In January 2026, the IRS released Form 7220, Prevailing Wage and Apprenticeship (PWA) Verification and Corrections, which finally creates a standardized way to document PW&A compliance on tax returns. The 2025 tax year is the first filing season in which it applies, making this largely uncharted territory for developers and their advisors. For any project that needs PW&A compliance to claim the full ITC or PTC rate, Form 7220 is now a required attachment to your return.

Here, we provide a brief refresher on PW&A requirements and then walk through how Form 7220 works in practice.

PW&A Requirements: A Quick Refresher

Under the IRA, the base credit rate for the Investment Tax Credit (48 or 48E) is 6%, increasing to 30% when prevailing wage and apprenticeship (PW&A) requirements are satisfied (or projects are exempted from them). For the Production Tax Credit (45 or 45Y), the base credit rate is 0.6 cents/kWh without PW&A, and 3.0 cents/kWh with it, for 2025 (adjusted for inflation annually). The same 5x multiplier applies across several other credits, including 179D, 45L, and 30C. For most clean energy developers, meeting PW&A isn't optional. It's what makes the project pencil.

There are two key exceptions that preserve the enhanced rate without compliance: projects with a maximum net output below 1 MWac and projects that began construction prior to January 29, 2023 are both exempt from the requirements and automatically eligible for the bonus rate.

For everyone else, here's what compliance requires:

Prevailing Wages. All laborers and mechanics on the project must be paid no less than the prevailing wage rate for federal construction work (the rate determined by job classification and location, published on sam.gov). The applicable rate locks in at contract execution and applies to all contractors and subcontractors. If the contract is later amended to change scope or extend the period, the wage rate resets to current levels. Developers are responsible for ensuring their contractors (and their subcontractors) comply, not just themselves.

Apprenticeship Requirements. Three separate requirements must be satisfied: (1) a minimum percentage of total construction labor hours must be performed by qualified apprentices from registered programs, or 12.5% for projects beginning construction in 2023, stepping up to 15% for 2024 and beyond; (2) the apprentice-to-journeyworker ratio set by the registered program must be met each day; and (3) any contractor or subcontractor employing four or more workers must employ at least one qualified apprentice. Apprenticeship requirements apply only during construction, not to post-construction alterations or repairs.

A Good Faith Effort Exception is available if a developer requests apprentices from a registered program and is denied or receives no response within 5 business days. That denial triggers a 365-day exemption period, after which new requests must be submitted.

Ongoing obligations. For ITC projects, the prevailing wage requirement extends through the five-year recapture period; for PTC projects under 45Y, it extends through the full 10-year production period. During this window, alterations or repairs must also be performed at prevailing wage rates. Developers must maintain payroll records for all workers, including any correction payments, whether work was performed directly or through contractors and subcontractors.

For a more detailed treatment of these requirements and the final regulations, see our earlier guide: Navigating the Final Guidance on PW&A Requirements.

Enter Form 7220

Form 7220 is now the required mechanism for claiming the bonus credit rate. It's not only for projects that made cure payments or had compliance issues; it must be filed by every taxpayer claiming the PW&A-enhanced credit amount.

A separate Form 7220 must be filed for each facility, so developers with multiple projects claiming enhanced credits will be filing multiple forms. The form attaches to the return on which the underlying credit is claimed, including Form 3468 for ITC and Form 7211 for PTC, among others.

Importantly, the obligation to file Form 7220 doesn't end at placed-in-service. For facilities placed in service in a prior year that claimed the bonus rate, developers must continue to file Form 7220 annually to report ongoing PW&A compliance during alterations or repairs for as long as the wage requirements remain in effect. If no alterations or repairs were performed during the year, the developer must attach a signed statement attesting to that fact.

Walking Through the Form

The form has five parts:

Part I — Facility/Project Information collects basic details: project description, address, coordinates, construction start date, and placed-in-service date. If the project uses a Section 6418 transfer or elective pay election, you'll also enter the IRS-issued pre-filing registration number here. One of the first-year questions asks whether the work was performed under a qualifying project labor agreement (PLA); a yes answer provides some additional compliance flexibility under the final regulations.

Part II — Prevailing Wages is the substantive wage reporting section. For each contractor or subcontractor that employed laborers or mechanics on the project, the developer lists the entity name and EIN, the labor classification, number of workers, total hours worked, total hourly wages paid, and total fringe benefits paid. This section applies at placed-in-service and in any subsequent year in which alterations or repairs were performed.

Part III — Apprenticeship Requirements follows the same structure: entity by entity, listing the number of apprentices by classification, total labor hours, wages, and, most critically, hours that did not satisfy the labor hour and participation requirements under Section 45(b)(8)(A) and (C). Those deficient hours are multiplied by $50 per hour to calculate the apprenticeship penalty, which flows to Form 4255 (the IRS’s credit recapture form, through which the penalty flows into the return).

Part IV — Corrections and Penalties (Prevailing Wage) is completed only if a developer made cure payments for prevailing wage underpayments. For each entity, it captures the number of workers covered by the penalty waiver, the number for whom a $5,000 per-worker penalty applies, and total correction amounts paid (back wages plus interest). This is where the mechanics of the two penalty-avoidance paths — the end-of-quarter cure and the collective bargaining agreement cure — get reported.

Part V — Good Faith Effort Exception is completed if a developer is relying on the apprenticeship Good Faith Effort Exception for some or all of the apprenticeship hours. For each entity, it documents how many apprentice hours were requested, how many were needed, how many were denied, and whether the denial came as a refusal or a non-response.

What This Means in Practice

Form 7220 doesn't create new obligations, it just formalizes how you evidence the ones that already exist. But the level of detail required in Parts II and III is a reminder that PW&A compliance is a record-keeping challenge as much as a construction management one. Payroll records, apprenticeship requests and denials, and contractor certifications all need to be organized and retained well before your return is filed, and the filing obligation continues annually for as long as the wage requirements remain in effect.

For the 2025 tax year, this is new for everyone. Any developer that placed a PW&A-complying project in service in 2025 needs to file; missing the form means missing the bonus rate. And while the documentation obligations follow the developer or seller of the credits, buyers aren’t off the hook: if a project is later found non-compliant, the buyer faces recapture of the increased credit amount, making PW&A diligence essential.

For projects transferring tax credits, Form 7220 creates a useful standardization point. Buyers should ensure that PW&A documentation is addressed in their transaction agreements and that they require sellers to provide the completed Form 7220 at tax filing. For deals already signed without that language, it's worth reaching out to sellers now before returns are due.

The Concentro team is happy to answer questions about PW&A compliance and Form 7220 as it applies to your project. Please feel free to contact the team.