WorldWide Drilling Resource

33 JANUARY 2022 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Taxing Infrastructure The recently enacted $1.2 trillion Infrastructure Investment and Jobs bill calls for the repair of roads, bridges, public transit, the power grid, broadband, cybersecurity, and more. Not too surprisingly, the bill includes a multitude of measures to pay for it. Bottom line, the bill will be financed through a combination of funds, including repurposing unspent COVID-19 relief funds, unused federal unemployment insurance, and imposing new superfund fees while strengthening tax enforcement for cryptocurrencies. Of concern to many drilling operations are a number of provisions including: c The Employee Retention Credit. After the Internal Revenue Service (IRS) issued guidance implementing the Employee Retention Credit (ERC), the refundable tax credit that encouraged businesses to keep employees on their payroll, for the last two quarters of 2021, the Infrastructure bill terminated it as of September 30, 2021, for employers impacted by the pandemic. c Highways Taxes and Trust Fund Authority. The Highway Trust Fund (HTF) finances most federal government spending for highways and mass transit. The HTF receives 82% of its funding from excise taxes on motor fuel, commonly known as the “gas tax”. Taxes on tires and heavy vehicles (trucks) make up the rest of the fund’s revenue. c Interest Rate Stabilization. Of interest to drilling operations offering single-employer retirement plans, a provision in the Infrastructure bill extends the Interest Rate Stabilization (IRS) rules, raising almost $2.9 billion during the period 2026-2031. The IRS rules provide many employers with flexibility to smooth out funding obligations over longer time periods, helping them avoid disruptive cost-cutting measures and, at least for some, ensuring the survival of both the employer and the pension plan. c Disaster Relief. With an expected negligible revenue effect, the Infrastructure bill modifies the extension of certain deadlines for drilling professionals and other taxpayers affected by federally declared disasters. The definition of what is and what isn’t a major disaster has also been modified to include those impacted by wildfires. c Environmental Remediation. The bill provides $21 billion to clean up Superfund and Brownfield sites, reclaim abandoned mine land, and cap orphaned gas wells. This raises the question of how the Infrastructure bill will be paid for. Although other provisions in the Infrastructure bill, such as the delay in a rebate for Medicare prescription drug plans and the $51 billion it is projected to raise, appear to be valid assumptions, and despite claim of being revenue neutral, the bulk of the funding is expected to come from taxpayers. Mark Mark E. Battersby may be contacted via e-mail to For more information call: (270) 786-3010 or visit us online: All New! N Atlantis-Pro Vault • Traffic-Rated Capable • Simple installation • Trouble-free operation WWDR MARCH EDITORIAL FOCUS: Hammers / Bits / Tooling