Bipartisan Legislation to Prevent Taxation of Broadband Grants Reintroduced in the House, Senate
Monterey, CA – Today, U.S. Reps. Jimmy Panetta (D-CA-19) and Mike Kelly (R-PA-16) along with Sens. Mark Warner (D-VA) and Jerry Moran (R-KS) reintroduced the Broadband Grant Tax Treatment Act (BGTTA) — legislation that would amend the Internal Revenue Code to ensure that funding for broadband deployment from the Infrastructure Investment and Jobs Act (IIJA) and the American Rescue Plan (ARP) will not be considered taxable income. This legislation was first introduced last Congress in both the House of Representatives and the Senate and with bipartisan support.
Grants awarded for the purposes of broadband deployment are currently factored into a company's income and are subject to taxation. This bipartisan, bicameral legislation moves to exclude broadband deployment grants awarded through the IIJA, ARP, and Tribal Broadband Connectivity Fund from an organization's income, ensuring the entirety of federal dollars awarded to companies for the purpose of deploying broadband around the country can be used wholly for that purpose, rather than making their way back to the government through taxes.
"Although we were able to pass legislation last Congress providing major investments in our nation's broadband, many small businesses who get that federal funding, to construct networks and connect our homes, may face steep taxes," said Rep. Panetta. "The Broadband Grant Tax Treatment Act would exempt those grants from federal taxation and ensure that the funding is allocated for universal broadband. We will continue to work across the aisle in the House and across the U.S. Capitol with Senators to close the digital divide with investment and incentives that will bolster connectivity for every American."
"More than 800,000 Pennsylvanians, including 520,000 rural Pennsylvanians, lack quality broadband internet access," said Rep. Kelly, Chairman of the Ways & Means Committee's Subcommittee on Tax. "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 to help all American families from farm communities in California to the shores of the Great Lakes in Pennsylvania."
"We have made significant strides to ensure that access to high-speed internet is available to more Americans than ever," said Sen. Warner. "But taxing broadband investment awards diminishes our efforts. This legislation ensures that individuals and businesses are able to reap the benefits of every dollar set aside for broadband expansion and deployment so that we can accomplish our goal of bringing reliable broadband to every corner of Virginia."
"Reliable, high-speed internet is more crucial than ever for Kansans to run their businesses, access telehealth or pursue an education," said Sen. Moran. "This commonsense legislation would make certain federal grants provided for broadband deployment are not counted as taxable income to maximize the impact and success of these resources."
Original co-sponsors in the House of Representatives are U.S. Reps. Terri Sewell (D-AL-07), Drew Ferguson (R-GA-03), Buddy Carter (R-GA-01), and Dan Kildee (D-MI-08). Joining Sens. Warner and Moran as co-sponsors are Sens. Tim Kaine (D-VA), Roger Wicker (R-MS), Rev. Raphael Warnock (D-GA), Kevin Cramer (R-ND), Joe Manchin (D-WV), Shelley Moore Capito (R-WV), Angus King (I-ME), James Risch (R-ID), Mark Kelly (D-AZ), Tommy Tuberville (R-AL), Kyrsten Sinema (I-AZ), Lisa Murkowski (R-AK), Bob Menendez (D-NJ), Michael Bennet (D-CO), and Tammy Baldwin (D-WI).
"As the COVID-19 has shown, 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."
"Broadband is essential 21st century infrastructure and every community – regardless of zip code – should have access to this critical tool and the growing opportunities it provides," said Rep. Ferguson. "These federal grant funds must strictly be used for the intended purpose of building out broadband in rural and underserved communities, and not redirected back to the federal government. This important legislative fix ensures every federal dollar allocated is maximized and goes towards closing the digital divide."
"The internet is no longer optional. From remote work to online learning, bill payments and more, we must ensure that federal dollars intended to help Georgians improve their digital access, particularly in rural areas, is not clawed back by the IRS," said Rep. Carter.
"Reliable and affordable internet access is essential for Michiganders in today's economy," said Rep. Kildee. "The last Congress passed a new law, the Bipartisan Infrastructure Law, to expand high-speed broadband to every Michigan household. Our new bipartisan legislation would exempt broadband infrastructure grants from federal taxation for local governments and small businesses, to ensure we are maximizing this investment."
"Access to high-speed internet is essential for telehealth, remote work, virtual learning, and more. The Bipartisan Infrastructure Law and American Rescue Plan made important investments to expand high-speed internet to more households in Virginia and across the country," said Sen. Kaine. "Protecting these investments from being taxed will help ensure Virginians are getting the most out of these federal dollars."
"The federal government should be lowering barriers to high speed internet access, not raising them," said Sen. Wicker. "Taxing grants for broadband expansion only reduces their impact and penalizes providers who are working to close the digital divide."
