Minor Changes to Tax Code in Recently Signed Infrastructure Bill

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Many may be hearing a lot about the proposed Build Back Better (BBB) legislation as our elected leaders try to hash out a finalized bill. BBB has had various tax implications we have been keeping our eyes on to ensure we are equipped to advise our clients. However, Congress passed the Infrastructure Investment and Jobs Act (the Act) earlier this month, and then the President signed the bill on November 15th.

This is a $1.5 trillion spending package for our roads, bridges, highways, utility systems, and public transportation. Although many of the tax provisions are working their way into BBB, there are still some important tax and finance items in the Act related to cryptocurrency, the employee retention credit, and a few other minor items.

Cryptocurrency Reporting

The Act is imposing new reporting requirements onto brokers of cryptocurrency. Previously, reporting of cryptocurrency transactions has been less stringent and primarily in the context of when crypto has been used as compensation or when a transaction was over $600. With the Act, brokers will have reporting requirements that more closely resemble those of other financial institutions such as banks and investment firms, including 1099B transaction reporting.

One of the government’s primary concerns lately has been that there may be many unreported cryptocurrency transactions not properly being reported on taxpayer’s tax filings. The additional tax revenue that is expected to be generated by this reporting requirement is a big part of the revenue projections to pay for the infrastructure spending in other areas of the Act.

These reporting requirements will apply starting in 2023, so crypto brokers have a little bit of time to prepare for this change.

This is a good time to remind everyone that even if you do not receive a tax reporting form such as a 1099, taxable transactions are still subject to tax. The reporting form is for administrative ease and to increase compliance, but the determination of taxability is not driven by the tax forms received (or not received). Cryptocurrency transactions continue to be a high area of compliance concerns for the IRS, and as such, it is important to tell us about any cryptocurrency transactions.

Employee Retention Credit

Many businesses that were negatively impacted by the pandemic have benefited from the Employee Retention Credit. This credit was originally expected to be applicable for wages paid through the end of 2021, but the Act cuts the benefits a little short by eliminating the credit for wages paid after September 30, 2021.

Although this will impact clients that continue to struggle with the pandemic, we are hopeful that other stimulus measures such as PPP, EIDL, and also this Employee Retention Credit will give businesses a greater likelihood of coming through the pandemic.

Other Provisions

Many of our clients benefit from tax-free municipal and other bonds. The Act makes small changes in determining which private activity bond issuances may benefit from tax-free status with the apparent result of additional bonds benefiting from tax-preferred status.

Certain excise taxes on fuel, including diesel, as well as sales of certain transportation equipment, have been extended through September 2028, as well as related exemptions.

We’re here to help

If you have questions about the changes or need assistance with a tax issue, JLK Rosenberger can help. For additional information, call us at 949-860-9892, or click here to contact us. We look forward to speaking with you soon.