Nprm Reg-100908-23

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Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–100908–23]
RIN 1545–BQ54

Increased Credit or Deduction
Amounts for Satisfying Certain
Prevailing Wage and Registered
Apprenticeship Requirements
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking
and public hearing.
AGENCY:

This document contains
proposed regulations regarding
increased credit or deduction amounts
available for taxpayers satisfying
prevailing wage and registered
apprenticeship (collectively, PWA)
requirements established by the
Inflation Reduction Act of 2022 (IRA).
These proposed regulations would affect
taxpayers intending to satisfy the PWA
requirements for increased Federal
income tax credits or deductions. These
proposed regulations would also affect
taxpayers intending to satisfy the
prevailing wage requirements for
increased Federal income tax credit
amounts that do not have associated
apprenticeship requirements.
Additionally, these proposed
regulations would affect taxpayers who
initially fail to satisfy the PWA or
prevailing wage requirements and
subsequently comply with the
correction and penalty procedures in
order to be deemed to satisfy the PWA
or prevailing wage requirements.
Finally, the proposed regulations
address specific PWA or prevailing
wage recordkeeping and reporting
requirements. The proposed regulations
would affect taxpayers intending to
claim increased credit or deduction
amounts pursuant to the IRA, including
those intending to make elective
payment elections for available credit
amounts, and those intending to transfer
increased credit amounts. This
document also provides notice of a
public hearing on the proposed
regulations.
DATES: Written or electronic comments
and requests for a public hearing must
be received by October 30, 2023. A
public hearing on these proposed
regulations is scheduled to be held on
November 21, 2023, at 10 a.m. ET.
Requests to speak and outlines of topics
to be discussed at the public hearing
must be received by October 30, 2023.
If no outlines are received by October

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SUMMARY:

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30, 2023, the public hearing will be
cancelled. Requests to attend the public
hearing must be received by 5 p.m. ET
on November 17, 2023. The public
hearing will be made accessible to
people with disabilities. Requests for
special assistance during the hearing
must be received by November 16, 2023.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically via the Federal
eRulemaking Portal at https://
www.regulations (indicate IRS and
REG–100908–23) by following the
online instructions for submitting
comments. Requests for a public hearing
must be submitted as prescribed in the
‘‘Comments and Requests for a Public
Hearing’’ section. Once submitted to the
Federal eRulemaking Portal, comments
cannot be edited or withdrawn. The
Department of the Treasury (Treasury
Department) and the IRS will publish
for public availability any comments
submitted to the IRS’s public docket.
Send paper submissions to:
CC:PA:LPD:PR (REG–100908–23), Room
5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station,
Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
the Office of Associate Chief Counsel
(Passthroughs & Special Industries) at
(202) 317–6853 (not a toll-free number);
concerning submissions of comments or
the public hearing, Vivian Hayes at
(202) 317–6901 (not a toll-free number)
or by email to [email protected]
(preferred).
SUPPLEMENTARY INFORMATION:
Background
I. Overview
This document contains proposed
regulations to amend the Income Tax
Regulations (26 CFR part 1) under
sections 30C, 45, 45L, 45U, 45V, 45Y,
45Z, 48C, 48E, and 179D of the Internal
Revenue Code (Code) and proposed
amendments to the Income Tax
Regulations (26 CFR part 1) under
sections 45Q and 48 (proposed
regulations). The Inflation Reduction
Act of 2022 (IRA), Public Law 117–169,
136 Stat. 1818 (August 16, 2022),
amended sections 30C, 45, 45L, 45Q, 48,
48C, and 179D to provide increased
credit or deduction amounts for
taxpayers who satisfy certain
requirements and added sections 45U,
45V, 45Y, 45Z, and 48E to the Code to
provide new credits, which also contain
provisions for increased credit amounts
for taxpayers who satisfy certain
requirements. Increased credit amounts
are available under sections 30C, 45,
45Q, 45V, 45Y, 45Z, 48, 48C, and 48E,

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and an increased deduction is available
under section 179D, for taxpayers
satisfying certain prevailing wage and
registered apprenticeship (PWA)
requirements. Increased credit amounts
are available under sections 45L and
45U for taxpayers satisfying certain
prevailing wage requirements.1 The IRA
includes correction and penalty
provisions available in certain situations
if taxpayers have failed to satisfy the
PWA requirements, and they are not
otherwise eligible for the increased
credit or deduction because they do not
qualify for an exception.
The increased credit amounts are also
generally available under sections 45,
45Y, 48, and 48E with respect to certain
facilities with a maximum net output (or
capacity for energy storage technology
under section 48E) of less than one
megawatt (One Megawatt Exception).
Additionally, increased credit and
deduction amounts are available under
sections 30C, 45, 45Q, 45V, 45Y, 48, 48E
and 179D if beginning of installation or
beginning of construction (BOC) occurs
before January 29, 2023 (BOC
Exception).
II. Prior Guidance
On October 24, 2022, the Treasury
Department and the IRS issued Notice
2022–51, 2022–43 I.R.B. 331, requesting
comments on aspects of the increased
credits and deduction amounts enacted
by the IRA, including the PWA
provisions. Section 3.01 of Notice 2022–
51 requested comments regarding the
applicability of subchapter IV of chapter
31 of title 40 of the United States Code,
which is commonly known as the DavisBacon Act; the special correction and
penalty procedures generally provided
for under section 45(b)(7)(B); any
documentation or substantiation that
should be required to show compliance
with the prevailing wage requirements;
and any other topics relating to the
prevailing wage requirements that may
require guidance. Section 3.02 of Notice
2022–51 requested comments
addressing factors to be considered in
regard to the appropriate duration of
employment of individuals for
construction, alteration, or repair work
for purposes of the Participation
Requirement; clarification regarding the
Good Faith Effort Exception; factors to
be considered in administering and
promoting compliance with the Good
1 The increased credit provisions in sections 45L
and 45U do not contain apprenticeship
requirements. For simplicity, where possible, the
preamble to the proposed regulations uses the
acronym PWA to refer to the prevailing wage and
apprenticeship requirements generally, including
the prevailing wage requirements in sections 45L
and 45U.

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Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules
Faith Effort Exception; whether methods
exist to facilitate reporting requirements
for the Good Faith Effort Exception;
documentation or substantiation
taxpayers maintain or could create to
demonstrate compliance with the
apprenticeship requirements or the
Good Faith Effort Exception; and any
other topics relating to the
apprenticeship requirements that may
require guidance. Comments received in
response to Notice 2022–51 were
considered in the drafting of these
proposed regulations.
On November 30, 2022, the Treasury
Department and the IRS published
Notice 2022–61. 87 FR 73580, corrected
in 87 FR 75141 (Dec. 7, 2022). Notice
2022–61 provided guidance on the PWA
requirements that generally apply under
sections 30C, 45, 45L, 45Q, 45U, 45V,
45Y, 45Z, 48, 48C, and 48E, and 179D.
Additionally, Notice 2022–61
established the 60-day period described
in sections 30C(g)(1)(C)(i),
45(b)(6)(B)(ii), 45Q(h)(2), 45V(e)(2)(A)(i),
45Y(a)(2)(B)(ii), 48(a)(9)(B)(ii),
48E(a)(2)(A)(ii)(II) and (a)(2)(B)(ii)(II),
and 179D(b)(3)(B)(i). Specifically,
Notice 2022–61 started the 60-day
period applicable for determining if
taxpayers qualify for the increased
credit or deduction amounts by
satisfying the BOC Exception. To be
eligible for the BOC Exception, as
indicated in Notice 2022–61, taxpayers
must have begun construction or
installation of a facility (as defined in
Notice 2022–61) before January 29,
2023. Finally, Notice 2022–61 provided
guidance for determining the beginning
of construction under sections 30C, 45,
45Q, 45V, 45Y, 48, and 48E, and the
beginning of installation under section
179D.

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III. Inflation Reduction Act
A. In General
Prior to enactment of the IRA, the
Code provided for certain temporary
credits and deductions with respect to
energy related facilities, projects,
equipment, and investments under
sections 30C, 45, 45L, 45Q, 48, 48C, and
179D. Congress had extended these
provisions multiple times and for
varying types of qualified facilities,
energy projects, equipment, and
investments. The IRA further amended
these sections, generally adjusting the
credit or deduction amounts, expiration
dates, and qualifying activities. Under
the IRA, Congress also enacted new
credits under sections 45U, 45V, 45Y,
45Z, (production tax credits) and 48E
(investment tax credit).
The IRA provides increased credit or
deduction amounts that generally apply

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for taxpayers who satisfy (i) certain
PWA requirements regarding the
construction, installation, alteration, or
repair of a qualified facility, qualified
property, qualified project, or qualified
equipment, or with respect to certain
facilities, (ii) the One Megawatt
Exception, or (iii) the BOC Exception.
Generally, if a taxpayer satisfies the
PWA requirements or meets the One
Megawatt Exception or the BOC
Exception, the amount of credit or
deduction determined is equal to the
otherwise determined amount of the
underlying credit or deduction
multiplied by five.
B. PWA Provisions
1. In General
The principal PWA requirements are
set forth in section 45(b)(6), (7), and (8).
In general, section 45(b)(6) provides the
increased credit amount for taxpayers
satisfying the PWA requirements or
meeting one of the exceptions, section
45(b)(7) provides the prevailing wage
requirements (Prevailing Wage
Requirements), and section 45(b)(8)
provides the apprenticeship
requirements (Apprenticeship
Requirements).2
Section 45 provides a credit for
taxpayers producing and selling
electricity from renewable resources to
unrelated persons during the taxable
year (section 45 credit). The section 45
credit is generally equal to 0.3 cents
multiplied by the kilowatt hours of
electricity (i) produced by the taxpayer
from qualified energy resources and at
a qualified facility during the 10-year
period beginning on the date the facility
was originally placed in service, and (ii)
sold by the taxpayer to an unrelated
person during the taxable year. If a
taxpayer satisfies the PWA
requirements, the One Megawatt
Exception, or the BOC Exception, then
the credit determined under section
45(a) for electricity produced at a
qualified facility is multiplied by five.
2. Prevailing Wage Requirements
Under section 45(b)(6), in the case of
a qualified facility that satisfies the
PWA requirements of section 45(b)(7)
and (b)(8), the One Megawatt Exception,
or the BOC Exception, the credit under
2 The prevailing wage requirements in sections
30C(g), 45L(g), 45Q(h), 45U(d), 45V(e), 48(a)(10),
48C(e), and 179D(b) are substantially similar to the
requirements provided under section 45(b)(7).
Sections 45Y(g)(9) and 45Z(f)(6)(A) adopt by crossreference the Prevailing Wage Requirements under
section 45(b)(7). Section 48E(d)(3) adopts by crossreference the Prevailing Wage Requirements under
section 48(a)(10). Section 48(a)(10) provides for a
special 5-year recapture rule that applies for
purposes of the prevailing wage requirements with
respect to sections 48 and 48E.

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section 45(a) ‘‘shall be equal to such
amount multiplied by five.’’ Section
45(b)(7)(A) provides that with respect to
any qualified facility, the taxpayer shall
ensure that any laborers and mechanics
employed by the taxpayer or any
contractor or subcontractor in—(i) the
construction of such facility, and (ii)
with respect to any taxable year, for any
portion of such taxable year that is
within the 10-year period beginning on
the date the qualified facility is
originally placed in service, the
alteration or repair of such facility, shall
be paid wages at rates not less than the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which such
facility is located as most recently
determined by the Secretary of Labor, in
accordance with subchapter IV of
chapter 31 of title 40, United States
Code.
3. Correction and Penalty Related to
Failure To Satisfy Prevailing Wage
Requirements
Under section 45(b)(7)(B), a taxpayer
who is not eligible for the One Megawatt
Exception or the BOC Exception and
fails to satisfy the Prevailing Wage
Requirements under section 45(b)(7)(A)
is ‘‘deemed’’ to have satisfied those
requirements if, for ‘‘any laborer or
mechanic who was paid wages at a rate
below the [required prevailing rate] for
any period’’ during any year of the
construction, alteration, or repair of the
facility, the taxpayer makes a correction
payment to the laborer or mechanic and
pays a penalty to the Secretary of the
Treasury or her delegate (Secretary).
Under section 45(b)(7)(B)(i)(I), the
amount of the correction payment is the
sum of (i) the difference between the
amount of wages paid to the laborer or
mechanic during the period and the
amount of wages required to be paid to
the laborer or mechanic during that
period in order to meet the Prevailing
Wage Requirements; and (ii) interest on
the amount under (i) at the
underpayment rate established under
section 6621 (determined by
substituting ‘‘6 percentage points’’ for
‘‘3 percentage points’’ in section
6621(a)(2)) for the applicable period.
Under section 45(b)(7)(B)(i)(II), the
amount of the penalty is ‘‘$5,000
multiplied by the total number of
laborers and mechanics who were paid
wages at a rate below the [prevailing
wage] rate described in [section
45(b)(7)(A)] for any period’’ during the
year. Deficiency procedures do not
apply ‘‘with respect to the assessment or
collection’’ of this penalty pursuant to
section 45(b)(7)(B)(ii).

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Under section 45(b)(7)(B)(iii), if the
Secretary determines that the failure to
satisfy the Prevailing Wage
Requirements is due to ‘‘intentional
disregard’’ of those requirements, then
the correction payment to the laborer or
mechanic is three times the amount that
would otherwise be determined under
section 45(b)(7)(B)(i)(I), and $10,000 is
substituted for $5,000 in calculating the
penalty under section 45(b)(7)(B)(i)(II).
Section 45(b)(7)(B)(iv) provides that,
‘‘pursuant to rules issued by the
Secretary, in the case of a final
determination by the Secretary with
respect to any failure . . . to satisfy [the
Prevailing Wage Requirements],’’ the
correction and penalty provisions do
not apply, ‘‘unless the payments . . .
are made by the taxpayer on or before
the date which is 180 days after the date
of such determination.’’

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4. Apprenticeship Requirements
Under section 45(b)(8), in order to
satisfy the Apprenticeship
Requirements, certain requirements
with respect to labor hours, apprenticeto-journeyworker ratios, and
participation by apprentices must be
satisfied.3
a. Labor Hours Requirement
Section 45(b)(8)(A)(i) provides that
‘‘[t]axpayers shall ensure that, with
respect to construction of any qualified
facility, not less than the applicable
percentage of the total labor hours of the
construction, alteration, or repair work
(including such work performed by any
contractor or subcontractor) with
respect to such facility shall, subject to
[section 45(b)(8)(B)] be performed by
qualified apprentices’’ (Labor Hours
Requirement).
For purposes of the Labor Hours
Requirement, section 45(b)(8)(A)(ii)
provides that the applicable percentage
is: (i) in the case of a qualified facility
the construction of which begins before
January 1, 2023, 10 percent, (ii) in the
case of a qualified facility the
construction of which begins after
December 31, 2022, and before January
1, 2024, 12.5 percent, and (iii) in the
case of a qualified facility the
construction of which begins after
December 31, 2023, 15 percent.
Section 45(b)(8)(E)(i) defines ‘‘labor
hours’’ as the ‘‘total number of hours
devoted to the performance of
construction, alteration, or repair work
by any individual employed by the
taxpayer or by any contractor or
3 Sections 30C(g)(3), 45Q(h)(4), 45V(e)(4),
45Y(g)(10), 45Z(f)(7), 48(a)(11), 48C(e)(6), 48E(d)(4),
and 179D(b)(5) cross-reference the apprenticeship
requirements in section 45(b)(8). Sections 45L and
45U do not have apprenticeship requirements.

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subcontractor, and exclud[ing] any
hours worked by foremen,
superintendents, owners, or persons
employed in a bona fide executive,
administrative, or professional capacity
(within the meaning of those terms in
part 541 of title 29, Code of Federal
Regulations).’’ Section 45(b)(8)(E)(ii)
defines ‘‘qualified apprentice’’ as ‘‘an
individual who is employed by the
taxpayer or by any contractor or
subcontractor and who is participating
in a registered apprenticeship program,
as defined in section 3131(e)(3)(B).’’
Section 3131(e)(3)(B) defines a
registered apprenticeship program as an
apprenticeship program registered
under the Act of August 16, 1937
(commonly known as the National
Apprenticeship Act, 50 Stat. 664,
chapter 663, 29 U.S.C. 50 et seq.) that
meets the standards of subpart A of part
29 and part 30 of title 29 of the Code
of Federal Regulations.4
b. Ratio Requirement
Under section 45(b)(8)(B), the Labor
Hours Requirement is subject to any
applicable requirements for apprenticeto-journeyworker ratios of the U.S.
Department of Labor (DOL) or the
applicable State apprenticeship agency
(Ratio Requirement).
c. Participation Requirement
Under section 45(b)(8)(C), each
taxpayer, contractor, or subcontractor
who employs four or more individuals
to perform construction, alteration, or
repair work with respect to the
construction of a qualified facility must
employ one or more qualified
apprentices to perform such work
(Participation Requirement).
5. Exceptions to Apprenticeship
Requirements
a. In General
Under section 45(b)(8)(D)(i), a
taxpayer is not treated as failing to
satisfy the Apprenticeship
Requirements in section 45(b)(8) if: (i)
the taxpayer satisfies the requirements
described in section 45(b)(8)(D)(ii)
(Good Faith Effort Exception), or (ii) in
the case of any failure by the taxpayer
to satisfy the Labor Hours Requirement
under section 45(b)(8)(A) and the
Participation Requirement under section
45(b)(8)(C), the taxpayer makes a
penalty payment to the Secretary
(Apprenticeship Cure Provision).
4 Effective November 25, 2022, 29 CFR part 29 is
no longer divided into subparts A and B because
subpart B (Industry Recognized Apprenticeship
Programs) was rescinded in a final rule published
on September 26, 2022 (87 FR 58269).

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b. Good Faith Effort Exception
Under the Good Faith Effort
Exception provided by section
45(b)(8)(D)(ii), a taxpayer is deemed to
have satisfied the Apprenticeship
Requirements with respect to a qualified
facility if the taxpayer has requested
qualified apprentices from a registered
apprenticeship program, as defined in
section 3131(e)(3)(B), and: (i) such
request has been denied, provided that
such denial is not the result of a refusal
by the taxpayer or any contractors or
subcontractors engaged in the
performance of construction, alteration,
or repair work with respect to such
qualified facility to comply with the
established standards and requirements
of the registered apprenticeship
program, or (ii) the registered
apprenticeship program fails to respond
to such request within five business
days after the date on which such
registered apprenticeship program
received such request.
c. Apprenticeship Cure Provision
Under section 45(b)(8)(D)(i)(II), if the
Good Faith Effort Exception does not
apply, then the taxpayer will not be
treated as failing to satisfy the Labor
Hours Requirement or the Participation
Requirement if the taxpayer makes a
penalty payment to the Secretary in an
amount equal to the product of $50
multiplied by the total labor hours for
which the Labor Hours Requirement or
the Participation Requirement was not
satisfied with respect to the
construction, alteration, or repair work
on the qualified facility. Under section
45(b)(8)(D)(iii), if the Secretary
determines that the failure was due to
intentional disregard of the Labor Hours
Requirement or Participation
Requirement, then the penalty amount
increases to $500 multiplied by the total
labor hours for which the requirement
was not satisfied.
C. One Megawatt Exception
Under the One Megawatt Exception in
section 45(b)(6)(B)(i), a qualified facility
that has a maximum net output of less
than one megawatt (as measured in
alternating current) is eligible for the
increased credit amount. A qualified
facility’s nameplate capacity determines
whether the facility meets the One
Megawatt Exception. Similar exceptions
apply for a qualified facility under
sections 45Y(a)(2)(B)(i) and
48E(a)(2)(A)(ii)(I) with a maximum net
output of less than one megawatt (as
measured in alternating current); a
qualified project under section
48(a)(9)(B)(i) with a maximum net
output of less than one megawatt of

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Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules
electrical (as measured in alternating
current) or thermal energy; and energy
storage technology under section
48E(a)(2)(B)(ii)(I) with a capacity of less
than one megawatt.

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D. Beginning of Construction Exception
Under the BOC Exception in section
45(b)(6)(B)(ii), a qualified facility the
construction of which began prior to the
date that is 60 days after the Secretary
publishes guidance with respect to the
requirements of section 45(b)(7)(A) and
(8) is eligible for the increased credit
amount in section 45(b)(6). On
November 30, 2022, the IRS and the
Treasury Department published Notice
2022–61, providing guidance with
respect to the PWA requirements in
section 45(b)(7)(A) and (8), including
initial guidance for determining the
beginning of construction for section 45
and other credits and the beginning of
installation under section 179D.
Therefore, if a taxpayer began
construction or installation of a facility 5
before January 29, 2023, then the
taxpayer is eligible for the increased
credit amount without satisfying the
PWA requirements, provided the
taxpayer is otherwise eligible for the
credit. Similar exceptions apply under
sections 30C, 45Q, 45V, 45Y, 48, 48E,
and 179D.
For purposes of determining when
construction or installation begins,
Notice 2022–61 incorporates by
reference the notices issued under
sections 45, 45Q, and 48 (collectively,
IRS Notices).6 The IRS Notices describe
two methods of establishing that
construction of a facility has begun: (i)
starting physical work of a significant
nature (Physical Work Test), and (ii)
paying or incurring five percent or more
of the total cost of the facility (Five
Percent Safe Harbor).
The IRS Notices, as clarified and
modified by Notice 2021–41, 2021–29
I.R.B. 17, provide that for purposes of
the Physical Work Test and Five Percent
Safe Harbor, taxpayers must
demonstrate either continuous
construction or continuous efforts
(Continuity Requirement) regardless of
whether the Physical Work Test or the
Five Percent Safe Harbor was used to
establish the beginning of construction.
Whether a taxpayer meets the
Continuity Requirement under either
test is determined by the relevant facts
and circumstances.
5 Notice 2022–61 defines ‘‘facility’’ as qualified
facility, property, project, or equipment.
6 Notice 2013–29, 2013–20 I.R.B. 1085 (section
45); Notice 2020–12, 2020–11 I.R.B. 495 (section
45Q); Notice 2018–59, 2018–28 I.R.B. 196 (section
48).

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The IRS Notices, as subsequently
clarified and modified, also provide for
a ‘‘Continuity Safe Harbor’’ under which
a taxpayer will be deemed to satisfy the
Continuity Requirement provided a
qualified facility is placed in service no
more than four calendar years after the
calendar year during which
construction of the qualified facility
began for purposes of sections 45 and
48, and no more than six calendar years
after the calendar year during which
construction of the qualified facility or
carbon capture equipment began for
purposes of section 45Q. For purposes
of the Continuity Safe Harbor, certain
offshore projects and projects built on
Federal land under sections 45 and 48
satisfy the Continuity Requirement if
such a project is placed into service no
more than 10 calendar years after the
calendar year during which
construction of the project began.
Until the Treasury Department and
the IRS issue further guidance on
determining when construction or
installation begins, taxpayers may
continue to rely on the guidance
provided in Notice 2022–61 and the IRS
Notices. Specifically, to determine when
construction begins for purposes of
sections 30C, 45V, 45Y, and 48E,
principles similar to those under Notice
2013–29 regarding the Physical Work
Test and Five Percent Safe Harbor
apply, and taxpayers satisfying either
test will be considered to have begun
construction. In addition, principles
similar to those provided in the IRS
Notices regarding the Continuity
Requirement for purposes of sections
30C, 45V, 45Y, and 48E apply. Whether
a taxpayer meets the Continuity
Requirement under either test is
determined by the relevant facts and
circumstances. Similar principles to
those under section 3 of Notice 2016–31
regarding the Continuity Safe Harbor
also apply for purposes of sections 30C,
45V, 45Y, and 48E. Taxpayers may rely
on the Continuity Safe Harbor with
respect to those sections, provided the
facility is placed in service no more
than four calendar years after the
calendar year during which
construction began.
For purposes of section 179D,
installation of energy efficient
commercial building property has begun
if a taxpayer generally satisfies
principles similar to the two tests
described in section 2.02 of Notice
2022–61 regarding the beginning of
construction under Notice 2013–29
(Physical Work Test and Five Percent
Safe Harbor). The relevant facts and
circumstances will ultimately determine
whether a taxpayer has begun
installation.

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For purposes of sections 45, 45Q, and
48, the IRS Notices will continue to
apply under each respective Code
section, including application of the
Physical Work Test and Five Percent
Safe Harbor, and the rules regarding the
Continuity Requirement and Continuity
Safe Harbors.
IV. Davis-Bacon Act
The Davis-Bacon Act (40 U.S.C. 3141
et seq.) (DBA), enacted in 1931, requires
the payment of minimum prevailing
wages determined by the DOL to
laborers and mechanics working on
contracts entered into by Federal
agencies and the District of Columbia
that are in excess of $2,000 and are for
the construction, alteration, or repair of
public buildings and public works. The
Copeland Act, Public Law 73–324 (40
U.S.C. 3145), was enacted in 1934 to
add a requirement that contractors
working on contracts covered by the
DBA submit weekly certified payroll
records to the contracting agency for
work performed on the contract.
Congress has included DBA
requirements in other laws, often
referred to as the Davis-Bacon Related
Acts (Related Acts), under which
Federal agencies provide assistance for
construction projects through grants,
loans, insurance, and other methods.
The Wage and Hour Division of the
DOL is responsible for administering the
DBA and has adopted regulations for the
determination of prevailing wages as
well as compliance with and
enforcement of DBA labor standards
requirements under 29 CFR parts 1, 3,
and 5.
Section 3142 of the DBA requires that
Federal agencies entering into contracts
covered by the DBA include the
requirements of the DBA in the contract,
including the requirement to
incorporate the applicable wage
determinations that set forth the
prevailing wages to be paid to laborers
and mechanics performing work, and
the Copeland Act, 40 U.S.C. 3145, sets
forth the requirement to submit certified
weekly payroll records to the
contracting Federal agency. Under
regulations implementing the DBA (29
CFR parts 1 and 5), the contracting
agency and the Wage and Hour Division
have responsibility to ensure
compliance with prevailing wage
requirements by engaging in periodic
audits or investigations of contracts,
including examination of payroll data.
The Wage and Hour Division
determines the wage rates that are
‘‘prevailing’’ for purposes of section
3142(b) of the DBA for each
classification of covered laborers and
mechanics on similar projects in the

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geographic area in which work is to be
performed. A prevailing wage is the
combination of the basic hourly rate and
any fringe benefit rate listed on the wage
determination. The Wage and Hour
Division generally makes its
determinations of the prevailing rates
based on survey information provided
by contractors and other interested
parties. The prevailing wage
determinations made by the Wage and
Hour Division are published on the
DOL-approved website for wage
determinations (currently https://
www.sam.gov).
Under the DBA, contracting agencies
follow specified procedures for
incorporating wage determinations into
covered contracts. The applicable
prevailing wage determination generally
applies for the duration of the contract.
In accordance with the DBA, certain
apprentices may be paid wages at a
lower wage rate than journeyworker
laborers and mechanics. Under 29 CFR
5.5(a)(4), an apprentice from a registered
apprentice program may be paid at not
less than the rate specified in the
registered program for the apprentice’s
level of progress in the apprenticeship
program, expressed as a percentage of
the journeyworker hourly rate specified
in the applicable wage determination.
Apprentices may also be paid bona fide
fringe benefits in accordance with the
provisions of the registered
apprenticeship program, but if the
registered apprenticeship program does
not specify bona fide fringe benefits,
apprentices must be paid the full
amount of bona fide fringe benefits
listed on the wage determination for the
applicable classification.
Sections 3143 and 3144 of the DBA
also provide for certain enforcement
authority and remedies to ensure
compliance with payment of prevailing
wage rates. When a contracting agency
or the Wage and Hour Division finds
there has been an underpayment of
wages, the contracting agency and the
Wage and Hour Division can seek to
recover the underpayments from the
contractor responsible, including but
not limited to the prime contractor. If
the underpayment of wages to laborers
and mechanics is not promptly
remedied, then the contracting agency
may withhold payments that are
otherwise due under the contract or
under another contract with the same
prime contractor in order to compensate
the laborers and mechanics for the
underpayments. Contractors who have
been found to have disregarded their
obligations to employees and
subcontractors, including by violating
prevailing wage requirements, may also
be subject to debarment from future

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Federal contracts under 40 U.S.C.
3144(b) and 29 CFR 5.12.
Explanation of Provisions
I. Overview
A. Incorporation of Certain DBA
Guidance
Under section 45(b)(7)(A), the
increased credit is available with
respect to a qualified facility if a
taxpayer ensures that laborers and
mechanics are ‘‘paid wages at rates not
less than the prevailing rates . . . in
accordance with [the DBA].’’ The phrase
‘‘in accordance with’’ means ‘‘in
agreement or harmony with; in
conformity to; according to.’’ 7 In
interpreting the ‘‘in accordance with’’
language, the Treasury Department and
the IRS propose to incorporate in these
regulations certain requirements of the
DBA that are relevant for the purposes
of section 45(b)(7)(A) and the intent of
the IRA, and that are necessary for, and
consistent with, sound tax
administration.
Under the DBA, a contractor must
agree to pay prevailing wages at the
commencement of the project as a
condition of a Federal contract award.
Conversely, under section 45, the
requirements related to payment of
prevailing wages are generally triggered
at the beginning of construction and
continue during the entire course of a
project, but the requirement becomes
binding only when a tax return claiming
the increased credit is filed. The Code
does not require taxpayers who do not
seek an increased credit under section
45(b)(6) to pay prevailing wages in the
construction, alteration, or repair of a
facility.
The proposed regulations seek to
strike the appropriate balance in
determining when DBA requirements
are relevant for purposes of the PWA
requirements and when they are not.
The proposed regulations would
incorporate DBA statutory and
regulatory guidance that is relevant for
purposes of claiming the increased tax
credit and consistent with sound tax
administration. For example, the
proposed regulations would largely
adopt DBA guidance relating to wage
determinations and the meaning of
pertinent terms such as ‘‘laborer’’ and
‘‘mechanic’’; ‘‘construction, alteration,
or repair’’; ‘‘wages’’; and ‘‘employed’’.
The proposed regulations would not
adopt DBA guidance if the result of
7 In accordance with, Oxford English Dictionary,
https://www.oed.com/search/dictionary/
?scope=Entries&q=in+accordance+with (last visited
Aug. 8, 2023); see Accordance, Merriam-Webster’s
Collegiate Dictionary (11th ed. 2006) (‘‘agreement,
conformity’’).

