The IRS issued final regulations on Tuesday regarding the prevailing wage and apprenticeship requirements for increased tax credits available for clean energy incentives.
The Inflation Reduction Act offers enhanced credit or deduction amounts for businesses, including project developers, who meet the prevailing wage and apprenticeship (PWA) requirements during the construction, alteration, or repair of specific clean energy facilities or properties. Taxpayers can generally increase the base amount of the credit or deduction fivefold if PWA requirements are satisfied.
The regulations will be officially published in the Federal Register on June 25.
To qualify for the increased tax credit, taxpayers must:
- Ensure that laborers and mechanics employed in construction, alteration, or repair work are paid wages at rates not less than applicable prevailing wage rates.
- Meet certain requirements related to employing qualified apprentices from registered apprenticeship programs.
- Fulfill specific recordkeeping and reporting requirements.
The PWA requirements apply to all contractors and subcontractors employed by the taxpayer in construction, alteration, or repair work. However, taxpayers claiming the increased credit or deduction bear sole responsibility for ensuring compliance with PWA requirements.
"The increased credit or deduction for taxpayers meeting prevailing wage and apprenticeship requirements creates opportunities for both workers and employers," IRS Commissioner Danny Werfel said.
"The IRS is committed to ensuring that taxpayers claiming the clean energy credits comply with all of the applicable prevailing wage and apprenticeship requirements," Werfel added. "The additional resources the IRS has received are making a difference for our efforts to ramp up taxpayer service and enforcement, and we will continue to build on these improvements."
For a list of applicable PWA Clean Energy Tax Incentives, visit here.
The IRS also released Publication 5983, IRA Prevailing Wage and Apprenticeship Requirements Fact Sheet; updated Publication 5855, IRA Prevailing Wage & Registered Apprenticeship Overview; and provided answers to frequently asked questions about prevailing wage and apprenticeship.
