May 20, 2026
The short answer: The IRA good faith effort exception in 26 CFR 1.45-8(f)(1) deems a taxpayer to have satisfied the Inflation Reduction Act apprenticeship requirements when qualified apprentices were properly requested from a registered apprenticeship program and the request was either denied or not substantively answered within five business days, provided the denial was not caused by the taxpayer's refusal to comply with the program's established standards.
This guide is written for tax-credit project sponsors, EPC (engineering, procurement, and construction) compliance leads, contractors, and subcontractors claiming the increased credit or deduction amounts under the IRA. The good faith effort exception is the most commonly misused safety net in the IRA Prevailing Wage and Apprenticeship (PWA) regime, and the documentation standard for relying on it is higher than most teams realize.
The IRA conditions its increased tax-credit and deduction amounts on satisfying prevailing wage and registered apprenticeship rules. The statutory good faith effort exception sits in Internal Revenue Code section 45(b)(8)(D)(ii), and the implementing regulation appears in 26 CFR 1.45-8(f)(1). Treasury and the IRS finalized the operative regulations in Treasury Decision 9998, published in the Federal Register on June 25, 2024, with technical corrections issued August 16, 2024.
The exception is purely an apprenticeship rule. It does not excuse prevailing-wage underpayments. The regulation says that a denied or deemed-denied apprentice request can cause the taxpayer to be treated as satisfying section 45(b)(8)(A) through (C) and the corresponding regulatory apprenticeship provisions, but it does not cure wages paid below the applicable wage-determination rate. The IRS treats apprenticeship cure payments and prevailing-wage correction-plus-penalty payments as separate regimes under 26 CFR 1.45-7 and 26 CFR 1.45-8.
The exception is relevant to every IRA credit or deduction section that incorporates the apprenticeship rules: sections 30C, 45, 45Q, 45V, 45Y, 45Z, 48, 48C, 48E, and 179D. It is not relevant to sections 45L and 45U, which are prevailing-wage only and have no apprenticeship requirement on the face of the IRS FAQs on prevailing wage and apprenticeship. DOL administrative support comes from the Office of Apprenticeship (OA) and State Apprenticeship Agencies, but the IRS, not DOL, makes the final determination of whether the exception has been satisfied.
For broader context, see DSPTCH's related coverage of IRA apprenticeship ratio requirements and out-of-ratio consequences, the IRA prevailing wage compliance framework, certified payroll workflow for federal-tax-credit projects, and the cure and penalty correction process for IRA PWA failures.
Deemed satisfaction, not waiver. The exception is structured as a deeming rule. When a valid written request for qualified apprentices is denied or unanswered for five business days, the taxpayer is deemed to have satisfied the apprenticeship labor-hours and participation requirements with respect to the requested apprentices. The denied apprentice labor hours are treated as labor hours performed by qualified apprentices. Treasury's preamble to T.D. 9998 emphasizes that this treatment does not proportionately reduce the labor-hours requirement; the denied hours flow into the numerator as if they had been worked.
Apprenticeship only. Nothing in 26 CFR 1.45-8(f)(1) excuses a prevailing-wage violation. If an apprentice was actually on the job site and was paid less than the applicable wage-determination rate, the prevailing-wage correction-and-penalty framework in 26 CFR 1.45-7(c) still applies. A good faith effort claim does not paper over a wage underpayment.
Time-bound. A successful good faith effort claim deems satisfaction for the period described in the request, but not beyond 365 days (366 in a leap year). Any portion of a denied or unanswered request that runs beyond that window requires one or more additional valid requests. Treasury also notes there is no limit on the number of requests a taxpayer may make, and the same registered apprenticeship program does not have to be reapproached each time.
Partial denial requires acceptance. If a request is partially denied, the taxpayer, contractor, or subcontractor must accept the apprentices that were offered in order to claim the exception for the denied portion. Walking away from offered apprentices forfeits the exception for the unfilled hours.