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doing so would not be in furtherance of
sound tax administration or the aims of
the IRA. For example, the proposed
regulations would not incorporate the
rules under the DBA regarding
provisions required to be included in
contracts, those provisions related to the
reporting of certified payroll records by
contractors to contracting agencies, and
the various enforcement processes that
are available to the DOL and the
contracting agencies to address
noncompliance. Additionally, the
DBA’s $2,000 monetary coverage
threshold has not been incorporated.8
The statutory language of the IRA
does not reflect any intent to include
exceptions from the PWA requirements,
other than the One Megawatt Exception
and the BOC Exception. Consequently,
the Treasury Department and the IRS
have not proposed a rule exempting
Tribal governments or the Tennessee
Valley Authority (TVA) from the PWA
requirements in section 45. The
Treasury Department and the IRS
request comments on the need for any
exceptions, including for Tribal
governments or the TVA, from the PWA
requirements in addition to those
expressly described in the statute. Such
comments should detail the specific
circumstances requiring the proposed
exception as well as how its design
would limit its application only to those
circumstances.
In addition, the Treasury Department
and the IRS will hold Tribal
consultation specifically to address the
prevailing wage and apprenticeship
requirements in these proposed
regulations, which will inform the
development of the final regulations.
See part VI. of the Special Analyses
section.
B. Applicability of PWA Requirements
to the Taxpayer
The proposed regulations would
provide that in order to earn the
increased credit under section 45(b)(6)
by satisfying the PWA requirements, the
taxpayer would be solely responsible
for: (i) ensuring that the relevant
laborers and mechanics are paid wages
not less than the prevailing rate whether
employed directly by the taxpayer, or by
a contractor, or a subcontractor, and (ii)
ensuring that the Apprenticeship
Requirements are satisfied. The
proposed regulations would also
provide that the taxpayer would be
solely responsible for the PWA
recordkeeping requirements, the
8 The Treasury Department and the IRS interpret
the One Megawatt Exception as addressing small
business taxpayers who would be excluded under
the $2,000 minimum contract requirement under
the DBA.

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correction and penalty provisions under
the Prevailing Wage Requirements, and
the Good Faith Effort Exception and
penalty provisions under the
Apprenticeship Requirements.
However, nothing in these proposed
regulations is intended to supersede
requirements that might otherwise
apply to a taxpayer, contractor, or
subcontractor by State or Federal law.
Generally, the proposed regulations
would define the term ‘‘taxpayer’’ to
mean any taxpayer as defined in section
7701(a)(14), including applicable
entities described in section
6417(d)(1)(A). This will generally be the
entity that claims the credit (as
increased under section 45(b)(6)), or
makes an election under section 6417
with respect to such credit amount on
a Federal income tax return. The section
45 credit, including the increased credit
amount available under section 45(b)(6),
is an eligible credit subject to the newly
enacted section 6418. Section 6418
allows ‘‘eligible taxpayers’’ to elect to
transfer certain credits to unrelated
taxpayers rather than using the credits
against their Federal income tax
liabilities. In the case of credits
transferred under section 6418, these
proposed regulations would provide
that the term ‘‘taxpayer’’ also means the
eligible taxpayer that determines the
eligible credit to be transferred and
makes a transfer election under section
6418 to transfer any specified credit
portion (including 100 percent) of an
eligible credit determined with respect
to any eligible credit property of such
eligible taxpayer for any taxable year.
Section 6418(a) provides that, in the
case of an eligible taxpayer that elects to
transfer all (or any specified portion) of
an eligible credit determined with
respect to the taxpayer for any taxable
year to an unrelated transferee taxpayer,
the transferee taxpayer specified in such
election (and not the eligible taxpayer)
is treated as the taxpayer with respect to
such credit (or such portion thereof).
The Treasury Department and the IRS
published proposed regulations in the
Federal Register (88 FR 40496 (June 21,
2023)) that would implement the
statutory provisions of section 6418
(6418 Proposed Regulations). As
explained in the 6418 Proposed
Regulations, the Treasury Department
and the IRS view inclusion of the word
‘‘determined’’ as instructive. Only
credits determined with respect to an
eligible taxpayer can be transferred by
the eligible taxpayer. The 6418
Proposed Regulations would provide
that Code sections relating to the
determination of an eligible credit, such
as sections 49 and 50(b), generally
impact the amount of an eligible credit

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that an eligible taxpayer can transfer. A
transferee taxpayer is generally not
subject to those Code sections, but a
transferee taxpayer is subject to Code
sections that would limit the amount of
an eligible credit that is allowed, such
as sections 38(c) and 469. In making a
transfer election, the 6418 Proposed
Regulations also would require an
eligible taxpayer to report the
determined credit as part of the
taxpayer’s return, including filing
properly completed credit source forms,
a properly completed Form 3800,
General Business Credit, and a schedule
showing the amount of eligible credit
transferred for each eligible credit
property.
The 6418 Proposed Regulations also
would apply with respect to the entire
credit determined under section 45,
where the amount of credit determined
would include increased credit amounts
available under section 45(b)(6). As the
rules for determining an eligible credit
apply to the eligible taxpayer and not
the transferee taxpayer under section
6418, these proposed regulations would
provide consistency with respect to the
rules relating to the determination of the
section 45 credit. Thus, while a
transferee taxpayer would claim a
transferred eligible credit (or portion
thereof) on a tax return, the
requirements of section 45 relevant to
determining the credit, including the
correction and penalty provisions
described in section 45(b)(7)(B) and
45(b)(8)(D), would remain with the
eligible taxpayer who determined the
credit. The Treasury Department and
the IRS request comments on the
application of the PWA penalty and
cure provisions, including to transferees
and eligible taxpayers, in the context of
transferred credits.
II. Prevailing Wage Requirements
Under Section 45(b)(7)(A)
A. In General
Section 45(b)(7)(A) requires that
taxpayers who are seeking an increased
credit ensure that laborers and
mechanics employed by the taxpayer, or
any contractor or subcontractor in the
construction, alteration, or repair of a
facility are paid wages at rates that are
not less than the prevailing rates
determined by the DOL in accordance
with the DBA.9 The proposed
regulations would provide that a
taxpayer would satisfy the Prevailing
Wage Requirements with respect to the
9 The requirement to pay prevailing wages with
respect to alteration or repair applies for any
portion of a taxable year that is within the 10-year
period beginning on the date the qualified facility
is placed in service.

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construction, alteration, or repair of a
facility by ensuring that all laborers and
mechanics employed by the taxpayer, or
any contractor or subcontractor, in the
construction, alteration, or repair of a
facility are paid wages at rates that are
not less than the prevailing rates
determined by the DOL in accordance
with the DBA.
The proposed regulations would
largely incorporate the definitions of
contractor and subcontractor from the
DBA and would provide that: (i) a
contractor would be any person that
enters into a contract with the taxpayer
for the construction, alteration, or repair
of a qualified facility, and (ii) a
subcontractor would be any contractor
that agrees to perform or be responsible
for the performance of any part of a
contract entered into with the taxpayer
(or contractor) with respect to the
construction, alteration, or repair of a
facility.
Consistent with the DBA and 29 CFR
5.2, and solely for purposes of the
Prevailing Wage Requirements, the
proposed regulations would provide
that a laborer or mechanic would be
considered employed by the taxpayer,
contractor, or subcontractor if the
individual performs the duties of a
laborer or mechanic for the taxpayer,
contractor, or subcontractor (as
applicable), regardless of whether the
individual would be characterized as an
employee or an independent contractor
for other Federal tax purposes. The
definition of employed for purposes of
the Prevailing Wage Requirements
would generally be different and
broader than the definition used
elsewhere in the Code, for example with
respect to employment taxes, as well as
the associated reporting and
withholding obligations. Laborers and
mechanics who are independent
contractors for employment tax
purposes may be considered employed
for purposes of the Prevailing Wage
Requirements. Whether an individual is
considered employed for purposes of
the Prevailing Wage Requirements and
these proposed regulations is not
relevant when determining whether an
individual is an employee or an
independent contractor for other
Federal tax purposes.
B. Determining the Prevailing Wage Rate
1. In General
Under the proposed regulations,
prevailing wage rates would be
determined by the DOL in accordance
with the DBA when they are issued and
published by the DOL as a general wage
determination or when issued to a
taxpayer as part of a supplemental wage

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determination or pursuant to a request
for a wage rate for an additional
classification. The proposed regulations
would require taxpayers to use the
general wage determination in effect
when the construction of the facility
begins but would not require taxpayers
to update the applicable prevailing wage
rates during construction of the facility
in the event a new general wage
determination is published by the DOL
after construction of the facility begins.
However, a new general wage
determination would be required to be
used when a contract is changed to
include additional, substantial
construction, alteration, or repair work
not within the scope of work of the
original contract, or to require work to
be performed for an additional time
period not originally obligated,
including where an option to extend the
term of a contract for the construction,
alteration, or repair is exercised. This is
consistent with DOL guidance under the
DBA, which generally requires the
contracting agency to incorporate the
applicable wage determinations as part
of the contract that is awarded to the
contractor with the applicable rates
valid through the duration of the
contract. The proposed regulations also
would provide that taxpayers would
need to update the applicable wage
rate(s), as necessary, with respect to any
alteration or repair of a facility that
begins after the facility has been placed
in service. Taxpayers would do this by
ensuring that wages are paid for such
alteration or repair based on the general
wage determination in effect when the
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2. General Wage Determinations
The proposed regulations would
provide that a general wage
determination would be one issued and
published by the DOL that includes a
list of wage and bona fide fringe benefit
rates determined to be prevailing for
laborers and mechanics for the various
classifications of work performed with
respect to a specified type of
construction in a geographic area.
Generally, the DOL determines the
prevailing rate based on wage rate data
submitted by contractors, contractors’
associations, labor organizations, public
officials, and other interested parties. In
general, the proposed regulations would
provide that taxpayers would need to
use the general wage determination(s)
published by the DOL under the DBA
on a DOL approved website, to
determine the applicable prevailing
wage rates. The current approved
website for publishing general wage
determinations is https://www.sam.gov.

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The proposed regulations would
largely incorporate the definition of
wages from 29 CFR 5.2 for the
Prevailing Wage Requirements. Under
29 CFR 5.2, wages are defined as the
basic hourly rate of pay; any
contribution irrevocably made by a
contractor or subcontractor to a trustee
or to a third person pursuant to a bona
fide fringe benefit fund, plan, or
program; and the rate of costs to the
contractor or subcontractor that may be
reasonably anticipated in providing
bona fide fringe benefits to laborers and
mechanics pursuant to an enforceable
commitment to carry out a financially
responsible plan or program, which was
communicated in writing to the laborers
and mechanics affected. Whether
amounts are wages for purposes of the
Prevailing Wage Requirements is not
relevant in determining whether
amounts are wages or compensation for
other Federal tax purposes.
3. Supplemental Wage Determinations
and Rates for Additional Classifications
The proposed regulations would
provide special procedures for the
limited circumstances in which a
general wage determination does not
provide an applicable wage rate(s) for
the work to be performed on the facility.
These circumstances include when no
general wage determination has been
issued for the geographic area or for the
specified type of construction, or when
the Secretary of Labor has issued a
general wage determination for the
relevant geographic area and type of
construction, but one or more labor
classifications necessary for the
construction, alteration, or repair work
that will be done on the facility by
laborers or mechanics is not listed as
part of that determination. The
proposed regulations would provide
that under these circumstances, a
taxpayer, contractor, or subcontractor
would need to request a supplemental
wage determination or request a
prevailing wage rate for an additional
classification from the DOL. A taxpayer
satisfies section 45(b)(7)(A) by ensuring
that laborers and mechanics are paid
wages at rates not less than the rates
determined by the DOL pursuant to a
request for a supplemental wage
determination or pursuant to a request
for a prevailing wage rate for an
additional classification.
The DOL has advised the Treasury
Department and the IRS that most
taxpayers will likely not need to use the
process for requesting a supplemental
wage determination or request a rate for
an additional classification because of
the availability of general wage
determinations. The request for a

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prevailing wage rate for an additional
classification would only be appropriate
when the work to be performed by the
classification is not performed by a
classification in the applicable general
wage determination and the
classification is used in the area by the
construction industry. In addition, a
prevailing wage rate for an additional
classification would only be approved
when the proposed wage rate, including
any bona fide fringe benefits, bears a
reasonable relationship to the wage rates
contained in the general wage
determination. A request for a
prevailing wage rate for additional
classification would not be permitted to
be used to split, subdivide, or otherwise
avoid application of classifications
listed in a general wage determination.
Under the proposed regulations, the
procedures for requesting a
supplemental wage determination or a
prevailing wage rate for an additional
classification from the DOL would
correspond to the provisions of 29 CFR
1.5(b) and 5.5(a)(1)(iii).
The Treasury Department and the IRS
expect that the construction of some
facilities may span two or more adjacent
geographic areas, and more than one
general wage determination could apply
to the facility. In such circumstances, a
taxpayer would be able to satisfy the
Prevailing Wage Requirements by
ensuring that laborers and mechanics
are paid wages at the highest rate for
each classification provided under the
general wage determinations. A
taxpayer would also be permitted to
request a supplemental wage
determination with respect to the
facility and pay the rates determined by
the DOL pursuant to the request.
The proposed regulations would also
provide a special rule for qualified
facilities located offshore so taxpayers
would not need to request a
supplemental wage determination for
offshore facilities. In lieu of requesting
a supplemental wage determination for
a facility located in an offshore area
within the outer continental shelf of the
United States, a taxpayer, contractor, or
subcontractor would be permitted to
rely on the general wage determination
for the relevant category of construction
that is applicable in the geographic area
closest to the area in which the qualified
facility will be located.
The process for requesting a
supplemental wage determination or a
prevailing wage rate for an additional
classification provided for in the
proposed regulations would be
consistent with the process described in
Notice 2022–61 while addressing the
different context of the PWA regime
wherein taxpayers, contractors, and

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subcontractors, rather than a contracting
agency, will seek additional wage rates
for purposes of complying with the
Prevailing Wage Requirements of
section 45. Under the DBA, the request
for a project wage determination
applicable under 29 CFR 1.5(b) or for a
conformance under 29 CFR 5.5(a)(1)(iii)
is made by the contracting agency rather
than the contractor and will often occur
after the contracting agency and the
contractor have conferred about the
need for the project wage determination
or for the conformance of an additional
classification. Because there is no
contracting agency in the tax credit
regime, the proposed regulations would
set forth an analogous process for
taxpayers, contractors, and
subcontractors to request a
supplemental wage determination, or a
request for a prevailing wage rate for an
additional classification, by submitting
the request and supporting material
directly to the Wage and Hour Division
of the DOL.
The proposed regulations would
provide that the request for a
supplemental wage determination or a
request for a prevailing wage rate for an
additional classification would need to
include information consistent with the
information that is required to be
provided by a contracting agency when
requesting a project wage determination
or a conformance for purposes of the
DBA. This information would include a
description of the type of work to be
performed, the geographic area where
the facility is located, the start date for
the construction, alteration, or repair of
the facility, the labor classification(s)
needed for performance of the work on
the facility for which wage rates are not
available on an applicable general wage
determination, pertinent wage payment
information that may be available with
respect to the classifications, and any
information the taxpayer wants the DOL
to consider for determining the
applicable classifications and prevailing
wage rates. After review, the Wage and
Hour Division will notify the taxpayer
as to the labor classifications and wage
rates to be used for the type of work in
question in the geographic area in
which the facility is located.
The proposed regulations would
adopt, by cross reference, the review
and appeal procedures available to any
interested party under the DBA with
respect to wage determinations
generally. Any interested party would
be able to seek reconsideration and
review of a supplemental wage
determination, or a prevailing wage rate
for an additional classification, by the
DOL Administrator of the Wage and
Hour Division and appeal any decision

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of the Administrator of the Wage and
Hour Division to the DOL
Administrative Review Board.
In general, the Treasury Department
and the IRS expect that supplemental
wage determinations and requests for
prevailing wage rates for an additional
classification will be requested no more
than 90 days prior to the beginning of
the construction, alteration, or repair of
the facility, as applicable. However, the
Treasury Department and the IRS
recognize that taxpayers may not
reasonably determine until after
construction, alteration, or repair begins
that a supplemental wage determination
or request for a prevailing wage rate for
an additional classification is necessary.
In these instances, the Treasury
Department and the IRS would expect
taxpayers, contractors, or subcontractors
to make a request as soon as practicable
after determining the need for a
supplemental wage determination or
prevailing wage rate for additional
classifications. The proposed
regulations would provide that when a
supplemental wage determination or a
prevailing wage rate for an additional
classification is issued by the DOL after
construction, alteration, or repair of the
facility has begun, the applicable
prevailing rates would apply
retroactively to the date that the
applicable construction, alteration, or
repair work that is the subject of the
request began. The taxpayer would be
required to ensure that wages (including
bona fide fringe benefits where
appropriate) are paid at appropriate
prevailing wage rates to all laborers and
mechanics performing work on the
project from the first day on which work
is performed in the classification. The
Treasury Department and the IRS
request comments on the proposed
procedures for requesting supplemental
wage determinations and prevailing
wage rates for additional classifications.
C. Paying Wages in Accordance With an
Applicable Wage Determination
1. In General
Under the proposed regulations, the
applicable wage determination for a
type of construction in a geographic area
would provide the prevailing wage rates
that apply to laborers or mechanics for
the construction, alteration, or repair of
a facility in that geographic area. The
proposed regulations would provide
that for purposes of satisfying the
Prevailing Wage Requirements, all
laborers and mechanics would need to
be paid in the time and manner
consistent with the regular payroll
practices of the taxpayer, contractor, or
subcontractor, as applicable. For

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purposes of satisfying section
45(b)(7)(A), the proposed regulations
would provide that a taxpayer would
need to ensure that the wages paid to
laborers and mechanics employed by
the taxpayer, contractor, or
subcontractor on the construction,
alteration, or repair of the facility must
be ‘‘not less than the prevailing rates
. . . in the locality in which such
facility is located.’’ The proposed
regulations would define the terms: (i)
laborer and mechanic, (ii) types of
construction, (iii) construction,
alteration, or repair, and (iv) locality,
generally consistent with the DBA
definitions.
The proposed regulations would
define the terms ‘‘laborer’’ and
‘‘mechanic’’ as those individuals whose
duties are manual or physical in nature.
Laborers and mechanics would include
apprentices and helpers. Working
forepersons who devote more than 20
percent of their time during a workweek
to laborer or mechanic duties and who
do not meet the criteria for exemption
under 29 CFR part 541 would also be
considered laborers and mechanics for
the time spent conducting laborer and
mechanic duties. However, laborers and
mechanics would not include
individuals whose duties are primarily
administrative, executive, or clerical,
and persons employed in a bona fide
executive, administrative, or
professional capacity as those terms are
defined in 29 CFR part 541. The
Treasury Department and the IRS
request comments on the treatment of
working forepersons or owners
performing the duties of laborers and
mechanics under certain circumstances,
and other executive or administrative
personnel who also perform duties of a
manual or physical nature, in the
construction, alteration, or repair of a
qualified facility.
The proposed regulations would
provide that the type of construction
would be the general category of
construction as established by the DOL
for the publication of general wage
determinations. Specific types of
construction currently include building,
residential, heavy, and highway. The
Treasury Department and the IRS
contemplate that the construction,
alteration, or repair of most facilities
eligible for the increased credit under
section 45(b)(6) would be either
building or heavy construction.
The proposed regulations would
provide that the term construction,
alteration, or repair would generally
mean construction, prosecution,
completion, or repair as provided under
29 CFR 5.2. Under this definition,
construction, alteration, or repair would

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mean all types of work performed at the
location of the facility and includes, but
is not limited to: constructing, altering,
remodeling, installing of items
fabricated offsite; painting and
decorating; and manufacturing or
furnishing of materials, articles, and
supplies or equipment at the location of
the facility. Additionally, the proposed
regulations would provide that
construction, alteration, or repair would
not include maintenance work that
occurs after the facility is placed in
service. Under the proposed regulations,
maintenance would be work that is
ordinary and regular in nature and
designed to maintain existing
functionality of a facility as opposed to
an isolated or infrequent repair of a
facility to restore specific functionality
or adapt it for a different or improved
use. Further, the proposed regulations
would provide that this definition of
construction, alteration, or repair would
be solely for purposes of the PWA
requirements and has no bearing on any
other provision under the Code,
including any determination of
construction, alteration, repair, or
maintenance under section 162 or 263.
The proposed regulations would
provide that a locality or geographic
area would be the county, independent
city, or other civil subdivision of the
State in which the facility or secondary
site is located. Geographic area would
also include offshore areas, including
areas located within the outer
continental shelf of the United States,
and the U.S. territories. If construction,
alteration, or repair is performed in
multiple counties, independent cities,
or other civil subdivisions, then the
geographic area would also include all
counties, independent cities, or other
civil subdivisions in which the work
will be performed.
Under section 45(b)(7)(A)(ii), the
prevailing wage rates that are required
to be paid with respect to such
construction, alteration, or repair are
determined by reference to ‘‘the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which such
facility is located.’’ The proposed
regulations would also use the DBA’s
‘‘site of the work’’ definition to clarify
the scope of the requirement under
section 45(b)(7)(A) to pay prevailing
wage rates. Under the DBA, the
requirement to pay prevailing wages is
limited by statute to laborers and
mechanics ‘‘employed directly on the
site of the work.’’ 40 U.S.C. 3142. By
comparison, section 45(b)(7)(A)(i) and
(ii) requires the payment of prevailing
wages generally in the ‘‘construction of
[a qualified] facility’’ and the ‘‘alteration

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or repair of such facility.’’ Over the
years, the DOL has updated its rules to
address developments in the
construction industry that have enabled
contractors to build large portions of a
building or project on one or more
secondary sites away from the primary
site of the work. The DBA rules now
provide that a secondary construction
site is considered part of the site of the
work, if a significant portion of a
building or work is constructed at the
secondary site for specific use in the
designated building or work and the site
either was established specifically for
the performance of the covered contract
or project or dedicated exclusively, or
nearly so, to the covered contract or
project. 29 CFR 5.2.
The Treasury Department and the IRS
view the DBA’s site of the work
requirement to be helpful for purposes
of interpreting the language in section
45(b)(7)(A) that the applicable
prevailing wage rates for the
construction, alteration, or repair of the
facility are rates not less than those
prevailing ‘‘in the locality in which
such facility is located.’’ As with certain
construction subject to the DBA, the
Treasury Department and the IRS expect
that taxpayers similarly may use
multiple construction sites in the
construction, alteration, or repair of a
facility and in certain cases prefabricate
large portions of the facility offsite for
later installation at the facility’s
location. Some of these secondary sites
will be dedicated solely to the
construction of a facility while others
may service multiple clients and
facilities. While the language of section
45(b)(7)(A) could be interpreted to
support an expansive reading of
construction such that all construction
of a facility, wherever located and
however small, is subject to the
Prevailing Wage Requirements, such a
reading would result in significantly
broader coverage than under the DBA
and likely would entail substantial
compliance costs and discourage
taxpayers from seeking the increased
credits or deduction available under the
IRA. Thus, the Treasury Department and
the IRS understand the DBA approach
to ‘‘site of the work’’ to strike an
appropriate balance between the
requirements of section 45(b)(7)(A) and
existing construction practices and thus
propose to largely adopt the DBA
approach for purposes of defining the
scope of the Prevailing Wage
Requirements.
Therefore, under the proposed
regulations, taxpayers would be subject
to the requirement to ensure that
laborers and mechanics are paid not less
than prevailing wage rates with respect

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to the construction, alteration, or repair
at the locality in which the facility is
located, which would be defined to
include any secondary sites where a
significant portion of the construction,
alteration, or repair of the facility
occurs, provided that the secondary site
either was established specifically for,
or dedicated exclusively for a specific
period of time to, the construction,
alteration, or repair of the facility.
Under 29 CFR 1.6(b)(1), the prevailing
wage rate that applies to laborers or
mechanics engaged in the construction,
alteration, or repair work at a secondary
site is determined by the geographic
area of the secondary site. The proposed
regulations would similarly provide that
when a secondary site is established
specifically for, or dedicated exclusively
for a specific period of time to, the
construction, alteration, or repair of the
facility, the prevailing wage rate
applicable to laborers and mechanics
engaged in the construction, alteration,
or repair of the facility at the secondary
site would be determined by the
applicable wage rate for that laborer or
mechanic classification based on the
geographic area of the secondary site.
2. Wages for Apprentices
Section 45(b)(8)(E)(ii) provides
generally that a qualified apprentice is
an individual who is employed by the
taxpayer, contractor, or subcontractor
and who is participating in a registered
apprenticeship program, as defined in
section 3131(e)(3)(B). For purposes of
the DBA, an apprentice may also
include an individual in the first 90
days of probationary employment as an
apprentice in a registered
apprenticeship program, who is not
individually registered in the program,
but who has been certified by the DOL’s
Office of Apprenticeship or a State
apprenticeship agency (where
appropriate) to be eligible for
probationary employment as an
apprentice.
A registered apprenticeship program
is a program that has been registered by
the DOL’s Office of Apprenticeship or a
recognized State apprenticeship agency,
pursuant to the basic standards and
requirements in 29 CFR parts 29 and 30.
Program registration is evidenced by a
Certificate of Registration or other
written indicia of registration.
The proposed regulations would
adopt 29 CFR 5.5(a)(4)(i) allowing the
payment of wages that differ from the
applicable prevailing wage rate to
apprentices who are participating in a
registered apprenticeship program. The
proposed regulations would also
provide that the calculation of the

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apprentice wage rate would be in
accordance with 29 CFR 5.5(a)(4)(i).
For purposes of determining whether
apprentices may be paid the apprentice
wage rate rather than the full prevailing
wage for other laborers and mechanics
of the same classification, the proposed
regulations would provide the
apprentice must be participating in a
registered apprentice program as
demonstrated by a written
apprenticeship agreement with the
registered apprenticeship program
containing the terms and conditions of
the employment and training of the
apprentice. The terms and conditions of
the agreement would be required to
comply with 29 CFR 29.7. The
registered apprenticeship program
would be required to be registered with
the DOL or a recognized State
apprenticeship agency in accordance
with 29 CFR parts 29 and 30. If the
apprentice is working in a classification
that is not in an occupation that is part
of the registered apprenticeship
program, to satisfy the Prevailing Wage
Requirements, the apprentice would
need to be paid the full prevailing wage
for laborers or mechanics for that
classification in that location.
The proposed regulations would
provide that taxpayers and contractors
or subcontractors who employ
apprentices who are not in a registered
apprenticeship program or who employ
apprentices in excess of applicable
ratios permitted by the registered
apprenticeship program would need to
pay those apprentices the full prevailing
wage rate listed for the classification of
the work performed in the applicable
wage determination.

