Tax confusion could hamper broadband stimulus deployments

Service providers and communities that were lucky enough to get a broadband grant in the first round of grant awards may have gotten through one hoop to fulfill their broadband ambitions, but they are facing uncertainty over whether those grants will be taxed by Uncle Sam.

Confusion over the tax issue related to the Recovery Act grants are already having an adverse affect on the electric utility industry. According to the National Association of Regulatory Utility Commissioners (NARUC), electric utilities put their respective smart grid projects on hold because they're concerned their funding grants will be taxed.

A similar shroud of confusion hangs over the $7.2 billion in broadband grants that are being doled out by the National Telecommunications & Information Administration and the Rural Utilities Service (RUS). NARUC argued in a letter to the Treasury that taxing the grants could have detrimental effects not only to the grant winners, but also to consumers by increasing "costs to utility ratepayers NARUC's members are charged to protect."

To resolve the tax issue, NARUC is asking the NTIA and RUS to meet with the Treasury to clarify what is taxable and not taxable.

For more:
- Broadcasting & Cable has this article

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