Earlier this week, the Department of Treasury and Internal Revenue Service (IRS) issued initial guidance for prevailing wage and apprenticeships as would apply under the Inflation Reduction Act’s labor requirements for certain energy tax incentives.

IRS Notice 2022-61 was published yesterday via the Federal Register, marking the start of the 60-day period until the wage and apprenticeship changes must be applied.

To satisfy the prevailing wage rate requirements, a taxpayer must pay and maintain records to show they pay “prevailing rates” for any laborer or mechanic employed in the construction, alteration or repair of a facility, property, project or equipment by the taxpayer, or any contractor or subcontractor of the taxpayer. The secretary of labor issued prevailing wage rates based on geographic location and type of construction. However, the notice indicates a course of action in the event that no prevailing wage rates have been published or the project in question doesn’t fit the parameters.

“The taxpayer can rely on the procedures established by the Secretary of Labor for purposes of the requirement to pay prevailing rates determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code,” the notice reads.

Employers will have met apprenticeship requirements if they have made “a good faith effort” in requesting qualified apprentices “from a registered apprenticeship program in accordance with usual and customary business practices for registered apprenticeship programs in a particular industry.”

The guiding document also lays out examples of how many hours on a project, and the number of apprentice hours worked, are needed to allow an employer to meet requisite apprentice-to-journey worker ratios.

The changes apply to building projects starting on or after January 30, 2023, though the Department of Treasury and the IRS “anticipate issuing proposed regulations and other guidance with respect to the prevailing wage and apprenticeship requirements.”

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