There are a many new federal programs that provide funding or economic incentives like tax credits, grants and loans to organizations in many different industries that are vital to our economy and infrastructure.

According to the U.S Department of Labor, prevailing wage is defined as the average wage paid to similarly employed workers in a specific occupation in the geographic area of intended employment.  While this may be a new concept for you, it doesn’t have to be difficult to address and there are tools that can help you manage this easily and effectively.

In this month’s InSight Minute we’re going to discuss some of the many different types of programs that may be receiving this increased investment, and how to more easily manage prevailing wage, and other workforce requirements like tracking of apprentices.

As you review the various programs that may affect you, know that no matter which industry you may be in, you can reach out to SkillSmart.

Following are some of the programs and industries that may require tracking of prevailing wage and apprentices.

The CHIPS and Science Act invests $280 billion to bolster US semiconductor capacity, catalyze R&D, and create regional high-tech hubs and a bigger, more inclusive STEM workforce. In an effort to increase the amount of semi-conductors manufactured in the US to support these activites, the federal government made a significant investment in the form of grants, loans, and loan guarantees support various organizations in this important sector.  Following are some of the impacted industries.

• Semiconductor manufacturing – Includes subsidies for building new fabrication plants and expanding domestic production capacity.
• Telecommunications – Funding to support 5G deployment and bolster supply chains.
• Automotive – Investments in electrification and autonomous vehicles which rely on advanced semiconductors.
• Defense – Research grants for developing specialized chips to meet national security needs.
• Technology – Broad support for advancing semiconductor-enabled technologies like AI and quantum computing.

The Broadband Equity, Access, and Deployment (BEAD) Program, provides $42.45 billion to expand high-speed internet access by funding planning, infrastructure deployment and adoption programs throughout the U.S.

The Bipartisan Infrastructure Law supports a number of policies and programs that generally include eight broad areas—clean energy projects and infrastructure; manufacturing and industrial transformation; water; buildings and schools; fairness for workers and communities; community resilience; transportation; and methane and natural gas distribution.

It includes $550 billion in new federal infrastructure funding over five years to repair, rebuild, and modernize America’s bridges, transit systems, water infrastructure, and more. While more than half of the bill’s funding is for transportation infrastructure—including surface transportation, airports, zero-emissions school buses, electric vehicle (EV) charging, ports, public transit, railways, and more—it also provides significant funding for broadband, the power grid, water infrastructure, resilience, and legacy pollution.

The Inflation Reduction Act (IRA) is an approximately $740 billion package, with nearly $400 billion earmarked for energy and climate projects, and makes several clean energy tax incentives available to organizations that satisfy certain prevailing wage and apprenticeship requirements.

• Clean Energy;
• Clean Technology Manufacturing;
• Industrial Transformation;
• EV Deployment, Manufacturing, and Supply Chain;
• Transmission;
• Buildings;
• Energy Transition for Workers and Communities; and
• Resilient and Healthy Communities.

In general, an organization that meets the prevailing wage and apprenticeship requirements will multiply the base amount of the tax incentive (credit or deduction) by five. Increased credit and deduction amounts are available for taxpayers satisfying prevailing wage and apprenticeship requirements under the following sections of the Internal Revenue Code (Code):

• Section 30C alternative fuel vehicle refueling property credit
• Section 45 renewable electricity production credit
• Section 45Q credit for carbon oxide sequestration
• Section 45V credit for production of clean hydrogen
• Section 45Y clean electricity production credit
• Section 45Z clean fuel production credit
• Section 48 energy credit
• Section 48C qualifying advanced energy project credit
• Section 48E clean electricity investment credit
• Section 179D energy efficient commercial buildings deduction

Increased credit amounts are available for taxpayers satisfying prevailing wage requirements under:

• Section 45L new energy efficient home credit (apprenticeship requirements do not apply)
• Section 45U zero-emission nuclear power production credit (apprenticeship requirements do not apply)

The Treasury Department released its guidance and the proposed rules regarding prevailing wage and apprenticeship requirements for the Inflation Reduction Act.  With this announcement it’s clear that investors and owners involved in clean energy projects are facing a pivotal moment.

This proposed rule shines a spotlight on the pressing need for embracing technology to successfully monitor and report prevailing wage compliance in order to maximize access to tax credits and incentives for these important projects.

