On November 15, 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act (the Act), a $1.2 trillion bipartisan legislation intended to “build back better” the country’s infrastructure. The Act focuses on infrastructure improvements to the transportation, energy and water sectors, and there are relatively few tax provisions in the legislation.
ERC Early Sunset
Established by the CARES Act in March of 2020, the Employee Retention Credit (ERC) provided relief to business owners. Its intention was to help businesses retain their workforces and avoid layoffs. The Infrastructure Act ends the Employee Retention Credit for many employers. Prior to the passage of the Act, the ERC was scheduled to terminate for all eligible employers at the end of 2021. Wages paid after September 30, 2021 are ineligible for the credit. Recovery startup businesses, however, may continue to claim the ERC on wages paid through December 31, 2021. It remains unknown if those employers who would have qualified for the 4th Quarter credit and reduced their payroll tax deposits prior to the passage of the bill will face late deposit penalties for the shortfall of the payroll taxes deposited.
Crypto Asset Broker Definition
The SEC is broadening the definition of “broker” to include those who operate trading platforms for cryptocurrency and other digital assets. In additions, brokers will be subject to new reporting requirements for purchases, sales, transfers, and transactions involving cryptocurrency.
The legislation modifies the funding stabilization percentages that were included in the American Rescue Plan Act enacted in March of 2021 and extends the interest rate period from 2029 to 2034.
Other Tax-Related Changes
Other tax-related changes in the legislation include:
- Modification of the automatic extension for certain deadlines in the case of taxpayers affected by federally declared disasters.
- Extension of various highway related excise taxes, including fuel taxes and heavy vehicle use taxes as well as certain related exemptions, for six years.
- Extension of certain Superfund excise taxes through December 31, 2031 and modification of the amount of tax applicable to certain chemicals effective as of July 1, 2022.
- Expansion of the definition of exempt facility bonds to include certain qualified broadband projects and qualified carbon dioxide capture facilities, providing a partial exemption the private activity bond volume cap for those projects.
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