A bipartisan group of six U.S. Senators proposed new legislation designed to eliminate taxes levied on broadband grants allocated from two key funding pots, earning praise from industry groups USTelecom and NTCA – The Rural Broadband Association.
Dubbed the Broadband Grant Tax Treatment Act, the bill would change the tax code to prevent grants awarded through the Infrastructure Investment and Jobs Act (IIJA) as well as the American Rescue Plan Act (ARPA) from being counted as corporate income. The measure’s co-sponsors pitched it as a move to ensure the money Congress set aside for broadband improvements across the country goes as far as possible.
Passed in November 2021, the IIJA includes a total of $65 billion for broadband, including $42.5 billion set to be distributed through the oft-discussed Broadband Equity, Access and Deployment (BEAD) program. ARPA, meanwhile, became law in March 2021 and includes $350 billion in fiscal recovery funds which can be used for broadband improvements, as well as another $10 billion in Capital Projects Fund dollars.
“Taxing these broadband investments awards would be counter-productive and could ultimately diminish efforts to give more Americans access to high-speed internet,” Senator Mark Warner said in a statement.
Senator Shelley Moore Capito added Congress intended all the money set aside for broadband in the IIJA and ARPA “to be used for exactly that purpose – for broadband deployment. 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.”
The bill’s introduction comes at a time when cable and fiber players alike are snapping up state-level broadband grants, many of which are currently fueled by ARPA money. To date in 2022, Charter Communications has won $208.4 million, Windstream $171 million, Comcast $123.2 million, Altice USA $43.6 million and Frontier Communications $22.4 million. Grant awards from the BEAD program are expected to begin flowing sometime next year.
USTelecom SVP Government Affairs Brandon Heiner applauded the bill. In a statement, he implied that regulations currently require operators to “return as much as 20 percent of those grants in the form of taxes” and said it is “vital” that Congress take action to change the status quo.
NTCA CEO Shirley Bloomfield seconded Heiner’s sentiments, stating that taxes on broadband grants “will dramatically reduce the impact of these programs” if left in place. “This legislation will maximize the impact of every dollar granted for broadband deployment and further the mission of getting every American connected,” she concluded.
In order to become law, the bill must be passed by both the Senate and House of Representatives and signed by the President.