If your project is audited under the Inflation Reduction Act (IRA), auditors will review your prevailing wage and apprenticeship compliance. Understanding the possible outcomes helps you respond quickly and protect your tax credits.
Possible Audit Results
Fully Compliant
All payroll, wage, and apprenticeship records are accurate.
Apprentice registrations, ratios, and labor-hour percentages meet requirements.
No action required; you remain eligible for enhanced IRA tax credits.
Minor Findings
Small documentation issues (e.g., missing notes, outdated file versions).
Auditors typically allow corrections within 30 days.
Once fixed, the project is cleared for compliance.
Significant Violations
Apprentices not properly registered.
Daily ratios not met or ignored.
Prevailing wage shortfalls or misclassifications.
These may trigger penalties or back-pay requirements.
Willful or Repeated Violations
Repeated failures to follow ratio or wage rules.
Intentional misclassification or ignoring apprentice requirements.
May lead to higher penalties ($500 per noncompliant hour) and possible disqualification from enhanced credits.
What Auditors Will Ask For
Certified payroll records (WH-347)
Apprentice and Trainee Worksheets (WH-357)
Signed apprenticeship agreements and wage schedules (Appendix A)
Apprentice labor-hour logs from Apprentix
Davis-Bacon certificates (for prevailing wage projects)
Proof of corrections or restitution, if applicable
How to Respond
Provide requested documents promptly.
Ensure certified payroll matches Apprentix data.
Document any corrective actions clearly and submit within deadlines.
Best Practices for Favorable Outcomes
Keep compliance records organized and accessible.
Use Apprentix for apprentice data, agreements, and certificates.
Partner with your payroll provider for prevailing wage and certified payroll documentation.
Conduct internal reviews before auditors arrive.