IRS Releases Guidance on IRA Prevailing Wage and Apprenticeship Provisions
On November 30, 2022, the Internal Revenue Service (IRS) published Notice 2022-61, which offers preliminary guidance on the prevailing wage and apprenticeship (PW&A) provisions attached to certain clean energy tax incentives introduced in the Inflation Reduction Act, Pub. L. 117-169 (IRA). The IRA introduced a two-tier “base” rate and “increased” rate structure for the energy tax incentives found in Internal Revenue Code sections 30C, 45, 45L, 45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E, and 179D. To qualify for the increased rate structure, the IRA requires that taxpayers, contractors, and subcontractors ensure:
- That laborers and mechanics are paid wages at rates not less than the prevailing rates.
- That a percentage of the total labor hours spent to construct the facility are performed by qualified apprentices.
Notice 2022-61 indicates that prevailing wage rates will be determined using information published by the Department of Labor (DOL) and that the required apprentices must be participating in a registered apprenticeship program. The guidance further supplies information on how to establish the beginning of construction, as well as recordkeeping and reporting requirements.
The PW&A requirements generally apply to qualifying facilities where construction begins 60 days or more after the publication of IRS guidance (60-day rule). Importantly, Notice 2022-61 indicates that by its publication IRS has begun the clock on the 60-day rule. Therefore, pursuant to the notice, the PW&A requirements will come into effect for facilities that begin construction on or after January 29, 2023.
Notice 2022-61 does not establish a public comment period. However, in October, IRS published Notice 2022-51. That notice requested public comment on implementation of the PW&A provisions. Although the comment period on Notice 2022-51 officially closed on November 4, IRS noted that it would consider comments submitted after that date. Advocacy encourages concerned parties to comment on the implementation of the PW&A provisions using the instructions found in Notice 2022-51.
- Read the PW&A guidance found in Notice 2022-61 and the correction to that notice, each published in the Federal Register.
- Register for DOL webinars on the PW&A provisions on Wednesday, December 14 and Thursday, December 15.
- Submit comments on Notice 2022-51 via the federal eRulemaking Portal.
- Advocacy Contact: Send an email to Meagan Singer at firstname.lastname@example.org or call (202) 921-4843.
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