The bipartisan infrastructure bill that the House passed over the weekend and sent to President Biden’s desk includes some tax-related provisions, including an early expiration of the Employee Retention Tax Credit and new rules for reporting on cryptocurrency transactions.
The $1.2 trillion bill, formally known as the Infrastructure Investment and Jobs Act, was approved by the Senate in August, and includes funding for improvements to the nation’s roads, bridges, public transit systems, railways, power grids, airports, railways, broadband internet and drinking water. It also contains some climate-related provisions to deal with pollution and climate change. Most of the tax provisions are included in the Democrats’ companion bill, the Build Back Better Act, but lawmakers are still negotiating that bill, although the Biden administration hopes to bring the $1.75 trillion bill up for a vote later this week in the House.
However, there are several tax provisions in the bipartisan infrastructure bill, including one that ends the Employee Retention Credit for wages paid after Sept. 30, 2021, rather than the end of the year, as a way to help pay for the cost of the bill. There are exceptions for so-called “recovery startup businesses,” however, but those need to have started their businesses after Feb. 15, 2020, and their gross receipts can’t exceed $1 million.
“Originally if the employer had met at least one of those tests to qualify for the credit, they no longer could claim the credit as a recovery startup business for the quarter,” wrote Ed Zollars, a partner at Thomas, Zollars & Lynch CPAs, on his
He predicts the IRS will provide relief in this area and tax advisors should watch for further guidance on whether any penalties or funds need to be repaid to the IRS by employers who decided to reduce their payroll tax deposits in the fourth quarter.
Another tax provision in the bill would require cryptocurrency “brokers” to provide information reporting on transactions over $10,000. It would take effect in 2023, with the first information reports to be filed by Feb. 15, 2024. Advocates for the crypto industry have been lobbying for the definition of “broker” to exclude companies like technology developers and cryptocurrency miners, and it may be narrowed by Congress or in Treasury Department regulations before the provision takes effect.
“One of the most discussed tax provisions of the IIJA with concerns being raised about the breadth of the transactions and entities that would be covered by these rules on digital assets, including concerns expressed by the Chairman of the Senate Finance Committee as the bill was nearing a Senate vote,” Zollars wrote. “Chairman Wyden proposed revised language, but an agreement was not reached before the bill came up for a vote. As the provision does not take effect until returns filed in 2024 covering 2023, it is very possible these provisions will be subject to changes in future legislation.”
Other tax-related provisions in the bill include ones related to the deadlines for disaster tax relief, automatically providing for 60 days after a disaster is declared or occurs for filing and paying income, estate, gift, employment or excise taxes, as well as filing a petition with the Tax Court, or filing a notice of appeal from a decision of the Tax Court, allowance of a credit or refund of any tax, filing a claim for a credit or refund of any tax, and filing a lawsuit claiming a tax credit or tax refund.
Taxpayers who have been in combat zones will also get more time to file petitions with the Tax Court. Taxpayers who have suffered from a “significant fire” will also get more time on tax deadlines.
Another provision adds a special exclusion from income for qualified contributions to a company’s capital for some regulated public water and sewage disposal utilities, including a “contribution in aid of construction.”
The bill also extends the interest rate stabilization table for the minimum funding requirements for single-employer defined benefit plans for another five years, until the end of 2030.
In addition, the bill extends and modifies some highway taxes and superfund excise taxes, and enables private activity bonds to be used for some broadband internet projects and carbon capture facilities.
