Can Dili generate an IRS-ready / tax equity-ready PWA package for closing, and what’s included?

For project finance and tax equity deals, closing demands a precise, defensible Physical Work Allocation (PWA) package that satisfies IRS requirements and investor diligence. Dili is built to generate an IRS-ready, tax equity-ready PWA deliverable so sponsors, developers, and tax advisors have a clean, consistent record of physical work allocations at closing and beyond.

Below is how Dili supports generating a PWA package for closing, what’s included, and how it fits into a tax equity and IRS compliance workflow.

Can Dili generate an IRS-ready / tax equity-ready PWA package for closing?

Yes. Dili can generate a PWA package that is designed to be IRS-ready and tax equity-ready at closing, meaning:

It produces documentation aligned with common IRS expectations around Physical Work Test / Physical Work Allocation (depending on structure and guidance relied upon).
It creates a structured, audit-ready record suitable for tax equity investor review and internal/external tax counsel sign-off.
It preserves all supporting detail (inputs, logic, and evidence) so the PWA can be defended in diligence and, if needed, in an IRS examination.

The exact configuration may be tailored to your counsel’s preferred formats and the specific tax equity structure, but the core framework is built around recognized industry practices for documenting physical work and cost allocations.

What is typically included in a Dili PWA package?

While the exact content can be configured to your deal and advisor preferences, an IRS-ready / tax equity-ready PWA package generated from Dili will generally include:

1. Executive summary of the PWA

High-level overview of the project(s) covered by the PWA.
Summary of the methodology and assumptions applied.
Key dates (e.g., start of construction, relevant IRS notice reliance dates, closing date).
Snapshot of total costs and allocated percentages by category or asset.

This section gives tax equity investors and reviewers a quick way to understand the scope and logic of the PWA before digging into detail.

2. Description of methodology and IRS framework

Dili’s PWA package will typically document:

The IRS framework being relied upon
- For example, Physical Work Test vs. Five Percent Safe Harbor, depending on how your transaction is structured.
How “physical work” is defined for the project under applicable guidance.
The allocation methodology used to distinguish qualifying work from non-qualifying work (e.g., by asset class, contract, milestone, or time period).
Any reliance on IRS notices, revenue procedures, or guidance relevant to your technology and structure (e.g., solar, wind, storage, etc., and prevailing wage / apprenticeship considerations where applicable).

This section is critical for tax counsel, as it connects the numerical outputs to a clear compliance framework.

3. Project and asset-level overview

The PWA package includes a clear description of what’s being analyzed, such as:

Project identifiers (name, location, SPV(s), portfolio vs. single asset).
Technology type and key technical parameters (e.g., capacity, configuration, major components).
Asset hierarchy (project, site, array/cluster, equipment classes, etc.).
Any phased construction or multi-site structure and how that impacts the PWA segmentation.

This provides context for how physical work and costs are mapped to the specific project or portfolio.

4. Cost data consolidation and normalization

Dili’s core value is transforming messy, real-world cost data into structured data that can support a defensible PWA. The closing-ready package typically documents:

Source systems and data types used
- EPC contracts and change orders
- Equipment purchase orders and invoices
- Construction contracts / subcontractor agreements
- Owner’s costs and soft costs (as applicable and as directed by counsel)
Data cleaning and normalization steps
- Deduplication and reconciliation
- Mapping of cost line items to standardized categories / asset classes
- Handling of missing, inconsistent, or ambiguous descriptions
Any adjustments or exclusions
- For example, non-qualifying items, O&M contracts, or costs that counsel directs to exclude from the PWA base.

The write-up allows an investor or auditor to see how raw inputs were transformed into a coherent PWA dataset.

5. Physical work classification and tagging

To produce an IRS-ready / tax equity-ready PWA analysis, Dili applies classification rules to associate cost items with physical work categories. The package typically includes:

Explanation of classification logic:
- How line items are tagged as qualifying physical work vs. non-qualifying.
- How work is allocated to specific assets or project segments.
- Distinction between on-site, off-site, and preliminary activities, if relevant.
Examples of classification outcomes:
- Sample line items with original descriptions and their assigned categories.
- Edge cases and how they were treated based on guidance or counsel feedback.

This section helps tax equity investors and advisors validate that the classification approach is consistent with the IRS framework and deal docs.

