SECTION 4. PREVAILING

WAGE AND APPRENTICESHIP REQUIREMENTS

.01 Prevailing Wage Requirement (1) Pursuant to § 48C(e)(5)(A), to meet the prevailing wage requirements, a taxpayer must ensure that any laborers and mechanics employed by the taxpay­ er or any contractor or subcontractor in the re-equipping, expansion, or estab­ lishment of a manufacturing facility that is part of a qualifying advanced energy project are paid wages at rates not less than the prevailing rates for construc­ tion, alteration, or repair of a similar character in the locality in which such project is located as most recently de­ termined by the Secretary of Labor. See section 3 of Notice 2022-61, 87 F.R. 73580 (Nov. 30, 2022), for additional information regarding the prevailing wage requirements.

(2) In accordance with § 48C(e)(5)(B), a taxpayer that fails to satisfy the prevail­ ing wage requirements for any laborer or mechanic employed by the taxpayer or any contractor or subcontractor in the re-equipping, expansion, or establishment of a manufacturing facility that is part of a qualifying advanced energy project will be deemed to have satisfied the prevailing wage requirement if the taxpayer:

(a) makes a payment to any such labor­ er or mechanic employed by the taxpayer or any contractor or subcontractor in the re-equipping, expansion, or establishment of a manufacturing facility in an amount equal to the sum of the difference between the amount of wages paid to such labor­ er or mechanic and the amount of wages required to be paid to such laborer or me­ chanic (three times the sum of back wages due in the case of intentional disregard), plus interest on such difference at the un­ derpayment rate established under § 6621 (substituting “6 percentage points” for “3 percentage points” in § 6621(a)(2)) and

(b) makes a payment to the Secretary of $5,000 ($10,000 in the case of inten­ tional disregard) multiplied by the number of laborers and mechanics who were paid wages below the prevailing wage for any period during such year.

.02 Apprenticeship Requirements (1) In accordance with § 48C(e)(6) and rules similar to § 45(b)(8), to meet the apprenticeship requirements, taxpayers must ensure that not less than 10 percent, 12.5 percent, or 15 percent (depending on the beginning of construction date) of the total labor hours for the construc­ tion, alteration or repair work must be performed by qualified apprentices. The labor hours requirement is subject to the apprentice-to-journey worker ratios of the Department of Labor or applicable State apprenticeship agency. In addition, each taxpayer, contractor, or subcontractor who employs 4 or more individuals to perform construction, alteration or repair work related to re-equipping, expanding, or es­ tablishing an industrial or manufacturing facility must employ 1 or more qualified apprentices to perform the work. See sec­ tion 4 of Notice 2022-61 for additional information about the apprenticeship re­ quirements.

(2) A taxpayer will not be treated as failing to satisfy the apprenticeship re­

quirements if the taxpayer satisfies either of the following:

(a) The taxpayer pays a penalty to the Secretary in the amount of $50 ($500 if the failure is due to intentional disregard) multiplied by the total labor hours for which the taxpayer failed to meet the ap­ prenticeship requirements, or

(b) The taxpayer made a good faith effort in accordance with section 4.01 of Notice 2022-61.

.03 Credit Rate Conditioned Upon Pre- vailing Wage and Apprenticeship Require- ments .

(1) A taxpayer that satisfies the prevail­ ing wage and apprenticeship requirements may claim a credit that is equal to 30 per­ cent of the taxpayer’s qualified investment for such taxable year with respect to any qualified energy project.

(2) A taxpayer that fails to satisfy the prevailing wage and apprenticeship re­ quirements generally may only claim a credit equal to 6 percent of the taxpayer’s qualified investment for such taxable with respect to any qualified advanced energy project. However, such a taxpayer may claim a credit equal to 30 percent of the taxpayer’s qualified investment for such taxable year with respect to any qualified advanced energy project if:

(a) In the event the taxpayer failed to meet the prevailing wage requirements, it pays the correction and penalty amounts related to such failure to satisfy the pre­ vailing wage requirements as described in section 4.01(2) of this notice; or

(b) In the event the taxpayer failed to meet the apprenticeship requirements, it pays the penalty amount related to such failure to satisfy the apprenticeship re­ quirements or meets the good faith effort exception described in section 4.02(2) of this notice.

(3) See section 5.07 of this notice for information regarding when an applicant must declare whether it will meet the pre­ vailing wage and apprenticeship require­ ments for § 48C.