A bill was introduced in the House that seeks to ensure that funding directed for the implementation of broadband from the Infrastructure Investment and Jobs Act (IIJA) and the American Rescue Plan (ARP) will not be considered taxable income.
The Broadband Grant Tax Treatment Act – introduced by U.S. Reps. Jimmy Panetta (D-CA) and Mike Kelly (R-PA) – would exclude broadband deployment grants awarded through the IIJA and ARP from an organization’s income.
Currently, grants awarded to the industry for the purposes of broadband deployment are factored into a company’s income. They will soon be subjected to additional taxes due to scheduled changes to the corporate tax code that begins next year. This bill would remedy that and ensure that the entirety of federal dollars awarded to companies to deploy broadband is used to connect Americans.
“Although Congress recently provided historic investments to build out our nation’s broadband, many of the small businesses and companies that will use that federal funding to construct the networks and connect our homes could face steep taxes,” Panetta said. “This bill would exempt those grants from federal taxation and ensure that those dollars go directly towards our goal of universal broadband. Congress is working together to address the digital divide with investment and incentives, and this bipartisan legislation would make it easier and quicker to close that gap with connectivity all across America.”
A companion bill was introduced in the U.S. Senate by Sens. Mark Warner (D-VA) and Jerry Moran (R-KS).
“More than 800,000 Pennsylvanians, including 520,000 rural Pennsylvanians, lack quality broadband internet access,” Kelly said. “This bill will not only help to change to that, but it will also work to make that access more affordable. It also ensures federal grant dollars, especially those made available to local governments through pandemic relief funding, will give constituents the best return on their investment.”
The bill is supported by several industry organizations, including USTelecom.
“Representative Panetta’s and Kelly’s bill to eliminate the counter-productive tax on broadband grants is right on the money. Closing the digital divide in America – especially in our hardest-to-reach rural communities – will require every cent of the $65 billion Congress has dedicated for that critical purpose. The dream of a truly connected nation is within reach, failure is not an option. America’s broadband providers are all in and are doing our part. For its part, Congress must act to eliminate the tax, and this bill is the right place to start,” Jonathan Spalter, president and CEO of USTelecom, said.