IRS Releases Initial Guidance on Labor Provisions for Clean Energy Tax Incentives

DOL to Provide Educational Webinars on December 14 & 15.

The Treasury Department and Internal Revenue Service have published a notice of initial guidance providing taxpayers some information on how to satisfy the prevailing wage and apprenticeship requirements for enhanced tax benefits under the Inflation Reduction Act (IRA).

The publication of this notice begins the 60-day period in which taxpayers can begin construction of a facility (or installation under the rules for energy efficient commercial building property) to receive the enhanced tax benefits without having to satisfy the prevailing wage and apprenticeship requirements included in the IRA.  Specifically, in order to receive increased incentives, taxpayers must meet the prevailing wage and apprenticeship requirements for facilities where construction begins on or after January 29, 2023.

The guidance generally explains how taxpayers – generally builders, developers, and owners of clean energy facilities – receive the increased tax credits or deduction amounts by satisfying the wage and apprenticeship requirements. For instance, the notice provides guidance on what constitutes a prevailing wage and the determination of qualified apprenticeships with some accompanying examples. Finally, the notice provides guidance for determining the “beginning of construction” (and “installation” for purposes of the rules for deductions for the cost of energy efficient commercial building property placed in service during the tax year). The Treasury Department plans to issue additional guidance and regulations with respect to these requirements in the coming months.

To further assist taxpayers and other stakeholders in understanding these provisions, the U.S. Department of Labor (DOL) issued two Frequently Asked Question (FAQ) documents – one on prevailing wage and the other one on apprenticeships. The DOL is also offering two educational webinars on the labor standards provisions contained in the Inflation Reduction Act and Treasury Guidance.

AGC submitted extensive comments on the original notice from the U.S. Department of the Treasury seeking public comments on these labor requirements in the IRA. AGC will continue to work with Treasury and the IRS as it develops further guidance regarding these new labor requirements.

For more information, contact Claiborne Guy at [email protected] or 703-837-5382.

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