On August 10, 2021, the US Senate voted to advance the Infrastructure Investments and Jobs Act (H.R. 3684) with a 69-30 vote. The Act’s provisions are intended to update the country’s aging infrastructure and include over $1.2 trillion in new spending. While much of the spending for the Act will be covered by unspent COVID relief measures and recouped unemployment insurance, Title VI-Other Provisions contain a number of tax provision and filing requirement changes meant to balance the remainder of the infrastructure spending. Two of the larger revenue raising items included on the tax side to offset the cost of the Act are an early end to the employee retention credit (“ERC”) and increased reporting and enforcement efforts on the digital currency market. Please note that this article does not address any of the broader tax reform items that were released in the Green Book proposals released this spring.
Employee Retention Credit End Date
The early end to the ERC, originally introduced in the Coronavirus Aid, Relief and Economic Security (CARES) Act (P.L. 116-136), comes as a bit of a surprise as it had been extended just this year as part of the American Rescue Plan Act of 2021 (P.L. 117-2). While originally extended through December 31, 2021, Section 80604 of H.R. 3684 would eliminate the ERC on October 1, 2021, removing fourth quarter wages from the credit eligible wages. As a result, employers may want to consider paying fourth quarter bonuses over August and September instead of in the fourth quarter, to make these bonuses eligible for the ERC. Larger employers (>500 average full-time employees in 2019) would need to ensure such bonuses meet the 30-day employee wage “look-back” rule and that they are tied to employees who are not providing services to receive the ERC.
We will continue to monitor the progress of the Infrastructure Investments and Jobs Act as the legislative process plays out.
Bennett Thrasher’s Tax practice can help you navigate the tax complexities of the Infrastructure Investments and Jobs Act (H.R. 3684) and assist in strategies to mitigate taxes and reporting obligations. To learn more about the Infrastructure Investments and Jobs Act (H.R. 3684), please contact Sam Heberton or Zack Leder by calling 770.396.2200.