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Infrastructure Bill - November 2021

Finally!  An infrastructure bill - what you need to know

Passage of Infrastructure Investment and Jobs Act / To be signed into law 11/15

On Friday, Nov. 5, the US House of Representatives passed the $1+ trillion Infrastructure Investment and Jobs Act (“IIJA”). The bill, originally passed by the Senate in August, is scheduled to be signed by President Joe Biden Monday, Nov. 15.

The following is a summary of the key components of the bill and, importantly, the major tax provisions – including termination of the popular Employee Retention Credit (“ERC”) effective 9/30/201 and a requirement for brokers to report transactions in digital assets, like cryptocurrency, with information returns filed in 2024.

Major Spending Items in IIJA

As indicated in its name, IIJA provides spending for a variety of infrastructure projects including:

  • $283.8 billion for Transportation – roads and bridges, passenger and freight rail, public transport, airports, ports and waterways and electric vehicle charging
  • $65 billion for Broadband
  • $65 billion for Power and the Electric Grid
  • $55 billion for Water projects

Tax Provisions Included in IIJA

The following are the potentially significant tax provisions in this legislation:

Termination of the Employee Retention Credit

The ERC was terminated effective September 30, 2021. There are some exceptions to this termination date for “recovery startup businesses” that started their business after February 15, 2020 and gross receipts cannot exceed $1 million.

Potential impact: Companies that planned to utilize the credit for the 4th quarter of 2021 will not receive this benefit for the 4th quarter. As a result, those companies may have underpaid applicable payroll taxes so far for the 4th quarter. It is currently unknown if the IRS will provide a practical method for payment of unpaid payroll taxes in these situations. The American Institute of CPAs (“AICPA”) has sent a letter to the IRS requesting guidance and penalty relief from the IRS in these situations. Perhaps the IRS will issue more guidance after the bill is signed on November 15. We will keep you posted.

Cryptoasset Reporting

The bill expands the definition of brokers required to provide transaction information returns to include “anyone who for consideration effectuates transfers of digital assets on behalf of another person.” For this purpose, “digital asset” is defined as “any digital representation of value which is recorded on a cryptographically secured distribution ledger or any similar technology.”

Potential impact: This provision, which is effective for information returns required to be filed after December 31, 2023, is intended to prevent taxpayers from failing to property report sales of cryptoassets.

Other noteworthy tax provisions include:

  • Amendment to language regarding automatic extensions for taxpayers affected by federally declared disasters
  • Extension of various high-way related taxes
  • Extension and modification of certain superfund excise taxes
  • Allow private activity bonds for qualified broadband projects and carbon dioxide capture facilities

Conclusion / Other Legislative Considerations

The IIJA is a major piece of bipartisan legislation, and the largest federal infrastructure bill in decades.

Next in focus: The Build Back Better (BBB) Act, still being negotiated in Congress. We previously posted a blog article summarizing the status of that pending legislation as of November 1, 2021 Tax Legislation Update: Updated Framework for "Build Back Better". As we indicated, the BBB Act is a work in progress, and it is currently uncertain if it will be enacted. We continue to monitor the situation and will provide pertinent updates as they occur.

Contact us at info@herbein.com for additional information.