Bill May Exempt Companies from Taxes on Broadband Infrastructure Grants

A bipartisan group of Senators introduced the Broadband Grant Tax Treatment Act. If passed, the measure would change the Internal Revenue Code to ensure that funding directed for broadband implementation from the Infrastructure Law and the American Rescue Plan will not be considered taxable income.   

Grants awarded to industry for the purposes of broadband deployment are currently factored into a company’s income and will soon be subjected to additional taxes due to scheduled changes to the corporate tax code that kick in beginning next year – unless Congress acts now to address the problem, according to the lawmakers. 

That ensures all federal dollars awarded to companies for the purpose of deploying broadband can be used wholly for that purpose, rather than making their way back to the government through taxes, say bill sponsors Sens. Mark Warner (D-VA) and Jerry Moran (R-KS). Co-sponsors are: Tim Kaine (D-VA), Roger Wicker (R-MS), Rev. Raphael Warnock (D-GA), and Shelley Moore Capito (R-WV). 

“In order to fully reap the benefits of the Infrastructure Law and the American Rescue Plan, every dollar that was set aside to fund broadband expansion and deployment should be used for that purpose,” said Warner, a member of the Finance Committee that oversees the nation’s tax code and a primary author of the broadband provisions in the Infrastructure Law and American Rescue Plan. “Taxing these broadband investment awards would be counter-productive, and could ultimately diminish efforts to give more Americans access to high-speed internet.”

Kaine agrees, stating: “Ensuring that those investments won’t be taxed will help speed our progress toward that goal and expand access to online learning tools, remote work opportunities, and telehealth services.”

Industry Support

Several broadband-related industry lobbies support the legislation. “Taxing broadband grants – requiring recipients to pay back to the government a portion of what they receive from the government – will dramatically reduce the impact of these programs and likely leave the hardest-to-reach communities without essential connectivity for even longer,” said NTCA CEO Shirley Bloomfield. “It is critical that all broadband grant funds go toward their intended purpose of network deployment. This legislation will maximize the impact of every dollar granted for broadband deployment and further the mission of getting every American connected.”

“The federal government is making an enormous investment in rural broadband, but the effects of the tax code make it harder for the small, locally-based broadband providers we represent to maximize the amount of funding going to build out the network,” said Derrick Owens, Senior Vice President for Government and Industry Affairs for WTA – Advocates for Rural Broadband. He said the measure would streamline the tax code “so that we’ll get as much broadband built as quickly as possible.”

Large telecoms appreciate the effort as well. “With an eye toward 100 percent connectivity, Congress made a historic investment in the broadband grant program in 2021. However, requiring grant recipients to return as much as 20 percent of those grants in the form of taxes jeopardizes our shared goal of universal connectivity,” said USTelecom SVP of Government Affairs Brandon Heiner. “It is vital that Congress move to eliminate this tax, as America’s broadband providers carefully plan and prepare to allocate resources to connect as many Americans as possible.” 

By Leslie Stimson, Inside Towers Washington Bureau Chief

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