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D. Correction and Penalty Provisions
1. General Rule
Under section 45(b)(7)(B)(i) and the
proposed regulations, taxpayers would
cure a failure to meet the Prevailing
Wage Requirements by making the
correction and penalty payments
described in Section III.B.3. Section
45(b)(7)(B)(i) provides that ‘‘[i]n the case
of any taxpayer which fails to satisfy the
requirement under subparagraph (A)
. . . such taxpayer shall be deemed to
have satisfied such requirement under
such subparagraph with respect to such
facility for any year if, with respect to
any laborer or mechanic who was paid
wages at a rate below the [prevailing
rate] for any period during such year,’’
the taxpayer makes the applicable
correction payments and pays the
penalty. The phrase ‘‘[i]n the case of any
taxpayer which fails to satisfy the
requirement under subparagraph (A)
. . . for any period’’ suggests that a

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failure to pay prevailing wages
immediately triggers the applicability of
the correction and penalty provisions if
the increased credit is claimed on a
return after a facility is placed in
service. The proposed regulations
would require the payment of prevailing
wages at the time work is performed
with respect to the construction,
alteration, or repair of a facility in order
to claim the increased credit. The
proposed regulations would also
provide that the requirement becomes
binding only when the increased credit
is claimed on a return. This is consistent
with tax administration regarding the
underlying credit.
Thus, the correction and penalty
payment requirements of section
45(b)(7)(B)(i) would become applicable
to a taxpayer upon the occurrence of the
taxpayer’s failure to satisfy the
Prevailing Wage Requirements of
section 45(b)(7)(A), which occurs
whenever wages are paid to a laborer or
mechanic below the prevailing wage
rates. That failures will occur, and the
obligation to make correction and
penalty payments will have arisen,
during the course of the construction,
alteration, or repair of a qualified
facility must be viewed in the context of
taxpayers not needing to satisfy the
Prevailing Wage Requirements in the
absence of an increased credit being
claimed on a return. Thus, the proposed
regulations would provide that the
obligation to make correction payments
and pay the penalty would not become
binding until a return is filed claiming
the increased credit, and the proposed
regulations would not require payment
of the correction payment or the penalty
until the time the increased credit is
claimed. The earliest time that a
taxpayer can make a penalty payment to
the IRS is at the time of filing a tax
return claiming the increased credit.
However, taxpayers would retain the
option of making correction payments to
laborers and mechanics at any time after
the initial payments were made and in
advance of the filing of a tax return
claiming the increased credit in order to
limit the amount of additional interest
the taxpayer must pay at the elevated
rates set forth in section
45(b)(7)(B)(i)(I)(bb).
In general, taxpayers would be
obligated to make any necessary
correction payments to any laborer and
mechanic on or before the date a return
is filed claiming an increased credit
amount. A taxpayer would also be
obligated to make any penalty payments
owed with respect to a failure to meet
the Prevailing Wage Requirements at the
time a return is filed claiming the
increased credit amount. Under the

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proposed regulations, whether taxpayers
make the necessary correction payments
and pay the penalty amounts promptly
is one of the facts and circumstances
that would be considered for purposes
of the increased penalties for intentional
disregard. The proposed regulations
would also provide a deadline for a
taxpayer’s ability to use the correction
and penalty provisions to rectify a
failure to comply with the Prevailing
Wage Requirements when the IRS
makes a final determination that a
taxpayer has failed to satisfy the
Prevailing Wage Requirements. Under
section 45(b)(7)(B)(iv), once the IRS
makes a final determination that a
taxpayer has failed to satisfy the
Prevailing Wage Requirements, the
taxpayer must make the correction and
penalty payments within 180 days after
the final determination to be eligible to
for the increased credit. The proposed
regulations would clarify that this final
determination would come in the form
of a notice sent by the IRS.
As provided in section 45(b)(7)(B)(ii),
under the proposed regulations,
deficiency procedures would not apply
to any penalty payment required to be
made in connection with a failure to
meet the Prevailing Wage Requirements.
The proposed regulations would clarify
that although deficiency procedures
would not apply to the penalty
payment, deficiency procedures would
apply to any determination by the IRS
disallowing a taxpayer’s claim for the
increased credit.
2. Special Circumstances Involving
Correction and Penalty Payments
Section 45(b)(7)(B)(i) states that a
taxpayer will be deemed to satisfy the
prevailing wage requirement ‘‘if, with
respect to any laborer or mechanic who
was paid wages at a rate below the rate
described in such subparagraph for any
period during such year, such
taxpayer—makes payment to such
laborer or mechanic . . .’’ in the amount
of the correction payment and makes
the required penalty payment to the IRS.
The Treasury Department and the IRS
are aware that the construction of a
qualified facility may occur over the
course of several years and some
taxpayers who fail to meet the
Prevailing Wage Requirements may be
unable to locate all laborers and
mechanics to which the correction
payment must be made. However,
section 45(b)(7)(B)(i) does not excuse
taxpayers from the requirement to make
the correction payment, even if the
taxpayer is unable to locate the laborer
or mechanic. The proposed regulations
would not provide for an exception to
the statutory requirement.

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The Treasury Department and the IRS
expect that taxpayers will be able to
establish correction payments even
when a former laborer or mechanic
cannot be located. In general, States
have developed specific rules for the
payment of wages to former laborers and
mechanics who cannot be located.
These rules can include diligence
requirements to locate the laborer or
mechanic, information reporting
obligations to relevant State agencies on
the amount of unclaimed wages, and
requirements to remit any unclaimed
wage amounts to State control as
unclaimed property after defined
holding periods. Taxpayers may also be
able to establish correction payments
were made by demonstrating
compliance with any withholding and
information reporting requirements with
respect to the payments. The Treasury
Department and the IRS request public
comments concerning appropriate rules
for situations in which laborers and
mechanics who are owed wages cannot
be located and how taxpayers may
establish that they have made the
correction payment described in section
45(b)(7)(B)(i)(I).
The Treasury Department and the IRS
expect that some taxpayers will have
made requests to the DOL for a
supplemental wage determination or a
prevailing wage rate for an additional
classification. It is possible that the
DOL’s response to these requests will
not be issued until after laborers and
mechanics have started working on the
facility. The laborers and mechanics
who are the subject of the requests will
have already been engaged in the
construction, alteration, or repair, and
may have already been paid wages
below the rates later determined to be
prevailing by the DOL. In this
circumstance, the proposed regulations
would provide that the taxpayer would
not be considered to have failed to meet
the Prevailing Wage Requirements with
respect to any mechanics or laborers
whose wage rate was subject to the
request and who were paid below the
prevailing wage rate before the
determination by the DOL if the
taxpayer requests the supplemental
wage determination or prevailing wage
rate for an additional classification
before the beginning of construction (or
as soon as practicable after the start of
construction) and makes a correction
payment within 30 days of the
determination to each laborer or
mechanic equal to the difference
between the amount of wages paid to
such laborer or mechanic before the
determination and the amount of wages
required by the Prevailing Wage

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Requirements to be paid to such laborer
or mechanic during such period. This
exception is intended to mitigate a rule
that would require taxpayers to make
correction and penalty payments for
failures to pay a prevailing wage rate
that could not be timely determined by
the taxpayer.
As previously described, for purposes
of transfers pursuant to section 6418,
the proposed regulations would clarify
that the requirement to make correction
and penalty payments would continue
to apply to an eligible taxpayer who (i)
transfers an increased credit amount
under section 45(b)(6) as part of a
specified credit portion and (ii) fails to
meet the prevailing wage requirement of
section 45(b)(7)(A) with respect to such
increased credit amount. Additionally,
the proposed regulations would provide
that the obligation to satisfy the
Prevailing Wage Requirements would
not become binding on an eligible
taxpayer until the earlier of: (i) the filing
of the eligible taxpayer’s return for the
taxable year for which the specified
credit portion is determined with
respect to the eligible taxpayer, or (ii)
the filing of the return of the transferee
taxpayer for the year in which the
specified credit portion is taken into
account.
The proposed regulations would also
provide that a taxpayer who determines
the underlying credit amount would
have no obligation to comply with the
correction and penalty provisions if the
IRS later determines that the taxpayer
was not entitled to the increased credit
amount. Additionally, if the taxpayer
does not correct and, therefore, is not
subsequently granted the increased
credit amount, no penalty is assessed
under section 45(b)(7)(B).
3. Intentional Disregard
Section 45(b)(7)(B)(iii) provides that if
the failure to ensure that the laborers
and mechanics are paid at the prevailing
wage rate is found to be due to
intentional disregard, then the amount
of the correction payment is tripled and
the amount of the penalty payment is
doubled. The proposed regulations
would provide that failures to meet the
Prevailing Wage Requirements would be
due to intentional disregard if they are
knowing or willful, which is a
determination that must be made by
considering all relevant facts and
circumstances. The proposed
regulations would provide a nonexhaustive list of facts that may be
relevant to this determination.
The proposed regulations would
explain that the facts and circumstances
would include consideration of whether
the failure was part of a pattern of

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conduct and whether the taxpayer has
been required to pay the penalty in
previous years. The Treasury
Department and the IRS believe that
failures that occur despite a taxpayer
exercising reasonable diligence weigh
against a finding of a knowing or willful
failure. Under the proposed regulations,
taxpayers would demonstrate
reasonable diligence by taking
appropriate steps to determine the
applicable classifications and wage rates
and by seeking to promptly correct any
failures when discovered. Last, the
proposed regulations would seek to
draw from behavior that is generally
required of contractors under the DBA
and that the Treasury Department and
the IRS believe would be best practices
of taxpayers seeking to comply with the
Prevailing Wage Requirements. These
behaviors would include posting
prevailing wage rates in a prominent
place for the duration of the
construction, alteration, or repair or
otherwise notifying employees of the
applicable prevailing wage rates;
incorporating provisions in any
contracts entered with contractors that
require payment of prevailing wage
rates by the contractors and any
subcontractors; and undertaking
quarterly, or more frequent, reviews of
wages paid to laborers and mechanics to
ensure that prevailing wages are being
paid. The Treasury Department and the
IRS request comments on additional
criteria that might be used as part of a
facts and circumstances analysis of
intentional disregard in this context.
The proposed regulations would also
provide that there would be a rebuttable
presumption against a finding of
intentional disregard if the taxpayer
makes the correction and penalty
payments before receiving a notice of an
examination with respect to a return
that claimed the underlying increased
credit. The presumption of no
intentional disregard would be intended
to encourage taxpayers who discover a
failure to meet the Prevailing Wage
Requirements after filing a return to use
the correction and penalty provisions
promptly.
The Treasury Department and the IRS
request comments on intentional
disregard, including but not limited to
additional criteria that might be used as
part of a facts and circumstances
analysis of intentional disregard and the
applicability of a presumption against a
finding of intentional disregard in
certain situations.
4. Penalty Waiver
In general, the IRS may exercise its
discretion to waive or decline to assert
penalties in the interest of sound tax

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administration. The proposed
regulations would use that discretion to
provide limited penalty waivers for
instances in which the failures to pay
prevailing wages to laborers and
mechanics for the construction,
alteration, or repair of a facility were
small in amount or occurred in a limited
number of pay periods. The Treasury
Department and the IRS would use the
waiver authority in a manner that assists
taxpayers seeking to be eligible for the
increased credit while remaining
consistent with the statutory
requirement to ensure that laborers and
mechanics are paid at prevailing wage
rates.
The Treasury Department and the IRS
understand that taxpayers intending to
pay prevailing wage rates may make
payroll errors. These errors are likely to
range in scope and frequency. It is also
possible that taxpayers may make
classification errors with respect to
work that is performed by certain
laborers or mechanics. The proposed
regulations would seek to account for
these likelihoods while continuing to
ensure that laborers and mechanics are
paid according to the applicable
prevailing wage rates.
The proposed regulations would
provide that the penalty payment
requirement would be waived with
respect to the construction, alteration, or
repair performed by a laborer or
mechanic during a calendar year if (i)
the taxpayer makes the required
correction payment (back wages and
interest) by the earlier of (a) 30 days
after the taxpayer became aware of the
error or (b) the date on which the tax
return claiming the increased credit is
filed; and (ii) either: (a) the laborer or
mechanic is paid below the prevailing
wage rate for not more than 10 percent
of all pay periods of the calendar year
(or part thereof) during which the
laborer or mechanic worked on the
construction, alteration, or repair of the
facility; or (b) the difference between the
amount the laborer or mechanic was
paid for the calendar year (or part
thereof) during which the laborer or
mechanic worked on the construction,
alteration, or repair of the facility and
the amount required to be paid by the
Prevailing Wage Requirements for the
calendar year is not greater than 2.5
percent of the amount required under
the Prevailing Wage Requirements. The
proposed regulations would use
calendar years to measure any failures
because taxpayers, contractors, and
subcontractors performing construction
may have different taxable years and
laborers and mechanics are generally
paid on a calendar year basis. The
Treasury Department and the IRS

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request comments on the proposed use
of calendar years in place of taxable
years for this purpose.
Pre-hire project labor agreements may
be used to incentivize stronger labor
standards and worker protections in the
types of construction projects for which
taxpayers may seek the increased credit,
and having a project labor agreement in
place may also help ensure compliance
with PWA requirements. For these
reasons, the proposed regulations would
also provide that the penalty payment
requirement would not apply with
respect to a laborer or mechanic
employed under a project labor
agreement that meets certain
requirements and any correction
payment owed to the laborer or
mechanic is paid on or before a return
is filed claiming an increased credit
amount. The Treasury Department and
the IRS request comments on the
proposed treatment of project labor
agreements, other ways taxpayers might
use project labor agreements to meet the
PWA requirements, and the definition
of a qualifying project labor agreement.
The proposed regulations would use
the IRS’s general enforcement discretion
to allow taxpayers to correct limited
failures to pay prevailing wages if the
taxpayers pay the mechanics and
laborers back wages and interest in a
timely manner before the increased
credit is claimed. The proposed
regulations would not provide for
waiver of the penalty after a return has
been filed claiming the increased credit.
The proposed regulations would seek to
create incentives for taxpayers to selfcorrect and promptly pay prevailing
wages.
III. Apprenticeship Requirements
A. In General
To satisfy the requirements of section
45(b)(8), taxpayers must ensure that,
with respect to the construction of any
qualified facility, the Labor Hours
Requirement, Ratio Requirement, and
Participation Requirement are satisfied.
The proposed regulations would clarify
the interaction among these
requirements. The proposed regulations
would explain that the Labor Hours
Requirement generally would be subject
to the Ratio Requirement. The proposed
regulations would further explain that
the Participation Requirement would
apply in addition to the Labor Hour
Requirement and the Ratio
Requirement. Therefore, in order to
meet the requirements of section
45(b)(8), a taxpayer generally would be
subject to all three components of the
Apprenticeship Requirements. If a
taxpayer satisfies the applicable Labor

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Hours Requirement but fails the
Participation Requirement, then the
taxpayer would not be eligible for the
increased credit unless the taxpayer
complies with the penalty provisions of
section 45(b)(8)(D) with respect to the
total hours that are not met with respect
to the Participation Requirement or
meets the Good Faith Effort Exception.
1. Labor Hours Requirement
The proposed regulations would
reiterate that under the Labor Hours
Requirement, the taxpayer must ensure
that the ‘‘applicable percentage’’ of the
total labor hours are performed by
qualified apprentices.
The Treasury Department and the IRS
understand that certain jurisdictions
and trades have developed preapprenticeship programs that are
designed to help individuals prepare for
and succeed in registered
apprenticeship programs but that are
not registered with the DOL under the
Act of August 16, 1937 (commonly
known as the ‘‘National Apprenticeship
Act’’; 50 Stat. 664, chapter 663; 29
U.S.C. 50 et seq.). Section 45(b)(8)(E)(ii)
defines a qualified apprentice as an
individual who is employed by the
taxpayer or by any contractor or
subcontractor and who is participating
in a registered apprenticeship program,
which is defined in section
3131(e)(3)(B) as apprenticeship
programs that are registered under the
National Apprenticeship Act. Thus,
under the proposed regulations, preapprenticeship programs would not
qualify as registered apprenticeship
programs for purposes of section
45(b)(8) and hours worked as part of a
pre-apprenticeship program would not
count towards the Labor Hour
Requirement.
2. Ratio Requirement
Under the Ratio Requirement, a
taxpayer must ensure that any
applicable apprenticeship-tojourneyworker ratio is satisfied. Section
45(b)(8)(B) provides that the applicable
apprenticeship-to-journeyworker ratio is
determined by reference to the ratios of
the DOL or the applicable State
apprenticeship agency. Under 29 CFR
part 29, registered apprenticeship
programs prescribe a numeric ratio of
apprentices to journeyworkers in their
standards of apprenticeship. This ratio
is intended to ensure that there are
enough journeyworkers to oversee the
work of apprentices. The Treasury
Department and the IRS understand that
the DOL and State apprenticeship
agencies review and approve the
prescribed ratio requirements.

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As stated in Notice 2022–61, the
applicable ratios set by registered
apprenticeship programs generally
apply on a daily basis. The proposed
regulations reiterate this requirement
and would provide that the applicable
ratio established by the apprenticeship
program would need to be satisfied each
day during construction, alteration, or
repair of the qualified facility for which
apprentice labor hours are being
claimed. This means that the number of
apprentices would not be permitted to
exceed the number set forth in the ratio
because the ratio sets the minimum
number of journeyworkers needed for
each apprentice, to ensure adequate
safety and supervision. For example, for
a 1:1 apprentice to journeyworker ratio,
having two apprentices and three
journeyworkers on a given day would
satisfy the ratio requirement whereas
having three apprentices and two
journeyworkers on a given day would
not.
The proposed regulations would
provide that if the Ratio Requirement is
not met on any day, then registered
apprentices in excess of the applicable
ratio who perform work on a facility
would be required to be paid the full
prevailing wage rate for the hours
worked for purposes of the Prevailing
Wage Requirement. Additionally, the
hours worked by the apprentices on a
day where the applicable ratio was not
satisfied would not be counted as
apprentice hours for purposes of
calculating the applicable percentage
under the Labor Hours Requirement.
For purposes of the Ratio
Requirement, the proposed regulations
would adopt the DOL definition of
journeyworker in 29 CFR 29.2, which
defines a journeyworker as a laborer or
mechanic who has attained a level of
skill, abilities and competencies
recognized within an industry as having
mastered the skills and competencies
required for the occupation. A mentor,
technician, specialist, or other skilled
individual who has documented
sufficient skills and knowledge of an
occupation, either through formal
apprenticeship or through practical onthe-job experience and formal training
may also be a journeyworker. The
Treasury Department and the IRS
request comments on the application of
the Ratio Requirement for purposes of
satisfying the Apprenticeship
Requirement.
3. Participation Requirement
The Treasury Department and the IRS
propose to interpret the Participation
Requirement as designed to prevent
taxpayers from satisfying the Labor
Hours Requirement by only hiring

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apprentices to preform one type of work
and instead encourages taxpayers to use
apprentices across the full range of work
performed with respect to the facility.
The proposed regulations would clarify
that the Participation Requirement
would be satisfied as long as the
taxpayer, contractor, or subcontractor
employs one or more apprentices to
perform work on the facility and would
not be a daily requirement. The
proposed regulations would also clarify
that it would be the responsibility of the
taxpayer to ensure that any contractor or
subcontractor performing work on the
facility with four or more employees
who perform such work on the facility
has hired one or more apprentices in
accordance with the Participation
Requirement of section 45(b)(8)(C).
Taxpayers who fail to meet the
Participation Requirement would be
subject to the penalty provisions of
section 45(b)(8)(D) even if the taxpayer
otherwise satisfies the applicable Labor
Hours Requirement unless the Good
Faith Effort Exception applies.
B. Exceptions
1. In General
Section 45(b)(8)(D) and the proposed
regulations would allow taxpayers who
fail to meet the Apprenticeship
Requirements to nonetheless qualify for
the increased credit by curing their
failures. To cure a failure to meet the
Apprenticeship Requirements,
taxpayers would be required to satisfy
the Good Faith Effort Exception from
the Apprenticeship Requirements or pay
a penalty if they do not qualify for the
Good Faith Effort Exception.
2. Good Faith Effort Exception
Section 45(b)(8)(D)(ii) provides that
taxpayers are deemed to satisfy the
Apprenticeship Requirements if they
have requested qualified apprentices
from a registered apprenticeship
program and such request has been
denied for reasons other than the
taxpayer, contractor, or subcontractor’s
refusal to comply with the program’s
standards and requirements or if the
program fails to respond within five
business days of receiving a request.
Notice 2022–61 provided that taxpayers
could satisfy the Good Faith Effort
Exception if the taxpayer requested
qualified apprentices ‘‘in accordance
with usual and customary business
practices for registered apprenticeship
programs in a particular industry.’’
The Treasury Department and the IRS
believe that additional guidance
explaining the ‘‘usual and customary’’
standard would be useful. The proposed
regulations would require the taxpayer,

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contractor, or subcontractor to make a
written request to at least one registered
apprenticeship program that has a
geographic area of operation that
includes the location of the facility, or
that can reasonably be expected to
provide apprentices to the location of
the facility, trains apprentices in the
occupation(s) needed by the taxpayer,
contractors, or subcontractors
performing construction, alteration, or
repair with respect to the facility, and
has a usual and customary business
practice of entering into agreements
with employers for the placement of
apprentices in the occupation for which
they are training, pursuant to its
standards and requirements.
The Treasury Department and the IRS
anticipate that a taxpayer may need to
submit a request to more than one
apprenticeship program in order to meet
the Good Faith Effort Exception based
on the size of the project, the number of
contractors or subcontractors and the
anticipated number of labor hours for
which apprentices are needed. Although
it may be possible for a taxpayer to meet
all of its Labor Hours Requirement from
one apprenticeship program, it is likely
that given the multiple occupations
involved in the construction, alteration,
or repair of a qualified facility, the
taxpayer would need to request
apprentices from more than one
apprenticeship program in order to
satisfy the Labor Hours Requirement
and the Participation Requirement with
respect to that facility. This is in part
because a registered apprenticeship
program typically trains apprentices in
a single occupation, whereas more than
one occupation may be needed to meet
the Labor Hours Requirement and the
Participation Requirement. A taxpayer,
contractor, or subcontractor would be
expected to estimate the number of
apprentices needed and the occupations
for which they are needed and to submit
its request for apprentices accordingly.
The proposed regulations would
require the written request to include
information concerning the dates of
employment, the occupation or
classification needed, the location and
type of work to be performed, the
number of apprentices needed, the
number of hours the apprentices will
work, and the name and contact
information of the person requesting the
apprentices. The written request would
also be required to include a statement
that the request for apprentices is made
with an intent to employ apprentices in
the occupation for which they are being
trained and in accordance with the
requirements and standards of the
registered apprenticeship program. The
Good Faith Effort Exception’s

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Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules
requirement to request qualified
apprentices from a registered
apprenticeship program would
necessitate that the taxpayer ascertain
its workforce needs to determine how
many qualified apprentices it needs to
employ in order to meet the
Apprenticeship Requirements, identify
registered apprenticeship programs in
the occupations needed by the taxpayer
and its contractors and subcontractors,
and demonstrate capacity to employ
apprentices in the occupations for
which apprentices are requested.
A denial of a request by a taxpayer,
contractor, or subcontractor for a
qualified apprentice would not
automatically qualify the taxpayer for
the Good Faith Effort Exception. The
proposed regulations would require the
taxpayer, contractor, or subcontractor to
submit an additional request within 120
days of a previously denied request. The
proposed regulations would also clarify
that a denial of a request means that the
registered apprenticeship program
denied the request in its entirety. A
registered apprenticeship program’s
response that it could partially fulfill
the request in the occupation(s) for
which it trains apprentices would not
constitute a denial of the request with
respect to the parts of the request that
could be fulfilled.
Under the proposed regulations, the
Good Faith Effort Exception would be
specific to the request for apprentices
made by the taxpayer, contractor, or
subcontractor, including the number of
apprentice hours for which the request
for apprentices has been made to a
registered apprenticeship program.
Thus, the Good Faith Effort Exception
would apply to the specific portion of
the request for apprentices that was
denied or not responded to and would
be subject to the requirement to submit
an additional request after 120 days.
The Treasury Department and the IRS
request comments on this proposed
approach.
Consistent with section
45(b)(8)(D)(ii)(I), the proposed
regulations would require that the
request cannot have been denied
because of a refusal of the taxpayer or
any contractor or subcontractor to
comply with the requirements and
standards of the apprenticeship
program. For example, if a registered
apprenticeship program requires a
requesting employer to enter into an
agreement with the registered
apprenticeship program, then a denial
of the request because the employer
refused to enter into the agreement
would not be a valid denial for purposes
of the Good Faith Effort Exception.
Section 45(b)(8)(D)(ii) provides that

