The Biden administration has tasked the IRS with ensuring companies are following the labor requirements tied to green energy tax incentives in this year’s tax-and-climate law, creating a new role for the agency with little time to stand up its enforcement plans.

Businesses and investors could see a beefed-up tax credit of 30% if they agree to follow certain labor rules in the Inflation Reduction Act, including paying laborers and mechanics the local prevailing wage and using trained workers participating in a registered apprenticeship program to complete a share of the work.

However, the provisions, which President Joe Biden said will be the key to federal green investments and good-paying union jobs, create myriad new responsibilities for everyone. The provisions also are sparking concerns about how investors and developers will comply, as well as whether the government can ensure the tax credits aren’t being abused.

Businesses that haven’t worked with training programs will have to learn to navigate the registered apprenticeship system, which also could mean a first-time interaction with a labor union. IRS enforcers also will be learning how to audit the new tax credit, which involves wage and apprenticeship standards typically overseen by the US Department of Labor.

“The IRS does not really want to take on responsibility for an area of law it doesn’t know...

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