110th CONGRESS
1st Session
H. R. 1818
To amend the Internal Revenue Code of 1986 to provide for the expensing
of broadband Internet access expenditures, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
March 29, 2007
Ms. MATSUI (for herself, Mr. ENGLISH of Pennsylvania, Mr. THOMPSON of California,
Mr. KUHL of New York, Mr. BOUCHER, Mr. MCINTYRE, Mr. CROWLEY, Mr. GILLMOR,
Mr. KIND, Mr. SCHIFF, and Mrs. CUBIN) introduced the following bill; which
was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide for the expensing
of broadband Internet access expenditures, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Broadband Deployment Acceleration Act of 2007'.
SEC. 2. EXPENSING OF BROADBAND INTERNET ACCESS EXPENDITURES.
(a) In General- Part VI of subchapter B of chapter 1 of the Internal Revenue
Code of 1986 (relating to itemized deductions for individuals and corporations)
is amended by inserting after section 190 the following new section:
`SEC. 191. BROADBAND EXPENDITURES.
`(a) Treatment of Expenditures-
`(1) IN GENERAL- A taxpayer may elect to treat any qualified broadband
expenditure which is paid or incurred by the taxpayer as an expense which
is not chargeable to capital account. Any expenditure which is so treated
shall be allowed as a deduction.
`(2) ELECTION- An election under paragraph (1) shall be made at such time
and in such manner as the Secretary may prescribe by regulation.
`(b) Qualified Broadband Expenditures- For purposes of this section--
`(1) IN GENERAL- The term `qualified broadband expenditure' means, with
respect to any taxable year, any direct or indirect costs incurred after
the date of the enactment of this section and before the date which is
4 years after such date and properly taken into account with respect to--
`(A) the purchase or installation of qualified equipment (including
any upgrades thereto), and
`(B) the connection of such qualified equipment to any qualified subscriber.
`(2) CERTAIN SATELLITE EXPENDITURES EXCLUDED- Such term shall not include
any costs incurred with respect to the launching of any satellite equipment.
`(3) LEASED EQUIPMENT- Such term shall include so much of the purchase
price paid by the lessor of qualified equipment subject to a lease described
in subsection (c)(2)(B) as is attributable to expenditures incurred by
the lessee which would otherwise be described in paragraph (1).
`(4) LIMITATION WITH REGARD TO CURRENT GENERATION BROADBAND SERVICES-
Only 50 percent of the amounts taken into account under paragraph (1)
with respect to qualified equipment through which current generation broadband
services are provided shall be treated as qualified broadband expenditures.
`(c) When Expenditures Taken Into Account- For purposes of this section--
`(1) IN GENERAL- Qualified broadband expenditures with respect to qualified
equipment shall be taken into account with respect to the first taxable
year in which--
`(A) current generation broadband services are provided through such
equipment to qualified subscribers, or
`(B) next generation broadband services are provided through such equipment
to qualified subscribers.
`(A) IN GENERAL- Qualified expenditures shall be taken into account
under paragraph (1) only with respect to qualified equipment--
`(i) the original use of which commences with the taxpayer, and
`(ii) which is placed in service, after the date of the enactment
of this section.
`(B) SALE-LEASEBACKS- For purposes of subparagraph (A), if property--
`(i) is originally placed in service after the date of the enactment
of this section by any person, and
`(ii) sold and leased back by such person within 3 months after the
date such property was originally placed in service,
such property shall be treated as originally placed in service not earlier
than the date on which such property is used under the leaseback referred
to in clause (ii).
`(d) Special Allocation Rules-
`(1) CURRENT GENERATION BROADBAND SERVICES- For purposes of determining
the amount of qualified broadband expenditures under subsection (a)(1)
with respect to qualified equipment through which current generation broadband
services are provided, if the qualified equipment is capable of serving
both qualified subscribers and other subscribers, the qualified broadband
expenditures shall be multiplied by a fraction--
`(A) the numerator of which is the sum of the number of potential qualified
subscribers within the rural areas and the underserved areas which the
equipment is capable of serving with current generation broadband services,
and
`(B) the denominator of which is the total potential subscriber population
of the area which the equipment is capable of serving with current generation
broadband services.
`(2) NEXT GENERATION BROADBAND SERVICES- For purposes of determining the
amount of qualified broadband expenditures under subsection (a)(1) with
respect to qualified equipment through which next generation broadband
services are provided, if the qualified equipment is capable of serving
both qualified subscribers and other subscribers, the qualified expenditures
shall be multiplied by a fraction--
`(A) the numerator of which is the sum of--
`(i) the number of potential qualified subscribers within the rural
areas and underserved areas, plus
`(ii) the number of potential qualified subscribers within the area
consisting only of residential subscribers not described in clause
(i),
which the equipment is capable of serving with next generation broadband
services, and
`(B) the denominator of which is the total potential subscriber population
of the area which the equipment is capable of serving with next generation
broadband services.