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taxpayers may also be deemed to satisfy
the Good Faith Effort Exception if a
registered apprenticeship program fails
to respond to a request for a qualified
apprentice. The proposed regulations
explain that an acknowledgement of
receipt by a registered apprenticeship
program would constitute a response for
purposes of section 45(b)(8)(D)(ii)(II),
and a taxpayer would be unable to rely
upon the Good Faith Effort Exception in
such circumstances.
The Treasury Department and the IRS
understand that apprenticeship
programs are not uniform across
industries and localities, including the
manner and processes by which
apprentices may be requested and
supplied for purposes of satisfying the
Apprenticeship Requirements. The
Treasury Department and the IRS also
understand that in many cases
employers are sponsors of registered
apprenticeship programs and directly
employ apprentices. In those instances,
a taxpayer, contractor, or subcontractor
would likely obtain apprentices to meet
the labor hours and participation
requirements through their own
registered apprenticeship programs
rather than requesting apprentices from
other registered apprenticeship
programs.
In addition, the Treasury Department
and the IRS are aware that the DOL’s
Office of Apprenticeship, as well as
State apprenticeship agencies, routinely
provide technical expertise on
registered apprenticeship program
matters, including identifying registered
apprenticeship programs, and assisting
employers seeking to register their own
programs.10 The Treasury Department
and the IRS request comments on
whether and how the proposed Good
Faith Effort Exception might take into
account a situation where a taxpayer
contacts the DOL’s Office of
Apprenticeship or the appropriate State
apprenticeship agency regarding their
apprenticeship request, in addition to
contacting a specific registered
apprenticeship program or programs.
The Treasury Department and the IRS
also request comments on how the
proposed Good Faith Effort Exception
will align with current practices with
respect to utilization of apprentices in
the construction, alteration, or repair of
facilities. In particular, the Treasury
Department and the IRS request
comments on the role of collective
bargaining agreements, project labor
agreements, and other agreements to
10 Information is available at https://
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satisfy the request for apprentices under
the Good Faith Effort Exception.
3. Opportunity To Cure
If a taxpayer does not qualify for the
Good Faith Effort Exception under
section 45(b)(8)(D)(ii), section
45(b)(8)(D)(i)(II) provides that the
taxpayer is not treated as failing to
satisfy the requirements of section
45(b)(8)(A) and (C) if the taxpayer pays
a penalty to the Secretary. The proposed
regulations explain that, with respect to
failures to satisfy the Labor Hours
Requirement or the Participation
Requirement, the amount of the penalty
would be equal to $50 multiplied by the
total labor hours for which the taxpayer
failed to meet the Labor Hours
Requirement and the Participation
Requirement. The proposed regulations
would provide that the total labor hours
by which the taxpayer failed to meet the
Labor Hours Requirement would be
calculated by subtracting the total labor
hours worked by all qualified
apprentices consistent with the Ratio
Requirement from the total labor hours
that should have been worked by
qualified apprentices under section
45(b)(8)(A)(ii) to satisfy the applicable
percentage.
Section 45(b)(8)(C) does not specify
the number of hours that apprentices
must work to satisfy the Participation
Requirement. The proposed regulations
would address this issue by providing
that the number of labor hours that an
apprentice was required to work for
purposes of calculating the penalty for
failing to satisfy the Participation
Requirement would be equal to the total
number of labor hours performed for the
taxpayer, contractor, or subcontractor
during construction, alteration, or repair
of the facility divided by the total
number of individuals employed by that
taxpayer, contractor, or subcontractor
who performed construction, alteration,
or repair work on the facility. This
calculation would be specific to the
taxpayer, contractor, or subcontractor
who failed to meet the Participation
Requirement. For example, if the
taxpayer failed to meet the Participation
Requirement, then the penalty would be
calculated with reference to the total
number of labor hours performed only
by those individuals who worked
directly for the taxpayer, and would not
include the labor hours worked by any
individuals who worked directly for a
contractor or subcontractor that satisfied
the Participation Requirement.
If the taxpayer failed to meet both the
Labor Hours Requirement and the
Participation Requirement, the penalty
would equal the sum of the penalty for
the failure to meet the Labor Hours

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Requirement plus the penalty for failure
to meet the Participation Requirement.
If the failure to meet the Labor Hours
Requirement or the Participation
Requirement is determined to be the
result of intentional disregard, then the
amount of the penalty payment is
enhanced tenfold—from $50 to $500 per
labor hour. The proposed regulations
would provide that failures to meet the
Apprenticeship Requirements would be
due to intentional disregard if they are
knowing or willful, considering all
relevant facts and circumstances. The
proposed regulations would provide a
non-exhaustive list of facts and
circumstances that may be relevant to
determining whether the failure was
knowing or willful.
The proposed regulations would also
provide the penalty payment
requirement for failures to meet the
Labor Hours Requirement or the
Participation Requirement would not
apply if there is in place a project labor
agreement that meets certain
requirements.
The proposed regulations also state
that there would be a rebuttable
presumption against a finding of
intentional disregard if the taxpayer
makes the penalty payments before
receiving a notice of an examination
with respect to the claim for the
increased credit. The presumption of no
intentional disregard is intended to
incentivize taxpayers who initially fail
to meet the Apprenticeship
Requirements to make use of the cure
provision promptly.
Consistent with the correction and
penalty payments under the Prevailing
Wage Requirements, the hiring of
qualified apprentices is a factor in the
taxpayer’s eligibility for the increased
credit and therefore applicable to
determining the credit. Additionally,
although the Apprenticeship
Requirements must be satisfied
contemporaneously with the
construction, alteration, or repair of the
qualified facility and before the filing of
the taxpayer’s tax return, the obligation
to meet the Apprenticeship
Requirements is not binding on the
eligible taxpayer until the earlier of: (i)
the filing of the eligible taxpayer’s
return for the taxable year for which the
specified credit portion is determined
with respect to the eligible taxpayer, or
(ii) the filing of the return of the
transferee taxpayer for the year in which
the specified credit portion is taken into
account. As a result, the proposed
regulations would provide that a
penalty payment that is required to
retain the increased credit because of
the failure of the eligible taxpayer to
satisfy the Apprenticeship

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Requirements would remain the
responsibility of the eligible taxpayer
following a transfer of a specified credit
portion pursuant to section 6418.
IV. Other Code Sections Applying PWA
Provisions for Increased Credit and
Deduction Amounts
A. Section 30C
Section 30C provides a credit for the
cost of any qualified alternative fuel
vehicle refueling property placed in
service during the taxable year. For
properties placed in service before
January 1, 2023, the credit is equal to 30
percent. For properties placed in service
after December 31, 2022, the credit is
equal to 30 percent (6 percent for
property of a character subject to
depreciation). If a taxpayer satisfies the
PWA requirements or the BOC
Exception, then the credit determined
under section 30C(a) for any qualified
alternative fuel vehicle refueling
property of a character subject to an
allowance for depreciation that is part of
such project is multiplied by five.
To satisfy the Prevailing Wage
Requirements under section
30C(g)(2)(A), a taxpayer must ensure
that any laborers and mechanics
employed by the taxpayer or any
contractor or subcontractor in the
construction of any qualified alternative
fuel vehicle refueling property that is
part of such project are paid wages at
rates not less than the prevailing rates
for construction, alteration, or repair of
a similar character in the locality in
which the project is located. Section
30C(g)(2)(B) provides that rules similar
to section 45(b)(7)(B) apply for purposes
of the correction and penalty related to
the failure to satisfy the Prevailing Wage
Requirements. Section 30C(g)(3)
provides that rules similar to section
45(b)(8) apply for purposes of the
Apprenticeship Requirements.
The proposed regulations would
provide that if a taxpayer satisfies the
PWA requirements, then the credit
determined under section 30C(a) for any
qualified alternative fuel vehicle
refueling property of a character subject
to an allowance for depreciation that is
part of such project would be multiplied
by five.
B. Section 45L
Section 45L provides a credit for a
qualified new energy efficient home
(qualified home) that is constructed by
an eligible contractor and acquired by a
person from that eligible contractor for
use as a residence during the taxable
year. Under section 45L(b)(2), a
qualified home is a dwelling unit
located in the United States, the

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construction of which is substantially
completed after August 8, 2005, and that
meets the energy saving requirements of
section 45L(c). Under section 45L(b)(1),
an eligible contractor is the person who
constructed the qualified home, or in
the case of a qualified home that is a
manufactured home, the manufactured
home producer of that home. For a
qualified home acquired after December
31, 2022, and before January 1, 2033,
that is part of a building eligible to
participate in the Energy Star
Multifamily New Construction Program
and meets the energy saving
requirements under section
45L(c)(1)(A), the credit is $500 ($2,500
if the taxpayer satisfies the Prevailing
Wage Requirements). For a qualified
home acquired after December 31, 2022,
and before January 1, 2033, that is part
of a building eligible to participate in
the Energy Star Multifamily New
Construction Program and meets the
energy saving requirements under
section 45L(c)(1)(B), the credit is $1,000
($5,000 if the taxpayer satisfies the
Prevailing Wage Requirements).
To satisfy the Prevailing Wage
Requirements under section
45L(g)(2)(A), a taxpayer must ensure
that any laborers and mechanics
employed by the taxpayer or any
contractor or subcontractor in the
construction of any qualified home
described in section 45L(a)(2)(B) are
paid wages at rates not less than the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which the
qualified home is located. Section
45L(g)(2)(B) provides that rules similar
to section 45(b)(7)(B) apply for purposes
of the correction and penalty related to
the failure to satisfy the Prevailing Wage
Requirements. There are no
Apprenticeship Requirements with
respect to section 45L.
The proposed regulations would
provide that if a taxpayer satisfies the
Prevailing Wage Requirements, then for
a qualified home that is part of a
building eligible to participate in the
Energy Star Multifamily New
Construction Program acquired after
December 31, 2022, and before January
1, 2033, the credit would be $2,500 if
the qualified home meets the energy
saving requirements under section
45L(c)(1)(A), and the credit would be
$5,000 if the qualified home meets the
energy saving requirements under
section 45L(c)(1)(B).
C. Section 45Q
Section 45Q provides a credit for the
capture and sequestration of qualified
carbon oxide. The credit is the sum of
the specified dollar amount, as provided

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by section 45Q(a) or (b), multiplied by
the metric ton of each qualified carbon
oxide specified under section 45Q(a). If
a taxpayer satisfies the PWA
requirements or the BOC Exception with
respect to any qualified facility or any
carbon capture equipment placed in
service at that facility, then the credit
determined under section 45Q(a) is
multiplied by five. For carbon capture
equipment that will be placed in service
at a qualified facility the construction of
which begins on or after January 29,
2023, the section 45Q(a) credit is
multiplied by five only if the PWA
requirements are satisfied with respect
to both the qualified facility and the
carbon capture equipment. For carbon
capture equipment the construction of
which begins on or after January 29,
2023 that will be placed in service at a
qualified facility the construction of
which began before January 29, 2023,
the PWA requirements apply only to the
carbon capture equipment.
To satisfy the Prevailing Wage
Requirements under section
45Q(h)(3)(A), the attributable taxpayer
described in section 45Q(f)(3)(A) and
§ 1.45Q–1(h)(1) must ensure that any
laborers and mechanics employed by
the taxpayer or any contractor or
subcontractor in: (i) the construction of
any qualified facility and any carbon
capture equipment placed in service at
that facility, and (ii) the alteration or
repair of that facility or equipment (with
respect to any taxable year, for any
portion of such taxable year that is
within the 12-year period beginning on
the date the facility or equipment is
originally placed in service), are paid
wages at rates not less than the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which that
facility and equipment are located.
Section 45Q(h)(3)(B) provides that rules
similar to section 45(b)(7)(B) apply for
purposes of the correction and penalty
related to the failure to satisfy the
Prevailing Wage Requirements. Section
45Q(h)(4) provides that rules similar to
section 45(b)(8) apply for purposes of
the Apprenticeship Requirements.
The proposed regulations would
provide rules based on the statutory
rules.
D. Section 45U
Section 45U provides a credit for
electricity produced by the taxpayer at
a qualified nuclear power facility and
sold by the taxpayer to an unrelated
person during the taxable year.
Generally, for taxable years beginning
after December 31, 2023, the credit is
equal to the amount by which the
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kilowatt hours of electricity produced
by the taxpayer at a qualified nuclear
power facility and sold by the taxpayer
to an unrelated person during the
taxable year, exceeds the applicable
‘‘reduction amount’’ for such taxable
year that is determined under section
45U(b)(2). If a taxpayer satisfies the
Prevailing Wage Requirements, then the
credit determined under section 45U(a)
for a qualified nuclear power facility is
multiplied by five.
To satisfy the Prevailing Wage
Requirements under section
45U(d)(2)(A), a taxpayer must ensure
that any laborers and mechanics
employed by the taxpayer or any
contractor or subcontractor in the
alteration or repair of any qualified
nuclear power facility are paid wages at
rates not less than the prevailing rates
for alteration or repair of a similar
character in the locality in which that
facility is located. Section 45U(d)(2)(B)
provides that rules similar to section
45(b)(7)(B) apply for purposes of the
correction and penalty related to the
failure to satisfy the Prevailing Wage
Requirements. There are no
Apprenticeship Requirements with
respect to section 45U.
The proposed regulations would
provide that if a taxpayer satisfies the
Prevailing Wage Requirements, then the
credit determined under section 45U(a)
for any qualified nuclear power facility
would be multiplied by five.
E. Section 45V
Section 45V provides a credit for the
production of qualified clean hydrogen
by the taxpayer during the taxable year
at a qualified clean hydrogen
production facility during the 10-year
period beginning on the date the facility
was originally placed in service. In
general, for hydrogen produced after
December 31, 2022, the credit is the
product of the kilograms of qualified
clean hydrogen produced multiplied by
the applicable amount. The applicable
amount is equal to the applicable
percentage of $0.60, which is
determined under section 45V(b)(2). If a
taxpayer satisfies either the PWA
requirements, or the BOC Exception and
the Prevailing Wage Requirements for
alterations or repairs occurring after
January 29, 2023, then the credit
amount determined under section
45V(a) for any qualified clean hydrogen
produced by the taxpayer during the
taxable year at a qualified clean
hydrogen production facility is
multiplied by five. A taxpayer must
satisfy the Prevailing Wage
Requirements with respect to an
alteration or repair that occurs after
January 29, 2023, notwithstanding the

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BOC Exception regarding the
construction of that qualified facility.
To satisfy the Prevailing Wage
Requirements under section
45V(e)(3)(A), a taxpayer must ensure
that any laborers and mechanics
employed by the taxpayer or any
contractor or subcontractor in: (i) the
construction of any qualified clean
hydrogen production facility, and (ii)
the alteration or repair of that facility
(with respect to any taxable year, for any
portion of such taxable year that is
within the 10-year credit period
beginning on the date that the facility
was originally placed in service),11 are
paid wages at rates not less than the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which that
facility is located. Section 45V(e)(3)(B)
provides that rules similar to section
45(b)(7)(B) apply for purposes of the
correction and penalty related to the
failure to satisfy the Prevailing Wage
Requirements. Section 45V(e)(4)
provides that rules similar to section
45(b)(8) apply for purposes of the
Apprenticeship Requirements.
The proposed regulations would
provide that if a taxpayer satisfies either
the PWA requirements, or the BOC
Exception and the Prevailing Wage
Requirements for alterations or repairs
occurring after January 29, 2023, then
the credit amount determined under
section 45V(a) for any qualified clean
hydrogen produced by the taxpayer
during the taxable year at a qualified
clean hydrogen production facility
would be multiplied by five.
F. Section 45Y
Section 45Y provides a credit for
clean electricity produced by the
taxpayer at a qualified facility and sold
to an unrelated person, or in the case of
a qualified facility which is equipped
with a metering device which is owned
and operated by an unrelated person,
sold, consumed, or stored by the
taxpayer during the taxable year, for
facilities placed in service after
December 31, 2024. Generally, the credit
for any taxable year is the product of the
kilowatt hours of electricity multiplied
by 0.3 cents. If a taxpayer satisfies the
PWA requirements, the One Megawatt
11 Section 45V(e)(3)(A)(ii) requires the payment of
wages at prevailing rates ‘‘with respect to any
taxable year, for any portion of such taxable year
which is within the period described in subsection
(a)(2)’’, with respect to the alteration or repair of
such facility. There is no ‘‘period described in
subsection (a)(2).’’ The Treasury Department and
the IRS propose to interpret the reference to
‘‘subsection (a)(2)’’ as a reference to section
45V(a)(1) where the 10-year credit period is
identified, and the proposed regulations would
apply to the period described in section 45V(a)(1).

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Exception, or the BOC Exception, the
applicable amount under section
45Y(a)(2) equals 1.5 cents.
Section 45Y(g)(9) provides that rules
similar to section 45(b)(7) apply for
purposes of the Prevailing Wage
Requirements. Section 45Y(g)(10)
provides that rules similar to section
45(b)(8) apply for purposes of the
Apprenticeship Requirements.
The proposed regulations would
provide that if a taxpayer satisfies the
PWA requirements, then the applicable
amount under section 45Y(a)(2) would
equal 1.5 cents.

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G. Section 45Z
Section 45Z provides a credit for
clean transportation fuel produced by
the taxpayer at a qualified facility after
December 31, 2024, and sold to an
unrelated person in a manner described
in section 45Z(a)(4). Generally, the
credit is the product of the applicable
amount (determined under section
45Z(a)(2)) per gallon(s) of transportation
fuel multiplied by the emission factor
for the fuel (determined under section
45Z(b)). If a taxpayer satisfies the PWA
requirements (modified for qualified
facilities placed in service before
January 1, 2025), then the applicable
amount determined under section
45Z(a)(2)(B) is $1.00, otherwise the
applicable amount is 20 cents.
In general, section 45Z(f)(6)(A)
provides that rules similar to section
45(b)(7) apply for purposes of the
Prevailing Wage Requirements.
However, section 45Z(f)(6)(B) provides a
special rule for qualified facilities
placed in service before January 1, 2025.
Under section 45Z(f)(6)(B), the
Prevailing Wage Requirements do not
apply with respect to construction of
that facility but do apply to the
alteration or repair of that facility with
respect to any taxable year beginning
after December 31, 2024, for which the
section 45Z credit is allowed with
respect to that facility. Section 45Z(f)(7)
provides that rules similar to section
45(b)(8) apply for purposes of the
Apprenticeship Requirements.
The proposed regulations would
provide that if a taxpayer satisfies the
PWA requirements, then the applicable
amount determined under section
45Z(a)(2)(B) would equal $1.00.
H. Section 48
Section 48 provides a credit for an
energy property placed in service during
a taxable year. For properties placed in
service after December 31, 2022, the
credit is generally six percent of the
basis of property described in section
48(a)(2)(A)(i) and two percent of the
basis of property described in section

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48(a)(2)(A)(ii). If a taxpayer satisfies the
PWA requirements, the One Megawatt
Exception, or the BOC Exception, then
the credit determined under section
48(a) for the basis of each energy
property placed in service during the
taxable year is multiplied by five.
To satisfy the Prevailing Wage
Requirements under section
48(a)(10)(A), a taxpayer must ensure
that any laborers and mechanics
employed by the taxpayer or any
contractor or subcontractor in: (i) the
construction of any energy project, and
(ii) the alteration or repair of that energy
project (for the five-year period
beginning on the date such project is
originally placed in service), are paid
wages at rates not less than the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which that
energy project is located. Section
48(a)(10)(B) provides that rules similar
to section 45(b)(7)(B) apply for purposes
of the correction and penalty related to
the failure to satisfy the Prevailing Wage
Requirements. Section 48(a)(10)(C)
provides a special recapture rule with
respect to alterations or repairs that
occur during the five-year period after
the energy project is placed in service if
that taxpayer does not satisfy the
Prevailing Wage Requirements. In
general, the section 48(a)(10)(C)
recapture is determined under similar
rules to those provided for in section 50.
Subject to the section 48(a)(10)(C)
recapture, the taxpayer is deemed at the
time the qualified energy project is
placed in service to satisfy the
Prevailing Wage Requirements for
alterations or repairs for the five-year
period beginning after such project is
originally placed in service. Section
48(a)(11) provides that rules similar to
section 45(b)(8) apply for purposes of
the Apprenticeship Requirements.
The proposed regulations would
provide that if a taxpayer satisfies the
PWA requirements, then the credit
determined under section 48 for any
qualified energy project would be
multiplied by five.

requirements, then the credit amount
determined under section 48C(a) is 30
percent.
To satisfy the Prevailing Wage
Requirements under section
48C(e)(5)(A), a taxpayer must ensure
that with respect to a qualifying
advanced energy project, any laborers
and mechanics employed by the
taxpayer or any contractor or
subcontractor in the re-equipping,
expansion, or establishment of a
manufacturing facility are paid wages at
rates not less than the prevailing rates
for construction, alteration, or repair of
a similar character in the locality in
which the project is located. Section
48C(e)(5)(B) provides that rules similar
to section 45(b)(7)(B) apply for purposes
of the correction and penalty related to
the failure to satisfy the Prevailing Wage
Requirements. Section 48C(e)(6)
provides that rules similar to section
45(b)(8) apply for purposes of the
Apprenticeship Requirements.
The Treasury Department and the IRS
issued Notice 2023–18, 2023–10 I.R.B.
508, and Notice 2023–44, 2023–25 I.R.B.
924, to provide guidance under section
48C(e). These notices provide a process
for the IRS to allocate Section 48C
Credits. To prevent an overallocation of
Section 48C Credits, section 5.07 of
Notice 2023–18 requires a taxpayer that
applies for a Section 48C Credit
allocation at the 30 percent credit
amount to confirm that the taxpayer
intends to satisfy the PWA
requirements. Section 5.07 of Notice
2023–18 additionally requires that when
the taxpayer provides notification that it
placed the project in service, the
taxpayer must also confirm that it
satisfied the PWA requirements.
The proposed regulations would
provide that if a taxpayer satisfies both
the PWA requirements and the PWA
confirmation requirements provided in
Notice 2023–18 (or any subsequent
guidance), then the credit amount for
Section 48C Credits allocated pursuant
to section 48C(e) would be equal to 30
percent.

I. Section 48C
Section 48C provides a credit for a
qualified investment in a qualifying
advanced energy project for that taxable
year (Section 48C Credit). The IRA
added section 48C(e) to the Code,
extending the Section 48C Credit to
provide an additional Section 48C
Credit allocation of $10 billion.
Generally, the credit amount for Section
48C Credits allocated pursuant to
section 48C(e) is equal to six percent of
the basis of the eligible property. If a
taxpayer satisfies the PWA

J. Section 48E

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Section 48E provides a clean
electricity investment credit for the
investment in qualified facilities and
energy storage technology placed in
service for the taxable year after
December 31, 2024. The credit is
generally six percent of the qualified
investment. If a taxpayer satisfies the
PWA requirements, the One Megawatt
Exception, or the BOC Exception, then
the credit amount determined under
section 48E(a) for a qualified investment
is 30 percent.

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Section 48E(d)(3) provides that rules
similar to section 48(a)(10) apply for
purposes of the Prevailing Wage
Requirements. Section 48E(d)(4)
provides that rules similar to section
45(b)(8) apply for purposes of the
Apprenticeship Requirements.
The proposed regulations would
provide that if a taxpayer satisfies the
PWA requirements, then the credit
amount determined under section
48E(a) for a qualified investment would
be equal to 30 percent.
K. Section 179D
Section 179D(a) provides a deduction
for the cost of energy efficient
commercial building property placed in
service during the taxable year. Section
179D(f) provides an alternative
deduction for energy efficient building
retrofit property (alternative deduction).
For taxable years beginning after
December 31, 2022, section 179D(b)
provides that the deduction cannot
exceed the excess (if any) of the product
of the applicable dollar value, and the
square footage of the building, over the
aggregate amount of deductions under
section 179D(a) and section 179D(f)
with respect to the building for the three
taxable years immediately preceding the
taxable year (or for any taxable year
ending during the four-taxable-year
period ending with such taxable year, if
the deduction is allowed to a person
other than the taxpayer). The alternative
deduction is an amount equal to the
lesser of the ‘‘excess’’ described in
section 179D(b) (determined by
substituting ‘‘energy use intensity’’ for
‘‘total annual energy and power costs’’)
or the aggregate adjusted basis
(determined after taking into account all
adjustments with respect to the taxable
year other than the reduction under
section 179D(e)) of energy efficient
building retrofit property placed in
service by the taxpayer pursuant to a
qualified retrofit plan. The applicable
dollar value is $0.50 increased by $0.02
(but not above $1.00) for each
percentage point by which the total
annual energy and power costs (or
energy use intensity, in the case of the
alternative deduction) for the building
are certified to be reduced by a
percentage greater than 25 percent. If a
taxpayer satisfies the PWA requirements
or the beginning of installation
exception, then the applicable dollar
value of the deduction determined
under section 179D(b)(2) is $2.50
increased by $0.10 (but not above
$5.00).
To satisfy the Prevailing Wage
Requirements under section
179D(b)(4)(A), a taxpayer must ensure
that any laborers and mechanics

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employed by the taxpayer or any
contractor or subcontractor in the
installation of any property are paid
wages at rates not less than the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which the
property is located. Section
179D(b)(4)(B) provides that rules similar
to section 45(b)(7)(B) apply for purposes
of the correction and penalty related to
the failure to satisfy the Prevailing Wage
Requirements. Section 179D(b)(5)
provides that rules similar to section
45(b)(8) apply for purposes of the
Apprenticeship Requirements.
The proposed regulations would
provide that if a taxpayer satisfies the
PWA requirements, then the applicable
dollar value of the deduction
determined under section 179D(b)(2)
would be $2.50 increased by $0.10 (but
not above $5.00).
V. Recordkeeping Requirements
A. In General
Section 45(b)(12) authorizes the
Secretary to issue such regulations or
other guidance as the Secretary
determines necessary to carry out the
purposes of section 45(b), including
regulations or other guidance that
provide requirements for recordkeeping
or information reporting for purposes of
administering the requirements of
section 45(b).
Section 6001 provides that every
person liable for any tax imposed by the
Code, or for the collection thereof, must
keep such records as the Secretary may
from time to time prescribe. Section
1.6001–1(a) provides that any person
subject to income tax must keep such
permanent books of account or records,
including inventories, as are sufficient
to establish the amount of gross income,
deductions, credits, or other matters
required to be shown by such person in
any return of such tax. Section 1.6001–
1(e) provides that the books and records
required by § 1.6001–1 must be retained
so long as the contents thereof may
become material in the administration
of any Internal Revenue law.
B. Recordkeeping With Respect to
Prevailing Wage Requirements
The Copeland Act requires
contractors and subcontractors subject
to the DBA to submit certified weekly
payroll records reflective of work
performed on a covered contract to the
contracting agency. This requirement to
comply with the DBA is statutory and
inherent in the award of a contract and
the submission of weekly payroll
records becomes part of the terms of the
awarded contract. In contrast, under

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section 45(b)(7)(A), although the
requirement to pay prevailing wages is
triggered by the beginning of
construction and continues over the
entire course of a project, the
requirement to pay prevailing wages
becomes binding only when a tax return
claiming the increased credit is filed.
Thus, because the increased credit is not
claimed until the time of filing a return,
which will only occur after a qualified
facility is placed in service, the
proposed regulations would not adopt
the Copeland Act requirement to report
payroll records to the IRS on a weekly
basis in advance of claiming an
increased credit. The Treasury
Department and the IRS understand that
adoption of the Copeland Act reporting
regime for purposes of section
45(b)(7)(A) would not assist the IRS
with administering the provision.
Instead, the proposed regulations
would provide that taxpayers would be
required to establish compliance with
the Prevailing Wage Requirements at the
time a return claiming the increased
credit is filed. The proposed regulations
would provide that a taxpayer would be
required to do so on such forms and in
such manner as the Commissioner
provides in IRS forms, publications, or
other guidance. The Treasury
Department and the IRS expect that
taxpayers will be required to report at
the time of filing a return the following
information: (i) the location and type of
qualified facility; (ii) the applicable
wage determinations for the type and
location of the facility; (iii) the wages
paid (including any correction
payments) and hours worked for each of
the laborer or mechanic classifications
engaged in the construction, alteration,
or repair of the facility; (iv) the number
of workers who received correction
payments; (v) the wages paid and hours
worked by qualified apprentices for
each of the laborer or mechanic
classifications engaged in the
construction, alteration, or repair of the
facility; (vi) the total labor hours for the
construction, alteration, or repair of the
facility by any laborer or mechanic
employed by the taxpayer or any
contractor or subcontractor; and (vii) the
total credit claimed.
The DBA has comprehensive
recordkeeping requirements that assist
the DOL in its oversight of Prevailing
Wage Requirements. The DBA
recordkeeping regime is consistent with
what the IRS would ordinarily expect
taxpayers to preserve to be able to
substantiate that the Prevailing Wage
Requirements have been satisfied. The
proposed regulations would impose
recordkeeping requirements that are
generally consistent with the

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recordkeeping requirements under the
DBA regime for purposes of the
Prevailing Wage Requirements.
The proposed regulations would
require taxpayers to maintain and
preserve sufficient records to establish
compliance with the requirement that
all laborers and mechanics were paid
wages at rates not less than the
applicable prevailing rates. Records
sufficient to establish compliance would
include payroll records that reflect the
hours worked in each classification and
the wages paid to each laborer and
mechanic performing construction,
alteration, or repair work on the facility
(including any correction payments
made to each laborer and mechanic).
The Treasury Department and the IRS
expect that most taxpayers will use
contractors and subcontractors in the
construction, alteration, or repair of
facilities and that construction may
occur for several years before a facility
is placed in service. The proposed
regulations would provide that it would
be the responsibility of the taxpayer to
maintain payroll records that reflect the
wages paid to labors and mechanics
engaged in the construction, alteration,
or repair of the qualified facility,
regardless of whether the laborers and
mechanics are employed by the
taxpayer, a contractor, or a
subcontractor. The proposed regulations
would also impose recordkeeping
requirements related to correction and
penalty payments.
The proposed regulations include a
non-exhaustive list of facts and
circumstances that would be relevant to
the IRS in determining whether a failure
to meet the Prevailing Wage
Requirements was due to intentional
disregard. To demonstrate that a failure
was not due to intentional disregard,
taxpayers would need to maintain and
preserve records sufficient to document
the failure and the actions they took to
prevent, mitigate, or remedy the failure
(for example, records demonstrating that
the taxpayer regularly reviewed payroll
practices, included requirements to pay
prevailing wages in contracts with
contractors, and posted prevailing wage
rates in a prominent place on the job
site).
The proposed regulations would also
waive penalties for certain limited
failures. To the extent taxpayers intend
to rely on these penalty waiver
provisions, they would need to maintain
records sufficient to demonstrate when
a failure occurred and proof that the
taxpayer made the required correction
payment.

