November 17, 2021

On Monday, President Biden signed HR 3684, the Infrastructure Investment and Jobs Act, into law. The comprehensive $1.2 trillion infrastructure package authorizes funds for federal-aid highways, highway safety programs, and transit programs, and for other purposes.

Included in the new law are a few tax provisions of note to taxpayers.

Termination of the Employee Retention Credit 

The Employee Retention Credit (ERC), created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, will end three months early. The CARES Act created a pandemic-era incentive for employers to retain employees by providing an employer tax credit toward Social Security taxes on qualified wages paid in 2020. The Consolidated Appropriations Act of 2021 (CAA) and the American Rescue Plan Act of 2021 (ARPA) expanded eligibility and allowed employers to claim the ERC on qualified wages paid through December 31, 2021. The early sunset of the ERC was unpopular with the nonprofit sector and was opposed by several groups including the AICPA and a bipartisan group of former lawmakers.

With the signing of the infrastructure bill, the fourth quarter extension is repealed, and wages paid after September 30, 2021 are no longer eligible for the credit (unless they are paid by an eligible recovery startup business).  For employers that qualified for the ERC, this early sunset provision could mean a loss of credit of up to $7,000 per employee for the fourth quarter.

Pension Plan Smoothing 

Amendments included in the new law adjust the funding stabilization percentages in ARPA and extend the interest rate stabilization period from 2029 to 2034 for plan years beginning after December 31, 2021. This smoothing of interest rates will provide defined pension plan sponsors with more flexibility in funding their obligations. Reducing the level of deductible employer pension contributions required under the pension funding rules, it is also expected to raise $2.9 billion over 10 years. Employers with defined benefit plans should work with their plan actuaries to determine the impact this amendment will have on their plan.

Reporting of Cryptocurrencies 

The new law requires cryptocurrency exchanges or brokers to issue a Form 1099-B notifying the IRS directly of transactions. While creating tax reporting challenges for investors, the new provision is expected to raise $28 million for infrastructure projects. The legislation also includes penalties for failing to report the required digital asset transfer information. This provision applies to “brokers” – currently “any person” who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person. This definition in the law has been criticized by some as too broad and there are efforts in Congress to narrow the definition.

The Nonprofit Energy Efficiency Act 

Houses of worship, religious schools, and other buildings belonging to nonprofit organizations are eligible for a $50 million program for energy efficiency. Section 40542, to be administered by the Department of Energy, will provide individual grants of up to $200,000 for upgrades of existing infrastructure including HVAC, ventilation, and windows and doors. We anticipate guidance to come on the grant process and our team will provide more information as it becomes available.

More on the Horizon 

More tax provisions are expected as part of a 2022 budget reconciliation bill. The $3.5 trillion package currently under consideration by Congress is expected to include tax rate increases as well as expansion of the Child Tax Credit, climate-related spending, and paid family and medical leave among others. GRF’s tax team will monitor developments and provide updates as information becomes available.


Troy Turner, CPA

Vice President, Partner and Director, Tax



Richard J. Locastro, CPA, JD

Partner and Director, Nonprofit Tax