Using technology to keep tabs on your project’s efforts in meeting prevailing wage and apprenticeship requirements is a big deal for the folks building clean energy projects resulting in more than $270 billion in federal tax credits. Here’s why it matters:

1. Compliance with Federal Tax Credits: The Inflation Reduction Act (IRA) offers substantial tax credits to investors, owners, and developers involved in clean energy projects. However, these credits are contingent upon strict adherence to prevailing wage and government-registered apprenticeship requirements. Utilizing technology helps ensure accurate tracking and reporting of compliance with these crucial regulations.
2. Clarity and Confidence: The initial guidance issued by the IRS on IRA’s prevailing wage and apprenticeship requirements left many unanswered questions. The proposed rule aims to provide much-needed clarity and specific guidelines for developers, contractors, and subcontractors. Technology streamlines the process of tracking and reporting, enabling stakeholders to make informed decisions regarding project participation.
3. Penalties for Non-Compliance: Failure to meet prevailing wage and apprenticeship requirements can result in substantial penalties and not maximizing the available tax credits for the project. These penalties become even more severe if the IRS determines that non-compliance was intentional. Utilizing technology minimizes the risk of inadvertent violations and helps in avoiding costly penalties.
4. Project Labor Agreements (PLAs): The proposed rule highlights the potential use of project labor agreements (PLAs). Technology can assist in monitoring PLA compliance and ensuring that the use of PLAs result in successful project outcomes.
5. Recordkeeping Efficiency: The proposed rule outlines recordkeeping requirements related to payroll records, worker pay information, Davis-Bacon wage determinations, and apprenticeship documentation. Technology facilitates efficient recordkeeping and reporting, reducing administrative burdens and ensuring that documentation is readily available when needed.
6. Transparency and Accountability: Utilizing technology for prevailing wage tracking and reporting enhances transparency and accountability in the construction process. It enables all stakeholders to have access to real-time data, fostering trust and collaboration among project participants.
7. Future-Proofing Clean Energy Projects: As the clean energy industry continues to grow, efficient compliance with prevailing wage and apprenticeship requirements becomes essential for project viability. Technology not only ensures compliance with current regulations but also prepares projects to meet evolving requirements and standards in the renewable energy sector.

To sum it up, what the IRS is suggesting with this new rule in the Inflation Reduction Act is that folks in the clean energy game need to invest in technology. This investment will result in successful access to tax credits, while helping projects run smoother, increase transparency, and get clean energy projects ready for whatever the future throws their way in an ever-changing world.

The Inflation Reduction Act (IRA) has brought prevailing wage and clean energy together. The IRA includes nearly $270 billion for incentives and tax credits to encourage acceleration of efforts to implement clean energy initiatives.  Yet, in order to receive these benefits, businesses must ensure that people working on their projects are being paid the prevailing wage.

Combining these concepts is intended to have positive benefits for both the economy and environment and ensure those working and living in the communities where these initiatives are being implemented will benefit. Each project is required to pay its workers a prevailing wage and employ a certain number of apprentices so that these project investments also train workers for the future.

To be eligible for the tax credits, a business must document that its workers are being paid appropriately and affirm that they have the appropriate number of apprentices The reality is most organizations haven’t done this well and are intimidated to try. This post can de-mystify this issue and help get the projects and tax credits rolling for your initiatives.

Prevailing wage is often used in construction projects to ensure that workers are being paid wages that are comparable to what others are being paid in the region for the same type of work. There is a usually a wage determination for your geographic area, along with corresponding job classifications, and this information can be found at the Department of Labor’s sam.gov website. By coordinating with the local government offices, you will find guidance about the apprentice to journeyman ratio for each project, as well as information on the recordkeeping and reporting requirements. Having the right tools can make this very straightforward, even if you or your clients haven’t managed prevailing wage projects before.

At SkillSmart, our InSight technology is designed to ease challenges in the data collection and project management process.  By deploying our platform for one or multiple projects, InSight can:

• identify the wage classifications for you,
• capture and review your payroll information each week to ensure that all of your vendors and contractors are paying subcontractors appropriately,
• document your apprentices and workforce demographic data,
• allow you to monitor and project manage this real-time information in your dashboard,
• automatically generate a formatted report that demonstrates progress toward tax credit requirements.

At SkillSmart we are interested in working with partners focused on doing well while doing good.  If you or your clients are pursuing these enhanced clean energy and climate tax incentives and want help simplifying the prevailing wage requirements, please connect with us at www.skillsmart.us