No-program rule. If no registered apprenticeship program meets the regulatory criteria for the facility location and the needed occupation, the taxpayer is deemed to satisfy the exception for the apprentices it would have requested. Treasury added in the preamble that taxpayers must keep records substantiating that no such program existed at the time the request would have been made, plus documentation of the hypothetical requests and the work the apprentices would have performed.
According to 26 CFR 1.45-8(f)(1) and Treasury's preamble to T.D. 9998, taxpayers, contractors, and subcontractors relying on the good faith effort exception must send a request that meets each of the following requirements:
(1) Send the request to at least one registered apprenticeship program that has a geographic area of operation covering the facility location, trains apprentices in the needed occupation, and customarily places apprentices with employers consistent with 29 CFR parts 29 and 30.
(2) Transmit the request in writing, either electronically or by registered mail. Treasury's preamble expressly rejected telephone outreach as sufficient by itself for good faith effort purposes.
(3) Make the initial request no later than 45 days before the requested start date for apprentice employment, and any later request to the same program no later than 14 days before the requested start date.
(4) Include the proposed dates of employment, the occupation needed, the location of the work, the number of apprentices needed, the number of apprentice labor hours expected, and the name and contact information of the requester.
(5) Include an intent-to-employ statement saying the requester intends to employ the apprentices in the occupation for which they are being trained, in accordance with the registered apprenticeship program's requirements, and consistent with the anticipated hours and dates in the request.
(6) Identify the direct employer if it is different from the requester.
(7) Make estimates that are reasonable. Treasury's preamble allows estimates but expects records showing projected and actual labor needs, journeyworker and apprentice needs, and factors such as apprentice utilization plans or contract requirements. Requests lacking specific employment details or not reflecting reasonable estimates will not be treated as valid requests.
The request must go to a registered apprenticeship program. Treasury declined to treat union contacts as sufficient, and a taxpayer or contractor that sponsors its own registered apprenticeship program cannot manufacture a denial from its own program and rely on that denial. To claim the exception, a self-sponsoring entity must request from another registered apprenticeship program, or establish that no others cover the location.
Contacting the DOL Office of Apprenticeship or a State Apprenticeship Agency is not required to qualify for the exception. Treasury recommends doing so when locating a program is difficult, and the Office of Apprenticeship Circular 2025-02 confirms that Registration Agencies can provide technical assistance and referrals but are not authorized to determine whether good faith effort was met for IRA purposes. That determination remains with the IRS.
According to 26 CFR 1.45-8(f)(1), 26 CFR 1.45-12(d), and the current Instructions for Form 7220 (Rev. December 2025), taxpayers must:
(1) Identify the registered apprenticeship programs that cover the facility location and the needed occupations before construction starts, with sufficient lead time to meet the 45-day initial-request deadline.
(2) Send the written request electronically or by registered mail with proof of delivery, including all seven required content fields and the intent-to-employ statement.
(3) Track the five-business-day response window from receipt, and preserve evidence of receipt (read receipts, delivery confirmation, postal tracking).
(4) Accept any partial offer of apprentices in writing, and preserve documentation of the acceptance to support the exception for the denied portion.
(5) Maintain the records described in 26 CFR 1.45-12(d), including written requests for apprentices, OA or SAA contacts, apprenticeship agreements, program standards and ratio documents, total labor-hour records, daily apprentice-to-journeyworker ratios, records demonstrating compliance with the exception, penalty-payment documentation, and records showing failures and remediation steps.
(6) Complete Part V of Form 7220 and attach it to the return when claiming or transferring the increased credit amount. Part V identifies the entity directly employing qualified apprentices, the EIN, labor and work classification, number of apprentices requested, hours needed to satisfy the labor-hours requirement, hours requested and denied, and whether the program denied the request or failed to respond.
(7) For section 48 and section 48E claims, follow the Instructions for Form 3468 (2025), which require Form 7220 attachment plus an increased-credit statement with project identification and a penalties-of-perjury declaration.
The good faith effort exception has scope limits worth flagging:
(1) Apprenticeship only. The exception does not excuse prevailing-wage underpayments under 26 CFR 1.45-7. A separate wage-correction and IRS penalty regime applies if apprentices on covered work were paid less than the applicable wage-determination rate.