`(e) Definitions- For purposes of this section--
`(1) ANTENNA- The term `antenna' means any device used to transmit or
receive signals through the electromagnetic spectrum, including satellite
equipment.
`(2) CABLE OPERATOR- The term `cable operator' has the meaning given such
term by section 602(5) of the Communications Act of 1934 (47 U.S.C. 522(5)).
`(3) COMMERCIAL MOBILE SERVICE CARRIER- The term `commercial mobile service
carrier' means any person authorized to provide commercial mobile radio
service as defined in section 20.3 of title 47, Code of Federal Regulations.
`(4) CURRENT GENERATION BROADBAND SERVICE- The term `current generation
broadband service' means the transmission of signals at a rate of at least
5,000,000 bits per second to the subscriber and at least 1,000,000 bits
per second from the subscriber.
`(5) MULTIPLEXING OR DEMULTIPLEXING- The term `multiplexing' means the
transmission of 2 or more signals over a single channel, and the term
`demultiplexing' means the separation of 2 or more signals previously
combined by compatible multiplexing equipment.
`(6) NEXT GENERATION BROADBAND SERVICE- The term `next generation broadband
service' means the transmission of signals at a rate of at least 50,000,000
bits per second to the subscriber and at least 10,000,000 bits per second
from the subscriber.
`(7) NONRESIDENTIAL SUBSCRIBER- The term `nonresidential subscriber' means
any person who purchases broadband services which are delivered to the
permanent place of business of such person.
`(8) OPEN VIDEO SYSTEM OPERATOR- The term `open video system operator'
means any person authorized to provide service under section 653 of the
Communications Act of 1934 (47 U.S.C. 573).
`(9) OTHER WIRELESS CARRIER- The term `other wireless carrier' means any
person (other than a telecommunications carrier, commercial mobile service
carrier, cable operator, open video system operator, or satellite carrier)
providing current generation broadband services or next generation broadband
service to subscribers through the radio transmission of energy.
`(10) PACKET SWITCHING- The term `packet switching' means controlling
or routing the path of any digitized transmission signal which is assembled
into packets or cells.
`(11) PROVIDER- The term `provider' means, with respect to any qualified
equipment--
`(B) a commercial mobile service carrier,
`(C) an open video system operator,
`(D) a satellite carrier,
`(E) a telecommunications carrier, or
`(F) any other wireless carrier,
providing current generation broadband services or next generation broadband
services to subscribers through such qualified equipment.
`(12) PROVISION OF SERVICES- A provider shall be treated as providing
services to 1 or more subscribers if--
`(A) such a subscriber has been passed by the provider's equipment and
can be connected to such equipment for a standard connection fee,
`(B) the provider is physically able to deliver current generation broadband
services or next generation broadband services, as applicable, to such
a subscriber without making more than an insignificant investment with
respect to such subscriber,
`(C) the provider has made reasonable efforts to make such subscribers
aware of the availability of such services,
`(D) such services have been purchased by 1 or more such subscribers,
and
`(E) such services are made available to such subscribers at average
prices comparable to those at which the provider makes available similar
services in any areas in which the provider makes available such services.
`(13) QUALIFIED EQUIPMENT-
`(A) IN GENERAL- The term `qualified equipment' means equipment which
provides current generation broadband services or next generation broadband
services--
`(i) at least a majority of the time during periods of maximum demand
to each subscriber who is utilizing such services, and
`(ii) in a manner substantially the same as such services are provided
by the provider to subscribers through equipment with respect to which
no deduction is allowed under subsection (a)(1).
`(B) ONLY CERTAIN INVESTMENT TAKEN INTO ACCOUNT- Except as provided
in subparagraph (C) or (D), equipment shall be taken into account under
subparagraph (A) only to the extent it--
`(i) extends from the last point of switching to the outside of the
unit, building, dwelling, or office owned or leased by a subscriber
in the case of a telecommunications carrier,
`(ii) extends from the customer side of the mobile telephone switching
office to a transmission/receive antenna (including such antenna)
owned or leased by a subscriber in the case of a commercial mobile
service carrier,
`(iii) extends from the customer side of the headend to the outside
of the unit, building, dwelling, or office owned or leased by a subscriber
in the case of a cable operator or open video system operator, or
`(iv) extends from a transmission/receive antenna (including such
antenna) which transmits and receives signals to or from multiple
subscribers, to a transmission/receive antenna (including such antenna)
on the outside of the unit, building, dwelling, or office owned or
leased by a subscriber in the case of a satellite carrier or other
wireless carrier, unless such other wireless carrier is also a telecommunications
carrier.
