Released late last night, the full legislative text – all 2,700 pages – of the infrastructure bill has come to light. From a first look by KCoe’s tax advisors, there seem to be no surprises from a tax perspective. Here are the tax highlights from what we have reviewed so far:
Notable Non-infrastructure Tax Provisions
- Early expiration of COVID-related Employee Retention Tax Credit (ERTC): Despite the threat of the Delta variant, Congress has proposed ending the COVID-related ERTC a quarter early on 9/30/21 rather than 12/31/21.
- Automatic deadline extensions for taxpayers affected by federally-declared disasters:
- Code is modified to provide a longer 60-day extension after the declaration of a federal disaster – rather than a 60 day extension from the date of the “incident” that caused the federally declared disaster, the extension is 60 days from the later of either (1) the earliest event that caused the disaster, or (2) the date a federal disaster declaration is issued.
- If multiple declarations are issued within the 60-day extension period, a separate extension period is determined with respect to each disaster declaration.
- Interest rate stabilization of Defined Benefit plans:
- Defined benefit plans’ required funding percentages are decreased to 105% of expected liability through 2030, and then increase between 2031 and 2034.
- Information reporting for digital asset brokers: Beginning on January 1, 2023, brokers of digital assets must provide 1099s to individuals who transfer those assets. Digital assets include, for example, cryptocurrency and nonfungible tokens (NFTs).
As Congressional leaders promised, the pay-fors of this bill are not reliant on tax increases.
Infrastructure-related Tax Provisions
- Extensions of infrastructure and superfund excise taxes:
- Highway Trust Fund and transportation-related excise taxes: As is standard, the transportation-related excise taxes are extended through the federal fiscal year ending September 30, 2028. These excise taxes include:
- Chemical superfund excise taxes are extended through December 31, 2031. Chemical superfund tax rates are also increased.
- Customs user fees are extended through September 30, 2031.
- Expansion of tax-exempt bond availability:
- The Code is amended to provide tax-exempt bond status for certain infrastructure projects: qualified broadband projects that bring high-speed broadband to underserved communities, and carbon dioxide capture and sequestration facilities.
- The carbon sequestration credit under Code Section 45Q is reduced by the amount of any tax-exempt bonds the recipient utilizes.
- Capital contributions to waste water and sewage disposal utilities: Water and sewage disposal utilities recognize as capital contributions, and not income, any:
- Contributions in aid of construction of facilities – except any user fees for starting or stopping service, which are taxable income to the utility, and
- Any contributions by a governmental entity in aid of construction of facilities.
KCoe’s tax advisors will continue to dive into the language presented by Congress for the infrastructure bill and monitor any amendments or new developments. If the bill passes the Senate, it will next be considered by the House of Representatives. Should you have any questions, please reach out to a Kcoe tax advisor or click the button below.