The Infrastructure Investment and Jobs Act (IIJA or “Act”) signed into law on Nov. 15 is a $1.2 trillion package introduced under President Joe Biden’s American Jobs Plan in March 2021.
The new 2,700-plus page infrastructure law holds two main objectives:
First, it renews numerous current infrastructure and transportation programs, which were recently extended through Dec. 3, 2021.
Second, the IIJA includes $550 billion in new federal spending over the next five years.
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The majority of the new spending focuses on all modes of transportation — including revitalization and improvements to the national supply chain infrastructure — from the country’s ports to aging roadways and bridges. The Act also provides federal spending for clean energy resources, power and water infrastructures, public transit, and the expansion of cybersecurity and broadband (telecommunication) services across the United States.
Addressing transportation needs
For the transportation and logistics industry, the IIJA focuses on the aging national infrastructure while enhancing safety programs and regulations both for companies and enforcement bodies. Of the total new spending included in the Act, $110 billion is designated for fixing roads and bridges across the physical supply chain. Also, the IIJA renews funding for numerous infrastructure programs that have been under short-term extensions.
State and local governments
The legislation will have a substantial effect on state and local governments that are both direct beneficiaries of initiatives and “financial funnels” for recipients within their jurisdiction.
Many state and local governments have infrastructure projects that are ready to utilize the funding; however, some of these entities are still struggling to balance their continued response to the pandemic with infrastructure and other priorities. The administration of COVID-relief and unemployment programs over the last 18+ months stretched resources for many entities.
Energy and utilities
Other critical infrastructure sectors, energy and water, received allocations of roughly $73 billion and $55 billion, respectively. This aid is intended to assist in the areas of sustainability, cybersecurity, and mitigating the future effect of climate change.
Sustainability aid includes:
Investments in green technology (i.e., hydro, wind, nuclear energy, and carbon capture technology)
Funding for sustainable manufacturing
Education and job training for green energy careers
Sustainable residential and commercial infrastructure for energy efficient appliances and green buildings
Cybersecurity aid includes:
Grants for improving current policies designed to protect data
Legislation requiring certain recipients of federal funding to standardize cybersecurity practices
Climate change aid includes:
Improved responses to wildfires
Upgrade the safety and reliability of transmission lines
Help to mitigate the effect of droughts
A win for the construction industry
Though the legislation is focused on transportation, energy, and other sectors, the construction industry is also a big winner. Industry advocates and trade associations have been pursuing this legislation for over a decade. With significant dollars flowing through government bodies and grant programs to build infrastructure (for utilities, roads, ports, bridges, rail, and other initiatives), construction companies and businesses that support the industry are among the biggest beneficiaries of the legislation.
One of our nation’s most vulnerable areas is the cybersecurity of our critical infrastructure. This is why cybersecurity funding, enhancement, and maturity are woven throughout the bill. The IIJA provides new mandates for establishing cybersecurity plans and adopting cybersecurity “maturity models” that standardize cybersecurity policies and practices. The Act also provides assistance for businesses, state and local governments, and other entities to prepare for and protect against cyberattacks.
The IIJA allocates $65 billion to expand basic broadband connectivity and service, with a focus on underserved areas. It will address middle mile network expansion to allow easier access to connectivity for providers. Funding will be pushed to local municipalities for both infrastructure and expansion. Low-income households will continue to receive subsidies, similar to the voice lifeline programs.
Public, nonprofit, and private providers will need to understand how to qualify for grants and subsidies, which agency to pursue a grant from, and how to comply with new rules and regulations for performance and completion statistics. More guidance is expected on grant applications, requirements, reporting, and compliance.
Employee retention tax credit
The IIJA eliminates the employee retention tax credit for most employers as of Sept. 30, 2021. Most organizations that would have qualified for the fourth quarter of 2021 under the expanded provisions of the American Rescue Plan will not be able to claim the credit as planned. However, assuming they qualified under either the partial suspension or the gross receipts test, they will still be able to amend prior quarter returns for the next three years to claim the credit.
New businesses that qualify as “recovery startup entities” — if they began after Feb. 15, 2020 and had less than $1 million in revenue for each of the prior three years — will continue to be eligible for the credit in the fourth quarter.
There is much to digest in this wide-reaching legislation. A consultation with a tax professional may help navigate you through.
For more information on the Infrastructure Investment and Jobs Act, contact Joe Solana at joe.solana@CLAconnect.com or 678-304-6465. For more information about CliftonLarsonAllen LLP, visit CLAconnect.com.
This article originally appeared on The Patriot Ledger: The Infrastructure Investment and Jobs Act earmarks $1.2 trillion