Increased Credit or Deduction Amounts for Satisfying Certain Prevailing Wage and Registered Apprenticeship Requirements

Published date30 August 2023
Record Number2023-18514
Citation88 FR 60018
CourtInternal Revenue Service
SectionProposed rules
Federal Register, Volume 88 Issue 167 (Wednesday, August 30, 2023)
[Federal Register Volume 88, Number 167 (Wednesday, August 30, 2023)]
                [Proposed Rules]
                [Pages 60018-60054]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2023-18514]
                [[Page 60017]]
                Vol. 88
                Wednesday,
                No. 167
                August 30, 2023
                Part IIDepartment of the Treasury-----------------------------------------------------------------------Internal Revenue Service-----------------------------------------------------------------------26 CFR Part 1Increased Credit or Deduction Amounts for Satisfying Certain Prevailing
                Wage and Registered Apprenticeship Requirements; Notice
                Federal Register / Vol. 88, No. 167 / Wednesday, August 30, 2023 /
                Proposed Rules
                [[Page 60018]]
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                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 [email protected]
                (preferred).
                SUPPLEMENTARY INFORMATION:
                Background
                I. Overview
                 This document contains proposed regulations to amend the Income Tax
                Regulations (26 CFR part 1) under sections 30C, 45, 45L, 45U, 45V, 45Y,
                45Z, 48C, 48E, and 179D of the Internal Revenue Code (Code) and
                proposed amendments to the Income Tax Regulations (26 CFR part 1) under
                sections 45Q and 48 (proposed regulations). The Inflation Reduction Act
                of 2022 (IRA), Public Law 117-169, 136 Stat. 1818 (August 16, 2022),
                amended sections 30C, 45, 45L, 45Q, 48, 48C, and 179D to provide
                increased credit or deduction amounts for taxpayers who satisfy certain
                requirements and added sections 45U, 45V, 45Y, 45Z, and 48E to the Code
                to provide new credits, which also contain provisions for increased
                credit amounts for taxpayers who satisfy certain requirements.
                Increased credit amounts are available under sections 30C, 45, 45Q,
                45V, 45Y, 45Z, 48, 48C, and 48E, 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.
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                 \1\ The increased credit provisions in sections 45L and 45U do
                not contain apprenticeship requirements. For simplicity, where
                possible, the preamble to the proposed regulations uses the acronym
                PWA to refer to the prevailing wage and apprenticeship requirements
                generally, including the prevailing wage requirements in sections
                45L and 45U.
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                 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
                Davis-Bacon 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
                [[Page 60019]]
                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\
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                 \2\ The prevailing wage requirements in sections 30C(g), 45L(g),
                45Q(h), 45U(d), 45V(e), 48(a)(10), 48C(e), and 179D(b) are
                substantially similar to the requirements provided under section
                45(b)(7). Sections 45Y(g)(9) and 45Z(f)(6)(A) adopt by cross-
                reference the Prevailing Wage Requirements under section 45(b)(7).
                Section 48E(d)(3) adopts by cross-reference the Prevailing Wage
                Requirements under section 48(a)(10). Section 48(a)(10) provides for
                a special 5-year recapture rule that applies for purposes of the
                prevailing wage requirements with respect to sections 48 and 48E.
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                 Section 45 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).
                [[Page 60020]]
                 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,
                apprentice-to-journeyworker ratios, and participation by apprentices
                must be satisfied.\3\
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                 \3\ Sections 30C(g)(3), 45Q(h)(4), 45V(e)(4), 45Y(g)(10),
                45Z(f)(7), 48(a)(11), 48C(e)(6), 48E(d)(4), and 179D(b)(5) cross-
                reference the apprenticeship requirements in section 45(b)(8).
                Sections 45L and 45U do not have apprenticeship requirements.
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                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\
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                 \4\ Effective November 25, 2022, 29 CFR part 29 is no longer
                divided into subparts A and B because subpart B (Industry Recognized
                Apprenticeship Programs) was rescinded in a final rule published on
                September 26, 2022 (87 FR 58269).
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                b. Ratio Requirement
                 Under section 45(b)(8)(B), the Labor Hours Requirement is subject
                to any applicable requirements for apprentice-to-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
                [[Page 60021]]
                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.
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                 \5\ Notice 2022-61 defines ``facility'' as qualified facility,
                property, project, or equipment.
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                 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).
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                 \6\ Notice 2013-29, 2013-20 I.R.B. 1085 (section 45); Notice
                2020-12, 2020-11 I.R.B. 495 (section 45Q); Notice 2018-59, 2018-28
                I.R.B. 196 (section 48).