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C. Recordkeeping With Respect to
Apprenticeship Requirements
The proposed regulations would
require taxpayers subject to the
Apprenticeship Requirements to
maintain sufficient records to establish
compliance with the Labor Hours
Requirement, Ratio Requirement, and
Participation Requirement. Records
sufficient to establish compliance with
the Apprenticeship Requirements
include copies of any written requests
for apprentices by the taxpayer,
contractor, or subcontractor, any
agreement entered by the taxpayer,
contractor, or subcontractor with a
registered apprenticeship program,
documents reflecting any registered
apprenticeship program sponsored by
the taxpayer, contractor, or
subcontractor, documents verifying
participation in a registered
apprenticeship program by each
apprentice, records reflecting the
required ratio of apprentices to
journeyworkers prescribed by each
registered apprenticeship program from
which qualified apprentices are
employed, records reflecting the daily
ratio of apprentices to journeyworkers,
and the payroll records for any work
performed by apprentices. The proposed
regulations provide that it would be the
responsibility of the taxpayer to
maintain the relevant records for each
apprentice engaged in the construction,
alteration, or repair on the qualified
facility, regardless of whether the
apprentice is employed by the taxpayer,
a contractor, or a subcontractor.
D. Recordkeeping for Credits
Transferred Under Section 6418
Because an eligible taxpayer
determines any increased credit amount
applicable to the prevailing wage and
apprenticeship requirements, the
general recordkeeping requirements
under these proposed regulations would
remain with an eligible taxpayer who
transfers a specified credit portion that
includes an increased credit amount.
The increased credit amount that is
determined by an eligible taxpayer
would be reported on the applicable
forms on the return of the eligible
taxpayer. The minimum required
documentation to be provided to the
transferee taxpayer is a separate
requirement under the 6418 Proposed
Regulations that does not impact the
requirements in these proposed
regulations.
VI. Effect on Other Documents
The provisions of sections 3 and 4 of
Notice 2022–61 would be obsoleted for
facilities, property, projects, or

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equipment the construction, or
installation of which begins after the
date the Treasury Decision adopting
these regulations as final regulations is
published in the Federal Register. The
proposed regulations would not
otherwise affect Notice 2022–61.
VII. Proposed Applicability Date
These regulations are proposed to
apply to facilities, property, projects, or
equipment placed in service in taxable
years ending after the date these
regulations are published as final in the
Federal Register and the construction or
installation of which begins after the
date these regulations are published as
final regulations in the Federal Register.
However, taxpayers may rely on these
proposed regulations with respect to
construction or installation of a facility,
property, project, or equipment
beginning on or after January 29, 2023,
and on or before the date these
regulations are published as final
regulations in the Federal Register,
provided, that beginning after the date
that is 60 days after August 29, 2023,
taxpayers follow the proposed
regulations in their entirety and in a
consistent manner.
Special Analyses
I. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) (PRA) generally
requires that a federal agency obtain the
approval of the Office of Management
and Budget (OMB) before collecting
information from the public, whether
such collection of information is
mandatory, voluntary, or required to
obtain or retain a benefit.
The collections of information in
these proposed regulations would
include reporting, recordkeeping, and
third-party disclosure requirements.
These collections are required for
purposes of claiming an increased credit
or deduction amount; and are necessary
for the IRS to validate that taxpayers
have met the regulatory requirements
and are entitled to claim the increased
credit amounts. The likely respondents
are individual, business, trust and estate
filers, and tax exempt organizations.
The proposed regulations would set
forth procedures for requesting
supplemental wage determinations and
wage rates for additional classifications
from the DOL. This collection is
approved by OMB under the DOL’s
Control Number 1235–0034. This IRS
regulation does not alter any of the DOL
collections approved under this control
number.
The proposed regulations would
include requirements to keep records

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sufficient to demonstrate that PWA
requirements have been met as detailed
in § 1.45–12. For purposes of the PRA,
the recordkeeping requirements of
§ 1.45–12 are considered general tax
records. These general tax records are
approved annually under 1545–0074 for
individuals/sole proprietors, 1545–0123
for business entities, and 1545–0047 for
tax-exempt organizations. IRS will seek
OMB approval under a new OMB
Control number (1545–NEW) for the
burden for trust and estate filers.
The proposed regulations would
include reporting requirements that
taxpayers provide a statement with the
tax return that claims an increased
credit or deduction amount that
includes aggregate information as
detailed in § 1.45–12. The Secretary may
issue forms and instructions in future
guidance for the purpose of meeting
these reporting requirements. These
reporting requirements will be covered
under 1545–0074 for individuals/sole
proprietors, 1545–0123 for business
entities. IRS will solicit public
comments on this requirement and the
associated burden for trusts and estates
filers as reflected below; and will seek
OMB approval under a new OMB
Control Number (1545–NEW) for trust
and estate filers.
The proposed regulations would
include third-party disclosures that
include notifying laborers and
mechanics of the applicable prevailing
wage rates as detailed in § 1.45–7. The
proposed regulations would also
include third party disclosures for
taxpayers requesting the dispatch of
apprentices from a registered
apprenticeship program as detailed in
§ 1.45–8. IRS will solicit public
comment on this requirement and
associated burden for all filers reflected
below; and will seek OMB approval
under a new OMB Control Number
(1545–NEW) for all filers for the
disclosure requirement.
The collections of information
contained in this notice of proposed
rulemaking has been submitted to the
Office of Management and Budget for
review in accordance with the
Paperwork Reduction Act. Commenters
are strongly encouraged to submit
public comments electronically. Written
comments and recommendations for the
proposed information collection should
be sent to https://www.reginfo.gov/
public/do/PRAMain, with copies to the
Internal Revenue Service. Find this
particular information collection by
selecting ‘‘Currently under Review—
Open for Public Comments’’ then by
using the search function. Submit
electronic submissions for the proposed
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email at [email protected] (indicate
REG–100908–23 on the Subject line).
Comments on the collection of
information should be received by
October 30, 2023. Comments are
specifically requested concerning:
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the IRS,
including whether the information will
have practical utility. The accuracy of
the estimated burden associated with
the proposed collection of information.
How the quality, utility, and clarity of
the information to be collected may be
enhanced. How the burden of
complying with the proposed collection
of information may be minimized,
including through the application of
automated collection techniques or
other forms of information technology;
and estimates of capital or start-up costs
and costs of operation, maintenance,
and purchase of services to provide
information.
The IRS estimates that 70 trust and
estates may claim the increased credit
and that it could take approximately 40
hours to compile the data needed for the
statement attached to their return.
Estimated total annual reporting and
recordkeeping burden for trusts and
estates filers: 2,800 hours.
Estimated average annual burden per
respondent: 40 hours.
Estimated number of respondents: 70.
Estimated frequency of responses:
Annual.
The IRS estimates that 70,000 filers
may claim the increased credit and that
it could take approximately two hours
to display the prevailing wages rates
and to request the dispatch of
apprentices.
Estimated total annual third-party
disclosure burden for all other filers:
140,000 hours.
Estimated average annual burden per
respondent: Two hours.
Estimated number of respondents:
70,000.
Estimated frequency of responses:
Once.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control
number assigned by the Office of
Management and Budget.
II. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to
Federal rules that are subject to the
notice and comment requirements of
section 553(b) of the Administrative
Procedure Act (5 U.S.C. 551 et seq.) and
that are likely to have a significant

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economic impact on a substantial
number of small entities. Unless an
agency determines that a proposal is not
likely to have a significant economic
impact on a substantial number of small
entities, section 603 of the RFA requires
the agency to present an initial
regulatory flexibility analysis (IRFA) of
the proposed rule. The Treasury
Department and the IRS have not
determined whether the proposed rule,
when finalized, will likely have a
significant economic impact on a
substantial number of small entities.
This determination requires further
study. However, because there is a
possibility of significant economic
impact on a substantial number of small
entities, an IRFA is provided in these
proposed regulations. The Treasury
Department and the IRS invite
comments on both the number of
entities affected and the economic
impact on small entities. Pursuant to
section 7805(f), this notice of proposed
rulemaking has been submitted to the
Chief Counsel of Advocacy of the Small
Business Administration for comment
on its impact on small business.
A. Need for and Objectives of the Rule
The proposed regulations would
provide guidance to taxpayers intending
to satisfy the PWA requirements to
qualify for an increased credit or
deduction under sections 30C, 45, 45Q,
45V, 45Y, 45Z, 48, 48C, 48E, and 179D
and for those taxpayers intending to
satisfy the Prevailing Wage
Requirements to qualify for the
increased credit under sections 45L and
45U. The proposed regulations would
provide needed guidance for taxpayers
on the use of wage determinations
issued by the DOL, on the time and
manner for reporting compliance with
the PWA requirements, as well as
needed definitions. The proposed
regulations would also provide
guidance concerning correction and
penalty payments that can be made by
taxpayers who initially fail to satisfy the
PWA requirements in order to qualify
for the increased credit and deduction
amounts.
The Treasury Department and the IRS
intend and expect that the increased
credit amount of five times the base
credit for taxpayers that ensure the
payment of paying prevailing wages and
hiring apprentices in the construction,
alteration, or repair of qualified facilities
provides financial incentives that will
beneficially impact various industries
involved in the production of and
investment in clean energy. These
proposed regulations would provide
clarifying guidance that will assist
taxpayers seeking to comply with the

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statutory prevailing wage and
apprenticeship requirements in order to
take advantage of the financial
incentives. The Treasury Department
and IRS expect that the increased credit
amounts available to taxpayers as
financial incentives will exceed the
costs of the additional recordkeeping
and reporting obligations that would be
imposed on taxpayers by these proposed
regulations.
The Treasury Department and the IRS
also expect the financial incentives for
taxpayers to ensure payment of
prevailing wage rates and using
apprentices will deliver benefits across
the economy by creating increased
opportunities for contractors and
subcontractors as well as laborers and
mechanics to become involved in clean
energy production. Allowing these
increased credits and an increased
deduction for taxpayers who satisfy
prevailing wage and apprentice
requirements will incentivize expansion
of clean energy resources and will
reduce economy wide greenhouse gas
emissions.
B. Affected Small Entities
The RFA directs agencies to provide
a description of, and where feasible, an
estimate of, the number of small entities
that may be affected by the proposed
rules, if adopted. The Small Business
Administration’s Office of Advocacy
estimates in its 2023 Frequently Asked
Questions that 99.9 percent of American
businesses meet its definition of a small
business. The applicability of these
proposed regulations does not depend
on the size of the business, as defined
by the Small Business Administration.
As described more fully in the preamble
to this proposed regulation and in this
IRFA, section 45 and these proposed
regulations may affect a variety of
different entities across several different
green energy industries as there are 12
different credits with increased credit
amount provisions. Although there is
uncertainty as to the exact number of
small businesses within this group, the
current estimated number of
respondents to these proposed rules is
70,000 taxpayers as described in the
Paperwork Reduction Act section of the
preamble. The Treasury Department and
the IRS expect to receive more
information on the impact on small
businesses through comments on this
proposed rule.
C. Impact of the Rules
The proposed regulations provide
rules for how taxpayers can satisfy the
PWA requirements in order to seek the
increased credits under section 45 as
well as the increased credit or

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deduction available under sections 30C,
45L, 45Q, 45U, 45V, 45Y, 45Z, 48, 48C,
48E, and 179D. Taxpayers that seek to
claim the increased credit or deduction
will have administrative costs related to
reading and understanding these
proposed rules, as well as increased
costs for the recordkeeping and
reporting requirements necessary to
establish compliance with the PWA
requirements. The costs will vary across
different-sized taxpayers and across the
type of facilities and projects in which
such taxpayers are engaged.
The Prevailing Wage Requirements
would require the taxpayer to obtain the
published wage determination issued by
the DOL for the county in which the
facility is located. To the extent a wage
determination does not include a
required classification, or if no wage
determination has been published, the
taxpayer would be required to contact
the DOL to obtain a supplemental wage
determination or a wage rate for an
additional classification. The taxpayer
would be required to ensure that any
contractor or subcontractor that works
on the construction, alteration, or repair
of a facility has paid hourly wages in
accordance with the wage determination
for each classification required to
complete such work. In order to be
eligible for certain proposed cure
provisions, the taxpayer would be
required to know or be able to
determine whether the laborers and
mechanics employed for construction,
alteration, or repair of the facility were
paid in accordance with the applicable
wage determination. Additionally, the
taxpayer would be required to retain
records sufficient to establish
compliance with these proposed
regulations for as long as may be
relevant. The Treasury Department and
the IRS expect that some of the
recordkeeping that would be required
under these proposed rules will be
consistent with recordkeeping
requirements already imposed under the
DBA and the Fair Labor Standards Act,
29 U.S.C. 201 et seq.
For the Apprenticeship Requirements,
the taxpayer, contractor, and
subcontractor, would be required to
contact a registered apprenticeship
program for purposes of requesting the
dispatch of qualified apprentices to
work on the construction, alteration, or
repair of the facility. Whether or not the
registered apprenticeship program
dispatches apprentices, the taxpayer
would be required to retain records to
establish compliance with these
proposed regulations for as long as may
be relevant.
The taxpayer claiming the increased
credit would be required to report the

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payment of prevailing wages and the
utilization of apprentices consistent
with the forms and instructions of the
IRS. Although the Treasury Department
and the IRS do not have sufficient data
to determine precisely the likely extent
of the increased costs of compliance, the
estimated burden of complying with the
recordkeeping and reporting
requirements are described in the
Paperwork Reduction Act section of the
preamble.
D. Alternatives Considered
The Treasury Department and the IRS
considered alternatives to the proposed
regulations. The proposed regulations
were designed to minimize burdens for
taxpayers while ensuring that laborers
and mechanics are paid the applicable
wage rates and that the IRS has
sufficient information to administer the
increased credits and deduction
provisions. The proposed regulations
would not adopt the DBA requirement
of submitting weekly certified payroll
records to the IRS. The Treasury
Department and IRS determined that
submission of weekly payroll records to
the IRS by taxpayers would not assist
the IRS with the efficient administration
of the increased credit provisions. The
Treasury Department and the IRS also
considered a requirement that taxpayers
submit payroll records for all laborers
and mechanics at the time of filing a
return that claims an increased credit.
The Treasury Department and the IRS
determined that per laborer and per
mechanic payroll records would not
provide the IRS with useful information
and would also involve substantial
burdens for taxpayers to report such
information.
Comments are requested on the
requirements in the proposed
regulations, including specifically,
whether there are less burdensome
alternatives that ensure the IRS has
sufficient information to administer the
increased credit claimed under section
45 as well as the increased credit and
deduction amounts that are claimed
under sections 30C, 45L, 45Q, 45U, 45V,
45Y, 45Z, 48, 48C, 48E, and 179D.
E. Duplicative, Overlapping, or
Conflicting Federal Rules
For energy facilities built under
contracts with the Federal Government,
or with Federal financial or other
assistance provided under a DavisBacon Related Act, the proposed
regulations may overlap with the rules
under the DBA, 29 CFR parts 1, 5, and
7. In all other instances, the proposed
regulations would not duplicate,
overlap, or conflict with any relevant
Federal rules. The Treasury Department

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Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules
and the IRS invite input from interested
members of the public about identifying
and avoiding overlapping, duplicative,
or conflicting requirements.
III. Section 7805(f)
Pursuant to section 7805(f), this
notice of proposed rulemaking has been
submitted to the Chief Counsel for the
Office of Advocacy of the Small
Business Administration for comment
on its impact on small business.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits and take certain other
actions before issuing a final rule that
includes any Federal mandate that may
result in expenditures in any one year
by a State, local, or Tribal government,
in the aggregate, or by the private sector,
of $100 million (updated annually for
inflation). This proposed rule does not
include any Federal mandate that may
result in expenditures by State, local, or
Tribal governments, or by the private
sector in excess of that threshold.

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V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial,
direct compliance costs on State and
local governments, and is not required
by statute, or preempts State law, unless
the agency meets the consultation and
funding requirements of section 6 of the
Executive order. This proposed rule
does not have federalism implications
and does not impose substantial direct
compliance costs on State and local
governments or preempt State law
within the meaning of the Executive
order.
VI. Executive Order 13175:
Consultation and Coordination With
Indian Tribal Governments
Executive Order 13175 (Consultation
and Coordination With Indian Tribal
Governments) prohibits an agency from
publishing any rule that has Tribal
implications if the rule either imposes
substantial, direct compliance costs on
Indian Tribal governments, and is not
required by statute, or preempts Tribal
law, unless the agency meets the
consultation and funding requirements
of section 5 of the Executive order.
The Treasury Department and the IRS
will hold a consultation with Tribal
leaders related to the prevailing wage
and apprenticeship requirements in
these proposed regulations, which will
inform the development of the final
regulations.

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VII. Regulatory Planning and Review
Pursuant to the Memorandum of
Agreement, Review of Treasury
Regulations under Executive Order
12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject
to the requirements of section 6 of
Executive Order 12866, as amended.
Therefore, a regulatory impact
assessment is not required.
Comments and Public Hearing
Before these proposed amendments to
the regulations are adopted as final
regulations, consideration will be given
to comments regarding the notice of
proposed rulemaking that are submitted
timely to the IRS as prescribed in the
preamble under the ADDRESSES section.
The Treasury Department and the IRS
request comments on all aspects of the
proposed regulations. All comments
will be made available at https://
www.regulations.gov. Once submitted to
the Federal eRulemaking Portal,
comments cannot be edited or
withdrawn.
A public hearing has been scheduled
for November 21, 2023, beginning at 10
a.m. ET, in the Auditorium at the
Internal Revenue Building, 1111
Constitution Avenue NW, Washington,
DC. Due to building security
procedures, visitors must enter at the
Constitution Avenue entrance. In
addition, all visitors must present photo
identification to enter the building.
Because of access restrictions, visitors
will not be admitted beyond the
immediate entrance area more than 30
minutes before the hearing starts.
Participants may alternatively attend the
public hearing by telephone.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish
to present oral comments at the hearing
must submit an outline of the topics to
be discussed and the time to be devoted
to each topic by October 30, 2023. A
period of 10 minutes will be allotted to
each person for making comments. An
agenda showing the scheduling of the
speakers will be prepared after the
deadline for receiving outlines has
passed. Copies of the agenda will be
available free of charge at the hearing.
If no outline of the topics to be
discussed at the hearing is received by
October 30, 2023, the public hearing
will be cancelled. If the public hearing
is cancelled, a notice of cancellation of
the public hearing will be published in
the Federal Register.
Individuals who want to testify in
person at the public hearing must send
an email to [email protected] to
have your name added to the building
access list. The subject line of the email

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must contain the regulation number
REG–100908–23 and the language
TESTIFY in Person. For example, the
subject line may say: Request to
TESTIFY in Person at Hearing for REG–
100908–23.
Individuals who want to testify by
telephone at the public hearing must
send an email to [email protected]
to receive the telephone number and
access code for the hearing. The subject
line of the email must contain the
regulation number REG–100908–23 and
the language TESTIFY Telephonically.
For example, the subject line may say:
Request to TESTIFY Telephonically at
Hearing for REG–100908–23.
Individuals who want to attend the
public hearing in person without
testifying must also send an email to
[email protected] to have your
name added to the building access list.
The subject line of the email must
contain the regulation number REG–
100908–23 and the language ATTEND
In Person. For example, the subject line
may say: Request to ATTEND Hearing in
Person for REG–100908–23. Requests to
attend the public hearing must be
received by 5:00 p.m. EST on November
17, 2023.
Hearings will be made accessible to
people with disabilities. To request
special assistance during a hearing
please contact the Publications and
Regulations Branch of the Office of
Associate Chief Counsel (Procedure and
Administration) by sending an email to
[email protected] (preferred) or by
telephone at (202) 317–6901 (not a tollfree number) by at least November 15,
2023.
Statement of Availability of IRS
Documents
Guidance cited in this preamble is
published in the Internal Revenue
Bulletin and is available from the
Superintendent of Documents, U.S.
Government Publishing Office,
Washington, DC 20402, or by visiting
the IRS website at https://www.irs.gov.
Drafting Information
The principal author of these
proposed regulations is the Office of the
Associate Chief Counsel (Passthroughs
and Special Industries). However, other
personnel from the Treasury
Department and the IRS participated in
the development of the proposed
regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.

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Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules

Authority: 26 U.S.C. 7805 * * *
Section 1.30C–3 also issued under 26
U.S.C. 30.

(1) A project the construction of
which began prior to January 29, 2023;
or
(2) A project that meets the prevailing
wage requirements of section 45(b)(7)
and § 1.45–7, the apprenticeship
requirements of section 45(b)(8) and
§ 1.45–8, and the recordkeeping and
reporting requirements of § 1.45–12.
(c) Applicability date. This section
applies to projects placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].
■ Par. 3. Sections 1.45–0 through 1.45–
12 are added to read as follows:

*

Sec.

Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1.The authority citation for
part 1 is amended by adding entries for
§§ 1.30C–3, 1.45–6 through 1.45–8,
1.45–12, 1.45L–3, 1.45Q–6, 1.45U–3,
1.45V–3, 1.45Y–3, 1.45Z–3, 1.48–13,
and 1.179D–3 in numerical order to read
in part as follows:

■

*

*

*

*

Section 1.45–6 also issued under 26 U.S.C.
45.
Section 1.45–7 also issued under 26 U.S.C.
45.
Section 1.45–8 also issued under 26 U.S.C.
45.
Section 1.45–12 also issued under 26
U.S.C. 45.

*

*

*

*

*

*

*

Section 1.45L–3 also issued under 26
U.S.C. 45L.

*

*

*

*

*

*

*

*

*

*

*
*

*

*
*
*
*
Par. 2. Sections 1.30C–1 through
1.30C–3 are added to read as follows:

■

[Reserved]

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§ 1.30C–3 Rules relating to the increased
credit amount for prevailing wage and
apprenticeship.

(a) In general. If any qualified
alternative fuel vehicle refueling project
placed in service during the taxable year
satisfies the requirements in paragraph
(b) of this section, the credit determined
under section 30C(a) for any qualified
alternative fuel vehicle refueling
property of a character subject to an
allowance for depreciation that is part of
such project is multiplied by five.
(b) Qualified project requirements. A
qualified alternative fuel vehicle
refueling project satisfies the
requirements of this paragraph (b) if it
is one of the following—

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*

*

*

*

*

Table of contents.

§§ 1.45–1—1.45–5

Section 1.179D–3 also issued under 26
U.S.C. 179D.

§§ 1.30C–1—1.30C–2

*

This section lists the table of contents
for §§ 1.45–1 through 1.45–12.

Section 1.48–13 also issued under 26
U.S.C. 48.

*

*

§ 1.45–0

*

Section 1.45Q–6 also issued under 26
U.S.C. 45Q.
Section 1.45U–3 also issued under 26
U.S.C. 45U.
Section 1.45V–3 also issued under 26
U.S.C. 45V.
Section 1.45Y–3 also issued under 26
U.S.C. 45Y.
Section 1.45Z–3 also issued under 26
U.S.C. 45Z.

*

*

1.45–0 Table of contents.
1.45–1—1.45–5 [Reserved]
1.45–6 Increased credit amount.
1.45–7 Prevailing wage requirements.
1.45–8 Apprenticeship requirements.
1.45–9—1.45.11 [Reserved]
1.45–12 Recordkeeping and reporting.

[Reserved]

§ 1.45–6 Increased credit amount.
(a) In general.
(b) Qualified facility requirements.
(c) Definition of nameplate capacity
for purposes of determining maximum
net output under section 45(b)(6)(B)(i).
(d) Applicability date.
§ 1.45–7 Prevailing wage requirements.
(a) In general.
(b) Wage determinations.
(c) Curing a failure to satisfy the
prevailing wage requirements.
(d) Definitions.
(e) Applicability date.
§ 1.45–8 Apprenticeship requirements.
(a) In general.
(b) Labor hours requirement.
(c) Application of apprentice-tojourneyworker ratio.
(d) Participation requirement.
(e) Exceptions to the Apprenticeship
Requirements.
(f) Definitions.
(g) Applicability date.
§§ 1.45–9—1.45–11

[Reserved]

§ 1.45–12 Recordkeeping and
reporting.
(a) In general.
(b) Recordkeeping for prevailing wage
and apprenticeship requirements.
(c) Recordkeeping for prevailing wage
requirements.
(d) Recordkeeping for apprenticeship
requirements.

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(e) Applicability date.
§§ 1.45–1—1.45–5
§ 1.45–6

[Reserved]

Increased credit amount.

(a) In general. If a qualified facility (as
defined in section 45(d)) satisfies the
requirements in paragraph (b) of this
section, the amount of the renewable
electricity production credit determined
under section 45(a) (after the
application of sections 45(b)(1) through
(5)) is equal to the credit determined
under section 45(a) multiplied by five.
(b) Qualified facility requirements. A
qualified facility satisfies the
requirements of this paragraph (b) if it
is one of the following—
(1) A facility with a maximum net
output (as determined under paragraph
(c) of this section) of less than one
megawatt (as measured in alternating
current);
(2) A facility the construction of
which began prior to January 29, 2023;
or
(3) A facility that meets the prevailing
wage requirements of section 45(b)(7)
and § 1.45–7, the apprenticeship
requirements of section 45(b)(8) and
§ 1.45–8, and the recordkeeping and
reporting requirements of § 1.45–12.
(c) Definition of nameplate capacity
for purposes of determining maximum
net output under section 45(b)(6)(B)(i).
For purposes of determining whether a
facility has a maximum net output of
less than one megawatt (as measured in
alternating current) for purposes of
section 45(b)(6)(B)(i), nameplate
capacity is determinative. Nameplate
capacity for an electrical generating unit
means the maximum electrical
generating output in megawatts (MW)
that the unit is capable of producing on
a steady state basis and during
continuous operation under standard
conditions, as measured by the
manufacturer and consistent with the
definition provided in 40 CFR 96.202.
Where applicable, the International
Standard Organization (ISO) conditions
are used to measure the maximum
electrical generating output or usable
energy capacity.
(d) Applicability date. This section
applies facilities placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].
§ 1.45–7

Prevailing wage requirements.

