Infrastructure Bill Includes Tax Provisions You’ll Want to Know About

President Joe Biden announced he’ll sign the Infrastructure Investment and Jobs Act (IIJA), better known as the bipartisan infrastructure bill, into law on Monday, November 15.

While the bulk of the bill is directed toward massive investment in infrastructure projects across the country, a handful of noteworthy tax provisions are tucked inside. Here’s what you need to know about them.

Early Termination of Employee Retention Credit

The IIJA will terminate the employee retention credit (ERC) created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act earlier than originally planned.

The American Rescue Plan Act (ARPA) had extended the credit to eligible employers for the third and fourth quarters of 2021, through December 31, 2021. Under the new law, the ERC, which for 2021 is worth up to $7,000 per qualifying employee per quarter, is no longer available for wages paid after September 30, 2021. This early termination doesn’t apply to recovery start-up businesses.

The ARPA generally defines recovery start-up businesses as those that began operating after February 15, 2020, with annual gross receipts for the three previous tax years of less than or equal to $1 million.

These employers can claim the ERC for up to $50,000 total per quarter for the third and fourth quarters of 2021 without showing suspended operations or reduced receipts.

New Information Reporting on Digital Assets

The IIJA will require brokers to report to the IRS the cost basis of digital assets transferred by their clients to nonbrokers, similar to how securities brokers report stock and bond trades.

Digital assets are defined as any digital representation of value that’s recorded on a cryptographically secured distributed ledger or similar technology. This definition could ensnare not only cryptocurrencies—such as Bitcoin and Ethereum—but also certain nonfungible tokens (NFTs). The IIJA will expand the definition of broker to include those who operate trading platforms for digital assets, such as cryptocurrency exchanges.

The IIJA will also modify existing tax law to treat digital assets as cash. As a result, individuals engaged in a trade or business will need to submit IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, when they receive such amounts in one transaction or multiple related transactions.

The digital assets provisions will take effect for returns required to be filed, and statements required to be furnished, after December 31, 2023. The IRS is expected to provide guidance before that time, but some businesses may find that accepting cryptocurrencies for payment won’t be worth the reporting burden.

While the bulk of the bill is directed toward massive investment in infrastructure projects across the country, a handful of noteworthy tax provisions are tucked inside.

Miscellaneous Tax Provisions

The IIJA includes a few additional tax provisions, including the following:

  • Extends several excise taxes used to fund highway spending
  • Extends and modifies certain superfund excise taxes
  • Allows private activity bonds for qualified broadband projects and carbon dioxide capture facilities
  • Extends pension funding relief
  • Expands certain IRS administrative relief for taxpayers affected by federally declared disasters and significant fires

Build Back Better Act

In addition to the IIJA, the Democrats proposed additional tax law changes in the Build Back Better Act (BBBA). The BBBA is still being discussed in the House of Representatives and Senate, and the proposals released so far are likely to change.

While the details remain uncertain, the BBBA could ultimately include significant provisions regarding the following:

  • Child tax credit
  • Cap on state and local tax deductions
  • Limits on the business interest expense deduction

We’ll keep you current on the developments that could affect your personal and business’s bottom lines.

We’re Here to Help

For more information about how the tax provisions in the IIJA may affect you or your company, contact your Moss Adams professional.

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