                ---------------------------------------------------------------------------
                 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
                [[Page 60022]]
                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.
                ---------------------------------------------------------------------------
                 \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'').
                ---------------------------------------------------------------------------
                 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\
                ---------------------------------------------------------------------------
                 \8\ The Treasury Department and the IRS interpret the One
                Megawatt Exception as addressing small business taxpayers who would
                be excluded under the $2,000 minimum contract requirement under the
                DBA.
                ---------------------------------------------------------------------------
                 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
                [[Page 60023]]
                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.
                ---------------------------------------------------------------------------
                 \9\ The requirement to pay prevailing wages with respect to
                alteration or repair applies for any portion of a taxable year that
                is within the 10-year period beginning on the date the qualified
                facility is placed in service.
                ---------------------------------------------------------------------------
                 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
                [[Page 60024]]
                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
                [[Page 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
                [[Page 60026]]
                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
                [[Page 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.
                [[Page 60028]]
                 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 non-exhaustive 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
                [[Page 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 self-correct 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 pre-apprenticeship 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, pre-apprenticeship 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-to-journeyworker 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.
                [[Page 60030]]
                 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
                on-the-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
                [[Page 60031]]
                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.
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                 \10\ Information is available at https://www.apprenticeship.gov/about-us/apprenticeship-system.
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                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
                [[Page 60032]]
                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
                [[Page 60033]]
                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 Sec. 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.
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                 \11\ Section 45V(e)(3)(A)(ii) requires the payment of wages at
                prevailing rates ``with respect to any taxable year, for any portion
                of such taxable year which is within the period described in
                subsection (a)(2)'', with respect to the alteration or repair of
                such facility. There is no ``period described in subsection
                (a)(2).'' The Treasury Department and the IRS propose to interpret
                the reference to ``subsection (a)(2)'' as a reference to section
                45V(a)(1) where the 10-year credit period is identified, and the
                proposed regulations would apply to the period described in section
                45V(a)(1).
                ---------------------------------------------------------------------------
                 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
                [[Page 60034]]
                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.
                [[Page 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
                Sec. 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
                [[Page 60036]]
                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
                [[Page 60037]]
                sufficient to demonstrate that PWA requirements have been met as
                detailed in Sec. 1.45-12. For purposes of the PRA, the recordkeeping
                requirements of Sec. 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 Sec. 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 Sec. 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 Sec. 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 [email protected] (indicate REG-100908-23 on the Subject
                line). Comments on the collection of information should be received by
                October 30, 2023. Comments are specifically requested concerning:
                 Whether the proposed collection of information is necessary for the
                proper performance of the functions of the IRS, including whether the
                information will have practical utility. The accuracy of the estimated
                burden associated with the proposed collection of information. How the
                quality, utility, and clarity of the information to be collected may be
                enhanced. How the burden of complying with the proposed collection of
                information may be minimized, including through the application of
                automated collection techniques or other forms of information
                technology; and estimates of capital or start-up costs and costs of
                operation, maintenance, and purchase of services to provide
                information.
                 The IRS estimates that 70 trust and estates may claim the increased
                credit and that it could take approximately 40 hours to compile the
                data needed for the statement attached to their return.
                 Estimated total annual reporting and recordkeeping burden for
                trusts and estates filers: 2,800 hours.
                 Estimated average annual burden per respondent: 40 hours.
                 Estimated number of respondents: 70.
                 Estimated frequency of responses: Annual.
                 The IRS estimates that 70,000 filers may claim the increased credit
                and that it could take approximately two hours to display the
                prevailing wages rates and to request the dispatch of apprentices.
                 Estimated total annual third-party disclosure burden for all other
                filers: 140,000 hours.
                 Estimated average annual burden per respondent: Two hours.
                 Estimated number of respondents: 70,000.
                 Estimated frequency of responses: Once.
                 An agency may not conduct or sponsor, and a person is not required
                to respond to, a collection of information unless it displays a valid
                control number assigned by the Office of Management and Budget.
                II. Regulatory Flexibility Act
                 The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
                certain requirements with respect to Federal rules that are subject to
                the notice and comment requirements of section 553(b) of the
                Administrative Procedure Act (5 U.S.C. 551 et seq.) and that are likely
                to have a significant 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
                [[Page 60038]]
                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 Davis-Bacon 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
                [[Page 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 [email protected] to have your name added to
                the building access list. The subject line of the email must contain
                the regulation number REG-100908-23 and the language TESTIFY in Person.
