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Proposed new rules from the IRS and the Department of the Treasury provide detailed guidance on the wage and apprenticeship requirements for projects using clean energy tax credit or deduction amounts for clean energy facilities and projects if taxpayers satisfy certain prevailing wage and registered apprenticeship requirements (PWA). 

The August 29 Notice of Proposed Rulemaking (NPRM) builds on initial guidance published last year following enactment of the Inflation Reduction Act (IRA).

The IRA provides increased credit or deduction amounts that will apply if taxpayers satisfy certain PWA requirements related to the construction, installation, alteration, or repair of a qualified facility or project. The proposed regulations offer guidance to taxpayers intending to claim the increased credit or deduction amounts, including correction and penalty procedures as well as reporting requirements.

Prevailing wage and apprenticeship provisions apply to the—

            Energy efficient commercial buildings deduction under section 179D

            Production tax credit under section 45

            Investment tax credit under section 48

            Alternative fuel refueling property credit under section 30C

            Clean fuel production credit under section 45Z

            Credit for carbon oxide sequestration under section 45Q

            Credit for production of clean hydrogen under section 45V

            Clean electricity production credit under section 45Y

            Advanced energy project credit under section 48C; and

            Clean electricity investment credit under section 48E.

The NPRM clarifies rules on the number of hours apprentices need to work for taxpayers to qualify for the bonus credit. Qualified apprentices must perform 12.5 percent of the total labor hours for facilities beginning construction in 2023 and 15 percent for facilities beginning construction in 2024 and after. There also is a ratio requirement: For every four individuals hired to perform construction, alteration, or repair work on a facility, one qualified apprentice must be employed.

Along with the NPRM, the IRS published FAQs and Publication 5855, which gives an overview of the prevailing wage and apprenticeship requirements and the applicable credits.

Comments on the proposed regulations are due to the IRS by October 30.


Mary Bachinger

Director, Tax Policy


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