The IRS has published initial guidance on the new wage and apprenticeship requirements for companies to qualify for clean energy tax credits under the Inflation Reduction Act.
The legislation provides $369 billion for clean energy initiatives, $270 billion of which is to be delivered through tax incentives, CPA Practice Advisor reported.
Under the guidance, published in the Federal Register on Nov. 30, “to meet the prevailing wage requirements with respect to any qualified facility, a taxpayer must ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in: (i) the construction of such facility, and (ii) the alteration or repair of such facility ... are paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such facility is located as most recently determined by the Secretary of Labor, in accordance with” the relevant sections of the United States Code.
The guidance further states that “to meet the apprenticeship requirements taxpayers must ensure that, with respect to the construction of any qualified facility, not less than the applicable percentage of the total labor hours of the construction, alteration, or repair work (including such work performed by any contractor or subcontractor) with respect to such facility is, subject to” relevant laws and “performed by qualified apprentices.”
According to CPA Practice Advisor, both the prevailing wage and apprenticeship requirements apply to the following tax incentives:
▪ Advanced Energy Project Credit;
▪ Alternative Fuel Refueling Property Credit;
▪ Credit for Carbon Oxide Sequestration;
▪ Clean Fuel Production Credit;
▪ Credit for Production of Clean Hydrogen;
▪ Energy Efficient Commercial Buildings Deduction;
▪ Renewable Energy Production Tax Credit; and
▪ Renewable Energy Property Investment Tax Credit.
The prevailing wage requirements also apply to tax incentives for the New Energy Efficient Home Credit and the Zero-Emission Nuclear Power Production Credit.
The guidance also contains requirements for record keeping and construction dates.