                For example, the subject line may say: Request to TESTIFY in Person at
                Hearing for REG-100908-23.
                 Individuals who want to testify by telephone at the public hearing
                must send an email to [email protected] to receive the telephone
                number and access code for the hearing. The subject line of the email
                must contain the regulation number REG-100908-23 and the language
                TESTIFY Telephonically. For example, the subject line may say: Request
                to TESTIFY Telephonically at Hearing for REG-100908-23.
                 Individuals who want to attend the public hearing in person without
                testifying must also send an email to [email protected] to have
                your name added to the building access list. The subject line of the
                email must contain the regulation number REG-100908-23 and the language
                ATTEND In Person. For example, the subject line may say: Request to
                ATTEND Hearing in Person for REG-100908-23. Requests to attend the
                public hearing must be received by 5:00 p.m. EST on November 17, 2023.
                 Hearings will be made accessible to people with disabilities. To
                request special assistance during a hearing please contact the
                Publications and Regulations Branch of the Office of Associate Chief
                Counsel (Procedure and Administration) by sending an email to
                [email protected] (preferred) or by telephone at (202) 317-6901
                (not a toll-free 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.
                [[Page 60040]]
                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
                0
                Paragraph 1.The authority citation for part 1 is amended by adding
                entries for Sec. Sec. 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.
                * * * * *
                0
                Par. 2. Sections 1.30C-1 through 1.30C-3 are added to read as follows:
                Sec. Sec. 1.30C-1--1.30C-2 [Reserved]
                Sec. 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 Sec. 1.45-7, the apprenticeship requirements of
                section 45(b)(8) and Sec. 1.45-8, and the recordkeeping and reporting
                requirements of Sec. 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].
                0
                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.
                * * * * *
                Sec. 1.45-0 Table of contents.
                 This section lists the table of contents for Sec. Sec. 1.45-1
                through 1.45-12.
                Sec. Sec. 1.45-1--1.45-5 [Reserved]
                Sec. 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.
                Sec. 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.
                Sec. 1.45-8 Apprenticeship requirements.
                 (a) In general.
                 (b) Labor hours requirement.
                 (c) Application of apprentice-to-journeyworker ratio.
                 (d) Participation requirement.
                 (e) Exceptions to the Apprenticeship Requirements.
                 (f) Definitions.
                 (g) Applicability date.
                Sec. Sec. 1.45-9--1.45-11 [Reserved]
                Sec. 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.
                Sec. Sec. 1.45-1--1.45-5 [Reserved]
                Sec. 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 Sec. 1.45-7, the apprenticeship requirements of
                section 45(b)(8) and Sec. 1.45-8, and the recordkeeping and reporting
                requirements of Sec. 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].
                Sec. 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
                [[Page 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 [email protected], or such other address as
                may be prescribed in guidance and instructions issued by the
                Administrator of the Wage and Hour Division of the U.S. Department of
                Labor (Wage and Hour Division). A taxpayer, contractor, or
                subcontractor should make such requests no more than 90 days before 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
                [[Page 60042]]
                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 Sec. 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
                Sec. 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
                [[Page 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
                [[Page 60044]]
                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 Sec. 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
                [[Page 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
                [[Page 60046]]
                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
                [[Page 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].
                Sec. 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-to-journeyworker 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
                [[Page 60048]]
                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
                [[Page 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 x 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 x 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
                [[Page 60050]]
                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-to-journeyworker 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 x 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
                [[Page 60051]]
                Project Labor Agreement as defined in Sec. 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 Sec.
                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].
                Sec. Sec. 1.45-9--1.45.11 [Reserved]
                Sec. 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 Sec. 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 Sec. 1.45-7(d) with
                respect to the prevailing wage requirements, and Sec. 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 Sec. Sec. 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 Sec. 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 Sec. 1.45-8 may include the following information for
                each apprentice
                [[Page 60052]]
                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].
                0
                Par. 4. Sections 1.45L-1 through 1.45L-3 are added to read as follows:
                Sec. Sec. 1.45L-1--1.45L-2 [Reserved]
                Sec. 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 Sec. 1.45-7, and the recordkeeping and reporting requirements of
                Sec. 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].
