On November 15, 2021, the President signed the Infrastructure Investment and Jobs Act (IIA). There are very few tax provisions in the infrastructure legislation; however, most of the tax changes may be coming into effect in the fiscal year 2022 budget reconciliation bill that remains under review by Congress. Those would include extensions of recent changes to the following:
• Child tax credit
• Earned income tax credit;
• Expanded premium tax credit;
• Relief from the $10,000 state and local tax deduction cap;
• Corporate and international tax changes; and
• Limits on the interest expense deduction.
Employee retention credit
The ERC was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and amended by the Consolidated Appropriations Act, 2021 (CAA). The American Rescue Plan Act, enacted March 11, made the ERC available to eligible employers for wages paid during the third and fourth quarters of 2021; however, the Bill would repeal the fourth-quarter extension. The IRS issued guidance Notice 2021-49 on claiming the credit in the third and fourth quarters of 2021, but that guidance is no longer in effect. The infrastructure legislation ends the employee retention credit (ERC) early, making wages paid after September 30, 2021, ineligible for the credit (except for wages paid by an eligible recovery startup business). There is still an opportunity to amend prior years Form 941’s for businesses that have not taken advantage of the credit since its availability that started in March 2020 through September 30, 2021.
The legislation will impose new crypto asset information reporting requirements on brokers effective for transactions occurring on or after January 1, 2023. Prior to the passage of the Bill, Internal Revenue Service issued notice guidance along with FAQ’s and revenue rulings.
Currently, Form 1099-B is used to report gains and losses from stocks, commodities, regulated futures contracts, foreign currency contracts, forward contracts, options, etc. The new rules ensure the IRS receives the information necessary to calculate the gain or loss from crypto-asset transactions.
Section 6045 expands the definition of a “broker” to include “anyone who for consideration effectuates the transfers of digital assets on behalf of another person.” For these purposes, “digital asset” is defined as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.”
The legislation amends Sec. 6045A to require brokers to provide information returns reporting any transfers of digital assets to accounts that are not maintained by a broker.
In addition, the Infrastructure Bill expands IRC Section 6050 (a) to treat digital assets like cash in which trade or businesses will be required to report cash payments over $10,000 received in a trade or business on Form 8300.
Other tax provisions
The legislation includes other tax provisions, including the extension of various highway-related taxes and the extension and modification of certain superfund excise taxes. It also would allow private activity bonds for qualified broadband projects and carbon dioxide capture facilities. The legislation will modify the automatic extension of certain deadlines for taxpayers affected by federally declared disasters, which was enacted in the Setting Every Community Up for Retirement Enhancement (SECURE) Act.
Our CPAs are available, and we have the knowledge, skill, and information that you need right now to address your financial needs impacted by the Infrastructure Investment and Jobs Act. Contact us today.
Maria is a Partner at Wilke & Associates, serving closely-held businesses in manufacturing, real estate, transportation/logistics, technology industries, and high net worth individuals and executives in delivering effective tax strategies.