August 2021 / United States

The U.S. Senate passed the Infrastructure Investment and Jobs Act on a broad bipartisan vote of 69-30. This historic bill includes many of President Joe Biden’s economic priorities, including record investments in minority-owned businesses, broadband infrastructure, expanded funding to track and address climate change, while also including the largest-ever federal investments in roads and bridges, clean drinking water and more.

After the Senate passed the Infrastructure Investment and Jobs Act, U.S. Secretary of Commerce Gina M. Raimondo released the following statement:

“I am deeply thankful for the unwavering commitment of the Republican and Democratic Senators who led the process to get this done. Throughout the entire process, President Biden showed incredible leadership keeping these talks together and encouraging all of us to remain committed to this bipartisan approach. Passing a bipartisan infrastructure bill sends a message to nations around the world about the strength of our democracy and what we can accomplish together for the benefit of all Americans. The investments in this bill will better position the United States to compete globally, strengthen our supply chains, and create millions of good-paying jobs – all while making our economy more resilient and just.

“The Infrastructure Investment and Jobs Act represents a historic investment in our country that will strengthen our economy to benefit all Americans for decades to come. This is a generational achievement that both parties can be proud of, and there is still more to do as we carry out President Biden’s Build Back Better agenda. Broad support exists to make needed investments in the Care Economy to provide access to affordable, quality care services as well as reinvigorating workforce training to ensure our workers are prepared for the jobs of the 21st century. I look forward to continued engagement with Congress to make progress on these critical challenges.”

Among the historic investments included in the bill is more than $48 billion in funding for the National Telecommunications and Information Administration (NTIA) to fund state and local investments to help reach 100% access to affordable, high-speed broadband service. This is among the most significant government investment in broadband access and infrastructure in American history, and is a critical component of President Biden’s Build Back Better agenda.

The bill will also make permanent the Minority Business Development Agency (MBDA), enhancing its ability to promote and administer its flagship programs to promote the growth, development, and resiliency of minority-owned businesses. As the only federal agency dedicated solely to economic development for minority businesses, the move to permanently authorize MBDA is essential to ensuring the economic recovery reaches all of America’s communities.

Finally, the legislation makes major investments to tackle climate change, increase infrastructure resiliency, and restore and improve coastal habitats by providing the National Oceanic and Atmospheric Administration (NOAA) with approximately $3 billion in funding for climate science and services.

Source: US Department of Commerce

U.S. Customs and Border Protection (CBP) is adjusting certain customs user fees and corresponding limitations established by the Consolidated Omnibus Budget Reconciliation Act (COBRA) for Fiscal Year 2022 in accordance with the Fixing America's Surface Transportation Act (FAST Act) as implemented by the CBP regulations.

The adjusted amounts of customs COBRA user fees and their corresponding limitations set forth in this notice for Fiscal Year 2022 are required as of October 1, 2021.

I. Background

A. Adjustments of COBRA User Fees and Corresponding Limitations for Inflation

On December 4, 2015, the Fixing America's Surface Transportation Act (FAST Act, Pub. L. 114-94) was signed into law. Section 32201 of the FAST Act amended section 13031 of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (19 U.S.C. 58c) by requiring the Secretary of the Treasury (Secretary) to adjust certain customs COBRA user fees and corresponding limitations to reflect certain increases in inflation.

Sections 24.22 and 24.23 of title 19 of the Code of Federal Regulations (19 CFR 24.22 and 24.23) describe the procedures that implement the requirements of the FAST Act. Specifically, paragraph (k) in § 24.22 (19 CFR 24.22(k)) sets forth the methodology to determine the change in inflation as well as the factor by which the fees and limitations will be adjusted, if necessary. The fees and limitations subject to adjustment, which are set forth in appendix A and appendix B of part 24, include the commercial vessel arrival fees, commercial truck arrival fees, railroad car arrival fees, private vessel arrival fees, private aircraft arrival fees, commercial aircraft and vessel passenger arrival fees, dutiable mail fees, customs broker permit user fees, barges and other bulk carriers arrival fees, and merchandise processing fees, as well as the corresponding limitations.

B. Determination of Whether an Adjustment Is Necessary for Fiscal Year 2022

In accordance with 19 CFR 24.22, CBP must determine annually whether the fees and limitations must be adjusted to reflect inflation. For Fiscal Year 2022, CBP is making this determination by comparing the average of the Consumer Price Index—All Urban Consumers, U.S. All items, 1982-1984 (CPI-U) for the current year (June 2020-May 2021) with the average of the CPI-U for the comparison year (June 2019-May 2020) to determine the change in inflation, if any. If there is an increase in the CPI-U of greater than one (1) percent, CBP must adjust the customs COBRA user fees and corresponding limitations using the methodology set forth in 19 CFR 24.22(k). Following the steps provided in paragraph (k)(2) of § 24.22, CBP has determined that the increase in the CPI-U between the most recent June to May twelve-month period (June 2020-May 2021) and the comparison year (June 2019-May 2020) is 1.94 percent. As the increase in the CPI-U is greater than one (1) percent, the customs COBRA user fees and corresponding limitations must be adjusted for Fiscal Year 2022.