                0
                Par. 5. Section 1.45Q-6 is added to read as follows:
                Sec. 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 Sec. 1.45-7 with respect to
                such facility and equipment, the apprenticeship requirements of section
                45(b)(8) and Sec. 1.45-8 with respect to the construction of such
                facility and equipment, and the recordkeeping and reporting
                requirements of Sec. 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 Sec. 1.45-7 with respect to such equipment, the
                apprenticeship requirements of section 45(b)(8) and Sec. 1.45-8 with
                respect to the construction of such equipment, and the recordkeeping
                and reporting requirements of Sec. 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].
                0
                Par. 6. Sections 1.45U-1 through 1.45U-3 are added to read as follows:
                Sec. Sec. 1.45U-1--1.45U-2 [Reserved]
                Sec. 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 Sec. 1.45-7 in
                the alteration or repair of such facility, and the recordkeeping and
                reporting requirements of Sec. 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].
                0
                Par. 7. Sections 1.45V-1 through 1.45V-3 are added to read as follows:
                Sec. Sec. 1.45V-1--1.45V-2 [Reserved]
                Sec. 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 Sec. 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 Sec. 1.45-12; or
                 (2) A facility that meets the prevailing wage requirements of
                section 45(b)(7) and Sec. 1.45-7, the apprenticeship requirements of
                section 45(b)(8) and Sec. 1.45-8, and the recordkeeping and reporting
                requirements of Sec. 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].
                [[Page 60053]]
                0
                Par. 8. Sections 1.45Y-1 through 1.45Y-3 are added to read as follows:
                Sec. Sec. 1.45Y-1--1.45Y-2 [Reserved]
                Sec. 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 Sec. 1.45-7, the apprenticeship requirements of
                section 45(b)(8) and Sec. 1.45-8, and the recordkeeping and reporting
                requirements of Sec. 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].
                0
                Par. 9. Sections 1.45Z-1 through 1.45Z-3 are added to read as follows:
                Sec. Sec. 1.45Z-1--1.45Z-2 [Reserved]
                Sec. 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
                Sec. 1.45-7, the apprenticeship requirements of section 45(b)(8) and
                Sec. 1.45-8, and the recordkeeping and reporting requirements of Sec.
                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 Sec. 1.45-7, the apprenticeship requirements of section
                45(b)(8) and Sec. 1.45-8, and the recordkeeping and reporting
                requirements of Sec. 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].
                0
                Par. 10. Section 1.48-13 is added to read as follows:
                Sec. 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 Sec. 1.45-7(b)-(d), the apprenticeship
                requirements of section 45(b)(8) and Sec. 1.45-8, and the
                recordkeeping and reporting requirements of Sec. 1.45-12.
                 (c) Special rule applicable to general prevailing wage
                requirements--(1) In general. In addition to satisfying the prevailing
                wage requirements under Sec. 1.45-7(b) through (d), a taxpayer must
                ensure that any laborers and mechanics employed (within the meaning of
                Sec. 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, Sec. 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 Sec. 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].
                0
                Par. 11. Sections 1.48C-1 through 1.48C-3 are added to read as follows:
                Sec. Sec. 1.48C-1--1.48C-2 [Reserved]
                Sec. 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 Sec. 1.45-7,
                the apprenticeship requirements of section 45(b)(8) and Sec. 1.45-8,
                and the recordkeeping and reporting requirements of Sec. 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].
                0
                Par. 12. Sections 1.48E-1 through 1.48E-3 are added to read as follows:
                [[Page 60054]]
                Sec. Sec. 1.48E-1--1.48E-2 [Reserved]
                Sec. 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 Sec.
                1.48-13(c), the apprenticeship requirements of section 45(b)(8) and
                Sec. 1.45-8, and the recordkeeping and reporting requirements of Sec.
                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 Sec. 1.48-13(c), the apprenticeship requirements of
                section 45(b)(8) and Sec. 1.45-8, and the recordkeeping and reporting
                requirements of Sec. 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].
                0
                Par. 13. Sections 1.179D-1 through 1.179D-3 are added to read as
                follows:
                Sec. Sec. 1.179D-1--1.179D-2 [Reserved]
                Sec. 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 Sec. 1.45-7, the apprenticeship requirements of section
                45(b)(8) and Sec. 1.45-8, and the recordkeeping and reporting
                requirements of Sec. 1.45-12.
                 (c) Applicability date. This section applies to property placed in
                service in taxable years ending after [date final rule publishes in the
                Federal Register], and the installation of which begins after [date
                final rule publishes in the Federal Register].
                Douglas W. O'Donnell,
                Deputy Commissioner for Services and Enforcement.
                [FR Doc. 2023-18514 Filed 8-29-23; 8:45 am]
                BILLING CODE 4830-01-P
                

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