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On November 5, 2021, the House of Representatives passed the Infrastructure Investment and Jobs Act (H.R. 3684) (the “Act”) by a 228-206 vote after the Act was passed in the Senate by a 69-30 vote in August. The Act was presented to President Biden on November 8, 2021, and he is expected to sign the measure into law.

In a Statement released on November 6, 2021, the White House said the Act “will rebuild America’s roads, bridges and rails, expand access to clean drinking water, ensure every American has access to high-speed internet, tackle the climate crisis, advance environmental justice, and invest in communities that have too often been left behind. The legislation will help ease inflationary pressures and strengthen supply chains by making long overdue improvements for our nation’s ports, airports, rail, and roads. It will drive the creation of good-paying union jobs and grow the economy sustainably and equitably so that everyone gets ahead for decades to come.”

The Act contains few explicit tax provisions. Instead, President Biden’s Build Back Better Act, which he hopes to pass in the House of Representatives the week of November 15, contains the bulk of this year’s proposed tax changes. Nevertheless, a summary of the significant tax provisions contained in the Act are below.

Individual Taxpayer Provisions

Automatic Extension of Certain Deadlines for Taxpayers Affected by Disasters. Under Section 7508A of the Internal Revenue Code (IRC), an automatic 60-day deadline extension period applies to qualified taxpayers impacted by federally declared disasters. The Act amends the IRC so that, for federally declared disasters declared after the date of the Act’s enactment, in determining the automatic extension period, the ending date of the extension period is 60 days after the later of (1) the earliest incident date described in IRC 7508A(d)(1)(A), or (2) the date such declaration was issued.[1]

Tolling of Time for Filing a Petition with the Tax Court. In any case in which a “filing location” (i.e., the office of the clerk of the Tax Court, or any online portal made available by the Tax Court for electronic filing of petitions) is inaccessible or otherwise unavailable to the general public on the date a Tax Court petition is due, the relevant time period for filing that petition is tolled for the number of days within the period of inaccessibility plus an additional 14 days.[2]

Authority to Postpone Certain Tax Deadlines by Reason of Significant Fires. The Act amends Section 7508A of the IRC to add “significant fire” (any fire for which assistance is provided under Section 420 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act) to the list of events (including federally declared disasters, terroristic or military actions) that allow the IRS to suspend filing and payment requirements.[3]

Business Provisions

Termination of Employee Retention Credit. The Act provides that the employee retention credit (ERC), created under the Coronavirus Aid, Relief and Economic Security (CARES) Act, applies to wages paid by an eligible employer after June 30, 2021 and before October 1, 2021 (or in the case of a recovery startup business, wages paid after June 30, 2021 and before January 1, 2022). Thus, unless an employer is a recovery startup business, it cannot claim the ERC for wages paid after September 30, 2021.[4] The Act repeals a previous extension of the ERC which would have applied the ERC through December 31, 2021.

Digital Asset Reporting Provisions

Information Reporting for Brokers and Digital Assets. Section 6045(a) of the IRC requires every person doing business as a “broker” to make a return showing the name and address of each customer, with such details regarding gross proceeds and such other information as the IRS may by forms or regulations require with respect to such business. With respect to a “covered security” (defined as a “specified security”) of a customer, the information required to be shown on the return must include the customer’s adjusted basis in such security and whether any gain or loss with respect to such security is long-term or short-term.

The Act provides that the definition of “broker” includes “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”[5] It also provides that a digital asset is a specified security.[6] A “digital asset” is defined by the Act as, except as otherwise provided by the IRS, “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified” by the IRS.[7]

Reporting Broker-to-Broker Transfers of Digital Assets. Section 6045A(a) of the IRC requires a broker that transfers to another broker a covered security to furnish to the other broker a written statement (transferee statement) in the manner that, and including the information that, the IRS may prescribe by regulations to enable the broker to meet the basis and holding period reporting requirements discussed above. The Act provides that any broker, with respect to any transfer during a calendar year for a covered security which is a digital asset from an account maintained by the broker to an account which is not maintained by or associated with a person that the broker knowns or has reason to know is also a broker, must make a return for the calendar year showing the information otherwise required to be furnished with respect to transfers subject to the transfer reporting rule.[8]

Digital Asset Treated as Cash for $10,000 Reporting Purposes. Section 6050I(a) of the IRC provides that a 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 or more related transactions) must file an information return with the IRS and furnish the payor with a statement. The information return must include the name, address, and TIN of the person from whom the cash was received, the amount of cash received, the date and nature of the transaction, and such other information as the IRS may prescribe. The Act provides that, for this purpose, “cash” includes any digital asset.[9] This change is significant for those involved in digital asset transactions, since such transactions are often anonymous and the information required to be included in the information return (such as the person’s name, address and TIN) may not be known.

Pension Provisions

Extension of Interest Rate Stabilization.. The Act extends interest rate smoothing for single-employer defined benefit pension plans to 2034.[10] The smooth interest rates were scheduled to be phased out in 2021, but the American Rescue Plan Act of 2021 previously extended the interest rate smoothing through 2029. Congress originally provided for interest rate smoothing to address concerns that historically low interest rates were creating inflated pension funding obligations, diverting corporate assets away from jobs and business recovery, and reducing federal income tax revenue.

Excise Tax Provisions

Extension of Highway-Related Taxes and LUST Tax. Certain excise fuel taxes and various highway-use related excise taxes, which fund the Highway Trust Fund (HTF), were scheduled to be reduced or expire after September 30, 2022 and September 30, 2023. In addition, the 0.1 cent per gallon “LUST tax” (imposed on gasoline, diesel fuel, and kerosene on removal from a terminal or refinery, which funds the Leaking Underground Storage Tank Trust Fund) was scheduled to expire after September 30, 2022. The Act delays the excise fuel tax rate reductions until after September 30, 2028, and extends through September 30, 2028 the 0.1 cent per gallon LUST tax and certain HTF excise taxes.[11]

Extension and Modification of Certain Superfund Exicse Taxes. The Act reinstates two Superfund Exicse Taxes through December 31, 2031: the Chemical Superfund Excise Tax and the Imported Substances Superfund Excise Tax.[12]

[1] Act Sec. 80501(a)(1)(A).

[2] Act Sec. 80503(a).

[3] Act Sec. 80504(a)(1)-(3).

[4] Act Sec. 80604.

[5] Act Sec. 80603(a)(3).

[6] Act Sec. 80603(b)(1)(A).

[7] Act Sec. 80603(b)(1)(B).

[8] Act Sec. 80603(b)(2)(A)(ii).

[9] Act Sec. 80603(b)(3).

[10] Act Sec. 80602.

[11] Act Sec. 80102.

[12] Act Sec. 80201.