C. Determination of the Adjusted Fees and Limitations

Using the methodology set forth in § 24.22(k)(2) of the CBP regulations (19 CFR 24.22(k)), CBP has determined that the factor by which the base fees and limitations will be adjusted is 11.009 percent (base fees and limitations can be found in appendices A and B to part 24 of title 19). In reaching this determination, CBP calculated the values for each variable found in paragraph (k) of 19 CFR 24.22 as follows:

• The arithmetic average of the CPI-U for June 2020-May 2021, referred to as (A) in the CBP regulations, is 261.992;
• The arithmetic average of the CPI-U for Fiscal Year 2014, referred to as (B), is 236.009;
• The arithmetic average of the CPI-U for the comparison year (June 2019-May 2020), referred to as (C), is 257.092;
• The difference between the arithmetic averages of the CPI-U of the comparison year (June 2019-May 2020) and the current year (June 2020-May 2021), referred to as (D), is 4.900;
• This difference rounded to the nearest whole number, referred to as (E), is 5;
• The percentage change in the arithmetic averages of the CPI-U of the comparison year (June 2019-May 2020) and the current year (June 2020-May 2021), referred to as (F), is 1.94 percent;
• The difference in the arithmetic average of the CPI-U between the current year (June 2020-May 2021) and the base year (Fiscal Year 2014), referred to as (G), is 25.984; and
• Lastly, the percentage change in the CPI-U from the base year (Fiscal Year 2014) to the current year (June 2020-May 2021), referred to as (H), is 11.009 percent.

D. Announcement of New Fees and Limitations

The adjusted amounts of customs COBRA user fees and their corresponding limitations for Fiscal Year 2022 as adjusted by 11.009 percent set forth below are required as of October 1, 2021. Table 1 provides the fees and limitations found in 19 CFR 24.22 as adjusted for Fiscal Year 2022, and Table 2 provides the fees and limitations found in 19 CFR 24.23 as adjusted for Fiscal Year 2022.

Tables 1 and 2, setting forth the adjusted fees and limitations for Fiscal Year 2022, will also be maintained for the public's convenience on the CBP website at www.cbp.gov.

Troy A. Miller, the Acting Commissioner, having reviewed and approved this document, is delegating the authority to electronically sign this notice document to Robert F. Altneu, who is the Director of the Regulations and Disclosure Law Division for CBP, for purposes of publication in the Federal Register.

Source: US Federal Register

The Congressional Research Service (CRS) of the US Library of Congress has issued a report with an overview of current information reporting requirements, as well as policy proposals and consideration, for certain cryptocurrency transfers. The CRS report is entitled "Cryptocurrency Transfers and Data Collection" (IF11910, 25 August 2021).

For US federal tax purposes, taxpayers should treat cryptocurrency transactions in the same manner as transactions involving other mediums of value, such as cash, checks and stocks. Accordingly, cryptocurrency transactions are subject to the capital gains and losses rules of the US Internal Revenue Code (IRC). Similarly, US federal income and employment tax rules apply when a business uses cryptocurrency to compensate an individual for a service provided. Cryptocurrency transactions are also generally subject to the same information reporting requirements as non-cryptocurrency transactions.

The Biden Administration's fiscal year (FY) 2022 Budget proposes:

• requiring cryptocurrency exchanges and custodians to file information returns with the US Internal Revenue Service (IRS) that report the amount flowing into and out of customer accounts with gross flows above USD 600 with a separate reporting requirement for inter-broker cryptocurrency transfers;
• requiring businesses that accept cryptocurrency to report crypto transactions exceeding USD 10,000 in value to the IRS; and
• expanding the information reporting requirements for brokers, including cryptocurrency exchanges and wallet providers, to include information on US and certain foreign account owners to allow for automatic information sharing with foreign tax jurisdictions in exchange for information on US taxpayers transacting in cryptocurrency outside the United States.

The Infrastructure Investment and Jobs Act (H.R. 3684), as passed by the US Senate on 10 August 2021 would, if enacted:

• require a party facilitating the transfer of cryptocurrency to file an information return as a broker with the IRS; and
• require a business that receives cryptocurrency worth more than USD 10,000 in a single transaction to report the transaction to the IRS.

The CRS report notes that US policymakers face a trade-off between providing the necessary tools to ensure anti-money laundering (AML) compliance and driving activities out of the US market because cryptocurrency can be used across jurisdictions with relative ease.