(a) In general. In order for the
increased credit under section
45(b)(6)(B)(iii) with respect to any
qualified facility to be claimed, the
taxpayer must satisfy the requirements

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Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules
of section 45(b)(7) and this section (the
‘‘Prevailing Wage Requirements’’) by
ensuring that all laborers and mechanics
employed by the taxpayer or any
contractor or subcontractor in the
construction of such facility, and with
respect to any taxable year, for any
portion of such taxable year that is
within the 10-year period beginning on
the date the facility was placed in
service, the alteration or repair of such
facility, are paid wages at rates not less
than the prevailing rates for
construction, alteration, or repair of a
similar character in the locality in
which such facility is located.
Prevailing rates are those rates most
recently determined by the Secretary of
Labor in accordance with 40 U.S.C.
chapter 31, subchapter IV (Davis-Bacon
Act), and as set forth in paragraphs
(b)(2) and (3) of this section. For
purposes of determining the increased
credit under section 45(b)(6) for a
taxable year, the Prevailing Wage
Requirements applicable to alteration or
repair work with respect to the taxable
year(s) in which the alteration or repair
of the qualified facility occurs apply.
See paragraph (d) of this section for
definitions of terms used in this section.
(b) Wage determinations—(1) In
general. A taxpayer satisfies the
Prevailing Wage Requirements if the
taxpayer ensures that laborers and
mechanics employed by the taxpayer or
any contractor or subcontractor in the
construction, alteration, or repair of a
facility are paid wages at rates not less
than those set forth in the applicable
wage determination issued by the
Secretary of Labor pursuant to 40 U.S.C.
3142, 29 CFR part 1, and other
implementing guidance for the specified
type of construction in the geographic
area where that facility is located. When
the construction, alteration, or repair of
a facility occurs in more than one
geographic area, the taxpayer,
contractor, or subcontractor must use
the applicable wage determination for
the work performed in each geographic
area. Subject to the requirements of this
section, the applicable wage
determination is a general wage
determination described in paragraph
(b)(2) of this section (including any
additional classifications and wage rates
described in paragraph (b)(3) of this
section), or a supplemental wage
determination described in paragraph
(b)(3) of this section.
(2) General wage determinations.
Except as provided in paragraph (b)(3)
of this section, to satisfy the Prevailing
Wage Requirements described in
paragraph (a) of this section, taxpayers
must ensure that laborers and
mechanics employed by the taxpayer or

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any contractor or subcontractor in the
construction, alteration, or repair of a
facility are paid wages at rates not less
than those set forth in the applicable
general wage determination(s)
published by the U.S. Department of
Labor on the approved website. The
applicable general wage determination
is the wage determination in effect for
the specified type of construction in the
geographic area when the construction,
alteration, or repair of the facility
begins.
(3) Supplemental wage
determinations and rates—(i) Use of
supplemental wage determinations and
rates. In the event the Secretary of Labor
has not published a general wage
determination for the relevant
geographic area and type of construction
for the facility, or the Secretary of Labor
has issued a general wage determination
for the relevant geographic area and
type of construction, but one or more
labor classifications for the
construction, alteration, or repair work
that will be done on the facility by
laborers or mechanics is not listed, the
taxpayer must ensure that laborers and
mechanics employed by the taxpayer or
any contractor or subcontractor in the
construction, alteration, or repair of a
facility are paid wages at rates not less
than those set forth in a supplemental
wage determination or in an additional
classification and wage rate issued to
the taxpayer by the U.S. Department of
Labor upon request by the taxpayer,
contractor, or subcontractor in
accordance with paragraph (b)(3)(ii) of
this section. A taxpayer, contractor, or
subcontractor may also request a
supplemental wage determination if the
location of the facility involves work by
covered laborers and mechanics that
spans more than one contiguous
geographic areas.
(ii) Request for supplemental wage
determinations and additional
classifications and rates—(A) Manner of
making request. A taxpayer, contractor,
or subcontractor requesting a
supplemental wage determination or
additional classification and wage rate
under paragraph (b)(3)(i) of this section
must submit the request to the U.S.
Department of Labor at, U.S.
Department of Labor, Wage and Hour
Division, Branch of Construction Wage
Determinations, Washington, DC 20210,
by email at [email protected],
or such other address as may be
prescribed in guidance and instructions
issued by the Administrator of the Wage
and Hour Division of the U.S.
Department of Labor (Wage and Hour
Division). A taxpayer, contractor, or
subcontractor should make such
requests no more than 90 days before

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the beginning of construction,
alteration, or repair, as appropriate (or
as soon as practicable after the start of
construction, alteration, or repair, in the
instance where the taxpayer, contractor,
or subcontractor cannot reasonably
determine prior to the start of
construction, alteration, or repair that a
supplemental wage determination or an
additional classification and wage rate
is necessary). After review, the Wage
and Hour Division will notify the
taxpayer, contractor, or subcontractor as
to the supplemental wage determination
or the labor classifications and wage
rates to be used for the type of work in
question in the geographic area in
which the facility is located.
(B) Required information. The request
for a supplemental wage determination
or additional classification and wage
rate must include the following
information:
(1) The name of the taxpayer,
contractor, or subcontractor requesting
the supplemental wage determination or
wage rate;
(2) The general wage determination(s),
if any, applicable to construction,
alteration, or repair of the facility;
(3) A description of the work to be
performed, including the type(s) of
construction involved and, if the project
involves multiple types of construction,
information indicating the expected cost
breakdown by type of construction;
(4) The geographic area in which the
facility is being constructed, altered, or
repaired, including the name and
address of the facility (if known);
(5) The start date of construction,
alteration, or repair at the facility;
(6) The labor classification(s) needed
for performance of the work on the
facility (excluding those for which wage
rates are available on an applicable
general wage determination);
(7) The duties to be performed by
each such labor classification on the
facility;
(8) The proposed wage rate, including
any bona fide fringe benefits, for each
such labor classification;
(9) Any pertinent wage payment
information that may be available;
(10) Any additional relevant
information otherwise required by forms
and instructions published by the U.S.
Department of Labor; and
(11) Any additional information the
taxpayer wants the U.S. Department of
Labor to consider.
(iii) Special rule for qualified facilities
located offshore. If a general wage
determination is not available, in lieu of
requesting a supplemental wage
determination for a facility located in an
offshore area within the outer
continental shelf of the United States, a

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taxpayer, contractor, or subcontractor
may rely on the general wage
determination for the relevant category
of construction that is applicable in the
geographic area closest to the area in
which the qualified facility will be
located.
(4) Reconsideration and review. A
taxpayer may seek reconsideration and
review by the Administrator of the Wage
and Hour Division of a general wage
determination, or a determination
issued with respect to a request for a
supplemental wage determination or
additional classification and wage rate
in accordance with the procedures set
forth in 29 CFR 1.8 and 5.13 and any
subsequent guidance issued by the U.S.
Department of Labor. A taxpayer may
appeal the decision of the Administrator
of the Wage and Hour Division to the
U.S. Department of Labor’s
Administrative Review Board in
accordance with the procedures set
forth in 29 CFR part 7 and any
subsequent guidance issued by the U.S.
Department of Labor. Questions
regarding wage determinations and rates
may be referred to the Administrator of
the Wage and Hour Division.
(5) Timing of wage determination. The
applicable prevailing wage rates on a
general wage determination are those in
effect at the time construction,
alteration, or repair of the facility
begins, and generally remain valid for
the duration of the work performed with
respect to the construction, alteration, or
repair of the facility by the taxpayer,
contractor, or subcontractor. Taxpayers
who perform any alteration or repair of
a facility after the facility is placed in
service must use the applicable wage
determination in effect at the time the
alteration or repair work begins. A new
wage determination would be required
to be used when work on a facility is
changed to include additional
construction, alteration, or repair work
not within the scope of work of the
original project, or to require work to be
performed for an additional time period
not originally obligated, including
where an option to extend the term of
a contract for the construction,
alteration, or repair is exercised. General
wage determinations published on the
U.S. Department of Labor approved
website contain no expiration date and
remain valid until revised, superseded,
or canceled. Any supplemental wage
determination or additional
classification and wage rate issued
under paragraph (b)(3) of this section
applies from the time the taxpayer
begins the construction, alteration, or
repair of the facility. If a supplemental
wage determination or additional
classification and wage rate is issued

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after construction, alteration, or repair
of the facility has begun, the applicable
prevailing rates apply retroactively to
the date construction began.
(6) Payment of wages. All laborers and
mechanics working on a qualified
facility must be paid in the time and
manner consistent with the regular
payroll practices of the taxpayer,
contractor, or subcontractor. The
payment of wages must be made
without subsequent deduction or rebate
on any account (except such payroll
deductions as are required by the law or
permitted by regulations issued by the
Secretary of Labor), and must consist of
the full amount of wages (including
bona fide fringe benefits or cash
equivalents thereof) due at time of
payment computed at rates not less than
those contained in the applicable wage
determination of the Secretary of Labor.
A taxpayer may discharge its wage
obligations for the payment of wages by
paying the full amount in cash, by
making payments to a bona fide fringe
benefit provider or incurring costs for
bona fide fringe benefits, or by a
combination thereof. The taxpayer is
solely responsible for ensuring that
laborers and mechanics are paid wages
not less than the prevailing rate whether
employed directly by the taxpayer, a
contractor, or a subcontractor in the
construction, alteration, or repair of the
facility for purposes of claiming the
increased credit under section 45(b)(6).
The rules set forth in 29 CFR 5.25
through 5.33, and subsequent guidance
issued by the U.S. Department of Labor
apply with respect to costs for bona fide
fringe benefits that may be credited for
purposes of the payment of wages.
(7) Apprentices—(i) Rate of pay.
Apprentices who perform work with
respect to the construction, alteration, or
repair of a facility consistent with the
requirements of section 45(b)(8) and
§ 1.45–8 and individuals in the first 90
days of probationary employment as an
apprentice in a registered
apprenticeship program who have been
certified by the U.S. Department of
Labor’s Office of Apprenticeship or a
State apprenticeship agency to be
eligible for probationary employment as
an apprentice, may be paid at less than
the predetermined rate for the work they
perform when they are employed
pursuant to and individually registered
in a bona fide apprenticeship program
registered with the U.S. Department of
Labor’s Office of Apprenticeship, or
with a State apprenticeship agency
recognized by the U.S. Department of
Labor’s Office of Apprenticeship. Every
apprentice must be paid at not less than
the rate specified by the registered
apprenticeship program for the

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apprentice’s level of progress, expressed
as a percentage of the journeyworker
hourly rate specified for the apprentice’s
classification in the applicable wage
determination. If the apprentice is
working in a classification that is not
part of the occupation of the registered
apprenticeship program, the apprentice
must be paid at the full applicable wage
rate determination for laborers or
mechanics working in that
classification. Any individual listed on
payroll at an apprenticeship wage, who
is not registered with a registered
apprenticeship program, must be paid
not less than the applicable wage rate on
the wage determination for the
classification of work actually
performed to satisfy the Prevailing Wage
Requirements. In the event the U.S.
Department of Labor’s Office of
Apprenticeship or a State
apprenticeship agency recognized by
the U.S. Department of Labor’s Office of
Apprenticeship withdraws approval of
an apprenticeship program, the
taxpayer, contractor, or subcontractor
will no longer satisfy the Prevailing
Wage Requirements by paying
apprentices less than the applicable
predetermined rate for the work
performed until an acceptable program
is approved.
(ii) Bona fide fringe benefits. To
satisfy the Prevailing Wage
Requirements, apprentices must be paid
bona fide fringe benefits in accordance
with the provisions of the registered
apprenticeship program. If the
apprenticeship program does not
specify the payment of bona fide fringe
benefits, apprentices must be paid the
full amount of bona fide fringe benefits
listed on the wage determination for the
applicable classification in cash or in
kind.
(iii) Apprenticeship ratio. The
allowance for payment of wages to
apprentices at rates less than the
applicable prevailing wage rates
determined by the U.S. Department of
Labor is subject to any applicable ratio
of apprentices to journeyworkers
required under the registered
apprenticeship program and consistent
with section 45(b)(8)(B) and § 1.45–8.
Any apprentice performing work on the
job site in excess of the ratio permitted
under the registered program or the ratio
applicable to the geographic area of the
facility pursuant to 29 CFR 5.5(a)(4)(i)
must be paid not less than the
applicable wage rate on the wage
determination for the work actually
performed to satisfy the Prevailing Wage
Requirements.
(iv) Reciprocity of ratios and wage
rates. If a taxpayer, contractor, or
subcontractor is performing

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construction alteration, or repair work
on a facility in a geographic area other
than the geographic area in which an
apprenticeship program is registered,
the ratios and wage rates (expressed in
percentages of the journeyworker’s
hourly rate) applicable within the
geographic area in which the
construction, alteration, or repair work
is being performed must be observed. If
there is no applicable ratio or wage rate
for the geographic area of the facility,
the ratio and wage rate (expressed in
percentages of the journeyworker’s
hourly rate) specified in the registered
apprenticeship program standard must
be observed.
(c) Curing a failure to satisfy the
prevailing wage requirements—(1) In
general. If a taxpayer fails to ensure that
all laborers and mechanics employed by
the taxpayer or any contractor or
subcontractor in the construction,
alteration, or repair of a qualified
facility are paid wages at rates not less
than those set forth in the applicable
wage determination(s), such taxpayer
will be deemed to have satisfied the
Prevailing Wage Requirements with
respect to such facility for any year if
the taxpayer makes the correction and
penalty payments provided in
paragraphs (c)(1)(i) and (ii) of this
section.
(i) Correction payment. The taxpayer
must pay any laborer or mechanic who
was paid wages at a rate below the rate
described in paragraph (b) of this
section for any pay period during such
year an amount equal to the sum of:
(A) The difference between the
amount of wages paid to such laborer or
mechanic for all hours worked during
such period and the amount of wages
required to be paid to such laborer or
mechanic pursuant to paragraph (a) of
this section for all hours worked during
such period; and
(B) Interest on the amount determined
under paragraph (c)(1)(i)(A) of this
section at the Federal short-term rate as
determined under section 6621 but
substituting ‘‘6 percentage points’’ for
‘‘3 percentage points’’ in section
6621(a)(2).
(ii) Penalty payment. The taxpayer
must pay a penalty equal to $5,000
multiplied by the total number of
laborers and mechanics who were paid
wages at a rate below the rate described
in paragraph (b) of this section for any
period during such year.
(iii) Correction and penalty payments
not required if taxpayer ineligible for
increased credit under section
45(b)(6)(B)(iii). If the taxpayer claims the
increased credit under section
45(b)(6)(B)(iii) and does not satisfy the
Prevailing Wage Requirements for the

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claimed increased credit amount, then
the obligation to make correction and
penalty payments under paragraphs
(c)(1)(i) and (ii) of this section applies in
order for the taxpayer to retain the
credit. If the IRS determines that a
taxpayer claiming the increased credit
under section 45(b)(6)(B)(iii) failed to
meet the Prevailing Wage Requirements
and the taxpayer does not make the
correction and penalty payments
provided in paragraphs (c)(1)(i) and (ii)
of this section, then no penalty is
assessed under paragraph (c)(1)(ii) of
this section, and the taxpayer is not
entitled to the increased credit under
section 45(b)(6)(B)(iii). Taxpayers that
are not entitled to claim the increased
credit amount may still be entitled to
the base amount of the renewable
electricity production credit under
section 45(a) if they meet the
requirements to claim the credit.
(iv) Correction and penalty payments
in the event of a transfer pursuant to
section 6418. To the extent an eligible
taxpayer, as defined in section
6418(f)(2), has determined an increased
credit amount under section 45(b)(6)
and transferred such increased credit
amount as part of a specified credit
portion, the obligation to make
correction and penalty payments under
paragraphs (c)(1)(i) and (ii) of this
section remains with the eligible
taxpayer. The obligation for an eligible
taxpayer to satisfy the Prevailing Wage
Requirements becomes binding upon
the earlier of the filing of the eligible
taxpayer’s return for the taxable year for
which the specified credit portion is
determined with respect to the eligible
taxpayer, or the filing of the return of
the transferee taxpayer for the year in
which the specified credit portion is
taken into account. If the IRS
determines that the eligible taxpayer
failed to meet the Prevailing Wage
Requirements and the eligible taxpayer
does not then make the correction and
penalty payments provided in
paragraphs (c)(1)(i) and (ii) of this
section, then no penalty is assessed
under paragraph (c)(1)(ii) of this section,
and the eligible taxpayer is not entitled
to the increased credit amount
determined under section
45(b)(6)(B)(iii). Section 6418 and the
regulations in this part under section
6418 control for determining the impact
of an eligible taxpayer’s failure to cure
on any transferee taxpayer. The eligible
taxpayer that is not entitled to claim the
increased credit amount may still be
entitled to the base amount of the
renewable electricity production credit
under section 45(a) if they meet the
requirements to claim the credit.

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(v) Examples. The provisions of this
paragraph (c)(1) may be illustrated by
the following examples, which do not
take into account any possible
application of the enhanced correction
and penalty payment requirements in
the case of intentional disregard under
paragraph (c)(3) of this section, the
exception for wages paid before a
determination by the U.S. Department of
Labor under paragraph (c)(5) of this
section, or the penalty waiver under
paragraph (c)(6) of this section. In each
example, assume that the taxpayer uses
the calendar year as the taxpayer’s
taxable year.
(A) Example 1. Taxpayer A begins
construction of a qualified facility on
February 3, 2023. The facility is placed
in service on October 10, 2023, and A
claims the increased credit under
section 45(b)(6) on its 2023 tax return.
Laborer X was employed in the
construction, alteration, or repair of the
facility in calendar year 2023 for 20
weeks and was paid on a weekly basis.
X was paid wages below the prevailing
wage rate for all pay periods in calendar
year 2023. All other laborers and
mechanics were paid at the prevailing
wage rate. The aggregate difference
between the amount of wages X was
paid and the amount required to be paid
under paragraph (a) of this section is
$400 (i.e., X worked 20 weeks during
the year and was underpaid by $20 in
each of those weeks). The amount of the
correction payment A must make to X
is equal to $400 plus interest from the
date of each underpayment at the rate as
determined under section 6621 but
substituting ‘‘6 percentage points’’ for
‘‘3 percentage points’’ in section
6621(a)(2). The total number of laborers
underpaid for any period in 2023 was
one, so the total amount of the penalty
payment that A must pay to the IRS to
retain the increased credit is $5,000.
(B) Example 2. Taxpayer B begins
construction of a qualified facility on
January 30, 2023. The facility is placed
in service on February 2, 2024.
Taxpayer B files a claim for the
increased credit under section 45(b)(6)
with its 2024 tax return. Taxpayer B
paid workers on a biweekly basis. Five
laborers employed in the construction of
the facility were paid wages below the
prevailing wage rates in 2023, with the
difference between the amount they
were paid and the amount of wages
required to be paid under paragraph (a)
of this section being $500 per laborer.
One of those laborers remained
employed in the construction of the
facility in 2024 and was paid wages
below the prevailing wage rate, with the
difference between the amount the
laborer was paid and the amount of

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wages required to be paid under
paragraph (a) of this section being $100.
All other laborers and mechanics
involved in the construction, alteration,
or repair of the facility were paid at the
prevailing wage rates. B must make
correction payments of $500 plus
interest from the date of each
underpayment at the rate as determined
under section 6621 but substituting ‘‘6
percentage points’’ for ‘‘3 percentage
points’’ in section 6621(a)(2) to each of
the five laborers that were underpaid in
2023, and a correction payment of $100
plus interest from the date of each
underpayment at the rate as determined
under section 6621 but substituting ‘‘6
percentage points’’ for ‘‘3 percentage
points’’ in section 6621(a)(2) to the
laborer that was underpaid in 2024. The
total amount of the penalty payment
that B must pay to the IRS to retain the
increased credit is $30,000, which
includes $5,000 for each of the laborers
underpaid in 2023 and $5,000 for the
one laborer underpaid in 2024.
(C) Example 3. Taxpayer B begins
construction of a qualified facility on
January 30, 2023. The facility is placed
in service on February 2, 2024.
Taxpayer B files a claim for the
increased credit under section 45(b)(6)
with its 2024 tax return. Taxpayer B
paid workers on a biweekly basis.
Laborer X was employed by the
taxpayer in the construction of the
facility for 22 weeks in 2023 was paid
wages below the prevailing wage rates
for the first 20 weeks of her employment
in the amount of $500 (i.e., X was
underpaid $50 in each of the 10
biweekly periods). For the last biweekly
pay period, Taxpayer B paid X the
correct prevailing rate for the work
performed during the period, plus $500
for the amounts that were underpaid in
the first 10 periods. All other laborers
and mechanics involved in the
construction, alteration, or repair of the
facility were paid at the prevailing wage
rates. Taxpayer B is required to make a
correction payment to X in the amount
of the interest from the date of each
underpayment. To retain the increased
credit, B must make a penalty payment
of $5,000 to the IRS with respect to
Laborer X.
(2) Deficiency procedures not to
apply. The penalty payment required by
paragraph (c)(1)(ii) of this section may
be assessed and collected without
regard to the deficiency procedures
provided by subchapter B of chapter 63
of the Code. Any determination by the
IRS disallowing a claim for the
increased credit under section 45(b)(6)
will be subject to the deficiency
procedures of subchapter B of chapter
63.

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(3) Intentional disregard—(i)
Application of section 45(b)(7)(B)(iii). If
the IRS determines that any failure to
satisfy the Prevailing Wage
Requirements in paragraph (a) of this
section is due to intentional disregard of
the requirement—
(A) The correction payment under
paragraph (c)(1)(i) of this section is
increased to three times the sum
determined in paragraph (c)(1)(i) of this
section; and
(B) The penalty payment under
paragraph (c)(1)(ii) of this section is
increased to $10,000 multiplied by the
total number of laborers and mechanics
who were paid wages at a rate below the
rate described in paragraph (b) of this
section for any period during such year.
(ii) Meaning of intentional disregard.
A failure to ensure that any laborer or
mechanic employed in the construction,
alteration, or repair of a qualified
facility is paid wages at the prevailing
wage rate is due to intentional disregard
if it is knowing or willful.
(iii) Facts and circumstances
considered. The facts and circumstances
that are considered in determining
whether a failure to satisfy the
Prevailing Wage Requirements is due to
intentional disregard include, but are
not limited to—
(A) Whether the failure was part of a
pattern of conduct that includes
repeated or systemic failures to ensure
that the laborers and mechanics were
paid wages at or above the applicable
prevailing wage rate;
(B) Whether the taxpayer failed to
take steps to determine the applicable
classifications of laborers and
mechanics;
(C) Whether the taxpayer failed to
take steps to determine the applicable
prevailing wage rate(s) for laborers and
mechanics;
(D) Whether the taxpayer promptly
cured any failures to ensure that
laborers and mechanics were paid
wages not less than the applicable
prevailing rates;
(E) Whether the taxpayer has been
required to make a penalty payment
under paragraph (c)(1)(ii) of this section
in previous years;
(F) Whether the taxpayer undertook a
quarterly, or more frequent, review of
wages paid to mechanics and laborers to
ensure that wages not less than the
applicable prevailing wage rate were
paid;
(G) Whether the taxpayer included
provisions in any contracts entered into
with contractors that required the
contractors and any subcontractors
retained by the contractors to pay
laborers and mechanics at or above the
prevailing wage rates and maintain

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records to ensure the taxpayer’s
compliance with recordkeeping
requirements set forth in § 1.45–12;
(H) Whether the taxpayer posted in a
prominent place at the facility or
otherwise provided written notice to
laborers and mechanics during the
construction, alteration, or repair of the
facility, of the applicable wage rate(s) as
determined by the U.S. Department of
Labor for all classifications of work to be
performed for the construction,
alteration, or repair of the facility, and
that in order to be eligible to claim
certain tax benefits, employers must
ensure that laborers and mechanics are
paid wages at rates not less than such
wage rates; and
(I) Whether the taxpayer had in place
procedures whereby laborers and
mechanics could report suspected
failures to pay prevailing wages and/or
suspected failures to classify workers in
accordance with the wage determination
of workers to appropriate personnel
departments or managers without
retaliation or adverse action.
(iv) Rebuttable presumption of no
intentional disregard. If a taxpayer
makes the correction and penalty
payments required by paragraphs
(c)(1)(i) and (ii) of this section before
receiving notice of an examination from
the IRS with respect to a claim for the
increased credit under section 45(b)(6),
the taxpayer will be presumed not to
have intentionally disregarded the
Prevailing Wage Requirements in
paragraph (a) of this section.
(4) Limitation on the availability of
cure—(i) 180-day limit. In the case of a
final determination by the IRS with
respect to any failure by the taxpayer to
satisfy the Prevailing Wage
Requirements in paragraph (a) of this
section, the cure provision in paragraph
(c)(1) of this section does not apply
unless the correction and penalty
payments described in paragraphs
(c)(1)(i) and (ii) of this section are made
by the taxpayer on or before the date
that is 180 days after the date of such
determination.
(ii) Final determination. For purposes
of paragraph (c)(4)(i) of this section, a
final determination occurs on the date
the IRS sends to the taxpayer a notice
stating that the taxpayer has failed to
satisfy the Prevailing Wage
Requirements under paragraph (a) of
this section.
(5) Exception for wages paid before a
wage determination by the U.S.
Department of Labor. If a taxpayer has
requested a supplemental wage
determination or an additional
classification and wage rate from the
U.S. Department of Labor in accordance
with paragraph (b)(3)(ii) of this section

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and the U.S. Department of Labor makes
a wage determination after the
construction, alteration, or repair of the
facility has started, the taxpayer will not
be considered to have failed to meet the
Prevailing Wage Requirements under
paragraph (a) of this section with
respect to wages paid to any mechanic
or laborer whose wage rate was subject
to the request and who was paid below
the prevailing wage rate before the
determination by the U.S. Department of
Labor if the taxpayer makes a payment
within 30 days of the determination to
each laborer or mechanic equal to the
difference between the amount of wages
paid to such laborer or mechanic before
the determination and the amount of
wages required to be paid to such
laborer or mechanic pursuant to
paragraph (a) of this section during such
period.
(6) Waiver of the penalty—(i)
Availability of waiver. The penalty
payment required by paragraph (c)(1)(ii)
of this section to cure a failure to satisfy
the Prevailing Wage Requirements in
paragraph (a) of this section is waived
with respect to a laborer or mechanic
employed in the construction,
alteration, or repair of a qualified
facility during a calendar year if the
taxpayer makes the correction payment
required by paragraph (c)(1)(i) of this
section by the earlier of 30 days after the
taxpayer became aware of the error or
the date on which the increased credit
is claimed under section 45(b)(6), and:
(A) The laborer or mechanic is paid
wages at rates less than the amount
required to be paid under paragraph (b)
of this section for not more than 10
percent of all pay periods of the
calendar year (or part thereof) during
which the laborer or mechanic was
employed in the construction,
alteration, or repair of the qualified
facility; or
(B) The difference between the
amount the laborer or mechanic was
paid during the calendar year (or part
thereof) and the amount required to be
paid under paragraph (b) of this section
is not greater than 2.5 percent of the
amount required to be paid under
paragraph (b) of this section.
(ii) Project labor agreements. The
penalty payment required by paragraph
(c)(1)(ii) of this section to cure a failure
to satisfy the Prevailing Wage
Requirements in paragraph (a) of this
section shall not apply with respect to
a laborer or mechanic employed in the
construction, alteration, or repair work
of a qualified facility if the work is done
pursuant to a pre-hire collective
bargaining agreement with one or more
labor organizations that establishes the
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a specific construction project
(Qualifying Project Labor Agreement)
and any correction payment owed to
any laborer or mechanic is paid on or
before the date on which the increased
credit is claimed under section 45(b)(6).
In order to be considered a Qualifying
Project Labor Agreement, such
agreement must at a minimum:
(A) Bind all contractors and
subcontractors on the construction
project through the inclusion of
appropriate specifications in all relevant
solicitation provisions and contract
documents;
(B) Contain guarantees against strikes,
lockouts, and similar job disruptions;
(C) Set forth effective, prompt, and
mutually binding procedures for
resolving labor disputes arising during
the term of the project labor agreement;
(D) Contain provisions to pay
prevailing wages;
(E) Contain provisions for referring
and using qualified apprentices
consistent with section 45(b)(8)(A)
through (C) and guidance issued
thereunder; and
(F) Be a collective bargaining
agreement with one or more labor
organizations (as defined in 29 U.S.C.
152(5)) of which building and
construction employees are members, as
described in 29 U.S.C. 158(f).
(iii) Examples. The provisions of this
paragraph (c)(6) may be illustrated by
the following examples, which do not
take into account any possible
application of the enhanced correction
and penalty payment requirements in
the case of intentional disregard under
paragraph (c)(3) of this section or the
exception for wages paid before a
determination by the U.S. Department of
Labor under paragraph (c)(5) of this
section. In each example, assume that
the taxpayer uses the calendar year as
the taxpayer’s taxable year.
(A) Example 1. Taxpayer A begins
construction of a qualified facility on
February 1, 2023. The facility is placed
in service on October 10, 2023, and A
claims the increased credit under
section 45(b)(6) on its 2023 tax return
filed on April 18, 2024. Taxpayer A
employs laborer W in the construction
of the facility for a total of 36 weekly
pay periods. Taxpayer A pays W at or
above the prevailing wage rate for all
pay periods except for the pay periods
ending on April 8, April 22, and May
20. Under the applicable prevailing
wage rate, W should have been paid a
total of $35,000 in 2023, but was instead
paid only $30,000. Taxpayer A ensures
that all other laborers and mechanics
employed in the construction,
alteration, or repair of the facility are
paid at the prevailing wage rate.

