Treasury & IRS Finalize Guidance on Labor Provisions for Clean Energy Tax Incentives

The Department of the Treasury and the Internal Revenue Service issued final regulations on the prevailing wage and apprenticeship (PWA) requirements related to increased credit or deduction amounts for certain clean energy incentives, enacted as a part of the Inflation Reduction Act (IRA).

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.

The IRA was intended to spur the construction of renewable energy projects and will impact the industry for years to come. AGC welcomes the clarity provided by Treasury in this rule, as it comes nearly two years after the IRA was signed into law. AGC’s concerns are punctuated by the over-incentivization of the usage of project labor agreements that could prohibit large swaths of industry from fairly competing for IRA projects, while giving preferential treatment to others. Additionally, increased focus on enforcement and compliance planned by Treasury could lead to project owners and developers placing further liability upon contractors for loss of credit or penalties.

Treasury statement with additional resources can be found here and AGC resources are in development.

For more information, contact Jim Young at [email protected] or 202-547-0133, Matt Turkstra at [email protected] or 202-547-4733, or Claiborne Guy at [email protected] or 703-837-5382.

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