WASHINGTON – Today, U.S. Sens. Mark Warner (D-VA) and Jerry Moran (R-KS), joined by Sens. Tim Kaine (D-VA), Roger Wicker (R-MS), Rev. Raphael Warnock (D-GA), and Shelley Moore Capito (R-WV), introduced the Broadband Grant Tax Treatment Act (BGTTA) — 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.
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 kick in beginning next year – unless Congress acts now to address the problem. This new bipartisan legislation moves to exclude 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 can be used wholly for that purpose, rather than making their way back to the government through taxes.
“In order to fully reap the benefits of the Infrastructure Investment and Jobs Act and the American Rescue Plan, every dollar that was set aside to fund broadband expansion and deployment should be used for that purpose,” said Sen. Warner, a member of the Finance Committee that oversees the nation’s tax code and a primary author of the broadband provisions in the IIJA and ARP. “Taxing these broadband investments awards would be counter-productive, and could ultimately diminish efforts to give more Americans access to high-speed internet.”
“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.”
“The pandemic underscored the need for everyone to have a high-speed internet connection—which is why Congress stepped up to help more households get connected through the American Rescue Plan and Bipartisan Infrastructure Law,” said Sen. Kaine. “Ensuring that those investments won’t be taxed will help speed our progress toward that goal and expand access to online learning tools, remote work opportunities, and telehealth services.”
“Many underserved communities will soon see the benefits of new federal investments in internet infrastructure, but new federal tax changes would reduce the grants’ reach,” said Sen. Wicker. “Broadband providers that are trying to close the digital divide should not be hit with tax penalties.”
“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 introduce this legislation, and I will continue working toward our shared goal of helping bridge the digital divide in West Virginia and rural America.”
“The pandemic forced many of us to live even more of our lives online. Hardworking Georgia families need reliable internet access for their jobs, education, health care and so much more,” said Sen. Rev. Warnock. “I’m pleased to be a champion for broadband access and to be a part of this bipartisan coalition working to ensure rural regions in Georgia and across the nation have access to the resources they need to deploy broadband. The Broadband Grant Tax Treatment Act will help connect Georgians so they can thrive in our bustling economy.”
As Senator, and during his tenure as the 69th Governor of Virginia, Sen. Warner has been a staunch advocate for expanded access to broadband. With more Virginia families relying on the internet for telework and telehealth following the COVID-19 crisis, Sen. Warner secured $65 billion in funding within the bipartisan infrastructure law to help deploy broadband, increase access, and decrease costs associated with connecting to the internet. Sen. Warner was also a key supporter of the American Rescue Plan, which delivered $17 billion in funding for broadband expansion across the country, including a $10 billion Capital Projects Fund that Sen. Warner authored and secured in the bill specifically for infrastructure projects to help rural and low- and moderate-income communities gain access to high-quality internet.
“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 Senators Warner and Moran 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.”
“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 the Senators for introducing this bipartisan legislation, which would streamline the tax code so that we’ll get as much broadband built as quickly as possible."
"We appreciate the leadership of Senators Warner and Moran for their efforts to eliminate the tax on broadband grants," said Brandon Heiner, USTelecom Senior Vice President of Government Affairs. "With an eye toward 100 percent connectivity, Congress made a historic investment in the broadband grant program in 2021. However, requiring grant recipients to return as much as 20 percent of those grants in the form of taxes jeopardizes our shared goal of universal connectivity. It is vital that Congress move to eliminate this tax, as America’s broadband providers carefully plan and prepare to allocate resources to connect as many Americans as possible."
“CTIA applauds Senators Warner and Moran for their work to protect investments that strengthen and expand broadband infrastructure," said CTIA Senior Vice President, Government Affairs, Kelly Cole. "Ensuring grants can be used for their fullest purpose to deploy broadband to unserved and underserved communities is critical to bringing the benefits of connectivity to all Americans.”
“I appreciate Senators Warner and Kaine introducing legislation to prevent the taxation of broadband grants," said Bill Franklin, CEO, Scott County Telephone Cooperative. "One of the requirements for these grants is financial sustainability. This tax burden would make many rural unserved and underserved areas ineligible due to their inability to meet the financial sustainability requirement. I appreciate Senator Warner’s business knowledge and experience to recognize that fact. This legislation will ensure many rural Virginians and rural households across the US get access to reliable and robust broadband!”
Full text of the bill is available here.