Regulations
      Back to home
      1. Reunion Help Center
      2. Regulations

      What Is Intentional Disregard in PWA Compliance?

      What Counts as Intentional Disregard—and How to Prevent It

      What Is Intentional Disregard in PWA Compliance?

      Intentional Disregard occurs when a taxpayer or contractor knowingly and willfully fails to comply with the prevailing wage or apprenticeship (PWA) requirements under the Inflation Reduction Act (IRA). Unlike an oversight or administrative error, it means the rules were understood but deliberately ignored.

      Why This Matters

      Violations deemed as Intentional Disregard carry significantly higher penalties compared to standard noncompliance:

      • Prevailing Wage Penalties

        • Standard: $5,000 per affected worker per year

        • Intentional Disregard: $10,000 per worker, plus triple corrective payments with interest

      • Apprenticeship Penalties

        • Standard: $50 per missed labor-hour

        • Intentional Disregard: $500 per missed labor-hour

      • Cure payments may not fully resolve penalties

      • You may risk reduced or lost eligibility for full clean energy tax credits

      How the IRS Assesses Intentional Disregard

      According to the IRS, whether a failure is considered Intentional Disregard depends on the specific facts and circumstances of each case. (IRS FAQ)

      Factors that may indicate Intentional Disregard include:

      • Ignoring repeated notices of noncompliance

      • Failing to make timely corrections

      • Maintaining inadequate records

      • Misclassifying workers to avoid proper wages or apprenticeship ratios

      • Lack of good faith efforts to meet apprenticeship requirements

      How to Avoid Being Classified as Intentional Disregard

      • Maintain comprehensive records: Document wage rates, labor hours, classifications, corrections made, and apprenticeship requests.

      • Take prompt corrective action when noncompliance is identified.

      • Regularly review wage determinations and audit compliance processes.

      • Include compliance clauses in contracts with contractors and subcontractors.

      • Document good faith efforts—especially for apprenticeship requests.

      Summary at a Glance

      Aspect Standard Failure Intentional Disregard
      Definition Unintentional or administrative error Willful neglect despite knowing rules
      Prevailing Wage Penalty $5,000 per affected worker/year $10,000 per worker + triple corrective payments
      Apprenticeship Penalty $50 per missed labor-hour $500 per missed labor-hour
      Assessment Factors Documentation errors, isolated lapses Recurring violations, lack of corrective action

      Official IRS Resources