What’s in the $1.2 Trillion Infrastructure Bill?

On November 15, 2021, President Joe Biden signed into law the $1.2 trillion Infrastructure Bill that the House approved on November 5, 2021, and the Senate passed on August 10, 2021.

The legislation primarily consists of direct spending measures focusing on roads, bridges and other infrastructure pursuits, but there are also tax-related provisions.

Tax Provisions Included in the Infrastructure Bill

Revival of Superfund Taxes

Prior to 1996, a tax of 9.7 cents per barrel of crude oil, and equivalent taxes on certain chemicals, was collected on their sale to fund the cleanup of Superfund sites. A Superfund site is a contaminated area that is cleaned up by the EPA. These sites include manufacturing facilities, processing plants, landfills and mining sites.

The Infrastructure Bill restores the superfund tax with respect to most chemicals that were previously subject to the tax, but not with respect to crude oil.

Cryptocurrency Reporting

The legislation extends existing reporting requirements (IRS Form 1099-B) to cover digital assets including cryptocurrency effective for digital assets acquired on or after January 1, 2023. It expands the definition of a broker, for reporting purposes, to include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”

Consequently, any person or business meeting this definition of “broker” will need to track and report transactions in digital assets purchased on or after January 1, 2023, similar to the information reporting that is done for stock and debt securities today. Significant penalties – $250 per customer up to $3 million – can apply for failures to file or provide all the required information.

Transfers of digital assets by brokers will be subject to reporting requirements, as well. In addition, the legislation treats digital assets, including but not limited to cryptocurrency, as “cash” for purposes of the requirement to report to the IRS on Form 8300 the receipt of more than $10,000 in one transaction (or multiple related transactions). Failure to comply with this reporting requirement can result in civil and criminal penalties.

The new requirements to report information related to digital assets and treat digital assets as “cash” are generally effective for transactions on or after January 1, 2023. Transactions subject to the reporting requirements must be disclosed on returns filed and statements furnished after December 31, 2023.

Here’s what you need to know about the Infrastructure Act and cryptocurrency transactions.

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Modification to the Employee Retention Tax Credit

The legislation sunsets the Employee Retention Tax Credit (ERTC) after September 30, 2021, instead of December 31, 2021, as originally written. It is not clear how the government will address a retroactive expiration of a tax provision.

Eligible start-up companies can still claim the employee retention credit for the fourth quarter; however, their fourth quarter credit is capped at $50,000. Also, startup businesses that began operations after February 15, 2020, and had annual gross receipts of less than $1 million are exempt from this provision, and their ERTC expiration date remains December 31, 2021.

Extending the Period for Filing a Petition with the Tax Court

When the Tax Court is inaccessible, the legislation provides for an additional 14 days after the Tax Court reopens to file a petition protesting a notice of deficiency.

It is important to note that this provision is related to all closures, not just those caused by COVID-19.

Extended Tax Filing Deadlines in Fire Management Assistance Areas

The infrastructure legislation extends the IRS tax filing deadlines in Fire Management Assistance areas after significant fires.

The provision gives victims of significant fires the ability to postpone certain tax deadlines, similar to the postponement available to those affected by presidentially declared disasters.

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