The Inflation Reduction Act (IRA) provides $500 billion in new spending and tax breaks to boost clean energy, increase tax revenues, and reduce healthcare costs.
Signed into law in August 2022, the IRA is the third piece of U.S. legislation passed in the past two years that aims to improve U.S. economic competitiveness, innovation, and industrial productivity. The funds will be delivered through tax incentives, grants, and loan guarantees.
Although the IRA’s incentives for clean electricity infrastructure investments and electric vehicles are getting the lion’s share of the headlines, the legislation offers benefits related to the workforce as well. The act is designed to ensure Davis-Bacon Act prevailing wages are paid to workers on such projects and registered apprenticeships are utilized.
Perhaps one of the best ways to ensure your business can qualify for these benefits is by using a contractor data management solution like the TRACK® platform. As you'll see, TRACK is a perfect fit for businesses that need a seamless way to demonstrate they qualify for these credits as detailed below.
Credits Advantageous to Your Organization
Earlier this year, the U.S. Treasury Department and the IRS published initial guidance on IRA section 48C(e) – the Advanced Energy Project Credit Program. The goal of the program, which was established by the 2009 Recovery Act and expanded with a $10 billion investment under the IRA, is to strengthen U.S. industrial competitiveness and expand clean energy-powered supply chains.
Legislators established the program to allocate tax credits for qualified investments in eligible advanced energy projects including clean energy manufacturing and recycling, greenhouse gas emission reduction, and critical materials refining, reprocessing, and recycling. It incentivizes businesses if they meet prevailing wage (going pay rates) and apprenticeship requirements. The program will provide an investment tax credit of up to 30% of qualified investment projects that do so.
Specifically:
- Worker pay cannot be less than the prevailing wage rates in the area where the project is located. The prevailing wage is the combination of the basic hourly wage rate and any fringe benefits rate, paid to workers in a specific classification of labor as determined by the Secretary of Labor.
- Depending on the construction start date, a minimum of 10% to 15% of total labor hours must be performed by qualified apprentices. For example, the percentage is 10% for projects in which construction starts in 2022 or earlier, 12.5% for projects starting construction in 2023, and 15% thereafter. Project owners can still qualify for the full tax credit value if they demonstrate a "good faith effort" to meet the requirements, including making written requests to qualified programs.
One potential wrinkle? There is an ongoing labor shortage that is exacerbated by an aging workforce and a high demand for craft workers.
Using Tech to Overcome Hiring Challenges
As such, companies who want to qualify for tax credits could face two issues: attracting workers/apprentices and ensuring they have the right technology to deliver the workplace data to prove they qualify.
According to Forbes, there’s a shortage of approximately 600,000 manufacturing jobs today. McKinsey notes that 41% of the current U.S. construction workforce is expected to retire by 2031.
Clean energy executives have raised concerns about the potential for labor shortages and a lack of apprenticeship programs in some areas.
Even as companies overcome these challenges and find workers to hire, they will still need the right tech tools in place to prove their employees’ status, whether they are new on the job or bring 40 years of experience. 
TRACK Helps You Qualify for Tax Credits
Management Controls’ TRACK® platform, which automates time tracking and shows the percentage of apprentices you have on hand, can confirm that you meet prevailing time and apprenticeship requirements to get the 48C(e) tax credit.
Using existing TRACK data, customers can request Management Controls build a custom dashboard/report that contains wage-rate benchmarking to simplify the process of applying for the program. The dashboard can also show the ratio of apprentices you use versus more seasoned journeymen.
Along with wages paid and worker/contractor skill level/title, TRACK helps companies:
- Validate worker location in real-time.
- Automatically capture accurate hours and costs and pay only what is in contract agreements.
- Help manage work sites, whether in a facility or at remote locations.
With a 30-year-plus history, Management Controls’ TRACK platform is used in more than 300 industrial sites in industries that include construction, oil and gas, metals and mining, pulp and paper, chemicals, utilities, and more. The system eliminates manual, paper-based timesheets and processes and enables real-time visibility into your contractor workforce, including skill qualifications.
Why TRACK, Why Now?
Although the initial application deadline has passed, future phases of 48C(e) will allow manufacturers to apply for these tax credits. Management Controls is following these phases for potential legislative changes and upcoming application deadlines. Don’t wait, though. By using TRACK to help qualify for the next tax credit, the 30% the company receives would be more than enough to help offset its investment in the platform and consulting services.
Existing TRACK clients should reach out to their customer account manager to request a customized dashboard to track information relevant to the 48C(e) incentive. Those new to Management Controls should contact sales@mccorp.com to find out how we can help you qualify for the tax credits.
Management Controls is here to help companies benefit from the Qualifying Advanced Energy Project Credit (48C) program. Although the language in the actual document is complex, we are here to help you simplify it and see how you can benefit.
