Article Summary –
The US Department of the Treasury has finalized labor standards for the Inflation Reduction Act (IRA) tax credits, which are projected to create over 1.5 million jobs in the next decade due to investments in clean energy projects. Under the new rules, taxpayers who pay prevailing wages and hire registered apprentices for projects supported by the IRA’s clean energy tax incentives, can claim a credit five times the base incentive, encompassing various energy sectors like wind, solar, battery storage, carbon capture, and clean hydrogen projects. The International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART) has welcomed the rule, stating that it effectively benefits union members by providing large tax credits for those who pay workers prevailing wages and employ registered apprentices on qualifying clean energy projects.
US Treasury Finalizes Labor Standards for Inflation Reduction Act Tax Credits
The US Treasury Department finalized labor standards for Inflation Reduction Act (IRA) tax credits. The IRA, passed in 2022, has spurred clean energy projects generating over 270,000 jobs, with a projection of 1.5 million more in the next decade.
“The IRA has catalyzed investment and ensures workers in the clean energy economy enjoy good pay and advancement opportunities,” said Treasury Secretary Janet L. Yellen. “Our final rules ensure a skilled workforce ready to capitalize on the job creation from these historic investments.”
Under the final rules, taxpayers paying prevailing wages to laborers and mechanics, and employing registered apprentices for projects supported by most of the IRA’s clean energy tax incentives can claim an increased credit five times the base incentive. This applies to utility-scale wind, solar, battery storage projects, credits for carbon capture, and clean hydrogen projects.
The IRS, in the coming months, will release a Prevailing Wage and Apprenticeship (PWA) fact sheet summarizing the PWA requirements and information on reporting suspected tax violations related to the PWA increase.
The prevailing wage and apprenticeship requirements took effect in January 2023. The final rules, following over 300 public comments on the proposed rule, will streamline compliance. The details include:
-
- Determinations of prevailing wage rates by DOL, as per the Davis-Bacon Act
-
- Incentives encouraging concurrent compliance
-
- Strong recordkeeping requirements
-
- Assurance that taxpayers with projects covered by qualifying project labor agreements won’t incur penalties
-
- Clarifying apprenticeship requirements such as defining requests for qualified apprentices, responses, and the application of the good faith effort exception
The International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART) reacted positively:
“There are laws that favor union members, and laws that benefit union members. The US Treasury Department’s final rule on IRA tax credits is a law that tangibly benefits SMART sheet metal workers. The pioneering tax credits provide up to five times the base credit to those paying prevailing wages and employing registered apprentices on qualifying clean energy projects, incentivizing the use of union labor on these projects.
“We are grateful to this administration for making sure green jobs are union jobs, and our skilled tradespeople are ready to build this nation’s sustainable future.”
—
Read More Kitchen Table News