On November 15, 2022, President Biden signed the Infrastructure Investment and Jobs Act. Currently, the larger tax bill—the Build Back Better Act—is still pending in the US Senate. We will keep you informed if anything changes or passes.
Although the signed infrastructure act includes fewer tax provisions than originally introduced, taxpayers should be aware of what’s included and how these changes affect them. Below is a high-level overview of some changes. Watch for additional, specific information in the coming weeks.
- Cryptocurrency: In an effort to curb underreporting of cryptocurrency transactions, the act will expand reporting requirements. These requirements are going to be imposed on brokers. The bill will require the IRS to define a “broker” of digital assets as well as what constitutes “digital assets.” Both have yet to be defined. Watch for additional information on guidance from the IRS as things continue to evolve.
- The Employee Retention Credit: The American Rescue Plan Act of 2021 extended the Employee Retention Credit to Dec. 31, 2021. However, the Infrastructure Investment and Jobs Act terminates the employee retention credit earlier than scheduled, making it applicable to wages paid before October 1, 2021. If you have been working with us on this credit, we will take this change into account during your year-end planning.
- Employer-Sponsored Retirement Plans: For employer-sponsored retirement plans, “pension smoothing”—which allows sponsors to avoid interest rate volatility—has been extended. The Infrastructure Act extends the interest stabilization set by the American Rescue Plan Act until 2034.
- Contributions to Water and Sewer Utilities: The act has restored an exclusion for contributions to a regulated public utility for water or sewer construction.
- Private Activity Bonds: The Infrastructure Investment and Jobs Act expands private activity bond uses to include qualified broadband projects and qualified carbon dioxide capture facilities.
- Excise Taxes: The act also expands excise taxes on fuels, retail sales of heavy trucks and trailers and tires.
- Superfund Excise Taxes: The act restores superfund excise taxes.
- Disaster Relief: Some disaster-related tax deadlines have been extended.
- Tax Deadlines: Tax deadlines are postponed for those who serve in a combat zone or contingency operation.
As always, Mowery & Schoenfeld will update you as soon as additional information is available regarding additional changes to tax law.