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Infrastructure Investment and Jobs
Act Summary
On November 15, 2021, the President signed into law H.R. 3684 -
Infrastructure Investment and Jobs Act (IIJA). In general, this legislation
authorizes funds for federal-aid highways, highway safety programs
and transit programs, and for several other purposes, but it also
contains the following key tax provisions.
Business Provision:
Termination of employee retention credit (ERC) for
employers subject to closure due toCOVID–19. (Section
80604)
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act;
P.L. 116-136) created the ERC, a refundable payroll tax credit. For
2020, eligible employers who paid qualified wages after March 12,
2020, and before Jan. 1, 2021, are eligible for a refundable credit equal
to 50% of qualified wages paid.
The Consolidated Appropriations Act, 2021 (CAA; P.L. 116-260)
extended the ERC to qualified wages paid before July 1, 2021 and
modified the ERC by increasing the credit to 70% of qualified wages.
The American Rescue Plan Act of 2021 (ARP Act; P.L. 117-2) extended
the ERC for wages paid after June 30, 2021, and before Jan. 1, 2022.
The ARP also included recovery startup businesses in the definition of
an eligible employer, but the credit allowed for any quarter cannot
exceed $50,000 for a recovery start-up business.
The Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58) modified
the ERC eligibility dates and the definition of recovery startup
businesses. The IIJA states the ERC applies to wages an eligible
employer pays after June 30, 2021, and before Oct. 1, 2021 (third
quarter). If the business is a recovery startup business, the ERC
applies to wages an eligible employer pays after June 30, 2021 and
before Jan. 1, 2022 (third and fourth quarters) [§3134, as amended by
Act. Section 80604]. In effect the IIJA terminated the ERC early except
for recovery startup businesses.
The IIJA also modified the definition of recovery startup businesses to
remove the requirement that a recovery startup business cannot be
subject to a suspension under a government order or have experienced
a significant decline in gross receipts for the calendar quarter.
The IIJA states a recovery startup business is any employer meeting all
of the following:
▪ It began carrying on any trade or business after Feb. 15, 2020
▪ Its average annual gross receipts for the three-taxable-year period
ending with the taxable year that precedes the calendar quarter for
which the ERC is determined does not exceed $1 million.
With the exception of recovery startup businesses, wages paid after
Sept. 30, 2021, are not eligible for the ERC.
Due to the late passage of this legislation, it is anticipated the IRS will
issue guidance regarding penalty relief for businesses that did not
make timely payroll deposits in anticipation of being able to claim the
ERC for the fourth quarter 2021 and provide a method for payment of
unpaid employment taxes. Businesses that were not making payroll
fourth quarter payroll deposits due to expecting the ERC should begin
making deposits again and stay tuned for possible guidance on penalty
relief.Effective date: Calendar quarters beginning after Sept. 30, 2021.
Individual Provisions:
Modification of automatic extension of certain deadlines for
taxpayers affected by federally declared disasters (Section
80501)
Prior to the IIJA, for qualified taxpayers impacted by federally declared
disasters, a mandatory 60-day deadline extension period applies
beginning on the earliest date specified in the declaration and ending
60 days after the latest incident date in the declaration [§7508A(d)(1)].
This extension is in addition to or in conjunction with the up to-one-year
discretionary extension period the IRS may provide under §7508A(a).
The IIJA modifies the following:
▪ When the automatic extension ends▪ Which required acts are
postponed▪ Definition of disaster area
▪ How to handle multiple declarations relating to a disaster area
When the automatic extension endsSection 7508A(d)(1) is
amended and states that in determining the automatic extension
period, the ending date is 60 days after the later of:
▪ The earliest incident date specified in the declaration, or
▪ The date such declaration was issued [§7508A(d)(1)(B)]
Which required acts are postponed
The IIJA explains the time-sensitive acts that are postponed. The IIJA
provides that the 60-day mandatoryextension period is disregarded in
determining, in respect of any tax liability of a qualified taxpayer,
whether any acts described in §7508(a)(1)(A) through §7508(a)(1)(F)
were performed within the time prescribed, without regard to extension
under any other provision of the Internal Revenue Code for periods
after the date determined under §7508A(d)(1)(B).
The following acts are included:
▪ Filing any return of income, estate, gift, employment or excise tax
▪ Payment of any income, estate, gift, employment or excise tax or any
installment or any other liability tothe United States with respect to
those taxes
▪ 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 a refund of any tax
▪ Filing a claim for credit or refund of any tax
▪ Bringing suit upon any such claim for credit or refund
Definition of disaster area
Prior to the IIJA, the disaster area was defined under §165(i)(5) as the
area subsequently determined by the President of the United States to
warrant assistance by the Federal Government under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). A
federally declared disaster includes both a major disaster declared
under section 401 of the Stafford Act and an emergency declared under
section 501 of the Stafford Act.
The disaster area now refers to an area for which the President
provides financial assistance under section 408 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5174).
Multiple declarations
The IIJA added this new provision, which applies when there are
multiple declarations relating to a disaster area.For purposes of the
automatic extension period, if multiple declarations relating to a disaster
area are issued within a 60-day period, a separate period is determined
under §7508A(d)(1) with respect to each such
declaration[§7508A(d)(6)]. Effective date: Applicable to federally
declared disasters declared after the date the IIJA was enacted.