"High-speed broadband in North Dakota increases access to telehealth services, enhances learning pathways for students, and expands e-commerce opportunities for local businesses," said Sen. Cramer. "We secured robust rural broadband grant funding in the infrastructure law, and this bill will help us maximize every dollar allocated."
"When Congress funded grant programs to help deploy broadband in underserved states like West Virginia, it was intended for all of those funds to be used for exactly that purpose – for broadband deployment," said Sen. Capito. "Taxing federal broadband grants as gross income undermines our intent for these programs and would further delay efforts to close the digital divide in areas that need broadband connectivity the most. I'm proud to join my colleagues to reintroduce this legislation, and will continue to work toward solutions that help us close the digital divide in West Virginia and rural America."
"Rural communities are the backbone of our nation, and we want to ensure that Americans living in these communities have access to high-speed internet," said Sen. Tuberville. "Taxing broadband grants would undermine federal efforts to prioritize rural broadband expansion. I am proud to support this legislation so that those living in rural America have internet needed to run their businesses, access healthcare, and pursue educational opportunities."
"Access to the internet is not a luxury, it is a fundamental necessity. However, too many families remain on the wrong side of the digital divide. Students, workers, families, innovators, and businesses of all sizes depend on reliable, affordable broadband more than ever, and that's why we made historic investments in broadband deployment and digital equity during the last Congress," said Sen. Menendez. "This commonsense bipartisan legislation will maximize the impact and success of these investments by ensuring these dollars support expanding access to broadband."
"Coloradans rely on affordable, high-speed internet to stay in touch with family, discuss health concerns with their doctors, and enjoy the economic opportunities presented by the digital era," said Sen. Bennet. "This bipartisan legislation will update our tax code to ensure that grants to connect our communities—including a program based off my BRIDGE Act that makes the single largest broadband investment in American history—are spent bridging the digital divide and building infrastructure for the 21st century."
In 2021, Congressman Panetta voted to pass the Infrastructure Investment and Jobs Act (IIJA), historic legislation that provided $65 billion in funding to help deploy broadband, increase access, and decrease costs associated with connecting to the internet, including $42.5 billion for broadband infrastructure buildout. Congressman Panetta also voted in support of the American Rescue Plan (ARP), which has delivered $17 billion in funding for broadband expansion across the country, including a $10 billion Capital Projects Fund specifically for infrastructure projects to help rural and low- and moderate-income communities gain access to high-quality internet.
"The Monterey Bay Economic Partnership (MBEP) supports the proposed Broadband Grant Tax Treatment Act. As a nonprofit membership organization with public, private, nonprofit and educational partners, MBEP advocates for the recognition, access, and adoption of Broadband as an essential utility," said Tahra Goraya, President and CEO, Monterey Bay Economic Partnership. "Closing the Digital Divide is one of the most significant regional initiatives that MBEP takes pride in leading, connecting the historically underrepresented communities through digital inclusion. The Broadband Grant Tax Treatment Act will empower Internet Service Providers to amplify their efforts in providing access and adoption choices for underserved priority areas in the Monterey Bay region. The proposed legation causes regional assurance and confidence as we all partner to serve our communities through proven dedication to equity and inclusion."
"Successful expansion of broadband to every part our country is an enormous task and will need every possible dollar to complete. American competitiveness is at stake. The BGTTA is an important part of the financial picture, and will help put rural and low-income Americans on a par not just with other Americans but internationally as well," said James Hackett, COO, Cruzio Internet.
"Closing the digital divide requires an all-hands-on-deck approach, and broadband providers have rolled up their sleeves to get the job done. Representatives Panetta and Kelly recognize that the tax on broadband grants is counter-productive to the goal of universal connectivity. Every available dollar must go to connect every community, and this bill will help to ensure that happens," said USTelecom Senior Vice President of Government Affairs, Brandon Heiner
"WTA applauds the historic federal investment in rural broadband that is underway, but the tax code needs to be amended so that the more than 370 small, locally-based broadband providers we represent don't have to divert money received from grant funding to build broadband networks to paying taxes on that funding," said Derrick B. Owens, Senior Vice President for Government and Industry Affairs for WTA Advocates for Rural Broadband. "We support the bipartisan efforts of Senators Warner, Moran, and others to streamline the tax code so as much broadband funding goes toward building networks, and connecting all Americans to broadband, as quickly as possible. We hope to see the Broadband Grant Tax Treatment Act passed by Congress."
"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 Panetta, Mike Kelly, Sewell, Ferguson, Kildee, and Buddy Carter for reintroducing the bill. This legislation will maximize the impact of every dollar granted for broadband deployment and further the mission of getting every American connected."
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