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Taxpayer A becomes aware of the
failure on June 1, 2023, and on June 19,
2023, A pays W the correction payment
required by paragraph (c)(1)(i) of this
section. The penalty waiver applies to
A. Although the difference between the
amount W was paid in 2023 and the
amount required to be paid under the
applicable prevailing wage rate was
$5,000, which is 14.29% of the amount
required to be paid under the applicable
prevailing wage rate, W was paid below
the prevailing wage rate for only three
out of 36 pay periods, or 8.3%.
Furthermore, A made the correction
payment within 30 days of discovering
the failure on June 1, 2023, and before
filing the tax return claiming the
increased credit on April 18, 2024.
(B) Example 2. Taxpayer B begins
construction of a qualified facility on
February 1, 2024. The facility is placed
in service on October 10, 2024, and B
claims the increased credit under
section 45(b)(6) on its 2024 tax return
filed on April 15, 2025. Taxpayer B
hires contractor M to assist in the
construction, and contractor M employs
laborer X in the construction of the
facility for a total of 36 pay periods. M
pays X at or above the prevailing wage
rate for all pay periods except for the
pay periods ending on February 24 and
March 2. Under the applicable
prevailing wage rate, X should have
been paid a total of $50,000 in 2024, but
was instead paid only $49,000. All other
laborers and mechanics employed in the
construction, alteration, or repair of the
facility are paid at the prevailing wage
rate. B learns on January 1, 2025, that
X was not paid at the prevailing wage
rate, and on January 19, 2025, B pays X
the correction payment required by
paragraph (c)(1)(i) of this section. The
penalty waiver applies to B. Y was paid
below the prevailing wage rate for two
out of 36 pay periods, or 5.5%, and the
difference between the amount X was
paid in 2024 and the amount required
to be paid under the applicable
prevailing wage rate was $1,000, which
is only 2% of the amount required to be
paid under the applicable prevailing
wage rate. Although B did not learn that
that M was paying X below the
prevailing wage rate until after the end
of the year, once B learned of the
underpayment, B made the correction
payment within 30 days and before
filing the tax return claiming the
increased credit on April 15, 2025.
(C) Example 3. Taxpayer C begins the
construction of a qualified facility on
April 5, 2024. The facility is placed in
service on December 1, 2024, and C
claims the increased credit under
section 45(b)(6) on its 2024 tax return
filed on April 15, 2025. Taxpayer C

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employs laborer Y in the construction of
the facility for a total of 35 pay periods.
Due to a failure to classify workers in
accordance with the wage
determination, C pays Y below the
prevailing wage rate for all 35 pay
periods. Under the applicable prevailing
wage rate, Y should have been paid
$65,000 in 2024, but was instead paid
only $63,500. All other laborers and
mechanics employed in the
construction, alteration, or repair of the
facility were paid at the prevailing wage
rate. Taxpayer C becomes aware of the
failure on January 10, 2025, and on
January 20, 2025, C pays Y the
correction payment required by
paragraph (c)(1)(i) of this section. The
penalty waiver applies to C. Although Y
was paid below the prevailing wage rate
100% of the pay periods Y worked in
2024, the difference between the
amount Y was paid in 2024 and the
amount required to be paid under the
applicable prevailing wage rate was
$1,500, which is only 2.3% of the
amount required to be paid under the
applicable prevailing wage rate.
Additionally, once C learned of the
underpayment, C made the correction
payment within 30 days and before
filing the tax return claiming for the
increased credit on April 15, 2025.
(D) Example 4. Taxpayer D begins
construction of a qualified facility on
August 29, 2024. The facility is placed
in service on June 30, 2025, and D
claims the increased credit under
section 45(b)(6) on its 2025 tax return.
Taxpayer D employs laborer Z in the
construction of the facility for a total of
25 weekly pay periods in 2025.
Taxpayer D pays Z at or above the
prevailing wage rate for all pay periods
except for the pay periods ending on
March 15, May 10, and June 14. Under
the applicable prevailing wage rate, Z
should have been paid $25,000 in 2025,
but was instead paid only $20,000.
Taxpayer D ensures that all other
laborers and mechanics employed in the
construction, alteration, or repair of the
facility are paid at the prevailing wage
rate. Taxpayer D has in place a pre-hire
collective bargaining agreement, but the
agreement does not contain a provision
for referring and using qualified
apprentices. Taxpayer D becomes aware
of the failure to pay Z at the prevailing
wage rate on June 30, 2025, and on July
4, 2025, D pays Z the correction
payment required by paragraph (c)(1)(i)
of this section. The penalty waiver does
not apply to D. The difference between
the amount Z was paid in 2025 and the
amount required to be paid under the
applicable prevailing wage rate was
$5,000, which is 20% of the amount

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required to be paid under the applicable
prevailing wage rate. Z was paid below
the prevailing wage rate for three out of
25 pay periods, or 12%. D does not have
in place a qualifying project labor
agreement because the pre-hire
collective bargaining agreement does
not contain a provision for referring and
using qualified apprentices as required
by paragraph (c)(6)(ii)(E) of this section.
Although the correction payment was
made within 30 days of discovering the
failure on June 30, 2025, and before
filing the tax return claiming for the
increased credit on April 15, 2026,
Taxpayer D failed to satisfy the
requirements of paragraphs (c)(6)(i)(A)
and (B) or paragraph (c)(6)(ii) of this
section.
(d) Definitions. Solely for purposes of
this section, the following definitions
apply:
(1) Bona fide fringe benefits. The term
bona fide fringe benefits means fringe
benefits described in 29 CFR part 5.
Bona fide fringe benefits include
medical or hospital care, pensions on
retirement or death, compensation for
injuries or illness resulting from
occupational activity, or insurance to
provide any of the foregoing;
unemployment benefits; life insurance,
disability insurance, sickness insurance,
or accident insurance; vacation or
holiday pay; defraying costs of
apprenticeship or other similar
programs; or other bona fide fringe
benefits (each as described in 29 CFR
part 5 and other U.S. Department of
Labor guidance). Consistent with 29
CFR 5.29, bona fide fringe benefits do
not include benefits required by other
Federal, State, or local law.
(2) Construction, alteration, or
repair—(i) In general. The term
construction, alteration, or repair
generally means construction,
prosecution, completion, or repair as
defined in 29 CFR 5.2. Construction,
alteration, or repair does not include
work that is ordinary and regular in
nature that is designed to maintain and
preserve existing functionalities of a
facility after it is placed in service. Work
designed to maintain and preserve
functionality of a facility after it is
placed in service includes basic
maintenance such as regular inspections
of the facility, regular cleaning and
janitorial work, replacing materials with
limited lifespans such as filters and
light bulbs, and the calibration of any
equipment. However, such work that
occurs before the facility is placed in
service may constitute construction for
which prevailing wages must be paid in
order to claim the increased credit.
Maintenance does not include work that
improves a facility, adapts it for a

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different use, or restores functionality as
a result of inoperability. This definition
has no bearing on any other sections of
the Code, including any determination
of construction, alteration, repair, or
maintenance under section 162 or 263.
(ii) Example. Taxpayer T employs a
contractor X to construct a 500
megawatt solar farm that is a qualified
facility under section 45. X employs
numerous laborers and mechanics
during construction and ensures that
wages are paid to the laborers and
mechanics at not less than the
prevailing rate for the geographic area of
the solar farm, as set forth in the
applicable wage determination. After
the solar farm is placed in service, an
inverter malfunctions and requires a
replacement part. T employs laborers
and mechanics to replace the
malfunctioning part to restore the
inverter’s functionality. The
replacement work is not considered
ordinary maintenance, and T must
ensure those laborers and mechanics
engaged in the replacement work are
paid wages not less than the prevailing
rate for the geographic area of the solar
farm to satisfy the Prevailing Wage
Requirements.
(3) Contractor. The term contractor
means any person that enters into a
contract with the taxpayer for the
construction, alteration, or repair of a
qualified facility.
(4) Employed. The term employed
means performing the duties of a laborer
or mechanic for the taxpayer, contractor,
or subcontractor (as applicable),
regardless of whether the individual
would be characterized as an employee
or an independent contractor for other
Federal tax purposes.
(5) General wage determination. The
term general wage determination means
a wage determination issued by the U.S.
Department of Labor and published on
the approved website. A general wage
determination provides the minimum
hourly wage rates (both the basic hourly
rate of pay and bona fide fringe benefit
rates) that the U.S. Department of Labor
has determined are prevailing for
laborers and mechanics in specified
types of construction in a given
geographic area.
(6) Geographic area and locality. The
terms geographic area and locality mean
the county, independent city, or other
civil subdivision of the State in which
the facility is located. The terms
geographic area and locality also
include areas located offshore of the
United States and within the outer
continental shelf of the United States
and the U.S. territories. If construction,
alteration, or repair work is performed
in multiple counties, independent

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cities, or other civil subdivisions, the
geographic area may include all
counties, independent cities, or other
civil subdivisions in which the work
will be performed. The locality in which
a facility is located is the primary
construction site of the facility, defined
as the physical place or places where
the facility will be placed in service and
remain. The locality of the facility also
includes secondary construction site(s),
where a significant portion of the
facility is constructed, altered, or
repaired provided that such
construction is for specific use at that
facility and does not simply reflect the
manufacture or construction of a
product made available to the general
public, and provided further that the
site is either established specifically for,
or dedicated exclusively for a specific
period of time to, the construction,
alteration, or repair of the facility. A
significant portion means one or more
entire portion(s) or module(s) of the
facility, such as a completed room or
structure, with minimal construction
work remaining other than the
installation and/or final assembly of the
portions or modules at the place where
the facility will be placed in service and
remain. A significant portion does not
include materials or prefabricated
component parts. A specific period of
time means a period of weeks, months,
or more, and does not include
circumstances where a site at which
multiple facilities are in progress is
shifted exclusively so to a single facility
for a few hours or days in order to meet
a deadline. The locality of the facility
also includes any adjacent or virtually
adjacent dedicated support sites,
including job headquarters, tool yards,
batch plants, borrow pits, and similar
facilities of a taxpayer, contractor, or
subcontractor that are established
specifically for or dedicated exclusively
to the construction, alteration, or repair
of the facility, and adjacent or virtually
adjacent to either a primary
construction site or a secondary
construction site.
(7) Laborer and mechanic. The terms
laborer and mechanic mean those
individuals whose duties are manual or
physical in nature (including those
individuals who use tools or who are
performing the work of a trade). The
terms laborer and mechanic include
apprentices and helpers. The terms do
not apply to individuals whose duties
are primarily administrative, executive,
or clerical, rather than manual. Persons
employed in a bona fide executive,
administrative, or professional capacity
as defined in 29 CFR part 541 are not
deemed to be laborers or mechanics.

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Working forepersons who devote more
than 20 percent of their time during a
workweek to laborer or mechanic
duties, and who do not meet the criteria
for exemption of 29 CFR part 541, are
considered laborers and mechanics for
the time spent conducting laborer and
mechanic duties.
(8) Subcontractor. The term
subcontractor means any contractor that
agrees to perform or be responsible for
the performance of any part of a contract
entered into with the taxpayer (or the
taxpayer’s contractor) with respect to
the construction, alteration, or repair of
a facility.
(9) Taxpayer. The term taxpayer
means any taxpayer as defined in
section 7701(a)(14), including
applicable entities described in section
6417(d)(1)(A). In the case of a credit
transferred under section 6418, the term
taxpayer means the eligible taxpayer
that determines the eligible credit to be
transferred and makes a transfer election
under section 6418 to transfer any
specified credit portion (including 100
percent) of an eligible credit determined
with respect to any eligible credit
property of such eligible taxpayer for
any taxable year.
(10) Type of construction. The type of
construction is the general category of
construction as established by the U.S.
Department of Labor for the publication
of general wage determinations. Specific
types of construction may include, but
are not limited to, building, residential,
heavy, and highway.
(11) Wages. The term wages generally
means wages as defined in 29 CFR 5.2.
In general, wages means the basic
hourly rate of pay; any contribution
irrevocably made by a taxpayer,
contractor, or subcontractor to a trustee
or to a third person pursuant to a bona
fide fringe benefit fund, plan, or
program; and the rate of costs to the
taxpayer, contractor, or subcontractor
that may be reasonably anticipated in
providing bona fide fringe benefits to
laborers and mechanics pursuant to an
enforceable commitment to carry out a
financially responsible plan or program,
provided the commitment was
communicated in writing to the laborers
and mechanics affected. Whether
amounts are wages for prevailing wage
purposes is not relevant in determining
whether amounts are wages or
compensation for other Federal tax
purposes.
(e) Applicability date. This section
applies to facilities placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].

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§ 1.45–8

60047

Apprenticeship requirements.

(a) In general. Except as provided in
paragraph (e) of this section, a taxpayer
claiming or transferring (under section
6418) the increased credit amount under
section 45(b)(6)(B)(iii) with respect to
any qualified facility must satisfy the
requirements of section 45(b)(8) and this
section (the ‘‘Apprenticeship
Requirements’’). The taxpayer is solely
responsible for ensuring that the
Apprenticeship Requirements are
satisfied. See paragraph (f) of this
section for definitions of terms used in
this section.
(b) Labor hours requirement—(1)
Percentage of total hours. A taxpayer
claiming or transferring (under section
6418) the increased credit amount under
section 45(b)(6) must ensure that
qualified apprentices (hired by the
taxpayer, contractor, or subcontractor)
perform not less than the applicable
percentage of the total labor hours of the
construction, alteration, or repair work
(including work performed by any
contractor or subcontractor) of any
qualified facility, subject to the
apprentice-to-journeyworker ratio
described in paragraph (c) of this
section.
(2) Applicable percentage. For
purposes of paragraph (b)(1) of this
section, the applicable percentage is—
(i) 10 percent in the case of a qualified
facility, the construction of which
begins before January 1, 2023;
(ii) 12.5 percent in the case of a
qualified facility, the construction of
which begins after December 31, 2022,
and before January 1, 2024; and
(iii) 15 percent in the case of a
qualified facility, the construction of
which begins after December 31, 2023.
(c) Application of apprentice-tojourneyworker ratio—(1) In general. The
labor hours requirement under
paragraph (b) of this section is subject
to any applicable requirements for
apprentice-to-journeyworker ratios of
the U.S. Department of Labor or the
applicable State apprenticeship agency.
(2) Ratio. The allowable ratio of
apprentices-to-journeyworkers on the
job site in any occupation and its
corresponding classification on any day
must comply with the applicable
apprentice to journeyworker ratio of the
registered apprenticeship program in
accordance with 29 CFR part 29.
(3) Failure to meet ratio requirements.
For purposes of section 45(b)(8)(B), if on
any day the ratio of apprentices to
journeyworkers exceeds the ratio
established in accordance with
paragraph (c)(2) of this section, and
subject to the requirements of the
registered apprenticeship program, the
labor hours performed by any qualified

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apprentice in excess of the ratio may not
be counted as hours performed by
apprentices for purposes of the labor
hours requirement of paragraph (b) of
this section.
(d) Participation requirement. Each
taxpayer, contractor, or subcontractor
who employs four or more individuals
to perform construction, alteration, or
repair work with respect to the
construction of a qualified facility must
employ one or more qualified
apprentices to perform work with
respect to the construction, alteration, or
repair of the facility.
(e) Exceptions to the Apprenticeship
Requirements. If a taxpayer fails to
satisfy the Apprenticeship
Requirements in paragraph (a) of this
section with respect to the construction
of any qualified facility or with respect
to the alteration or repair of a facility,
the taxpayer will nonetheless be
deemed to have satisfied the
Apprenticeship Requirements if the
taxpayer has made a good faith effort to
meet the Apprenticeship Requirements
as described in paragraph (e)(1) of this
section (the ‘‘Good Faith Effort
Exception’’) or made the penalty
payment provided in paragraph (e)(2) of
this section for any failures to which the
Good Faith Effort Exception does not
apply.
(1) Good Faith Effort Exception—(i) In
general. A taxpayer is deemed to have
satisfied the Apprenticeship
Requirements of this section with
respect to a request for qualified
apprentices if the taxpayer meets the
following requirements:
(A) Request for apprentices. The
taxpayer, contractor, or subcontractor
must submit a written request for
qualified apprentices to at least one
registered apprenticeship program, as
defined in paragraph (f)(4) of this
section, which has a geographic area of
operation that includes the location of
the facility, or to a registered
apprenticeship program that can
reasonably be expected to provide
apprentices to the location of the
facility; trains apprentices in the
occupation(s) needed to perform
construction, alteration, or repair with
respect to the facility; and has a usual
and customary business practice of
entering into agreements with
employers for the placement of
apprentices in the occupation for which
they are training, pursuant to its
standards and requirements. Such
request must be in writing and sent
electronically or by registered mail.
(1) Content of request. The request of
the taxpayer, contractor, or
subcontractor must include the
proposed dates of employment,

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occupation of apprentices needed,
location of the work to be performed,
number of apprentices needed, the
expected number of labor hours to be
performed by the apprentices, and the
name and contact information of the
taxpayer, contractor, or subcontractor
requesting employment of apprentices
from the registered apprenticeship
program. The request must also state
that the request for apprentices is made
with an intent to employ apprentices in
the occupation for which they are being
trained and in accordance with the
requirements and standards of the
registered apprenticeship program.
(2) Duration of request. If the
taxpayer, contractor, or subcontractor
submits a request in accordance with
paragraph (e)(1)(i)(A) of this section and
the request is denied or not responded
to, the taxpayer will be deemed to have
exercised a Good Faith Effort with
respect to the request for a period of 120
days from the date of the request. The
taxpayer will not be deemed to have
exercised a Good Faith Effort beyond
120 days of a previously denied request
unless the taxpayer submits an
additional request.
(B) Denial of request. If a taxpayer,
contractor, or subcontractor submits a
request in accordance with paragraph
(e)(1)(i)(A) of this section and the
request is denied, the taxpayer will be
deemed to satisfy the requirements of
section 45(b)(8)(A) through (C),
provided that such denial is not the
result of a refusal by the taxpayer or any
contractors or subcontractors engaged in
the performance of construction,
alteration, or repair work with respect to
such qualified facility to comply with
the established standards and
requirements of the registered
apprenticeship program. The denial of a
request is only valid for purposes of
establishing a Good Faith Effort with
respect to the portion(s) of the request
that were denied.
(C) Failure to respond. If the
registered apprenticeship program fails
to respond to a request submitted in
accordance with paragraph (e)(1)(i)(A)
of this section within five business days
after the date on which such registered
apprenticeship program received the
taxpayer’s (or its contractor or
subcontractor) request, then such
request is deemed to be denied.
Acknowledgement, whether in writing
or otherwise, by the registered
apprenticeship program of receipt of
such request submitted in accordance
with paragraph (e)(1)(i)(A) of this
section is a sufficient response for
purposes of this paragraph (e)(1)(i)(C).

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(ii) Examples. The provisions of
paragraph (e)(1) of this section may be
illustrated by the following examples.
(A) Example 1. Taxpayer A submits a
request to a registered apprenticeship
program by email. The registered
apprenticeship program responds three
days later, but reply emails from the
registered apprenticeship program are
auto forwarded to taxpayer A’s spam or
junk mail folder. Taxpayer A claims that
the registered apprenticeship program
failed to respond within five business
days and claims the good faith effort
exception. Taxpayer A would not
qualify for the Good Faith Effort
Exception of this section because the
registered apprenticeship program did
respond within five business days.
(B) Example 2. Contractor C makes a
request for qualified apprentices from a
registered apprenticeship program
outside the geographic area of the
qualified facility and the registered
apprenticeship program cannot
reasonably be expected to provide
apprentices to the location of the
facility. As a result, Contractor C’s
request is denied. Contractor C’s request
would not qualify for the Good Faith
Effort Exception of this section because
the registered apprenticeship program
could not reasonably be expected to
provide apprentices to the location of
the facility.
(C) Example 3. Contractor D submits
a request to a registered apprenticeship
program. The registered apprenticeship
program requires contractors to enter
into an agreement to partner with that
registered apprenticeship program.
Contractor D refuses to enter into the
agreement and as a result, the registered
apprenticeship program denies the
Contractor D’s request. Contractor D’s
request would not qualify for the Good
Faith Effort Exception of this section
because Contractor D refused to comply
with the established standards of the
registered apprenticeship program.
(D) Example 4. Contractor E enters
into an agreement with a registered
apprenticeship program with standards
of apprenticeship for a specific
occupation. Contractor E then requests
apprentices from that registered
apprenticeship program for a different
occupation in which they do not have
standards of apprenticeship or an
agreement. Contractor E’s request would
not qualify for the Good Faith Effort
Exception of this section.
(E) Example 5. Taxpayer F, a tax
equity investor in the partnership that
owns the facility, makes a request to a
registered apprenticeship program.
Taxpayer F’s request is denied because
it was not made with an intent to
employ apprentices in the occupation

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for which they are being trained and in
accordance with the requirements and
standards of the registered
apprenticeship program. Rather, the
contractor (or subcontractor) that will
employ and train the apprentices in the
construction, alteration, or repair of the
facility is the proper party to request
apprentices from the registered
apprenticeship program. Taxpayer F’s
request would not qualify for the Good
Faith Effort Exception of this section.
(F) Example 6. Contractor G submits
a request for apprentices from a
registered apprenticeship program.
Contractor’s request states that it seeks
to employ four apprentices for a period
of 180 days for a total of 4,160 hours
(1,040 hours × four apprentices). The
registered apprenticeship program
informs Contractor G that it can supply
two apprentices for the 26 weeks and
denies the request for the other two
apprentices. Contractor G does not
submit any additional requests for
apprentices from a registered
apprenticeship program after 120 days.
Contractor G’s request would qualify for
the Good Faith Effort Exception of 693
hours for each of the two requested
apprentices that were denied for the 120
day period after the request was
submitted (120/180 × 1,040 hours = 693
hours for each denied apprentice). The
request would not qualify for the Good
Faith Effort Exception of this section
after 120 days because Contractor G did
not submit an additional request with
respect to the portion of the request that
was denied.
(2) Penalty payment—(i) In general.
The taxpayer must pay the Internal
Revenue Service (IRS) a penalty equal to
$50 multiplied by the total labor hours
for which the requirements described in
paragraph (b) or (d) of this section were
not satisfied with respect to the
construction, alteration, or repair work
on such qualified facility to retain the
increased credit.
(A) Total labor hours for which the
percentage requirement is not met. For
failures to meet the percentage of total
labor hours requirement in paragraph
(b)(1) of this section, the total labor
hours for which the requirement was
not satisfied is calculated as the
difference between the total labor hours
that would be required to meet the
applicable percentage under paragraph
(b)(2) of this section and the total labor
hours actually worked by all qualified
apprentices consistent with the
applicable ratio of apprentices to
journeyworkers.
(B) Total labor hours for which the
participation requirement is not met.
For failures to meet the participation
requirement in paragraph (d) of this

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section, the total labor hours for which
the requirement was not satisfied is
calculated as the total labor hours of
construction, alteration, or repair
worked by all individuals employed by
the taxpayer, contractor, or
subcontractor who failed to meet the
participation requirement of the
qualified facility divided by the number
of individuals employed by the
taxpayer, contractor, or subcontractor
who performed construction, alteration,
or repair work on the facility.
(C) Penalty payment not required if
taxpayer ineligible for increased credit
under section 45(b)(6)(B)(iii). If the
taxpayer claims the increased credit
under section 45(b)(6)(B)(iii) and does
not satisfy the Apprenticeship
Requirements for the claimed increased
credit amount, then the obligation to
make the penalty payment under
paragraph (e)(2)(i) of this section
applies. If the IRS determines that a
taxpayer claiming the increased credit
under section 45(b)(6)(B)(iii) failed to
meet the Apprenticeship Requirements
and the taxpayer does not make the
penalty payment required under this
paragraph (e)(2)(i), then no penalty is
assessed under this paragraph (e)(2)(i),
and the taxpayer is not entitled to the
increased credit under section
45(b)(6)(B)(iii). Taxpayers that are not
entitled to claim the increased credit
amount may still be entitled to the base
amount of the renewable electricity
production credit under section 45(a) if
they meet the requirements to claim the
credit.
(D) Examples. The provisions of this
paragraph (e)(2)(i) may be illustrated by
the following examples, which do not
take into account any possible
application of the exception for Good
Faith Effort Exception under paragraph
(e)(1) of this section, the enhanced
penalty payment requirement in the
case of intentional disregard under
paragraph (e)(2)(ii) of this section, or the
inapplicability of the penalty in the case
of a qualifying project labor agreement
under paragraph (e)(2)(v) of this section.
In each example, assume that the
taxpayer uses the calendar year as the
taxpayer’s taxable year.
(1) Example 1. Taxpayer A begins
construction of a qualified facility on
April 1, 2023. The facility is placed in
service on April 1, 2025, and A claims
the increased credit on its 2025 tax
return. All individuals who performed
the construction, alteration, or repair
work were employed directly by
taxpayer A, including one qualified
apprentice. At the time A claims the
increased credit, a total of 50,000 labor
hours were spent on the construction,
alteration, or repair work of the facility,

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6,000 of which were performed by
qualified apprentices. Taxpayer A has
satisfied the participation requirement
because A has employed at least one
apprentice. Taxpayer A failed to satisfy
the percentage requirement under
paragraph (b)(2) of this section because
less than 12.5% of the total labor hours
were performed by qualified
apprentices. Qualified apprentices must
have performed at least 6,250 labor
hours, so the total labor hours by which
the percentage requirement was not
satisfied is 250. To cure A’s failure to
meet the percentage requirement, A
must pay a penalty of $12,500.
(2) Example 2. Taxpayer B begins
construction of a qualified facility on
February 10, 2023. The facility is placed
in service on February 10, 2026, and B
claims the increased credit on its 2026
tax return. B employs 10 individuals to
perform construction, alteration, or
repair work of the facility, two of whom
are qualified apprentices. Taxpayer B
also hires contractor M, who employs
five individuals to perform
construction, alteration, or repair work
of the facility, none of whom are
qualified apprentices. At the time B
claims the increased credit, a total of
50,000 labor hours were spent on the
construction, alteration, or repair work
of the facility, 6,500 of which were
performed by qualified apprentices. Of
the total 50,000 labor hours, 33,000
labor hours were performed by
individuals employed by B and 17,000
labor hours were performed by
individuals employed by M. B has
satisfied the percentage requirement
under paragraph (b)(2) of this section
because more than 12.5% of the total
labor hours were performed by qualified
apprentices. B failed to satisfy the
participation requirement under
paragraph (d) of this section because
contractor M employed five individuals
but no qualified apprentices. The total
labor hours for which the participation
requirement was not satisfied is 3,400,
which is equal to the total labor hours
performed by individuals employed by
M (17,000) divided by the number of
individuals employed by M (five). To
cure B’s failure to meet the
Apprenticeship Requirements, B must
pay a penalty of $170,000.
(3) Example 3. Taxpayer C begins
construction of a qualified facility on
January 1, 2024. The facility is placed in
service on January 1, 2025, and C claims
the increased credit on its 2025 tax
return. C employs 15 individuals to
perform construction, alteration, or
repair work of the facility, none of
whom is a qualified apprentice.
Taxpayer C also hires contractor N, who
employs five individuals to perform

