On Oct. 31, an ABC-led coalition of 22 construction and energy groups sent a letter to the U.S. Department of the Treasury and Internal Revenue Service requesting a 60-day extension of the Nov. 4 deadline in response to their request for comments regarding implementation of the Inflation Reduction Act. Specifically, the agencies requested comments on Davis-Bacon and government-registered apprenticeship requirements for applicable clean energy construction projects. A previous extension request by ABC has received no response.
The IRA, opposed by ABC, was signed into law on Aug. 16, 2022, and provides over $369 billion in tax credits for the construction of solar, wind, hydrogen, carbon sequestration, electric vehicle charging stations and other clean energy projects. Developers/taxpayers can receive a bonus tax credit 500% greater than a baseline tax credit of 6%, but this is conditioned on requirements that project contractors pay Davis-Bacon prevailing wages and utilize apprentices enrolled in government-registered apprenticeship programs. This new policy is an unprecedented expansion of Davis-Bacon and registered apprenticeship requirements/enticements onto private construction projects via the federal tax code.
Treasury and IRS are seeking feedback on prevailing wage, apprenticeship, domestic content and energy community requirements under the IRA. The wage and apprenticeship provisions apply to projects that begin construction 60 days after Treasury has published relevant guidance with respect to the requirements. It has been reported that Treasury intends to issue guidance by the end of the year, so this aspect of the IRA may be in effect as early as March 2023.
ABC urges members to submit comments by the Nov. 4 deadline on this important issue. Please reach out to Michael Altman at [email protected] with any questions. Learn more about these new requirements in Newsline, in this publication from Littler Mendelson and from ABC’s webinar on implementation of the IRA.