A recurring inspection and a repair to failed equipment might both be called “maintenance,” but that does not Certain clean energy tax incentives offer increased credit or deduction amounts when applicable prevailing wage and apprenticeship requirements are satisfied.?
Meeting those requirements also depends on maintaining records that support the work performed, wages paid, apprenticeship participation, and any corrections. Reviewing these five areas early can help project and tax teams stay aligned while construction is underway.?
1. Confirm Which Requirements Apply?
Start by confirming the credit or deduction being claimed, the applicable facility or project, and whether prevailing wage and apprenticeship requirements or an exception applies. These project-specific tax questions should be reviewed with qualified tax and legal advisors.?
2. Confirm the Applicable Wage Requirements?
Identify the prevailing wage rates that apply to the location, construction type, and worker classifications involved. Contractors should understand the wage and fringe benefit expectations for the work they perform.?
3. Gather and Track Apprenticeship Information Early
When apprenticeship requirements apply, project teams will need records related to apprentice participation, labor hours, applicable ratios, and good-faith efforts. Collecting this information throughout the project is generally more manageable than trying to recreate it later.?
4. Maintain Payroll and Supporting Records?
Taxpayers claiming increased amounts must maintain adequate books and records supporting the applicable requirements. Depending on the project, useful records may include:?
- Worker classifications and hours?
- Wage rates and fringe benefits?
- Contractor and subcontractor information?
- Apprenticeship participation and labor hours?
- Corrections and supporting documentation?
The appropriate records should be confirmed with the organization’s tax and legal advisors because requirements can vary by credit, facility, and project.?
5. Organize Records by Facility and Tax Year?
Keeping labor information organized by facility and tax year can make advisor review and required tax reporting more manageable.?
IRS Form 7220 is used to report facility-level information when claiming certain increased credit or deduction amounts for satisfying prevailing wage and apprenticeship requirements, and to calculate related penalties when applicable. The form is not required in every situation, so filing questions should remain with the taxpayer’s advisor.?
Review Your IRA Prevailing Wage and Apprenticeship Records?
Use our IRA Prevailing Wage and Apprenticeship Readiness Checklist to confirm which project and facility records are organized and identify areas that may need additional advisor review? If you have questions about how LCPtracker can support your energy project, contact our team.
These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.