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construction, alteration, or repair work
of the facility, one of whom is a
qualified apprentice. At the time C
claims the increased credit, a total of
20,000 labor hours were spent on the
construction, alteration, or repair work
of the facility, 1,000 of which were
performed by qualified apprentices. Of
the 50,000 total labor hours, 15,000
labor hours were performed by
individuals employed by C and 5,000
labor hours were performed by
individuals employed by N. C failed to
satisfy the percentage requirement
under paragraph (b)(2) of this section
because less than 15% of the total labor
hours were performed by qualified
apprentices. Qualified apprentices must
have performed at least 3,000 labor
hours, so the total labor hours by which
the percentage requirement was not
satisfied is 2,000. C also failed to satisfy
the participation requirement under
paragraph (d) of this section because C
employed 15 individuals but zero
qualified apprentices. The total labor
hours for which the participation
requirement was not satisfied is 1,000,
which is equal to the total labor hours
performed by individuals employed by
C—15,000—divided by the number of
individuals employed by C—15. The
total labor hours by which C failed to
meet the percentage and participation
requirements is 3,000. To cure C’s
failure to meet the Apprenticeship
Requirements, C must pay a penalty of
$150,000.
(4) Example 4. Taxpayer D begins
construction of a qualified facility on
April 1, 2023. The facility is placed in
service on January 1, 2024, and D files
a claim for the increased credit with its
2024 tax return. D does not employ any
individuals to perform construction,
alteration, or repair work of the facility,
but hires contractors O, P, and Q.
Contractor O employs 10
journeyworkers who work 10,000 hours
and one qualified apprentice who works
400 hours. Contractor P employs four
journeyworkers who work 4,000 hours
and five qualified apprentices who work
2,000 hours. Contractor Q employs three
journeyworkers who work 3,000 hours
and one qualified apprentice who works
400 hours. The registered
apprenticeship program for all of the
apprentices has prescribed a 1:1
apprentice to journeyworker ratio. For
each day, all journeyworkers and
apprentices employed by the contractors
are on the job site. The contractors have
satisfied the participation requirement
because they each employed one or
more qualified apprentices. The total
labor hours are 19,800 hours, and the
total hours worked by qualified

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apprentices are 2,800. However,
Contractor P employed one apprentice
in excess of the apprentice-tojourneyworker ratio (five qualified
apprentices: four journeyworkers) that
was prescribed by the apprenticeship
program. Because Contractor P
employed one apprentice in excess of
the apprentice-to-journeyworker ratio,
400 of the apprentice hours worked by
Contractor P do not count towards the
labor hour requirement. Thus, Taxpayer
D has failed to meet the percentage
requirement because only 2,400 hours
worked by apprentices are counted for
purposes of the percentage requirement.
The total labor hours by which D failed
to meet the percentage requirement is 75
(19,800 total hours × 12.5%¥2,400
apprentice hours). To cure D’s failure to
meet the Apprenticeship Requirements,
D must pay a penalty of $3,750.
(ii) Intentional disregard—(A)
Application of section 45(b)(8)(D)(iii). If
the IRS determines that any failure to
satisfy the Apprenticeship
Requirements in paragraph (b) or (d) of
this section is due to intentional
disregard of those requirements, the
amount of the penalty payment under
paragraph (e)(2) of this section is
increased to $500 multiplied by the total
labor hours for which the requirements
described in paragraph (b) or (d) of this
section were not satisfied with respect
to the construction, alteration, or repair
work on such qualified facility.
(B) Meaning of intentional disregard.
A failure to satisfy the Apprenticeship
Requirements of paragraph (b) or (d) of
this section is due to intentional
disregard if it is knowing or willful.
(C) Facts and circumstances
considered. The facts and circumstances
that are considered in determining
whether a failure to satisfy the
Apprenticeship Requirements is due to
intentional disregard include, but are
not limited to—
(1) Whether the failure was part of a
pattern of conduct that includes
repeated and systemic failures to
comply with the Apprenticeship
Requirements;
(2) Whether the taxpayer failed to take
steps to determine the applicable
percentage of labor hours required to be
performed by qualified apprentices;
(3) Whether the taxpayer sought to
promptly cure any failures;
(4) Whether the taxpayer has been
required to make a penalty payment
under paragraph (e)(2) of this section in
previous years;
(5) Whether the taxpayer included
provisions in any contracts entered into
with contractors that required the
employment of apprentices by the
contractor and any subcontractors

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consistent with the labor hour
requirement of section 45(b)(8)(A) and
the participation requirement of section
45(b)(8)(C); and
(6) Whether the taxpayer made no
attempt to comply with the
Apprenticeship Requirements.
(D) Rebuttable presumption of no
intentional disregard. If a taxpayer
makes the penalty payment required by
paragraph (e)(2) of this section before
receiving notice of an examination from
the IRS with respect to a claim for the
increased credit under section 45(b)(6),
the taxpayer will be presumed not to
have intentionally disregarded the
Apprenticeship Requirements in
paragraphs (b) and (d) of this section.
(iii) Deficiency procedures to apply.
The penalty payment required by
paragraph (e)(2) of this section is subject
to deficiency procedures of subchapter
B of chapter 63 of the Code.
(iv) Penalty payments in the event of
a transfer pursuant to section 6418. To
the extent an eligible taxpayer, as
defined in section 6418(f)(2), has
determined an increased credit amount
under section 45(b)(6) and transferred
such increased credit amount as part of
a specified credit portion, the obligation
to make a penalty payment under
paragraph (e)(2)(i) of this section
remains with the eligible taxpayer. The
obligation for an eligible taxpayer to
satisfy the Apprenticeship
Requirements becomes binding upon
the earlier of the filing of the eligible
taxpayer’s return for the taxable year for
which the specified credit portion is
determined with respect to the eligible
taxpayer, or the filing of the return of
the transferee taxpayer for the year in
which the specified credit portion is
taken into account. If the IRS
determines that the eligible taxpayer
failed to meet the Apprenticeship
Requirements and the eligible taxpayer
does not then make the penalty
payments provided in paragraph (e)(2)(i)
of this section, then no penalty is
assessed under paragraph (e)(2)(i) of this
section, and the eligible taxpayer is not
entitled to the increased credit amount
determined under section
45(b)(6)(B)(iii). Section 6418 and the
regulations in this part under section
6418 control for determining the impact
of an eligible taxpayer’s failure to cure
on any transferee taxpayer.
(v) Project labor agreements. The
penalty payment required by paragraph
(e)(2)(i) of this section to cure a failure
to satisfy the Apprenticeship
Requirements in paragraphs (b) and (d)
of this section shall not apply with
respect to the construction, alteration, or
repair work of a qualified facility if the
work is done pursuant to a Qualifying

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Project Labor Agreement as defined in
§ 1.45–7(c)(6)(ii).
(f) Definitions. Solely for purposes of
this section, the following definitions
apply:
(1) Journeyworker. The term
journeyworker means an individual who
has attained a level of skill, abilities,
and competencies recognized within an
industry as having mastered the skills
and competencies required for the
occupation. Use of the term may also
refer to a mentor, technician, specialist
or other skilled individual who has
documented sufficient skills and
knowledge of an occupation, either
through formal apprenticeship or
through practical on-the-job experience
and formal training.
(2) Labor hours. The term labor hours
means the total number of hours
devoted to the performance of
construction, alteration, or repair work
by any individual employed by the
taxpayer or by any contractor or
subcontractor. Labor hours do not
include hours worked by foremen,
superintendents, owners, or persons
employed in bona fide executive,
administrative, or professional
capacities (as defined in 29 CFR part
541).
(3) Qualified apprentice. The term
qualified apprentice means an
individual who is employed by the
taxpayer or by any contractor or
subcontractor who is participating in a
registered apprenticeship program.
Participating in a registered apprentice
program means the apprentice has
entered into a written agreement with a
registered apprenticeship program
containing the terms and conditions of
the employment and training of the
apprentice and has been registered as an
apprentice with the U.S. Department of
Labor’s Office of Apprenticeship or a
State apprenticeship agency during the
time period in which work is performed
by the apprentice for the taxpayer,
contractor, or subcontractor.
(4) Registered apprenticeship
program. A registered apprenticeship
program means a program that has been
registered by the U.S. Department of
Labor’s Office of Apprenticeship or a
recognized State apprenticeship agency,
pursuant to the National Apprenticeship
Act and its implementing regulations for
registered apprenticeship at 29 CFR
parts 29 and 30, as meeting the basic
standards and requirements of the
Department of Labor for approval of
such program for Federal purposes.
Registration of a program is evidenced
by a Certificate of Registration or other
written indicia.
(5) State apprenticeship agency. The
term State apprenticeship agency means

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an agency of a State government that has
responsibility and accountability for
apprenticeship within the State and that
has been recognized and authorized by
the U.S. Department of Labor’s Office of
Apprenticeship to register and oversee
apprenticeship programs and
agreements for Federal purposes.
(6) Taxpayer. The term taxpayer has
the same meaning as in § 1.45–7(d)(9).
(g) Applicability date. This section
applies to facilities placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].
§§ 1.45–9—1.45.11
§ 1.45–12

[Reserved]

Recordkeeping and reporting.

(a) In general. The increased credit
must be claimed in such form and
manner as may be prescribed in Internal
Revenue Service forms or instructions
or in publications or guidance
published in the Internal Revenue
Bulletin. See § 601.601 of this chapter.
Consistent with sections 45 and 6001, a
taxpayer claiming or transferring (under
section 6418) an increased credit under
section 45(b)(6)(A) must retain records
sufficient to establish compliance with
the applicable requirements in section
45(b)(6)(B), as applicable. In the case of
any increased credit transferred under
section 6418, the requirement to
maintain and preserve sufficient records
demonstrating compliance with the
applicable prevailing wage and
apprenticeship requirements remains
with the eligible taxpayer that
determined and transferred the credit.
For definitions of terms used in this
section, see § 1.45–7(d) with respect to
the prevailing wage requirements, and
§ 1.45–8(f) with respect to the
apprenticeship requirements.
(b) Recordkeeping for prevailing wage
and apprenticeship requirements. With
respect to each qualified facility for
which a taxpayer is claiming or
transferring (under section 6418) an
increased credit under section
45(b)(6)(A), unless section 45(b)(6)(B)(i)
or 45(b)(6)(B)(ii) applies, the taxpayer
must maintain and preserve records
sufficient to demonstrate compliance
with the applicable prevailing wage and
apprenticeship requirements in §§ 1.45–
7 and 1.45–8, respectively. At a
minimum, those records include payroll
records for each laborer and mechanic
(including each qualified apprentice)
employed by the taxpayer, contractor, or
subcontractor in the construction,
alteration, or repair of the qualified
facility.

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(c) Recordkeeping for prevailing wage
requirements. In addition to payroll
records otherwise maintained by the
taxpayer, records sufficient to
demonstrate compliance with the
applicable prevailing wage requirements
in § 1.45–7 may include the following
information for each laborer and
mechanic (including each qualified
apprentice) employed by the taxpayer, a
contractor, or subcontractor with respect
to each qualified facility:
(1) Identifying information, including
the name, social security or tax
identification number, address,
telephone number, and email address;
(2) The location and type of qualified
facility;
(3) The labor classification(s) the
taxpayer applied to the laborer or
mechanic for determining the prevailing
wage rate and documentation
supporting the applicable classification,
including the applicable wage
determination;
(3) The hourly rate(s) of wages paid
(including rates of contributions or costs
for bona fide fringe benefits or cash
equivalents thereof) for each applicable
labor classification;
(4) Records to support any
contribution irrevocably made on behalf
of a laborer or mechanic to a trustee or
other third person pursuant to a bona
fide fringe benefit program, and the rate
of costs that were reasonably anticipated
in providing bona fide fringe benefits to
laborers and mechanics pursuant to an
enforceable commitment to carry out a
plan or program described in 40 U.S.C.
3141(2)(B), including records
demonstrating that the enforceable
commitment was provided in writing to
the laborers and mechanics affected;
(5) The total number of labor hours
worked per pay period;
(6) The total wages paid for each pay
period (including identifying any
deductions from wages);
(7) Records to support wages paid to
any apprentices at less than the
applicable prevailing wage rates,
including records reflecting the
registration of the apprentices with a
registered apprenticeship program and
the applicable wage rates and
apprentice to journeyworker ratios
prescribed by the apprenticeship
program; and
(8) The amount and timing of any
correction payments and documentation
reflecting the calculation of the
correction payments.
(d) Recordkeeping for apprenticeship
requirements. Records sufficient to
demonstrate compliance with the
applicable apprenticeship requirements
in § 1.45–8 may include the following
information for each apprentice

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employed by the taxpayer, a contractor,
or subcontractor with respect to each
qualified facility:
(1) Any written requests for the
employment of apprentices from
registered apprenticeship programs,
including any contacts with the U.S.
Department of Labor’s Office of
Apprenticeship or a State
apprenticeship agency regarding
requests for apprentices from registered
apprenticeship programs;
(2) Any agreements entered into with
registered apprenticeship programs with
respect to the construction, alteration, or
repair of the facility;
(3) Documents reflecting the
standards and requirements of any
registered apprenticeship program,
including the applicable ratio
requirement prescribed by each
registered apprenticeship program from
which taxpayers, contractors, or
subcontractors employ apprentices;
(4) The total number of labor hours
worked by apprentices; and
(5) Records reflecting the daily ratio of
apprentices to journeyworkers.
(e) Applicability date. This section
applies to facilities placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].
■ Par. 4. Sections 1.45L–1 through
1.45L–3 are added to read as follows:
§§ 1.45L–1—1.45L–2

[Reserved]

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§ 1.45L–3 Rules relating to the increased
credit amount for prevailing wage.

(a) In general. With respect to a
qualified new energy efficient home
described in section 45L(a)(2)(B), the
credit determined under section
45L(a)(2)(B)(i) is $2,500 and the credit
determined under section
45L(a)(2)(B)(ii) is $5,000 if the qualified
new energy efficient home described in
section 45L(a)(2)(B)—
(1) Meets the requirements under
section 45L(c)(1)(A) or 45L(c)(1)(B), as
applicable;
(2) Is constructed by an eligible
contractor;
(3) Is acquired by a person for use as
a residence during the taxable year; and
(4) Satisfies the prevailing wage
requirements of section 45(b)(7) and
§ 1.45–7, and the recordkeeping and
reporting requirements of § 1.45–12.
(b) Definitions—(1) Qualified new
energy efficient home. For purposes of
this section, a qualified new energy
efficient home means a qualified new
energy efficient home described in
section 45L(b)(2).
(2) Eligible contractor. For purposes of
this section, an eligible contractor

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means an eligible contractor described
in section 45L(b)(1).
(c) Applicability date. This section
applies to qualified new energy efficient
homes acquired for use in taxable years
ending after [date final rule publishes in
the Federal Register], and the
construction of which begins after [date
final publishes in the Federal Register].
■ Par. 5. Section 1.45Q–6 is added to
read as follows:
§ 1.45Q–6 Rules relating to the increased
credit amount for prevailing wage and
apprenticeship.

(a) In general. If the requirements in
paragraph (b) of this section are satisfied
with respect to any qualified facility or
any carbon capture equipment placed in
service at that facility, then the credit
determined under section 45Q(a) is
multiplied by five.
(b) Qualified facility and carbon
capture equipment requirements. The
requirements of this paragraph (b) are
satisfied if any of the following
requirements are met—
(1) With respect to a qualified facility
the construction of which begins on or
after January 29, 2023, and any carbon
capture equipment placed in service at
such facility, the taxpayer meets the
prevailing wage requirements of section
45(b)(7) and § 1.45–7 with respect to
such facility and equipment, the
apprenticeship requirements of section
45(b)(8) and § 1.45–8 with respect to the
construction of such facility and
equipment, and the recordkeeping and
reporting requirements of § 1.45–12;
(2) With respect to any carbon capture
equipment the construction of which
begins on or after January 29, 2023, and
which is installed at a qualified facility
the construction of which began prior to
such date, the taxpayer meets the
prevailing wage requirements of section
45(b)(7) and § 1.45–7 with respect to
such equipment, the apprenticeship
requirements of section 45(b)(8) and
§ 1.45–8 with respect to the construction
of such equipment, and the
recordkeeping and reporting
requirements of § 1.45–12; or
(3) The construction of carbon capture
equipment begins prior to January 29,
2023, and such equipment is installed at
a qualified facility the construction of
which begins prior to January 29, 2023.
(c) Applicability date. This section
applies to facilities or equipment placed
in service in taxable years ending after
[date final rule publishes in the Federal
Register], and the construction of which
begins after [date final rule publishes in
the Federal Register].
■ Par. 6. Sections 1.45U–1 through
1.45U–3 are added to read as follows:

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§§ 1.45U–1—1.45U–2

[Reserved]

§ 1.45U–3 Rules relating to the increased
credit amount for prevailing wage.

(a) In general. If a qualified nuclear
power facility satisfies the prevailing
wage requirements of section 45(b)(7)
and § 1.45–7 in the alteration or repair
of such facility, and the recordkeeping
and reporting requirements of § 1.45–12,
then the amount of the zero-emission
nuclear power production credit for the
taxable year is equal to the credit
amount determined under section
45U(a) multiplied by five.
(b) Applicability date. This section
applies to qualified nuclear power
facilities that produce and sell
electricity during the taxable year and
the alteration or repair of which occurs
after [date final rule publishes in the
Federal Register].
■ Par. 7. Sections 1.45V–1 through
1.45V–3 are added to read as follows:
§§ 1.45V–1—1.45V–2

[Reserved]

§ 1.45V–3 Rules relating to the increased
credit amount for prevailing wage and
apprenticeship.

(a) In general. If any qualified clean
hydrogen production facility satisfies
the requirements in paragraph (b) of this
section, then the amount of the credit
for producing qualified clean hydrogen
determined under section 45V(a) with
respect to qualified clean hydrogen
described in section 45V(b)(2) is equal
to the credit amount determined under
section 45V(a) multiplied by five.
(b) Qualified clean hydrogen
production facility requirements. A
qualified clean hydrogen production
facility satisfies the requirements of this
paragraph (b) if it is one of the
following—
(1) A facility the construction of
which began prior to January 29, 2023,
and that meets the prevailing wage
requirements of section 45(b)(7) and
§ 1.45–7 with respect to an alteration or
repair of the facility that occurs after
January 29, 2023 (to the extent
applicable), and that meets the
recordkeeping and reporting
requirements of § 1.45–12; or
(2) A facility that meets the prevailing
wage requirements of section 45(b)(7)
and § 1.45–7, the apprenticeship
requirements of section 45(b)(8) and
§ 1.45–8, and the recordkeeping and
reporting requirements of § 1.45–12.
(c) Applicability date. This section
applies to facilities placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].

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Par. 8. Sections 1.45Y–1 through
1.45Y–3 are added to read as follows:

■

§§ 1.45Y–1—1.45Y–2

[Reserved]

§ 1.45Y–3 Rules relating to the increased
credit amount for prevailing wage and
apprenticeship.

(a) In general. If any qualified clean
electricity production facility satisfies
the requirements in paragraph (b) of this
section, the amount of the credit for
producing clean electricity determined
under section 45Y(a)(2) equals 1.5 cents.
(b) Qualified clean electricity
production facility requirements. A
qualified facility satisfies the
requirements of this paragraph (b) if it
is one of the following—
(1) A facility with a maximum net
output of less than one megawatt (as
measured in alternating current);
(2) A facility the construction of
which began prior to January 29, 2023;
or
(3) A facility that meets the prevailing
wage requirements of section 45(b)(7)
and § 1.45–7, the apprenticeship
requirements of section 45(b)(8) and
§ 1.45–8, and the recordkeeping and
reporting requirements of § 1.45–12.
(c) Applicability date. This section
applies to facilities placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].
■ Par. 9. Sections 1.45Z–1 through
1.45Z–3 are added to read as follows:
§§ 1.45Z–1—1.45Z–2

[Reserved]

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§ 1.45Z–3 Rules relating to the increased
credit amount for prevailing wage and
apprenticeship.

(a) In general. If any qualified facility
for clean fuel production satisfies the
requirements in paragraph (b) of this
section, the clean fuel production credit
determined under section 45Z(a) is
multiplied by five.
(b) Qualified facility for clean fuel
production. A qualified facility for clean
fuel production satisfies the
requirements of this paragraph (b) if it
is one of the following—
(1) A qualified facility that begins
construction on or after January 29,
2023, and is placed in service after
December 31, 2024, that meets the
prevailing wage requirements of section
45(b)(7) and § 1.45–7, the
apprenticeship requirements of section
45(b)(8) and § 1.45–8, and the
recordkeeping and reporting
requirements of § 1.45–12; or
(2) A qualified facility that is placed
in service before January 1, 2025, that
meets the prevailing wage requirements

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of section 45(b)(7) and § 1.45–7, the
apprenticeship requirements of section
45(b)(8) and § 1.45–8, and the
recordkeeping and reporting
requirements of § 1.45–12, with respect
to any alteration or repair of the facility
with respect to any taxable year
beginning after December 31, 2024, for
which the credit is allowed under
section 45Z.
(c) Applicability date. This section
applies to facilities placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].
■ Par. 10. Section 1.48–13 is added to
read as follows:
§ 1.48–13 Rules relating to the increased
credit for prevailing wage and
apprenticeship.

(a) In general. If a qualified energy
project satisfies the requirements in
paragraph (b) of this section, the amount
of the energy credit determined under
section 48(a), after the application of
sections 48(a)(1) through (8), and
48(a)(15), is equal to the credit
determined under section 48(a) (section
48 credit) multiplied by five.
(b) Qualified energy project
requirements. A qualified energy project
satisfies the requirements of this
paragraph (b) if it is one of the
following—
(1) A project with a maximum net
output of less than one megawatt (as
measured in alternating current) or
thermal energy;
(2) A project the construction of
which began prior to January 29, 2023;
or
(3) A project that meets the prevailing
wage requirements of section
48(a)(10)(A) and § 1.45–7(b)-(d), the
apprenticeship requirements of section
45(b)(8) and § 1.45–8, and the
recordkeeping and reporting
requirements of § 1.45–12.
(c) Special rule applicable to general
prevailing wage requirements—(1) In
general. In addition to satisfying the
prevailing wage requirements under
§ 1.45–7(b) through (d), a taxpayer must
ensure that any laborers and mechanics
employed (within the meaning of
§ 1.45–7) by the taxpayer or any
contractor or subcontractor in the
construction of such energy project, and
for the five-year period beginning on the
date such project is placed in service,
the alteration or repair of such project,
are paid wages at rates not less than the
prevailing rates for construction,
alteration, or repair of a similar
character in the locality in which such
project is located as most recently

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determined by the Secretary of Labor, in
accordance with 40 U.S.C. chapter 31,
subchapter IV. Subject to recapture
under paragraph (c)(3) of this section,
for purposes of determining the
increased credit amount under section
48(a)(9)(B)(iii), the taxpayer is deemed
to satisfy the prevailing wage
requirements at the time such project is
placed in service.
(2) Exception. For purposes of
satisfying the wage requirements of
paragraph (b)(3) of this section, § 1.45–
7(a) does not apply.
(3) Recapture. The increased section
48 credit amount is subject to recapture
for any project that does not satisfy the
prevailing wage requirements in § 1.45–
7 with respect to an alteration or repair
of such project for the five-year period
beginning on the date such project is
originally placed in service (but which
does not cease to be investment credit
property within the meaning of section
50(a) of the Code).
(d) Applicability date. This section
applies to projects placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the construction of which begins
after [date final rule publishes in the
Federal Register].
■ Par. 11. Sections 1.48C–1 through
1.48C–3 are added to read as follows:
§§ 1.48C–1—1.48C–2

[Reserved]

§ 1.48C–3 Rules relating to the increased
credit amount for prevailing wage and
apprenticeship.

(a) In general. If any qualifying
advanced energy project satisfies the
prevailing wage requirements of section
45(b)(7) and § 1.45–7, the
apprenticeship requirements of section
45(b)(8) and § 1.45–8, and the
recordkeeping and reporting
requirements of § 1.45–12, the
qualifying advanced energy project
credit determined under section 48C(a)
for any taxable year with respect to
credits allocated pursuant to section
48C(e) is an amount equal to 30 percent
of the qualified investment for the
taxable year.
(b) Applicability date. This section
applies to qualifying advanced energy
projects placed in service in taxable
years ending after [date final rule
publishes in the Federal Register], and
the construction of which begins after
[date final rule publishes in the Federal
Register].
■ Par. 12. Sections 1.48E–1 through
1.48E–3 are added to read as follows:

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60054

Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules

§§ 1.48E–1—1.48E–2

[Reserved]

§ 1.48E–3 Rules relating to the increased
credit for prevailing wage and
apprenticeship.

lotter on DSK11XQN23PROD with PROPOSALS2

(a) In general. If any clean electricity
investment with respect to a qualified
facility or energy storage technology
satisfies the requirements in paragraph
(b) of this section, the applicable
percentage of the qualified clean
electricity investment credit determined
under section 48E(a) for the taxable year
equals 30 percent.
(b) Qualified clean electricity
investment requirements. A qualified
clean electricity investment satisfies the
requirements of this paragraph (b) if it
is one of the following—
(1) A facility with a maximum net
output of less than one megawatt (as
measured in alternating current);
(2) A facility the construction of
which began prior to January 29, 2023;
(3) A facility that meets the prevailing
wage requirements of § 1.48–13(c), the
apprenticeship requirements of section
45(b)(8) and § 1.45–8, and the
recordkeeping and reporting
requirements of § 1.45–12;
(4) Energy storage technology with a
capacity of less than one megawatt;

VerDate Sep<11>2014

18:22 Aug 29, 2023

Jkt 259001

(5) Energy storage technology the
construction of which began prior to
January 29, 2023; or
(6) Energy storage technology that
satisfies the prevailing wage
requirements of § 1.48–13(c), the
apprenticeship requirements of section
45(b)(8) and § 1.45–8, and the
recordkeeping and reporting
requirements of § 1.45–12.
(c) Applicability date. This section
applies to facilities and energy storage
technologies placed in service in taxable
years ending after [date final rule
publishes in the Federal Register], and
the construction of which begins after
[date final rule publishes in the Federal
Register].
■ Par. 13. Sections 1.179D–1 through
1.179D–3 are added to read as follows:
§§ 1.179D–1—1.179D–2

[Reserved]

§ 1.179D–3 Rules relating to the increased
deduction for prevailing wage and
apprenticeship.

(a) In general. If any energy efficient
commercial building property, energy
efficient building retrofit property, or
property installed pursuant to a
qualified retrofit plan satisfies the
requirements in paragraph (b) of this
section, the applicable dollar value for
determining the maximum amount of

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the deduction under section 179D(b)(2)
is multiplied by five.
(b) Certain energy efficient
commercial building property
requirements. Energy efficient
commercial building property, energy
efficient building retrofit property, or
property installed pursuant to a
qualified retrofit plan satisfies the
requirements of this paragraph (b) if it
is one of the following—
(1) Property the installation of which
began prior to January 29, 2023; or
(2) Property that meets the prevailing
wage requirements of section 45(b)(7)
and § 1.45–7, the apprenticeship
requirements of section 45(b)(8) and
§ 1.45–8, and the recordkeeping and
reporting requirements of § 1.45–12.
(c) Applicability date. This section
applies to property placed in service in
taxable years ending after [date final
rule publishes in the Federal Register],
and the installation of which begins
after [date final rule publishes in the
Federal Register].
Douglas W. O’Donnell,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. 2023–18514 Filed 8–29–23; 8:45 am]
BILLING CODE 4830–01–P

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