60018 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

1The 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. 

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 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

and public hearing. 

SUMMARY: 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 

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 publichearings@irs.gov 

(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, 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60019 

2The 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. 

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. 

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 

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 

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). 


lotter on DSK11XQN23PROD with PROPOSALS2
60020 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

3Sections 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. 

4Effective 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). 

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.’’ 

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 

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). 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60021 

5Notice 2022–61 defines ‘‘facility’’ as qualified 

facility, property, project, or equipment. 

6Notice 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). 

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. 

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. 

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. 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60022 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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’’). 

8The 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. 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60023 

9The 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. 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60024 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

alteration or repair begins. 

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. 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60025 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60026 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60027 

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. 

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 

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 

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. 


lotter on DSK11XQN23PROD with PROPOSALS2
60028 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60029 

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 

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 

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. 


lotter on DSK11XQN23PROD with PROPOSALS2
60030 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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, 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60031 

10 Information is available at https://

www.apprenticeship.gov/about-us/apprenticeshipsystem. 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60032 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60033 

11Section 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). 

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 

product of 0.3 cents multiplied by the 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60034 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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. 

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 

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. 

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 

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. 

J. Section 48E 

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. 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60035 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60036 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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. 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60037 

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 

information collection to the IRS via 

email at pra.comments@irs.gov (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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60038 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60039 

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. 

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. 

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 publichearings@irs.gov 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 

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 publichearings@irs.gov 

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 

publichearings@irs.gov 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 

publichearings@irs.gov (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. 


lotter on DSK11XQN23PROD with PROPOSALS2
60040 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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: 

Authority: 26 U.S.C. 7805 * * * 

Section 1.30C–3 also issued under 26 

U.S.C. 30. 

* * * * * 

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. 

* * * * * 

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. 

* * * * * 

Section 1.48–13 also issued under 26 

U.S.C. 48. 

* * * * * 

Section 1.179D–3 also issued under 26 

U.S.C. 179D. 

* * * * * 

■ Par. 2. Sections 1.30C–1 through 

1.30C–3 are added to read as follows: 

§§ 1.30C–1—1.30C–2 [Reserved] 

§ 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— 

(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. 

* * * * * 

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. 

* * * * * 

§ 1.45–0 Table of contents. 

This section lists the table of contents 

for §§ 1.45–1 through 1.45–12. 

§§ 1.45–1—1.45–5 [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. 

(e) Applicability date. 

§§ 1.45–1—1.45–5 [Reserved] 

§ 1.45–6 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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60041 

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 

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 IRAprevailingwage@dol.gov, 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60042 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60043 

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 

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. 

(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 


lotter on DSK11XQN23PROD with PROPOSALS2
60044 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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. 

(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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60045 

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 

terms and conditions of employment for 

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. 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60046 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60047 

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. 

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]. 

§ 1.45–8 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 


lotter on DSK11XQN23PROD with PROPOSALS2
60048 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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, 

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). 

(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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60049 

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 

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, 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
60050 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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 

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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60051 

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 

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 [Reserved] 

§ 1.45–12 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. 

(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 


lotter on DSK11XQN23PROD with PROPOSALS2
60052 Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 

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] 

§ 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 

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: 

§§ 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]. 


lotter on DSK11XQN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 / Proposed Rules 60053 

■ 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] 

§ 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 

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 

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: 


lotter on DSK11XQN23PROD with PROPOSALS2
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. 

(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; 

(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 

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 


lotter on DSK11XQN23PROD with PROPOSALS2