On August 30, 2023, the IRS and Treasury published proposed Treasury regulations (the “Proposed Regulations”) providing expansive guidance on the prevailing wage and apprenticeship requirements (the “PWA Requirements”) that taxpayers must[1] satisfy to receive the full credit amount[2] available under various revised and new tax credits provided for in the Inflation Reduction Act of 2022 (the “IRA”).[3] Taxpayers are permitted to rely on the Proposed Regulations with respect to a facility[4] on which construction began on or after January 29, 2023 but before final regulations are published.[5]
The Proposed Regulations are detailed, and a comprehensive discussion of them is beyond the scope of this alert. Instead, this alert begins with some background regarding these requirements, then provides a short summary of the Prevailing Wage Requirement and the Apprentice Requirements (including, with respect to each requirement, a short description of the consequences of noncompliance, remediation opportunities, and recordkeeping obligations), and concludes with observations regarding key implications of the guidance for market participants.
Background
The IRA introduced the PWA Requirements with the intent of “creating good-paying union jobs” in the clean energy, manufacturing, and construction sectors.[6] At a high level, the “Prevailing Wage Requirement” requires that all laborers and mechanics employed by a taxpayer (or a contractor or subcontractor of such...
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