The Infrastructure Bill – Tax Provisions

On Friday, November 5, 2021, the House of Representatives passed H.R.3684, a $1 Trillion bipartisan “Infrastructure Investment and Jobs Act”. The Senate had passed the same version of the bill on August 10, 2021 and the bill is expected to be signed into law by President Biden.

The bipartisan Infrastructure Bill funds massive investments in improvements to the nation’s roads, bridges, railways, airports, power grids, highways, and Internet connections. It also includes a few tax-related provisions.

The Bill requires information reporting with respect to digital assets such as cryptocurrency, generally effective for returns and statements required to be filed or furnished after December 31, 2023. It adds digital assets to current rules that require businesses to report cash payments over $10,000.

The definition of a broker will be expanded to include those who for consideration, set up transfers of digital assets, including cryptocurrency, on behalf of another person (operate trading platforms), thereby requiring such transactions to be disclosed to the IRS.

Employee Retention Credit:

The Bill ends the Employee Retention Credit (ERC) for wages paid after September 30, 2021, instead of December 31, 2021, as originally extended by the American Rescue Plan Act.

There are exceptions for “recovery startup businesses”.

However, it is not clear if employers who would have qualified (under the gross receipts test or the full/partial suspension test) for the fourth quarter credit and reduced their payroll tax deposits prior to passage of the Bill, will face late deposit penalties for the short-fall of the payroll taxes deposited.

Pension Smoothing:

“Pension Smoothing” allows sponsors of defined benefit plans to apply higher interest rates in assessing future liabilities, leading to a reduced annual contribution to pension plans, thereby reducing the deductible employer pension contributions required under the pension funding rules.

The Bill modifies §430(h)(2)(c)(iv) table of applicable minimum and maximum percentages with respect to certain defined benefit pension plans. This provision applies to plan years beginning after December 31, 2021.

For the text of the Bill, please click here.

If you have any questions, please contact your HM&M advisor.