On November 5, the United States House of Representatives passed the “Infrastructure Investment and Jobs Act” (“Infrastructure Act”, “Act”). The Senate previously approved the bill in August. On November 15, President Biden signed the bill into law.
The Infrastructure Act contains relatively few tax provisions. The majority of any potential tax law changes are expected to be included in the legislation currently under consideration by Congress, the “Build Back Better Act.” Some of the key tax provisions in the Infrastructure Act include:
Termination of the Employee Retention Credit (ERC)
Before the passage of the Infrastructure Act, the ERC was available to eligible employers for qualified wages paid after June 30, 2021, and before January 1, 2022. The Act changes the ending date of the qualified period from January 1, 2022, to September 30, 2021.
Eligible recovery start-up businesses can claim the credit for wages paid after June 30, 2021, and before January 1, 2022. A recovery start-up business is an employer that began carrying on a trade or business after February 15, 2020, with average gross receipts less than $1 million for the three-year period ending with the tax year that precedes the calendar quarter for which the ERC is claimed.
Information Reporting for Digital Assets
Under current tax law, a broker is required to report sales of specified securities that it makes on behalf of its customers. The Infrastructure Act expands the definition of a broker to include any person who (for consideration) is responsible for regularly providing any service transferring digital assets on behalf of another person.
Effective January 1, 2023, digital assets are considered specified securities. Therefore, a broker will be required to report to the IRS any sale or exchange of a digital asset it makes on behalf of its customers. Broker to broker transfers of digital assets will also be required to be reported to the IRS.
In addition, digital assets will be treated as cash for purposes of the reporting requirements for cash transactions beginning on January 1, 2024. This expansion will require taxpayers to report to the IRS transfers of more than $10,000 of digital assets in one or more related transactions.
Whitley Penn will send out additional alerts when tax law changes are enacted, including the Build Back Better Act. In the interim, please contact your Whitley Penn tax advisor with any questions or if you require any additional information. Please visit our Tax Alert page to stay up to date!