The Telecommunications Industry Association (TIA) is encouraging members of Congress to support connectivity for unserved communities as well as critical investments in R&D as part of the $78 billion bipartisan tax deal agreed-to last week. The Tax Relief for American Families and Workers Act would expand the child tax credit and provide a series of tax breaks for businesses.
TIA says Congress should prioritize restoring the ability to expense foreign and domestic R&D costs. Since 2022, companies have been required to amortize their R&D expense deductions over a five-year period for research conducted domestically and 15 years for research conducted internationally, notes the association.
“As a result, it is more expensive for businesses to invest in the next generation of technologies,” says TIA VP Government Affairs Melissa Newman in a letter to House and Senate leaders. “For the telecommunications industry specifically, amortizing R&D expenses makes it harder for U.S. firms to lead the next wave of innovation in 6G, hobbles investments in OpenRAN, and puts America at a disadvantage as we compete with countries like China that provide more generous subsidies for companies investing in innovation.”
The association also urged lawmakers to fix the tax treatment of broadband grants. Currently, the federal government’s broadband programs under the Infrastructure Investment and Jobs Act are subject to “costly” taxes, according to the association. TIA supports the Broadband Grant Tax Treatment Act, which would modify Section 118 of the IRS code to ensure that federal broadband grants, like BEAD, are not treated as taxable income.
“Subjecting small carriers to substantial tax bills for participating in the BEAD program reduces the amount of funding that will go toward building high-speed networks in unserved and underserved communities,” states Newman. TIA urges Congress to pass what the association calls a “bipartisan, commonsense fix” so that BEAD dollars are used for their intended purpose of connecting as many Americans as possible to high-speed, trustworthy, and reliable communications networks.
The tax relief bill still needs to be written into legislation and secure the votes to pass the Republican-led House and the Democratic-led Senate, which is not guaranteed. But the top tax writers are hopeful it can pass quickly, before people file their taxes this year, reports NBC.
By Leslie Stimson, Inside Towers Washington Bureau Chief