(2) Out-of-ratio hours. The exception treats denied apprentice hours as qualified-apprentice hours, but actual hours worked by apprentices in excess of the applicable daily ratio under 26 CFR 1.45-8(c) still do not count. The reviewed primary authorities do not extend the exception to actual out-of-ratio work.
(3) 365-day cap. The exception covers only the requested period, capped at 365 days (366 in a leap year). Longer periods require additional valid requests.
(4) Wrong-geography requests. Requests sent to programs outside the facility's geographic area of operation do not qualify, even if the program would otherwise meet the occupation and placement criteria.
(5) Self-sponsor denials. A denial from the requester's own registered apprenticeship program does not support the exception.
(6) Refusal to comply with program standards. A denial caused by the taxpayer's or contractor's refusal to comply with generally applicable program standards (for example, a partnership requirement) does not qualify.
(7) Sections 45L and 45U. These sections have no apprenticeship requirement and therefore no good faith effort exception. Wage-rate rules under 26 CFR 1.45-7 can still apply to apprentices on covered work.
If the good faith effort exception does not apply and the taxpayer cannot otherwise show satisfaction of the apprenticeship requirements, the consequences track the IRA apprenticeship cure framework:
Apprenticeship cure payment. Under 26 CFR 1.45-8(f)(2), the basic cure is $50 per labor hour for which the labor-hours or participation requirement was not satisfied ($500 per labor hour for intentional disregard). The shortfall is measured against counted qualified-apprentice hours plus hours qualifying for the exception. Paying the cure before the IRS issues a notice of examination creates a rebuttable presumption against intentional disregard.
No-cure consequence. If the taxpayer claims the increased credit amount, neither qualifies for the good faith effort exception, nor makes the cure payment, the regulations state that no 26 CFR 1.45-8(f)(2) penalty is assessed and the taxpayer is simply not eligible for the increased credit amount. The practical effect is loss of the five-times bonus on the underlying credit.
Qualifying Project Labor Agreement. Under 26 CFR 1.45-8(f)(2)(v) and the Form 7220 Instructions, the apprenticeship cure payment does not apply to work done under a qualifying project labor agreement (QPLA). A QPLA does not convert the exception into a prevailing-wage cure, and it does not erase separate prevailing-wage correction obligations.
Prevailing-wage exposure. If apprentices were actually employed but paid below the applicable wage-determination rate, the prevailing-wage framework under 26 CFR 1.45-7(c) requires a correction payment of the wage shortfall plus interest, and an IRS penalty of $5,000 per underpaid laborer or mechanic ($10,000 for intentional disregard). The good faith effort exception does not reach these consequences.
Intentional disregard signals. Treasury's preamble and 26 CFR 1.45-8(f)(2) point to compliance conduct that affects intentional-disregard analysis: contract clauses requiring apprentice use, regular review of contractor performance, follow-up with programs, and OA or SAA outreach. Even if the exception fails on its merits, the surrounding compliance record can change the penalty tier.
Public IRA PWA enforcement remains in early stages. The IRS released Notice 2022-61 on November 30, 2022, announcing the initial PWA guidance, and finalized the regulations in T.D. 9998 on June 25, 2024, with technical corrections on August 16, 2024. The IRS revised Form 7220 in December 2025 and published current Instructions reviewed April 30, 2026, formally codifying the Part V workflow for taxpayers claiming the exception. The DOL Office of Apprenticeship issued OA Circular 2025-02 on January 17, 2025, clarifying that DOL Registration Agencies are not authorized to determine whether good faith effort was satisfied for IRA tax purposes.
DOL Davis-Bacon Act (DBA) enforcement on traditional federal-funded projects continues at the Wage and Hour Division. WHD's Field Operations Handbook Chapter 15 and published back-wage recoveries on the WHD Enforcement Database provide analogical context for what IRA examinations are likely to scrutinize, particularly around apprentice request documentation and ratio recordkeeping.
