RINA Alert - November 12, 2021 | Volume 19, Issue 20
On November 15th, 2021, President Biden will sign into law the largest federal investment in infrastructure in more than a decade – the $1.2 trillion infrastructure bill known as the Bipartisan Infrastructure and Jobs Act (BIJA).
The $1.2 trillion bill includes funding for improvements to the nation’s roads, bridges, public transit systems, railways, power grids, airports, railways, broadband internet and drinking water. It also contains some climate-related provisions to deal with pollution and climate change.
While the major tax provisions on the Biden Administration’s agenda are contained in the still pending Build Back Better Act, the BIJA does include the following tax-related provisions:
- An early expiration of the Employee Retention Tax Credit (ERTC)
- New rules for reporting on cryptocurrency transactions
Early Termination of the Employee Retention Tax Credit
The BIJA ends the ERTC for most employers. The credit will not be allowed after the third quarter of 2021 for employers other than Startup Recovery Businesses which is defined as one that:
- Began conducting any trade or business after February 15, 2020; and
- Which had average annual gross receipts not exceeding $1 million; and
- Does not otherwise qualify for the ERTC either by full or partial closure or significant decline in gross receipts requirements.
An early termination of the credit is likely to require employers that monetized the fourth quarter credit by reducing employment tax deposits to repay these amounts. It is not clear whether the IRS will impose late deposit penalties and interest. The IRS will provide notification of a penalty waiver procedure for this situation and RINA will monitor this situation for further guidance.
New rules for reporting on cryptocurrency transactions
Another tax provision in the bill would require cryptocurrency “brokers” to provide information reporting on transactions over $10,000. It would take effect in 2023, with the first information reports to be filed by Feb. 15, 2024. The delayed effective date likely means that there may be legislative changes to this rule over the next couple of years.
Advocates for the crypto industry have been lobbying for the definition of “broker” to exclude companies like technology developers and cryptocurrency miners, and the definition may be narrowed by Congress or in Treasury Department regulations before the provision takes effect.
Additional BIJA tax-related provisions
Other tax-related provisions in the BIJA include:
- Deadlines for disaster tax relief
- Special exclusion from income for qualified contributions to a company’s capital for some regulated public water and sewage disposal utilities, including a “contribution in aid of construction.”
- An extension of the interest rate stabilization table for the minimum funding requirements for single employer defined benefit plans for another five years, until the end of 2030.
- This rule is expected to decrease the level of current contributions causing a reduction of deductions in determining taxable income and generate higher tax revenue.
- An extension and modification of some highway taxes and superfund excise taxes enabling private activity bonds to be used for some broadband internet projects and carbon capture facilities.
For questions regarding how these tax changes may affect your or your business, please reach out to your RINA professional. We invite you to contact the RINA tax team for further information and assistance.