What: On August 10, the US Senate passed the Infrastructure Investment and Jobs Act with bipartisan support. The bulk of the bill is focused on traditional infrastructure improvement funding, such as bridges, mass transit, power, roads, water, as well as broadband access expansion, at a cost of $1 trillion over five years and including $550 billion in new spending.
While funding sources originally focused on an increase in gasoline taxes and projected revenue from increased Internal Revenue Service (IRS) enforcement funding, the Administration rejected the former and Republican Senators rejected the latter. Ultimately, the bill passed by the US Senate specifies that funding comes from the use of available COVID-19 funds, other provisions related to pensions and Medicare, and a few tax provisions focused on cryptocurrency reporting, Superfund excise taxes, early termination of the employee retention credit, and extension of interest rate stabilization.
The US House of Representatives intends to consider the legislation along with a separate budget reconciliation measure. The budget resolution on this measure passed the US Senate but the legislative language to reach the total budget figure is still being drafted. Therefore, the timing of when the US House of Representatives will pass the Infrastructure Investment and Jobs Act is not clear at this point.
Why: The tax provisions relate not only to the revenue raising provisions but also to disaster relief, private activity bonds, highway taxes and trust fund authority, as well as water and sewage disposal facilities.
- Cryptocurrency reporting. The Infrastructure Investment and Jobs Act requires brokers to report cryptocurrency transactions to the IRS and provides an expansive definition of “broker.” A US Senate amendment to narrow the definition of “broker” failed to be adopted but is likely to be addressed again by the US House of Representatives
- Employee retention credit. The American Rescue Plan Act extended the COVID-related employee retention credit to December 31, 2021 and the IRS has just published guidance on handling the credit for the last two quarters of 2021. However, the Infrastructure Investment and Jobs Act legislation would terminate the credit for employers that shut down due to COVID-19 pandemic after September 30, 2021
- Superfund excise taxes. The Infrastructure Investment and Jobs Act would restore Superfund excise taxes on certain chemicals that had been repealed in the 1990s
- Interest rate stabilization. The Infrastructure Investment and Jobs Act would extend interest rate stabilization with respect to single employer retirement plans
- Highway taxes and trust fund authority. The Infrastructure Investment and Jobs Act would extend highway taxes to 2028 and highway trust fund expenditure authority to 2026
- Private activity bonds. The Infrastructure Investment and Jobs Act would expand eligibility for private activity bonds to qualified broadband projects and carbon dioxide capture facilities
- Water and sewage disposal utilities. The Tax Cuts and Jobs Act of 2017 removed an exception for water and sewage disposal facilities from a requirement that a corporation recognize contributions in aid of construction. The Infrastructure Investment and Jobs Act would restore this exception
- Disaster relief and extended tax deadlines. The Infrastructure Investment and Jobs Act would extend tax deadlines due to declared disasters and service in a combat area and expand IRS deadline extension authority to taxpayers impacted by wildfires
Who: Tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, can help discuss the tax provisions in the Infrastructure Investment and Jobs Act passed by the US Senate.
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