Infrastructure Bill Tax Provisions Include Early ERC Termination

November 10, 2021

The early termination of the employee retention credit (ERC) and the requirement of broker reporting of cryptoasset transfers are two tax provisions of H.R. 3684, the Infrastructure Investment and Jobs Act, which passed the House of Representatives last Friday. The legislation now heads to President Joe Biden's desk.

H.R. 3684 ends the ERC early, making wages paid after Sept. 30, 2021, ineligible for the credit except for wages paid by an eligible recovery startup business. The ERC was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, and amended by the Consolidated Appropriations Act, 2021, P.L. 116-260. The American Rescue Plan Act, P.L. 117-2, made the ERC available to eligible employers for wages paid during the third and fourth quarters of 2021. H.R. 3684 would repeal the fourth-quarter extension.

The legislation also imposes new cryptoasset information reporting requirements on brokers. The Sec. 6045(c)(1) definition of "broker" is expanded to include anyone who for consideration effectuates "transfers of digital assets on behalf of another person." A “digital asset" is defined as "any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology." The legislation amends Sec. 6045A to require brokers to provide information returns reporting any transfers of digital assets to accounts that are not maintained by a broker.

H.R. 3684 also modifies the automatic extension of certain deadlines for taxpayers affected by federally declared disasters in Sec. 7508A, which was enacted in the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, P.L. 116-94. The definition of a disaster area is amended to mean "an area in which a major disaster for which the President provides financial assistance under section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5174) occurs." That paragraph currently cross-refers to the definition in Sec. 165(i)(5)(B).

Other tax provisions included in the legislation are the extension of various highway-related taxes, the extension and modification of certain superfund excise taxes and the allowance of private activity bonds for qualified broadband projects and carbon dioxide capture facilities.