The recently passed Senate bipartisan infrastructure bill has many tax-related issues. The bill must still go to the House for approval, but we wanted to alert you to two provisions that may affect you.
Additional Reporting for Digital Asset Brokers
The bill imposes new reporting requirements on brokers of “digital assets” (cryptocurrency and nonfungible tokens (NFTs)). Starting January 1, 2023, brokers will be required to report information on digital currency transactions similar to what is reported on a 1099 issued by an investment broker. The information must include the basis and gain or loss on each transaction of a digital asset. In addition, a broker who receives over $10,000 of digital currency will be required to file an information return with the IRS and provide the payor with a statement.
Changes to the Employee Retention Credit
The infrastructure bill, if signed into law, would terminate the employee retention credit (ERC) early for most businesses. Under the new law, the ERC would apply to wages paid prior to October 1, 2021, rather than January 1, 2022. Wages paid after September 30, 2021, would be ineligible for the credit with the exception of recovery startup businesses. Recovery startup businesses are those that 1) started a business after February 15, 2020, and 2) had annual gross receipts under $1,000,000. These recovered startup businesses would continue to be eligible under existing rules through December 31, 2021.
We anticipate additional information will come to light as the bill moves through the House. If you have any questions regarding the Infrastructure Bill, please contact the Anderson ZurMuehlen Tax Team.
This article was written by Mike Combo, CPA and Shareholder located in our Missoula Office.