(1) Requesting from the wrong type of recipient. Sending a request to a union local, hiring hall, or labor organization that is not itself a registered apprenticeship program does not satisfy 26 CFR 1.45-8(f)(1). Treasury rejected this practice in the preamble. The request must go to the registered program.
(2) Missing the 45-day or 14-day window. The exception requires the initial request to be sent at least 45 days before the requested start date, and any later request to the same program at least 14 days before. Late requests, even if otherwise complete, do not qualify.
(3) Treating spam-folder receipts as non-responses. Example 1 in 26 CFR 1.45-8(f)(1)(ii) makes the point directly: a program's substantive acceptance sent within five business days defeats the exception even if the email landed in a spam folder. Taxpayers cannot manufacture a deemed denial by failing to monitor their inbox.
(4) Walking away from partially offered apprentices. Example 4 in 26 CFR 1.45-8(f)(1)(ii) makes acceptance of offered apprentices a precondition for claiming the exception on the denied portion. Rejecting the partial offer forfeits the exception.
What is the IRA good faith effort exception?
The IRA good faith effort exception under 26 CFR 1.45-8(f)(1) deems a taxpayer to have satisfied the IRA apprenticeship requirements when a valid written request for qualified apprentices was either denied or not substantively answered within five business days by a registered apprenticeship program. The deemed period covers the dates in the request, capped at 365 days (366 in a leap year). The exception is apprenticeship only and does not cure prevailing-wage underpayments.
How do I qualify for the IRA good faith effort exception?
A valid request must go to a registered apprenticeship program whose geographic area of operation covers the facility, must be in writing (electronic or registered mail), must be sent at least 45 days before the apprentice start date (14 days for later requests to the same program), and must include the dates, occupation, location, count, hours, requester contact, intent-to-employ statement, and direct employer if different. Estimates must be reasonable. See 26 CFR 1.45-8(f)(1) and Treasury's preamble to T.D. 9998.
What is required in a good faith effort apprentice request?
The request must include the proposed dates of employment, the occupation needed, the location of work, the number of apprentices needed, the number of apprentice labor hours expected, the requester's name and contact information, an intent-to-employ statement, and identification of the direct employer if different from the requester. Reasonable estimates are allowed but must be supported by records showing projected and actual labor needs.
Does the IRA good faith effort exception apply to prevailing wage?
No. The exception in 26 CFR 1.45-8(f)(1) is an apprenticeship-only rule. Prevailing-wage underpayments are governed by 26 CFR 1.45-7(c) and require correction payments equal to the wage shortfall plus interest, plus an IRS penalty of $5,000 per underpaid laborer or mechanic ($10,000 for intentional disregard). Good faith effort does not reach those consequences.
What happens if no registered apprenticeship program covers my facility?
26 CFR 1.45-8(f)(1) deems the taxpayer to satisfy the exception for the apprentices it would have requested. Treasury's preamble requires records substantiating that no qualifying program existed at the time the request would have been made, plus documentation of the hypothetical requests and the work the apprentices would have performed.
How long does a successful good faith effort claim last?
A valid denied or unanswered request supports the exception for the requested period, capped at 365 days (366 in a leap year). For periods beyond that cap, the taxpayer must send one or more additional valid requests. There is no limit on the number of requests a taxpayer may make, and additional requests do not have to go to the same registered apprenticeship program.
Do I have to contact the DOL Office of Apprenticeship to qualify?
No. Contacting DOL OA or a State Apprenticeship Agency is not required by 26 CFR 1.45-8(f)(1). Treasury recommends it when locating a program is difficult, and evidence of such outreach can matter in later intentional-disregard analysis if the exception does not apply. OA Circular 2025-02 confirms that DOL Registration Agencies are not authorized to determine whether good faith effort was met for IRA purposes.
Need help with IRA good faith effort exception compliance? DSPTCH's real-time compliance software can help.
Want the full one-page reference?
We built a free one-pager that distills the IRA good faith effort exception into a printable reference, covering valid request requirements, the 45-day and 14-day windows, partial-denial mechanics, and the Form 7220 Part V filing workflow.
Download it here: Download the one-pager (PDF)
