President Biden signed the Infrastructure Investment and Jobs Act (the Act) into law on November 15, 2021. While the thrust of the Act embodied in its 2,740 pages is $1.2 trillion of federal expenditures on roads, bridges, highways, internet, and other infrastructure-related areas, it also included several tax provisions, which we have highlighted below.
The Act includes a provision that amends Internal Revenue Code (IRC) Section 6045 to expand information reporting requirements to include brokers or any person who is responsible for regularly providing any service effectuating transfers of digital assets, including cryptocurrency, on behalf of another person. This would make required reporting similar to that required for traditional assets like stock and bonds.
The Act also adds digital assets to current rules that require businesses to report cash payments over $10,000. As a result, persons engaged in a trade or business would be required to report via Form 8300 (Report of Cash Payments over $10,000 Received in a Trade or Business) when they receive digital assets (or cash) in one transaction or a series of related transactions.
These provisions apply to returns required to be filed and statements required to be furnished after December 31, 2023.
The Treasury Department has informally indicated they will not target non-brokers, such as miners and software developers, but the statute does not preclude application to non-brokers.
Early Termination of Employee Retention Credit (ERC)
The ERC was implemented as part of the CARES Act in response to COVID to assist businesses with employee costs and was extended in pre-Act law through December 31, 2021. The Act includes a provision that amends IRC Section 3134 to make the ERC available only for wages paid before October 1, 2021, three months earlier than the current statute, which allowed the ERC for wages paid before January 1, 2022. The provision applies to calendar quarters beginning after September 30, 2021. “Recovery Start-up Businesses” that began operations after February 15, 2020, and had annual gross receipts under $1 million are still eligible for the ERC for the last quarter of 2021.
Defined Benefit Pension Plan Minimum Funding Change
The Act includes a revenue-raising provision that modifies the IRC Section 430(h)(2)(C)(iv) table of applicable minimum and maximum percentages with respect to certain pension plans, known as “pension smoothing.” This is estimated to raise approximately $2.9 billion over a 10-year period by reducing the level of deductible employer pension contributions required under the pension funding rules. These amendments apply to plan years beginning after December 31, 2021. The gist of this is that minimum funding requirements were relaxed, such that projected pension contributions and related tax deductions will be deferred, resulting in increased federal revenue under the scoring of the Act.
Excise Tax Modifications
The Act also reinstates and modifies some expired Superfund excise taxes imposed on the production of specified chemicals, generally effective July 1, 2022 through December 31, 2031, and extends various highway-related excise taxes (including fuel taxes and heavy vehicle use taxes) and related exemptions for six years.
Extension of Time to File Federal Tax Court Petitions
The Act provides for a tolling of the normal 90-day deadline to file a U.S. Tax Court petition once a statutory notice of deficiency has been received. If the Tax Court is determined to be inaccessible, taxpayers would be granted 14 days beyond the date the Tax Court reopens from inaccessibility to submit their petition.
More to Come
Note that the majority of the tax law changes being negotiated and reported on in the press that you may be aware of were not part of the Infrastructure Investment and Jobs Act but are part of the Build Back Better Act (BBBA) still in negotiation. We will update you when there is actual BBBA legislation enacted into law.
Disclaimer: The information contained in this communication, including attachments and enclosures, is not intended to be a complete analysis of all related issues. Nor is it sufficient to avoid tax-related penalties. It has been prepared for informational purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and Perkins & Company, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.