Tax & Assurance Guidance

Insights from Washington: Finally! Draft Legislation

Posted on November 12, 2021 by

Sarah Russell

Sarah Russell

Share This

Share on facebook
Share on twitter
Share on linkedin
Share on email

Some things changed and some have stayed the same. While I was away on vacation drinking wine and dreaming of living in Napa, the House finally passed the Infrastructure Investment and Jobs Act, also known as the infrastructure bill. Looking back, the bill passed the Senate in August and includes funding for improvements to the nation’s roads, bridges, public transit systems, railways, power grids, airports, broadband internet, and drinking water. Most of the tax provisions discussed in previous blogs are included in the Build Back Better Act, which has yet to move forward in the House of Representatives; however, there are a few key tax items to note in the infrastructure bill.

The two key tax takeaways are as follows:

  • The Employee Retention Credit was terminated effective September 30, 2021. There are exceptions for “recovery startup businesses”; however, those need to have started their business after February 15, 2020 and their gross receipts cannot exceed $1 million.
  • Impact: Companies planning on the credit for the 4th quarter will no longer receive this benefit. At this time, it is unknown if the IRS will provide a practical method for payment of unpaid employment taxes for those that continued to reduce payroll tax deposits before the bill was passed and waive penalties for late payment of such payroll tax deposits.
  • Brokers are required to report transactions in digital assets like cryptocurrency, starting with returns to be filed in 2024.
  • Impact: This is expected to prevent taxpayers from failing to report and from under-reporting gain on the sale of such assets.

Regarding the larger “Build Back Better” legislation, we are still waiting for things to move forward. On November 9, House Speaker Nancy Pelosi announced the plan is to pass the bill the week of November 15, 2021. However, the following day the Congressional Budget Office (CBO) announced it will not include the $400 billion of revenue the White House expected to be generated from increased IRS enforcement, complicating the question of whether the legislation will be fully “paid for” as President Biden has promised.

Last week, House moderates delayed a vote on the floor, saying they needed to make sure the official CBO analysis matched up with the White House’s cost projections. The office estimated the legislation scored so far would amount to direct spending outlays totaling $20.5 billion from 2022 to 2031. It is expected to score the overall bill in the coming weeks. The office said the funding in the areas scored thus far would not add to the deficit after 10 years, complying with a key rule for reconciliation process Democrats are using to pass the bill. It is unclear whether the recent information will continue to delay a vote in the House or whether the party will agree to move forward with a vote next week.

Once the House agrees to a vote, it will advance to the Senate. It is expected the House will not vote on the bill unless they are confident it will pass a vote in the Senate.

We will update you with any new developments in next week’s blog. If you have any questions, please contact us.

Sarah Russell

Shareholder

Sarah leads the firm’s domestic and international tax practice and is known for the practical & passionate way she advocates for clients.

Related Insights

Tax & Assurance Guidance

Foreign Tax Withholding: What You Need to Know

Posted on April 26, 2022 by

Rob Cheyne
Making service payments to a foreign person is a common cross-border transaction. U.S. taxpayers need to be aware of the applicability of withholding tax and related reporting requirements to ensure they comply and avoid unintended consequences. A U.S. payor must collect withholding tax and remit it to the IRS in the case it is applicable.

Tax & Assurance Guidance

SALT Relief for Partners and S Corps

Posted on February 23, 2022 by

Miroslav Georgiev
With small businesses supporting nearly 47% of U.S. employees, states have been advocating for pass-through entities, operating partnerships and S corporations that have been harshly impacted by the Tax Cuts and Job Act ‘s state and local taxes deduction limit. Recent legislative activity is finally providing relief for many of these businesses. 

Tax & Assurance Guidance

IRS Provides Relief on K-2 and K-3

Posted on February 17, 2022 by

Margaret Amsden
In an attempt to provide more transparency with regard to reporting of foreign activity and/or information to foreign owners, the IRS came out with two new forms: Schedule K-2 (an addendum to the Schedule K) and Schedule K-3 (an addendum to the Schedule K-1). Learn about the latest K-2 and K-3 reporting requirements issued by the IRS.

Sign up for our newsletters

Get general business and industry-specific news and knowledge straight from our accounting specialists.

The Sound of Automation Podcast

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Insights & Perspectives

Data-driven decision making: 3 key insights for business owners

What does it take to build a data-driven business? For self-reliant leaders who feel they’ve hit a plateau when it comes to scaling a business, adopting a data-driven approach can be a breakthrough success strategy. Using data in a more focused way helps good engineers become good entrepreneurs. It’s about creating balance. Here we take a look at key insights for business owners when using data in decision making.

Read More

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content