Tax changes could make it harder for cooperatives to provide broadband

As if policy and technology weren’t enough to make it hard to understand broadband for your community – we can now throw in taxes! But the devil is in the details and understanding the policy, technology and taxes helps your community make god choices when it comes to getting better broadband.

The Institute for Local Self Reliance reports

For many rural Americans, the local electric or telephone cooperative is their best hope for finally obtaining modern-day connectivity. With the support of government funding, rural cooperatives have brought electricity, telephone service, and more recently broadband access to some of the most rugged and sparsely populated places in the country.

However, recent tax code changes might prevent co-ops from connecting more rural communities. Cooperatives could potentially lose their tax exempt status if they accept government grants for broadband expansion and disaster recovery — an unintended yet foreseeable consequence of the Republican “Tax Cuts and Jobs Act” passed late last year. In a press release, Senator Tina Smith called attention to the oversight, noting, “This uncertainty has caused cooperatives significant concern and frozen some of their grant applications.”

They outline the specifics of the tax code and policy and mention what Senator Smith is going to propose to improve the situation…

To ensure that convoluted tax policy isn’t standing in the way of better connectivity for millions of rural residents, Senator Smith plans to introduce legislation that would ensure government grants are not counted as income for the purpose of a telephone or electric cooperative’s tax-exempt status. In the meantime, she requested that Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig take action to address the co-ops’ concerns.

This entry was posted in Funding, Policy by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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