Treasury and IRS Release Final Rule on the Prevailing Wage and Apprenticeship Requirements for Increased Credit and Deduction Amounts Under the Inflation Reduction Act
The Treasury Department and Internal Revenue Service (IRS) issued a final rule interpreting the prevailing wage and apprenticeship (PWA) requirements related to increased credit or deduction amounts for certain clean energy incentives, enacted as part of the Inflation Reduction Act (IRA). As you may recall, SWACCA lobbied for the inclusion of prevailing wage and apprenticeship requirements in the IRA in 2022. A fact sheet on the final rule from the White House is available here and a fact sheet on the final rule from the IRS is available here.
The IRA 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. By satisfying the PWA requirements, taxpayers can generally increase the base amount of the credit or deduction by five times. To qualify for the PWA increased credit or deduction amounts, taxpayers generally need to: (1) ensure that laborers and mechanics employed in the construction, alteration, or repair of the facility or property, project or equipment are paid wages at rates not less than applicable prevailing wage rates; (2) meet certain apprenticeship requirements, including, among others, ensuring that a minimum percentage of the total labor hours performed on a project are performed by qualified apprentices from a registered apprenticeship program and ensuring that any taxpayer that employs four or more individuals for a project must hire at least one qualified apprentice; and (3) meet specific recordkeeping requirements. The rule does, however, include statutory exceptions for meeting the prevailing wage and apprentice requirements.
In addition to publishing the final rule and associated fact sheets, Treasury, the IRS, and the Department of Labor (DOL) released additional resources, including: (1) a Treasury/DOL blog post on Project Labor Agreements; (2) an IRS overview of the PWA requirements; (3) an IRS fact sheet on the PWA requirements; (4) a frequently asked questions document from the IRS; (5) a dedicated IRA PWA page on the DOL website; (6) a dedicated IRA apprenticeship page on the DOL website; (7) a DOL PWA frequently asked questions site; and (8) a Good Clean Energy Jobs Interactive Map from DOL.
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