President Biden on Nov. 15 signed into law the $1.2 trillion
infrastructure legislation that includes new reporting requirements for digital
assets, additional pension smoothing relief and clarifies disaster relief
assistance.
The House approved the Infrastructure Investment and Jobs
Act (H.R. 3684) Nov. 6 by a vote of 228-205, with 13 Republicans voting for the
bill and six Democrats against it. The Senate approved the bill in August on a
69-30 vote.
Digital Asset Reporting
H.R. 3684 expands information reporting requirements to
include “digital assets,” including cryptocurrency. The legislation defines
digital assets as “any digital representation of value which is recorded on a
cryptographically secured distributed ledger or any similar technology as
specified by the [Treasury] Secretary.”
The definition of “broker” is also modified to include “any
person who (for consideration) is responsible for regularly providing any
service effectuating transfers of digital assets on behalf of another person.”
In addition, broker-to-broker reporting requirements are expanded to make clear
that transfers of digital assets are included. The bill also adds digital
assets to existing rules requiring businesses to report cash payments of more
than $10,000. The changes are effective for reports to be filed and statements
required to be furnished after Dec. 31, 2023.
Notwithstanding these newly enacted reporting changes,
Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cynthia Lummis
(R-WY) introduced legislation Nov. 15 to clarify the definition of “broker”
with respect to digital asset third-party reporting requirements.
The senators’ bill would clarify that the “broker”
definition excludes miners and stakers, as well as wallet providers and
developers, and would ensure that only those digital asset intermediaries that
actually have access to material customer information are required to report to
the IRS. Sens. Wyden, Lummis and others tried to add a similar provision to the
infrastructure bill as it was being considered in August.
Pension Smoothing
The pension smoothing provision was included to help offset
the cost of $550 billion in new spending to rebuild the nation’s highways,
roads, bridges, railways, transit systems and other infrastructure projects.
Under the provision, plan sponsors have the option for more
flexibility in funding their pension obligations by adjusting the funding
stabilization percentages that were included in the American Rescue Plan (ARPA)
that was enacted in March. The bill also further extends the stabilization
period from 2029 to 2034. The changes made by H.R. 3684 apply with respect to
plan years beginning after Dec. 31, 2021.
For a table summarizing the minimum and maximum percentages
included in the infrastructure legislation, along with the corresponding
calendar years, click here.
Disaster Relief
H.R. 3684 also clarifies the automatic extension of certain
deadlines in the case of taxpayers affected by federally declared disasters
under Code Section 7508A. Under the legislation, the definition of a disaster
area in Section 7508A(d)(3) 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.”
The provision is intended to ensure that the mandatory
minimum extension period of 60 days is automatic, which the IRS does not
currently interpret to be automatic in some cases. As background, the Taxpayer
Certainty and Disaster Tax Relief Act of 2019 added IRC Section 7508A(d),
creating a mandatory 60-day postponement period, commencing on the earliest
incident date and ending 60 days after the latest incident date, for
tax-related deadlines under IRC Section 7508A.
The provision clarifies the legislative intent of that
provision by stating when the automatic extension ends, which required acts are
postponed, the location of a qualifying disaster, and how to proceed when there
are declarations relating to multiple disasters. For instance, the legislation
specifies that in the case of multiple declarations relating to a disaster area
which are issued within a 60-day period, a separate period will be determined
under paragraph 1 of Section 7508A(d) with respect to each such declaration.
Several retirement-related deadlines and actions are
affected by the automatic 60-day extension following a presidentially declared
disaster. The provision applies to federally declared disasters declared after
the date of enactment.
Employee Retention Credit
The newly enacted infrastructure legislation also ends the
employee retention tax credit early. In general, wages paid after Sept. 30,
2021, are no longer eligible for the credit (except for wages paid by an
eligible recovery startup business, which retains the Jan. 1, 2022, expiration
date).
The credit was first created by the CARES Act, and then
subsequently amended by the Consolidated Appropriations Act, 2021, and extended
by the American Rescue Plan Act. There apparently was a low take-up rate with
the credit, which was part of the impetus for ending it early.
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