Final Rules on Wage, Apprenticeship Under Inflation Act Released by IRS, Treasury
TL/DR –
The U.S. Department of the Treasury and the Internal Revenue Service have issued final regulations detailing ways taxpayers can seek increased tax benefits by adhering to prevailing wage and apprenticeship (PWA) requirements on qualifying clean energy projects. The regulations clarify that taxpayers can qualify for increased credit amounts through means such as meeting PWA requirements, the beginning of construction exception, or the one megawatt exception. The PWA Transition Rule states that any work done before January 29, 2023, doesn’t need to meet PWA requirements, and the apprenticeship requirements only apply during the construction phase of a facility, not after the facility is operational.
US Treasury and IRS Finalize Clean Energy Project Tax Benefit Regulations
The US Treasury Department and Internal Revenue Service (IRS) have issued finalized regulations on how taxpayers can achieve greater tax benefits by adhering to prevailing wage and apprenticeship (PWA) conditions on eligible clean energy projects.
The rules focus on increased credit sums for specific federal income tax credits and incentives, like the energy investment tax credit (ITC) and production tax credit (PTC).
Eligible taxpayers can access increased credit amounts by fulfilling one of these criteria:
- Complying with PWA requirements;
- Initiating construction before deadlines; or
- Meeting the one megawatt exception.
The regulations specify a PWA Transition Rule exempting work carried out prior to January 29, 2023, from PWA obligations, regardless of any construction commencement exception. Hence, taxpayers are only obliged to adhere to PWA rules for construction, alteration, or repair work occurring on or post-January 29, 2023.
The PWA Transition Rule is also applicable to taxpayers who initiated construction before January 29, 2023, but later fail to meet the construction start exception. These taxpayers must adhere to PWA rules for work performed on or after January 29, 2023.
Additionally, the final rules specify that apprenticeship obligations cease once the project is operational. Apprenticeship conditions apply to alterations and repairs during the construction phase, not post-operation.
—
Read More US Economic News