CCA, Others Want Broadband Grants Exemption Included in Tax Package

The Competitive Carriers Association, NTCA and seven other communications industry groups urged House Ways and Means and Senate Finance committee leaders Thursday night to include language from the Broadband Grant Tax Treatment Act (HR-889/S-341) in a broader tax legislative package. Congressional leaders are weighing bringing up the funding package for a vote. HR-889/S-341, first filed in 2022 (see 2209290067), would amend the Internal Revenue Code to say broadband grants enacted via either statute don’t count as “gross income.”

House Speaker Mike Johnson, R-La., is reportedly considering whether to bring the Tax Relief for American Families and Workers Act (HR-7024) to the floor for a vote as soon as this week. However, he faces resistance from some members of the GOP’s moderate and conservative wings. House Ways and Means Chairman Jason Smith, R-Mo., and Senate Finance Chairman Ron Wyden, D-Ore., agreed to the measure earlier this month. It doesn’t include language from HR-889/S-341.

Congress “has provided historic investment” via the 2021 Infrastructure Investment and Jobs Act and COVID-19 aid measures “with the goal of achieving universal connectivity for all Americans,” the groups said in a letter to Smith, Wyden and their respective ranking members. “However, without this change in the tax code, a significant portion of funding intended for deploying broadband to unserved and underserved communities will revert to the government in the form of taxes. Adoption of” HR-889/S-341 “will ensure that funding Congress intended to close the digital divide will be used for that purpose.” Enacting the legislation “will make sure that several additional billion dollars of broadband funding will be used for that purpose instead of returning to the government as tax, a massive return on the bill’s $578 million cost,” the groups said: “These investments will be particularly meaningful in rural and otherwise hard-to-serve areas.”

Separately, NTCA CEO Shirley Bloomfield endorsed HR-7024 because it extends a tax statute allowing businesses to fully deduct the purchase price of eligible assets; however, Bloomfield also urged Wyden to attach HR-889/S-341 language to the measure. “The 100% bonus depreciation extension would help many small rural broadband providers justify and recover the costs of network investment in the most sparsely populated areas of” the U.S., Bloomfield said in a letter to Wyden released Friday. HR-889/S341 “should likewise be seen as a critical component of any comprehensive tax legislation as well.”

Congress “recently committed tens of billions of dollars to broadband deployment, but taxing broadband grants dramatically reduces their impact,” Bloomfield said. “In addition, most of the assets to be purchased and deployed leveraging recent federal broadband deployment funding will likely not qualify for 100% bonus depreciation even if extended, since much of the network construction will not be completed until after” the proposed bonus depreciation extension expires, “leaving many small, rural broadband providers unable to take full advantage of this pro-investment tax relief.”