Regs. cover green energy incentive wage and apprenticeship requirements

The IRS issued final regulations (T.D. 9998) Tuesday on the prevailing wage and apprenticeship (PWA) requirements that allow increased credit or deduction amounts for certain green energy incentives that were established in the Inflation Reduction Act of 2022, P.L. 117-169.

The legislation provides increased credit or deduction amounts for taxpayers who satisfy certain PWA requirements regarding the construction, alteration, or repair of certain clean energy facilities or properties, projects, or equipment. Taxpayers can generally increase the base amount of the credit or deduction by five times when they satisfy the PWA requirements, the IRS said in a news release.

To qualify for the PWA increased credit or deduction amounts, the IRS said taxpayers generally need to:

• Ensure employed laborers and mechanics are paid wages at rates not less than applicable prevailing wage rates;
• Meet certain requirements related to employing qualified apprentices from registered apprenticeship programs; and
• Meet specific recordkeeping and reporting requirements. 

The PWA requirements apply to all contractors and subcontractors of the taxpayer that employ laborers and mechanics. However, taxpayers claiming the increased credit or deduction are responsible for ensuring that the PWA requirements are satisfied.

The IRS said it “will dedicate significant resources to promoting and enforcing compliance with the final clean energy rules.”

New publications and FAQs

In addition to the final regulations, the IRS also released Publication 5983, IRA Prevailing Wage and Apprenticeship Requirements Fact Sheet; updated Publication 5855, IRA Prevailing Wage & Registered Apprenticeship Overview and the Prevailing Wage and Apprenticeship Frequently Asked Questions. 

The U.S. Department of Labor (DOL) determines the applicable prevailing wage rates for each classification of laborers and mechanics. More information about prevailing wage rates can be found on the DOL’s website.

The DOL and the IRS are working on a memorandum of understanding (MOU) — to be signed by the end of the year — that will lay out education and public outreach and development of training content for IRS examination personnel. The MOU will also facilitate the DOL’s review and comment as part of the development of PWA tax forms. Finally, the MOU will formalize a process for the DOL to share with the IRS any credible tips or information that the DOL receives as to potential noncompliance with the PWA requirements. 

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.