Reps. Kelly, Panetta Introduce Bipartisan Legislation to Exempt Broadband Grants from Taxation
WASHINGTON, D.C. -- Today, Reps. Mike Kelly (R-PA-16) and Jimmy Panetta (D-CA-20), joined by Reps. Terri Sewell (D-AL-07) and Drew Ferguson (R-GA-03), authored and introduced H.R. 9449, The Broadband Grant Tax Treatment Act, bipartisan legislation to amend the Internal Revenue Code 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.
“More than 800,000 Pennsylvanians, including 520,000 rural Pennsylvanians, lack quality broadband internet access,” said Rep. Kelly. “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. Internet connectivity brings together all Americans; it strengthens small businesses and E-Commerce; and it expands educational opportunities for our children. This legislation allows for existing grant funding to be spent as effectively as possible.”
This bill was introduced in the Senate by Senators Mark Warner (D-VA) and Jerry Moran (R-KS), and joined by Sens. Tim Kaine (D-VA), Roger Wicker (R-MS), Rev. Raphael Warnock (D-GA), and Shelley Moore Capito (R-WV).
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 begin next year. In response to this issue, this bipartisan legislation excludes broadband deployment grants awarded through the IIJA and ARP from an organization’s income, ensuring the entirety of federal dollars awarded to companies for the purpose of deploying broadband around the country are 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,” said Rep. Panetta. “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.”
“As the COVID-19 pandemic continues to impact Alabama’s businesses, hospitals and institutions of learning; access to reliable high-speed internet remains critical to the success of our communities,” said Rep. Sewell. “I am proud to support this rational bill ensuring that such resources can be utilized to the fullest extent without the tax code hindering growth in my district and across the state.”
“Closing the digital divide so that every community has access to 21st century opportunities is critical to the success and growth of rural America,” said Rep. Ferguson. “Any federal grant program intended to build-out broadband in rural and underserved communities should maximize every dollar allocated for that intended purpose and ensure funds aren’t redirected back to the federal government.”
WHAT THEY'RE SAYING
“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 B. Owens, Senior Vice President for Government and Industry Affairs for WTA - Advocates for Rural Broadband. “We applaud Representatives Panetta and Kelly for introducing the House version of the bipartisan Broadband Grant Tax Treatment Act, which would streamline the tax code so that every broadband grant dollar goes toward building broadband networks and extending service to those who don’t have it. WTA strongly urges Congressional leadership to address this issue quickly.”
“We are grateful that Congress committed tens of billions of dollars to broadband deployment grants through recent bills seeking to help close the digital divide in our country. But 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 Chief Executive Officer of NTCA Shirley Bloomfield. “It is critical that all broadband grant funds go toward their intended purpose of network deployment. NTCA is proud to support the ‘Broadband Grant Tax Treatment Act,’ and on behalf of our members, I want to thank Representatives Jimmy Panetta and Mike Kelly for introducing the bill. This legislation will maximize the impact of every dollar granted for broadband deployment and further the mission of getting every American connected.”
“CTIA applauds Congressmen Jimmy Panetta and Mike Kelly for their work to introduce the Broadband Grant Tax Treatment Act. Protecting broadband infrastructure investments maximizes grants, which is vital in the deployment of broadband and closing the digital divide,” said Kelly Cole, CTIA Senior Vice President, Government Affairs.
“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,” said Jonathan Spalter, USTelecom President and CEO.
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