Infrastructure Bill Clears Senate and Returns to House for Approval

Infrastructure Bill Clears Senate and Returns to House for Approval

The first installment of the Biden Administration’s “Build Back Better” infrastructure package is now one step closer to reality. On August 10, the Senate passed the Infrastructure Investment and Jobs Act (H.R. 3684, or the Infrastructure Act), with the support of all 50 Democrats and 19 Republicans. This $1.2 trillion bill focuses primarily on “hard infrastructure” initiatives such as roads, bridges, and airports. The Infrastructure Act also contains provisions for expanded broadband access, municipal water system upgrades, and increased renewable energy production, among a host of other projects.

The Infrastructure Act does not advance the Biden Administration’s headline tax proposals from the American Jobs Plan (AJP) or the American Families Plan (AFP), although it does contain a number of other tax provisions to help offset costs. For instance, the Infrastructure Act would end the employee retention tax credit earlier than expected by moving the final date for qualified wages back by three months, from Dec. 31 to Sept. 30, 2021. The bill would also modify and extend the application of certain Superfund excise taxes on chemical manufacturers. And notably, the bill would impose new information reporting requirements for brokers and digital assets (cryptocurrency) to help identify taxable transactions. This cryptocurrency provision deserves a spotlight.

Proposed Cryptocurrency Reporting Requirements

The first new information reporting requirement under the Infrastructure Act would require reporting of cryptocurrency transactions by any “broker” of cryptocurrency transactions where the transaction amount exceeds $600. As with other broker transactions, this reporting would be performed under Section 6045 on Form 1099-B, and would be effective Jan. 1, 2023. To facilitate this reporting, cryptocurrency exchanges that are brokers would need to obtain a Form W-9 from those for whom they effectuate transfers. If a broker does not obtain a Form W-9, then they would be required to withhold 24% of the reportable amount or face potential penalties. This requirement would be applied to new and old clients, and could place a significant burden on the exchanges as they generally do not collect this information presently.

For these purposes, the Infrastructure Act would re-define a broker as “any person who (for consideration) is responsible for providing any service effectuating transfers of digital assets on behalf of another person.” In turn, a digital asset would mean “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.” These broad definitions could ensnare many more parties than simple brokers, such as virtual currency miners, ethereum validators, and others who regularly transact in virtual currencies but who are not operating virtual currency exchanges. Furthermore, it is impossible for certain parties (such as miners) to collect the Form W-9 information needed for the reporting requirement, which could effectively end their ability to continue their crypto activities (at least in the U.S.). A last-minute compromise amendment was crafted by a bipartisan group of Senators to scale back the reach of this provision, but it did not receive enough votes to pass.

This seemingly straight forward provision became one of the most hotly debated provisions of the bill.

This means that, assuming there are no changes to the final bill (more on that in a minute) it seems likely that those who deal in cryptocurrency will need clarification from the Treasury Department about the scope of who is a broker. Until such guidance is issued, all affected parties who regularly complete virtual currency transactions in excess of $600 for profit should plan on a reporting requirement and to collect a Form W-9 from their clients.

The second new information reporting requirement is in addition to the aforementioned broker reporting requirement, and pertains to large cryptocurrency transactions beginning in 2024. This additional reporting requirement would fall under the present-law cash transaction reporting provisions of Section 6050I, where “digital assets” would be added as an asset treated as cash. Under this code section, any business that receives “cash” in excess of $10,000 must file Form 8300. This form requires that the business provide identifying information on the transferor, the transferee, and the nature of the transaction. This additional reporting requirement may not be as controversial as the broker reporting requirement, which could diminish the likelihood of a future amendment.

Next Steps for the Infrastructure Act

There are members of the House of Representatives that have promised to narrow this cryptocurrency reporting requirement, but any changes to the bill in the House would trigger a revote in the Senate. This realization may make lawmakers reticent to change the provision, unless a clear path to Senate resolution emerges.

Separately, the second installment of the Biden Administration’s infrastructure package is being negotiated in the Senate using budget reconciliation rules. The $3.5 trillion reconciliation bill would contain many of the other proposals that were part of the Biden Administration’s infrastructure plans, including the headline tax proposals which would offset the bill’s costs. House Speaker Nancy Pelosi (D-CA) stated that the House would not take up the Infrastructure Act without also receiving the reconciliation bill from the Senate. However, a group of nine moderate Democrats in the House indicated recently that they might withhold support for the reconciliation bill if the House does not vote first on the Infrastructure Act.

These delicate and fluid negotiations may lead to substantial changes in the Infrastructure Act, including potential changes to the proposed cryptocurrency reporting requirements. The contours of the separate reconciliation bill are also taking shape in the Senate, which are anticipated to include many of the Biden Administration’s tax proposals that were summarized in a previous article. If you would like to discuss the potential impact that either of these proposals may have on you or your business, please contact us.


This article was updated on August 24, 2021 with new information.

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Infrastructure Bill Clears Senate and Returns to House for Approvalhttps://www.cbiz.com/Portals/0/Images/Build-Back-Better-CBIZ.jpg?ver=Y5wUrs6Y65kHnTkgaYXVvw%3d%3dThe first installment of the Biden Administration’s “Build Back Better” infrastructure package is now one step closer to reality.2021-08-17T17:00:00-05:00

The first installment of the Biden Administration’s “Build Back Better” infrastructure package is now one step closer to reality.

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