Written by Dalton Bradshaw, CPA Supervisor

After passing a House vote in July, H.R. 3684, originally introduced as the “Investing in a New Vision for the Environment and Surface Transportation in America Act” or the “INVEST in America Act,” an infrastructure bill is now being considered by the Senate. Retitled as the “Infrastructure Investment and Jobs Act” (the “Act”) by the Senate, the Act aims to dedicate substantial resources to improve and maintain our Nation’s critical infrastructure. The Act has bipartisan support but its passage and its final contents, if passed, is uncertain. This summary addresses some key components of the Act as it currently stands.


The Act’s primary objective is to revitalize the United States’ critical infrastructure, a key component of President Biden’s platform in the 2020 presidential election. The Act seeks to fortify the U.S. infrastructure by providing significant resources to build, maintain and expand public roads and bridges, public transportation, water quality and distribution, and broadband availability.

To subsidize these efforts, the Act grants a plethora of funds to various organizations and federal programs, such as the Federal-Aid Highway Program and the Federal Railroad Administration, tasked with improving and maintaining roads, bridges and public transportation. The Act also seeks to improve water quality and availability by providing additional funding and expenditure authority to the Federal Water Pollution Control Act and by establishing a Wastewater Efficiency Grant Pilot Program. This pilot program would award grants to owners and operators of publicly owned water treatment centers that aim to create or improve waste-to-energy systems.

Additionally, the Act proposes changes to Internal Revenue Code (“IRC”) §118, Contributions to Capital of a Corporation, by excluding from income all contributions, regardless of source, to a regulated public utility for water or sewage disposal services. Currently, any contributions to a governmental entity, whether if they are made by a customer, another governmental entity, or civic group, are included as income by the governmental entity. This proposal is expected to lose $1.25 billion in tax revenues over a 10-year period for the government.

In light of the COVID-19 pandemic and the remote work and learning environment, the Act also focuses on the expansion of broadband services and availability. The Act seeks to provide Internet services to geographic areas, commercial and residential, in which more than 50% of households or businesses do not have access to adequate broadband services. These efforts would be funded by appropriations and private activity bond issuances that would be federally exempt from income taxes.

The Act also addresses President Biden’s climate change agenda by providing several energy provisions that would also be partially funded through private activity bond issuances. The Act provides for subsidies to nuclear power plants, carbon dioxide capture and storage facilities, electric buses, charging stations, and battery recycling centers. However, Biden’s broader agenda of establishing standards for clean energy and providing additional tax credits for electric vehicles are notably excluded from the Act.


In addition to revamping the nation’s infrastructure, the Act also proposes several changes to relief programs and funds that were created and distributed in response to COVID-19. The Act seeks to rescind roughly $40 billion of unused funds from programs established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Consolidated Appropriations Act of 2021. The rescinded funds will be reappropriated to assist in funding the provisions of this Act.

Furthermore, due to a multitude of states suspending additional unemployment payments provided by the American Rescue Plan Act of 2021 earlier than anticipated, the Congressional Budget Office (CBO) reduced its projected cost of this program. Initially, the CBO projected the expanded payments would cost $144 billion in 2021 and $8 billion in 2022. Now, the CBO expects that these projections will be $50 billion and $3 billion less in 2021 and 2022, respectively. The savings from this reduction will serve to offset the cost of this Act.

The Act also eliminates the employee retention tax credit (ERC) effective September 30, 2021. The credit was originally set to expire on December 31, 2021. The ERC was initially established within the CARES Act to provide an alternative relief program for businesses that were ineligible to receive Payroll Protection Program (PPP) funds. Due to a low number of businesses claiming the credit, Congress amended and expanded the credit in December 2020 and March 2021 to increase the amount of businesses that could qualify for the credit, including those that had already received PPP funds. By terminating the credit early, the government would save approximately $8.2 billion to offset new spending.

Additionally, in response to the various IRS service center closures during the height of COVID-19, the Act implements various protections for taxpayers. In the event of a tax court petition, if the location is closed on the date a petition is due, the relevant taxpayer will receive additional time to file equal to the amount of time the office was inaccessible plus 14 days. Also, provisions have been included to more accurately define a federally declared disaster and to more clearly outline tax deadlines in the event of such disaster.


The Act will primarily be funded through bond issuances and by designating unused funds from the CARES Act and the Consolidated Appropriations Act of 2021, rather than by increasing income taxes on individuals and corporations. Most of the tax increases come in the form of extending sales and use taxes, mostly highway and gas related, that were set to expire in 2022 and 2023. Additionally, the Act proposes an increase in federal excise taxes on, and more broadly defines, taxable substances and chemicals.

Furthermore, the Act seeks to procure funding by approving the sale of petroleum reserves. Beginning in 2028, the Secretary of Energy will be authorized to sell 87.6 million barrels of crude oil from the Strategic Petroleum Reserves. This sale is intended to generate $6.1 billion in revenues that will be deposited into the General Fund of the United States Treasury. To achieve this objective, the Act reduces the minimum petroleum reserve requirements from 340 million barrels to 252.4 million barrels in 2028 and provides $43.5 million to facilitate the sales.

Originally, President Biden intended to increase the corporate tax rate and provide additional funding to the Internal Revenue Service (IRS) to improve enforcement activities through the Act. However, this did not come to fruition in the Act as currently before the Senate. While there is currently no increase in funding to the IRS, the Act does aim to increase enforcement and reporting of cryptocurrency transactions. The Act more broadly defines covered securities to include digital assets, which would require brokers to report all taxable transactions to the IRS and the relevant taxpayer. Additionally, the Act would require brokers to report transfers of digital assets, which are not part of a sale or exchange, to the IRS. These new reporting requirements would take effect on January 1, 2023 and are expected to generate an additional $28 billion in tax revenues.

Specifically, the Act includes the following appropriations:

  • $110 billion for roads and bridges
  • $73 billion for power grid upgrades
  • $66 billion for railways
  • $65 billion for broadband expansion
  • $55 billion for clean drinking water
  • $39 billion for transit



While several of Biden’s proposals were not included in the Act, Senate Democrats are also working on a larger bill to pass in conjunction with the Act using the budget reconciliation process. This bill will likely include many proposals detailed in Biden’s American Jobs Plan and American Families Plan. The bill will face staunch resistance from GOP members as it will likely entail significant tax changes. By utilizing the budget reconciliation process, Senate Democrats can avoid a Republican filibuster and bypass the requirement of garnering a supermajority to pass the legislation.

We will continue to monitor developments on these proposals and provide updates as they occur. If you wish to discuss how these proposals might affect you or your business, please contact your BMSS professional.

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