Modification of rules for postponing certain acts for service
in a combat zone or contingency operation (Section 80502)
Certain individuals are entitled to a combat zone extension. The period
of extension applies to certain tax-related acts that are listed in
§7508(a)(1). These acts include filing returns, paying tax and filing Tax
Court petitions to name a few. This extension applies to individuals who
are:
▪ Serving in the Armed Forces or in support of the Armed Forces, in a
combat zone
▪ Deployed outside the U.S. and away from a permanent duty station
while participating in a contingencyoperation or
▪ Hospitalized due to injury received while serving under either of the
above
In addition to filing a petition with the Tax Court, the IIJA adds the act of
filing a notice of appeal from a Tax Court decision. The language “filing
a petition with the Tax Court” in the IIJA does not contain any limitations
or modifiers, and so it is inferred the extension would cover any petition
with the Tax Court. Any petition would cover such items as a petition to
redetermine deficiency, petition for declaratory judgment, petition to
review the determination at a collection due process hearing and
others. The IIJA also adds the act of bringing suit by the U.S. to recover
an erroneous refund.
Effective date: Any period for performing an act that has not expired
before the date the IIJA was enacted.
Authority to postpone certain tax deadlines due to
significant fires (Section 80504)
Under §7508A(a) the IRS can suspend filing and payment
requirements for taxpayers affected by federally declared disasters, or
terroristic or military actions.
The IIJA amends §7508A to add significant fire to the list of events that
allow the IRS to suspend filing and payment requirements.
A significant fire is any fire for which assistance is provided under
section 420 of the Robert T Stafford Disaster Relief and Emergency
Assistance Act.
Effective date: Applicable to fires for which assistance is provided after
the date the IIJA was enacted.
Information Reporting Provisions:
Information reporting for brokers and digital assets (Section
80603)
The IIJA adds new information reporting requirements for brokers and
digital assets regarding the following:
▪ Sales of digital assets
▪ Broker-to-broker transfers of covered securities, including digital
assets
▪ Broker transfers of digital assets not otherwise subject to reporting
▪ Digital assets treated as cash
Sales of digital assets
Currently, brokers (dealers) must file Form 1099-B, Proceeds From
Broker and Barter Exchange Transactions, showing the name and
address of each customer, with details regarding gross proceeds and
other information the IRS may require with respect to such business
[§6045(a)]. Additional information must be reported as well for covered
securities, including the cost or other basis (adjusted basis) of such
security [§6045(g)]. A covered security is any specified security
acquired after a certain date, and a specified security most commonly
includes any share of stock in a corporation. For example, a covered
security includes stock acquired for cash after 2010 [§6045(g)(3)].
The IIJA requires brokers to report sales of digital assets, including the
adjusted basis of such assets, oninformation returns and statements
furnished to customers.
▪ The definition of a broker is expanded to include any person who (for
consideration) is responsiblefor regularly providing any service
effectuating transfers of digital assets on behalf of another
person[§6045(c)(1)(D)].
▪ The term specified security is expanded to include any digital asset
acquired after 2022 [§6045(g)(3)(B)(iv)].
▪ The term digital asset means any digital representation of value that is
recorded on a cryptographicallysecured distributed ledger or any similar
technology as specified by the IRS [§6045(g)(3)(D)].Effective date: For
returns required to be filed, and statements required to be furnished,
after Dec. 31, 2023.
Broker-to-broker transfers of covered securities, including
digital assets
Before 2024, any broker transferring custody of a security that is a
covered security to another broker must give the other broker a written
transfer statement including specific information required in the
regulations, such as the type of security and the security’s adjusted
basis and original acquisition date [§6045A(a)].
The IIJA requires any broker as defined in §6045(c)(1) transferring
custody of a covered security as defined in §6045(g)(3), including a
digital asset as defined in §6045(g)(3)(D), to another broker to give the
other broker a written transfer statement including the same information
required before 2024.Effective date: For statements required to be
furnished after Dec. 31, 2023.
Broker transfers of digital assets not otherwise subject to
reporting
The IIJA requires any broker, with respect to any transfer (that is not
part of a sale or exchange executed by such broker) during a calendar
year of a covered security that is a digital asset as defined in
§6045(g)(3)(D) from an account maintained by such broker to an
account that is not maintained by another broker, to file a return for
such calendar year (in a form determined by the IRS) reporting the
information otherwise required to be furnished in a transfer statement
under §6045A(a).Effective date: For returns required to be filed, and
statements required to be furnished, after Dec. 31, 2023.
Digital assets treated as cash
Currently, each person engaged in a trade or business who, in the
course of that trade or business, receives more than $10,000 in cash in
one transaction or in two or more related transactions, must file Form
8300, Report of Cash Payments Over $10,000 Received in a Trade or
Business [§6050I(a)].The IIJA expands the term cash to include any
digital asset as defined in §6045(g)(3)(D) [§6050I(d)((3)]. Thus,
taxpayers will be required to file Form 8300 if they receive a digital
asset in the course of their trade or business that is more than the
$10,000 filing requirement.Effective date: For returns required to be
filed, and statements required to be furnished, after Dec. 31, 2023.
Other Tax Provisions:
There are some other tax provisions in the new legislation, including
but not limited to:▪ Extension of interest rate stabilization for single-
employer defined benefit plans (Section 80602)
▪ Extension of various highway-related taxes (Section 80102)
▪ Extension and modification of certain superfund excise taxes (Section
80201)
▪ Expansion of private activity bonds for qualified broadband projects
(Section 80401)
▪ Tolling of time for filing a petition with the tax court (Section 80503)
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