Several industry associations urged Congress to quickly pass a bill to exempt broadband deployment grants from the American Rescue Plan Act (ARPA) and the Infrastructure Law from being taxed.
“The 117th Congress made historic investments in broadband infrastructure by allocating billions to programs in the ARPA and [Infrastructure Law] that aim to bring high-speed Internet services to all Americans,” wrote CCA, CTIA, NTCA, TIA, USTelecom, and WIA. They warned that if lawmakers don’t act, “grant recipients will be required to return as much as 21 percent of the broadband grants to the federal government in the form of taxes, leaving millions of Americans without access to the broadband they were promised.”
In the past, the Internal Revenue Service had the flexibility to act unilaterally to exempt some broadband grants from taxation. However, the 2017 Tax Cuts and Jobs Act changed the law, declaring that all federal grants, including broadband grants, are taxable as income, according to the associations. In the letter to the leaders of the Senate Finance Committee and House Ways and Means Committee, the associations said: “Congress should exempt broadband grants from taxation as consistent with the ubiquitous deployment goals reflected in the ARPA and the Infrastructure Law.”
Senators Mark Warner (D-VA) and Jerry Moran (R-KS) recently introduced the Broadband Grant Tax Treatment Act, which excludes the Infrastructure Law and ARPA broadband grants from a recipient’s taxable income. “This legislation will ensure all of the awarded federal grant dollars are dedicated to broadband deployment and allow broadband providers to plan project bids accordingly,” note the groups.
“Our nation’s broadband providers are currently matching grant opportunities with supply chain needs and budgets in order to make accurate bids for BEAD [Broadband Equity, Access, and Deployment Program] and other funding opportunities that will enable difficult and expensive broadband deployments, many that have been out of reach heretofore,” wrote CCA, CTIA, NTCA, TIA, USTelecom, and WIA. “As providers begin these strategic budgetary assessments it is clear the tax on broadband grants stands as a major limiting factor in the effectiveness and reach of each project and will result in fewer broadband connections.”
By Leslie Stimson, Inside Towers Washington Bureau Chief