December 1, 2021
President Biden signed the $1 trillion bipartisan infrastructure bill (the Bill) into law on Monday, November 15, 2021. The plan is slated to put $550 billion into things such as transportation, utilities and broadband. There are also several impacts in the tax world included within the bill. Here are some main considerations:
The bill ends Employee Retention Credit for wages paid after September 30,2021 instead of December 31, 2021, as originally extended by the American Rescue Plan Act. There is an exception for “recovery startup businesses” – those that started their businesses after Feb. 15, 2020, with gross receipts not exceeding $1 million. It is not clear if employers who would have qualified for the 4th quarter credit and reduced their payroll tax deposits prior to passage of the Bill will face late deposit penalties for the shortfall of the payroll taxes deposited.
There will now be a requirement for cryptocurrency “brokers” to provide information reporting on transactions over $10,000. It will take effect in 2023, with the first information reports to be filed by Feb. 15, 2024. The definition of broker is 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.
A 60 day grace period will be automatically implemented after a disaster is declared or occurs for filing and paying income, estate, gift, employment, or excise taxes. This will also be the case when filing a petition with the Tax Court or filing a notice of appeal from a decision of the Tax Court, allowance of a credit or refund of any tax, filing a claim for a credit or refund of any tax, and filing a lawsuit claiming a tax credit or tax refund.
“Pension Smoothing” will now allow sponsors of defined benefit plans to apply higher interest rates in assessing future liabilities, leading to a reduced annual contribution to pension plans. This will reduce deductible employer pension contributions required under the pension funding rules. The provision applies to plan years beginning after December 31, 2021.
Various highway-related taxes have been extended. The extension and modification of certain superfund excise taxes have also been implemented.
The Bill allows private activity bonds for qualified broadband projects and carbon dioxide capture facilities.
For questions on how these changes may impact your specific situation please reach out to your Faw Casson advisor.