What You Need to Know About the Infrastructure Investment and Jobs Act
By: Alex Smith, CPA
On November 5th, Congress passed the $1 trillion Infrastructure Investment and Jobs Act, a key piece of the President’s agenda. So, what tax changes does the Infrastructure Investment and Jobs Act bring us?
Not as many as you would think. But the changes that are included will be felt by taxpayers now and in the future.
The major tax change is the retroactive termination of the Employee Retention Credit (ERC) back to September 30, 2021. The ERC was originally part of the Coronavirus Aid, Relief, and Economic Security Act (CARES) and was extended and modified under several subsequent acts. The ERC gave eligible employers the opportunity to claim a refundable payroll tax credit of up to $7,000 per employee. The ERC was scheduled to end in December 2021, but after the passage of the Infrastructure Investment and Jobs Act, very few businesses will be eligible to claim any ERC amounts for the 4th quarter of 2021. This retroactive termination could potentially leave some employers in a bind if they anticipated taking the ERC for their 4th quarter 2021 payroll tax returns.
If you are a cryptocurrency investor, the Infrastructure Investment and Jobs Act brings in requirements for crypto-brokers to report their activity during the year much like other financial brokers do for stocks and bonds. The IRS knows many people are not aware of their cryptocurrency reporting requirements and views enforcing taxation on crypto-transactions as a large potential revenue raiser. These reporting requirements would come into effect for the 2023 tax year, for returns required to be filed and statements required to be furnished after December 31, 2023.
Continuing with cryptocurrency reporting, beginning in the 2023 tax year, the Infrastructure Investment and Jobs Act includes cryptocurrency (or any digital asset) in the definition of “cash” specifically for anti-money laundering informational reporting to the IRS. Taxpayers engaged in a trade or business who receive more than $10,000 in cash (or any digital asset) are required to file an informational return with the IRS and furnish the payor with a statement.
The significant tax-related changes you have heard about including tax rate changes, relief from the $10,000 state and local tax deduction limit and extensions to the recent changes to the child tax credit and earned income credit are still in consideration for another bill before Congress, called the Build Back Better Act (BBB Act).
Negotiations continue and much of what is included in the current version of the BBB Act could change before the passage of the final version. We will update you on any important developments regarding changes under the BBB Act as they become available.
If you have any questions about how the Infrastructure Investment and Jobs Act or BBB Act affect you, please reach out to us at info@melton-melton.com.