The IRA Is Not Davis-Bacon

Complying with prevailing wage and apprenticeship (PW&A) requirements under the Inflation Reduction Act (IRA) can significantly enhance the value of tax credits for qualifying energy projects, a five times multiplier. However, unlike Davis-Bacon, compliance with these requirements is complex and challenging to verify. While Davis-Bacon is a labor law, PW&A falls under tax law, necessitating compliance submissions to the Internal Revenue Service (IRS) along with stringent, extended record-keeping requirements.

For contractors, this means continuously addressing noncompliance issues, paying penalties and maintaining extensive records. Manual record-keeping, such as using Excel, is not enough. Project owners and credit seekers for clean energy projects face significant risk and are looking to contractors to comply with PW&A requirements to maximize their tax credit value.

In response to the confusion about the similarities and differences between Davis-Bacon and the PW&A requirements of the IRA, AGC of America partnered with Baker Tilly offer a quick one-pager comparison guide.