Key Takeaways:

• The IRS issued initial guidance on prevailing wage and apprenticeship requirements for energy projects commencing construction on or after January 29, 2023. See our blog post on the details of and applicable tax credit implications of the guidance here.

What you should know about the labor impacts of the guidance:

• The prevailing wage requirements are largely derived from the prevailing wage regime established by the federal Davis Bacon Act.
• The apprenticeship framework requires developers and their contractors or subcontractors to employ apprentices in the development and construction of projects and assign a proportion of the overall construction work to apprentices.

On November 30, 2022, the Internal Revenue Service (IRS) published Notice 2022-61 (the Notice), providing initial guidance on the prevailing wage and apprenticeship requirements applicable to certain provisions of the Internal Revenue Code (the Code), as amended by the Inflation Reduction Act (the Act). The Act amended the Code to provide increased tax credits and deductions to certain taxpayers constructing and installing alternative energy projects, provided that those taxpayers satisfy various prevailing wage and apprenticeship requirements. The Notice presents novel tax and effective cost implications to developers sponsoring the creation of alternative energy projects, such as onshore and offshore solar, wind and hydroelectric installations.

Prevailing Wage Requirements

With respect...

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