Proposed regulations: Guidance on prevailing wage and apprenticeship requirements under clean energy tax incentives
Guidance for taxpayers who initially fail to satisfy prevailing wage and requirements and subsequently comply with correction and penalty procedures
Guidance on prevailing wage and apprenticeship requirements under clean energy tax
The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-100908-23) regarding the rules relating to qualifying for increased credit or deduction amounts available for taxpayers satisfying prevailing wage and registered apprenticeship (PWA) requirements established by H.R. 5376 (commonly called the “Inflation Reduction Act of 2022” (IRA)).
The IRA provides increased credit or deduction amounts that generally apply for taxpayers who satisfy certain PWA requirements regarding the construction, installation, alteration or repair of a qualified facility, qualified property, qualified project, qualified equipment or for certain energy facilities. The increased credit or deduction amount is generally equal to the base amount multiplied by five if the taxpayer satisfies the PWA requirements.
The proposed regulations [PDF 365 KB] (37 pages) as published in the Federal Register on August 30, 2023, provide guidance on various aspects of the PWA requirements including:
- Taxpayer recordkeeping requirements
- Wage determinations, including for projects spanning multiple geographic areas or located offshore
- Correction and penalty provisions
- Apprenticeship requirements and the “Good Faith Effort” exception
- Application of the PWA rules to specific Code provisions
The IRS today also released “frequently asked questions” (FAQs) about the PWA requirements and Publication 5855 [PDF 75 KB], which is an overview of the PWA requirements and the applicable credits.
Treasury and the IRS previously provided guidance on the PWA requirements in Notice 2022-61 (read TaxNewsFlash). Notice 2022-61 provided high-level rules on the PWA requirements and also started the 60-day “clock” for a PWA requirements transition rule such that projects on which construction began before January 29, 2023, are eligible for the higher credit or deduction amounts without satisfying the PWA requirements.
Comments on the proposed regulations, as well as requests to speak and outlines of topics to be discussed at the public hearing (scheduled for November 21, 2023, at 10 a.m. ET), are due by October 30, 2023. If no outlines are received by that date, the public hearing will be cancelled.
Read a related IRS release—IR-2023-156 (August 29, 2023)
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