Treasury Releases Guidance on Prevailing Wage and Apprenticeship Requirements for Enhanced Tax Benefits Effective January 30, 2023; DOL Releases FAQs
Published November 30, 2022
The Treasury Department and Internal Revenue Service (IRS) published guidance providing taxpayers (generally builders, developers and owners of clean energy facilities) information on how to satisfy the prevailing wage and apprenticeship requirements for enhanced tax benefits under the Inflation Reduction Act. The guidance explains how to receive the increased tax credits or deduction amounts by satisfying the wage and apprenticeship requirements. The notice provides guidance on what constitutes a prevailing wage and the determination of qualified apprenticeships with accompanying examples.
“The historic Inflation Reduction Act that President Biden signed into law earlier this year puts in place tax incentives across the energy sector that will drive renewable energy investment and economic growth while ensuring the jobs created from this investment and growth are good-paying ones, with strong labor protections,” U.S. Secretary of the Treasury Janet L. Yellen said.
Highlights of the Notice of Initial Guidance entitled, "Prevailing Wage and Apprenticeship Initial Guidance Under Section 45(b)(6)(B)(ii) and Other Substantially Similar Provisions," include:
- Treasury and IRS anticipate issuing proposed regulations and other guidance with respect to the prevailing wage and apprenticeship requirements.
- 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 guidance starts 60-day “clock” for labor provisions to take effect meaning that his notice affects facilities the construction of which began, or certain property the installation of which began, on or after January 30, 2023.