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.