IRA Section 48E Clean Electricity Investment Tax Credit: Compliance Requirements

File Form 3468 (Investment Credit) with annual tax return for the first taxable year claiming the credit, and file Form 7220 (Prevailing Wage and Apprenticeship Verification and Corrections) for each facility if claiming increased credit based on PWA compliance.

Deadline: with taxpayer's annual tax return for each year in the recapture period

Source: Instructions Form 3468 (2025); Form 7220

For elective pay (direct pay) claims, pre-filing registration is required with the IRS before claiming the credit. Tax-exempt and governmental entities must complete pre-filing registration for each project.

Deadline: must be completed before filing the return claiming elective pay

Source: IRS Publication 6045; 26 USC 6417

For facilities beginning construction after December 31, 2025, ensure no material assistance from prohibited foreign entities of concern (as defined in IRC 7701(a)(52)) is used in construction, or the facility will be disqualified.

Deadline: must be verified before construction begins after December 31, 2025

Source: 26 USC 48E(b)(6)

Pay prevailing wages to all laborers and mechanics during construction, alteration, or repair work (including during the 5-year recapture period), unless the facility is under 1 megawatt or began construction before January 29, 2023. Failure to comply reduces credit from 30% to 6% or triggers penalties of $5,000 per underpaid worker ($10,000 for intentional violations).

Deadline: wages must be paid at prevailing rates throughout construction and during the 5-year recapture period for alterations/repairs

Source: 26 USC 48E(a)(2); Final Regulations 1.48-13; Notice 2023-38

Employ registered apprentices for 12.5%-15% of total labor hours (depending on construction start date) and meet apprenticeship ratio and participation requirements. Non-compliance triggers $50 penalty per non-complying labor hour ($500 for intentional violations).

Deadline: throughout all construction, alteration, and repair activities

Source: 26 USC 48E(a)(2)(A)(ii); Instructions Form 3468; IRS PWA FAQs

Maintain greenhouse gas emissions rate of zero grams or not greater than 10 grams CO2e per kWh throughout facility operation. If IRS determines emissions exceed 10 grams CO2e/kWh, the property ceases to be investment credit property and credit is recaptured.

Deadline: continuous compliance after facility is placed in service

Source: 26 USC 48E(g); 26 USC 50 (recapture)

Maintain records under IRC Section 6001 to substantiate domestic content compliance if claiming the 10-percentage point domestic content bonus, including a Domestic Content Certification Statement attached to Form 3468 in the first year claimed.

Deadline: Certification Statement must be attached to Form 3468 filed with the first annual return claiming the domestic content bonus

Source: Notice 2023-38 Section 6; Instructions Form 3468

Do not claim both the Section 48E investment tax credit and the Section 45Y production tax credit (or legacy Section 45/48 credits) for the same facility. An irrevocable election must be made between ITC and PTC.

Deadline: election is irrevocable and made when first claiming credit

Source: 26 USC 48E(b)(3); IRS Publication 6045