Infrastructure bill tax provisions include ERC termination

By Alistair M. Nevius, J.D., and Ken Tysiac

The employee retention credit will be terminated early and broker reporting of cryptoasset transfers will be required as a result of legislation (H.R. 3684) that passed the House of Representatives late Friday and is headed to President Joe Biden's desk to be signed into law.

Editor’s note: President Joe Biden signed the bill into law on Nov. 15.

Known as the Infrastructure Investment and Jobs Act, the legislation was approved in the House by a 228–206 vote after passing the Senate by a 69–30 vote in August.

There are relatively few tax provisions in the infrastructure legislation, but more extensive changes may be coming in a fiscal year 2022 budget reconciliation bill that remains under consideration by Congress. Those would include extensions of recent changes to the child tax credit and the earned income tax credit; an 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 infrastructure legislation ends the employee retention credit (ERC) early, making wages paid after Sept. 30, 2021, ineligible for the credit (except for wages paid by an eligible recovery startup business).

The ERC was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, and amended by the Consolidated Appropriations Act, 2021, P.L. 116-260. The American Rescue Plan Act, P.L. 117-2, enacted March 11, made the ERC available to eligible employers for wages paid during the third and fourth quarters of 2021; however, H.R. 3684 would repeal the fourth-quarter extension. The IRS issued guidance on claiming the credit in the third and fourth quarters of 2021 (Notice 2021-49), but noted in that guidance that it is watching this legislative development.

Cryptoasset reporting

Section 80603 of the legislation will impose new cryptoasset information reporting requirements on brokers. The Sec. 6045(c)(1) definition of "broker" is expanded to include anyone who for consideration effectuates "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 is set to amend Sec. 6045A to require brokers to provide information returns reporting any transfers of digital assets to accounts that are not maintained by a broker.

Disaster relief

The legislation will modify the automatic extension of certain deadlines for taxpayers affected by federally declared disasters in Sec. 7508A, which was enacted in the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, P.L. 116-94. The definition of a disaster area in Sec. 7508A(d)(3) would be amended to mean "an area in which a major disaster for which the President provides financial assistance under section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5174) occurs." Currently, that paragraph cross-refers to the definition in Sec. 165(i)(5)(B).

Other tax provisions

The legislation includes other tax provisions, including extension of various highway-related taxes, and extension and modification of certain superfund excise taxes. It also would allow private activity bonds for qualified broadband projects and carbon dioxide capture facilities.  

Alistair M. Nevius, J.D., (Alistair.Nevius@aicpa-cima.com) is the JofA's editor-in-chief, tax. Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA's editorial director.

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