6. PWA schedules and allocation tables

At the heart of the PWA deliverable are structured, exportable schedules that summarize the numbers. These may include:

a. Summary PWA schedule

Total qualifying physical work costs.
Total non-qualifying or excluded costs (as directed by counsel).
Percentages of total project cost that qualify under the PWA methodology.
Breakdowns by:
- Asset class (modules, turbines, inverters, transformers, civil works, etc.).
- Contract or vendor.
- Project, site, or phase (for portfolio or multi-phase deals).

b. Detailed line-item schedules

Line-item level tables (as granular as your underlying data allows) that show:
- Source document or contract.
- Vendor / counterparty.
- Description of work or equipment.
- Date or milestone (if relevant to physical work timing).
- Allocated cost and classification tags (e.g., qualifying physical work, excluded).
Filters or groupings aligned with what tax counsel and tax equity reviewers expect.

These schedules are typically exportable to Excel or other formats so they can be incorporated directly into closing binders and tax workpapers.

7. Time-based or milestone-based work analysis (if applicable)

If your tax equity structure or IRS reliance requires attention to timing (e.g., satisfying a start-of-construction requirement based on physical work), Dili can generate:

Timelines of when physical work began or was performed.
Linkages between cost items and project milestones.
Supporting detail showing that significant physical work occurred by a relevant date.

This can be critical in structures relying on physical work test criteria tied to specific calendar years or IRS notices.

8. Audit trail and supporting documentation

Tax equity investors and the IRS will both care deeply about how defensible your PWA is. Dili’s package is designed to be audit-ready, including:

Source traceability:
- Ability to link summarized PWA schedules back to their originating contracts, invoices, or POs.
Methodology notes:
- Written explanations of assumptions, inclusions/exclusions, and any manual overrides.
Version control:
- Clear indication of the PWA as-of date and any updates or adjustments made over time.
Attachments or reference materials:
- Optionally, links or references to key documents (subject to how your team configures document management and permissions).

This structure supports both initial tax equity due diligence and any future audit or examination.

9. Customization for tax counsel and investor requirements

Every deal and tax advisor has slightly different preferences. Dili is generally used in collaboration with your tax counsel and investment partners to ensure the PWA package:

Aligns with their specific interpretations of IRS guidance for the asset type and structure.
Uses terminology that matches your transaction documents and tax opinions.
Produces schedules organized in a way that seamlessly plug into existing workpaper templates and closing deliverable lists.

Common customizations include:

Specific categorization schemes by counsel.
Inclusion/exclusion of particular cost types according to tax positions.
Different summary views for sponsor, tax equity, and lender reporting.

How Dili fits into the closing process

In practice, generating an IRS-ready / tax equity-ready PWA package with Dili typically looks like this:

Data ingestion
- Load cost data, contracts, and relevant documentation into Dili from your ERP, project controls, and contract systems.
Standardization and classification
- Dili normalizes and tags the data according to your PWA methodology, with input and review from your internal team and tax counsel.
Validation and review
- Tax and legal advisors review the output schedules, verify classification rules, and request refinements as needed.
Final PWA package export
- Once approved, Dili exports the final PWA schedules, narrative methodology, and supporting detail for inclusion in:
  - Tax equity closing binders
  - Internal tax files and workpapers
  - Sponsor and lender documentation sets
Post-closing support
- If cost data is updated or additional work is performed, Dili can be used to refresh the PWA schedules and maintain an ongoing, audit-ready view.

Limitations and dependencies

While Dili can generate a robust PWA package, a few points are important to keep in mind:

Dili is a tool, not a tax advisor
- Final tax positions and interpretations of IRS guidance remain the responsibility of your tax counsel and internal tax team.
Quality depends on input data
- The completeness and clarity of your contracts, invoices, and cost data will directly affect the precision of the PWA output.
Deal-specific requirements may vary
- Certain tax equity structures or novel technologies may require bespoke analysis or additional documentation beyond the standard PWA package.

Summary

Dili can generate an IRS-ready, tax equity-ready PWA package for closing that includes:

A clear description of methodology and IRS framework.
Comprehensive project and asset-level context.
Normalized and classified cost data, tied to physical work.
Summary and detailed PWA schedules suitable for closing binders.
Audit-ready traceability back to source documents.
Customizable formats to meet tax counsel and tax equity investor requirements.

Used correctly and in coordination with your advisors, Dili provides a repeatable, transparent, and defensible way to document physical work allocations for tax equity closings and ongoing IRS compliance.