Broadband Grant Tax Treatment Act
Broadband Grant Tax Treatment Act
Plain Language Summary
# Broadband Grant Tax Treatment Act Summary **What It Would Do:** This bill would change how broadband companies are taxed when they receive government grants for expanding internet infrastructure. Currently, these grants are treated as taxable income, meaning companies owe federal income taxes on the money they receive. The bill would exclude these grants from taxable income, allowing companies to keep more of the grant money without paying taxes on it. **Who It Affects:** The bill specifically targets broadband companies and internet service providers that receive grants from federal programs managed by the National Telecommunications and Information Administration (NTIA). These include grants for broadband deployment, expanding broadband access in rural or underserved areas, and building middle-mile broadband infrastructure. **Background and Current Status:** A 2017 tax law change classified government grants as taxable income for companies.
This bill would reverse that treatment for broadband-related grants, returning to how the IRS handled these grants before 2017. The bill is currently in committee and has not yet been voted on by Congress. The reasoning behind it is that by reducing the tax burden on grant recipients, more of the federal funding can be directly used for broadband infrastructure rather than being paid in taxes.
CRS Official Summary
Broadband Grant Tax Treatment ActThis bill excludes from gross income (for federal tax purposes) certain grants received for broadband deployment.As background, contributions of capital to a corporation generally are not taxable income. However, under an exception enacted in 2017 by the Tax Cuts and Jobs Act, grants from a government or civic organization are not contributions to capital and, thus, treated as taxable income. Prior to the Tax Cuts and Jobs Act, the Internal Revenue Service (IRS) considered certain grants from a government or civic organization contributions of capital and, thus, not taxable income.The bill specifically excludes from gross income grants received for broadband deployment from theNational Telecommunications and Information Administration (NTIA) Broadband Equity, Access, and Deployment Program;NTIA State Digital Equity Capacity Grant Program;NTIA Digital Equity Competitive Grant Program;NTIA Enabling Middle Mile Broadband Infrastructure Program;Department of Agriculture ReConnect Program;Coronavirus State and Local Fiscal Recovery Funds and the Coronavirus Capital Projects Fund; andNTIA Tribal Broadband Connectivity Program and the Broadband Infrastructure Program.The bill also requires the IRS to issue guidance on the exclusion from gross income of such grants.The bill applies to funds received in tax years ending after March 11, 2023.
Latest Action
Referred to the House Committee on Ways and Means.