Note: The CRS is an agency within the US Library of Congress and serves the US Congress throughout the legislative process by providing legislative research and analysis for an informed national legislature.

The White House has released a Fact Sheet outlining US President Joe Biden's tax reform plan to provide greater tax fairness for small businesses. The Fact Sheet, dated 19 August 2021, is entitled "The Build Back Better Agenda Will Provide Greater Tax Fairness or Small Businesses."

To level the playing field and address the concerns of small business owners, President Biden's plan, if adopted by the US congress, will:

• raise the corporate income tax rate from 21% to 28%;
• strengthen the global minimum tax for large multinational corporations;
• reduce incentives for foreign jurisdictions to maintain ultra-low corporate tax rates by encouraging global adoption of robust minimum taxes for large corporations;
• enact a 15% minimum tax on book income of large, highly profitable corporations;
• eliminate incentives for large corporations to offshore profits and jobs;
• ramp up enforcement to address tax avoidance among large corporations;
• extend the expansion of the Child Tax Credit (CTC) in the American Rescue Plan Act (ARP) (from USD 2,000 per child to USD 3,000 per child for children over the age of six and USD 3,600 for children under the age of six); and
• permanently extend the tax credits that lowered health insurance premiums for those buying coverage through the Affordable Care Act (ACA) (www.HealthCare.gov).

The Fact Sheet states that, according to the US Treasury Department's analysis, President Biden's plan will protect 97% of small business owners from income tax rate increases while delivering tax cuts to more than 3.9 million entrepreneurs.

The Congressional Research Service (CRS) of the US Library of Congress has analysed the US federal tax gap in its recent report. The CRS report is entitled "Federal Tax Gap: Size, Contributing Factors, and the Debate Over Reducing It" (IF11887-Version 2, 2 August 2021).

The federal tax gap is a measure of taxpayer non-compliance. The US Internal Revenue Service (IRS) provides two estimates of the tax gap:

• the gross federal tax gap, i.e. the difference between:
  • the total amount of federal individual and corporate income, employment, and estate and gift taxes owed in a year; and
  • the total amount of those taxes paid voluntarily in full and on time; and
• the net tax gap, i.e. the difference between:
  • all taxes owed; and
  • taxes paid after late taxpayer payments and taxes collected through IRS enforcement actions.

The federal tax gap has three components:

• the understatement of tax liability through underreporting of income or overstating deductions, credits and other income adjustments;
• the failure to pay the full amount of taxes owed when filing a tax return on time (tax underpayment); and
• the failure to file a required return on time (non-filing).

The CRS report includes the following table showing the net federal tax gap from 2001 to 2013:

An updated estimate from the IRS is unlikely to be released before 2022. In testimony given at a congressional hearing in April 2021, IRS Commissioner Charles Rettig stated that the current gross federal tax gap could total as much as USD 1 trillion, although not everyone agrees with that assessment.

The CRS report states that options for decreasing the federal tax gap include:

• increasing the IRS's resources, especially for enforcement;
• regulating paid tax preparers;
• requiring new information reporting for certain taxpayer transactions with banks;
• major new investments in the IRS's information technology and employee training;
• a greater emphasis on the IRS's taxpayer services;
• a redesign of the IRS's information systems;
• simplifying the federal tax code to make it possible for more taxpayers to meet their tax obligations on their own with fewer errors; and
• clarifying ambiguous areas of the tax code to make it harder for corporations and high-income individuals to prevail in disputes with the IRS over the legality of their tax minimization strategies.

Note: The CRS is an agency within the US Library of Congress and serves the US Congress throughout the legislative process by providing legislative research and analysis for an informed national legislature.

New York has enacted legislation expanding its definition of receipts for sales and use tax purposes. The definition now includes consideration received by a vendor from third parties in certain circumstances (A01143-A / S06301). The new law is effective for sales occurring on or after 1 December 2021.

The newly enacted legislation provides that receipts shall include consideration received by the vendor from third parties under the following conditions:

• the vendor receives consideration from a third party and the consideration is directly related to a rebate, discount or similar price reduction on the sale (except sales of motor vehicles);
• the vendor has an obligation to pass the consideration through to the purchaser in the form of a price reduction;
• the amount of the consideration to be paid by the third party is fixed and determinable by the vendor at the time of the sale of the property or service to the purchaser; and
• one of the following criteria is met:
  • the purchaser presents to the vendor a coupon, certificate or other documentation to claim a price reduction granted by a third party, who will reimburse any vendor to whom the document is presented;
  • the purchaser presents identification as a member of a group or organization entitled to a price reduction (excluding the presentation of a customer loyalty or related rewards program card); or
  • the invoice received by the purchaser or a coupon, certificate or other documentation presented by the purchaser identifies the price reduction as third-party.

The New York Governor signed the bill into law on 20 August 2021.