The Internal Revenue Service and the Treasury Department issued guidance Tuesday to require employers to meet the prevailing wage and apprenticeship requirements for clean energy jobs and tax credits under the Inflation Reduction Act.
The guidance includes
The prevailing wage and registered apprenticeship requirements apply to many of the clean energy tax incentives under the 2022 law, including the investment and production tax credits that help finance wind, solar and battery storage projects along with credits for carbon capture, utilization, and storage and clean hydrogen projects. If the requirements are met, a taxpayer can claim an enhanced tax credit or deduction for up to five times the value of the regular credit or deduction.
"President Biden's Investing in America agenda is focused on ensuring that we're creating jobs with good pay and expanded opportunities, and that American workers have the skills they need to get ahead," said Treasury Secretary Janet Yellen in a statement. "The Inflation Reduction Act is spurring historic investments in clean energy across the country, and today's announcement will make sure we have skilled workers ready to take advantage of the jobs being created."
The Inflation Reduction Act provides larger credit or deduction amounts that generally apply for taxpayers who meet certain prevailing wage and apprenticement requirements for the construction, installation, alteration or repair of a qualified facility, qualified property, qualified project, qualified equipment or for certain energy facilities.
Under the tax law, the increased credit or deduction amount is typically equal to the base amount multiplied by five if the taxpayer satisfies the necessary requirements. There are certain limited exceptions where a taxpayer may be eligible for an increased credit amount without satisfying the requirements.
The proposed regulations aim to offer guidance to taxpayers that plan to claim the increased credit or deduction amounts and those who want to transfer the increased credit amounts. The proposed rules also provide guidance for taxpayers that initially fail to satisfy the prevailing wage and apprenticement requirements but hope to cure the failure by complying with the relevant correction and penalty procedures. The proposed regs also include rules on the recordkeeping and reporting requirements.