`(C) PACKET SWITCHING EQUIPMENT- Packet switching equipment, regardless
of location, shall be taken into account under subparagraph (A) only
if it is deployed in connection with equipment described in subparagraph
(B) and is uniquely designed to perform the function of packet switching
for current generation broadband services or next generation broadband
services, but only if such packet switching is the last in a series
of such functions performed in the transmission of a signal to a subscriber
or the first in a series of such functions performed in the transmission
of a signal from a subscriber.
`(D) MULTIPLEXING AND DEMULTIPLEXING EQUIPMENT- Multiplexing and demultiplexing
equipment shall be taken into account under subparagraph (A) only to
the extent it is deployed in connection with equipment described in
subparagraph (B) and is uniquely designed to perform the function of
multiplexing and demultiplexing packets or cells of data and making
associated application adaptions, but only if such multiplexing or demultiplexing
equipment is located between packet switching equipment described in
subparagraph (C) and the subscriber's premises.
`(14) QUALIFIED SUBSCRIBER- The term `qualified subscriber' means--
`(A) with respect to the provision of current generation broadband services--
`(i) any nonresidential subscriber maintaining a permanent place of
business in a rural area or underserved area, or
`(ii) any residential subscriber residing in a dwelling located in
a rural area or underserved area which is not a saturated market,
and
`(B) with respect to the provision of next generation broadband services--
`(i) any nonresidential subscriber maintaining a permanent place of
business in a rural area or underserved area, or
`(ii) any residential subscriber.
`(15) RESIDENTIAL SUBSCRIBER- The term `residential subscriber' means
any individual who purchases broadband services which are delivered to
such individual's dwelling.
`(16) RURAL AREA- The term `rural area' means any census tract which--
`(A) is not within 10 miles of any incorporated or census designated
place containing more than 25,000 people, and
`(B) is not within a county or county equivalent which has an overall
population density of more than 500 people per square mile of land.
`(17) RURAL SUBSCRIBER- The term `rural subscriber' means any residential
subscriber residing in a dwelling located in a rural area or nonresidential
subscriber maintaining a permanent place of business located in a rural
area.
`(18) SATELLITE CARRIER- The term `satellite carrier' means any person
using the facilities of a satellite or satellite service licensed by the
Federal Communications Commission and operating in the Fixed-Satellite
Service under part 25 of title 47 of the Code of Federal Regulations or
the Direct Broadcast Satellite Service under part 100 of title 47 of such
Code to establish and operate a channel of communications for distribution
of signals, and owning or leasing a capacity or service on a satellite
in order to provide such point-to-multipoint distribution.
`(19) SATURATED MARKET- The term `saturated market' means any census tract
in which, as of the date of the enactment of this section--
`(A) current generation broadband services have been provided by a single
provider to 85 percent or more of the total number of potential residential
subscribers residing in dwellings located within such census tract,
and
`(B) such services can be utilized--
`(i) at least a majority of the time during periods of maximum demand
by each such subscriber who is utilizing such services, and
`(ii) in a manner substantially the same as such services are provided
by the provider to subscribers through equipment with respect to which
no deduction is allowed under subsection (a)(1).
`(20) SUBSCRIBER- The term `subscriber' means any person who purchases
current generation broadband services or next generation broadband services.
`(21) TELECOMMUNICATIONS CARRIER- The term `telecommunications carrier'
has the meaning given such term by section 3(44) of the Communications
Act of 1934 (47 U.S.C. 153(44)), but--
`(A) includes all members of an affiliated group of which a telecommunications
carrier is a member, and
`(B) does not include a commercial mobile service carrier.
`(22) TOTAL POTENTIAL SUBSCRIBER POPULATION- The term `total potential
subscriber population' means, with respect to any area and based on the
most recent census data, the total number of potential residential subscribers
residing in dwellings located in such area and potential nonresidential
subscribers maintaining permanent places of business located in such area.
`(23) UNDERSERVED AREA- The term `underserved area' means--
`(A) any census tract which is located in--
`(i) an empowerment zone or enterprise community designated under
section 1391, or
`(ii) the District of Columbia Enterprise Zone established under section
1400, or
`(i) the poverty level of which is at least 30 percent (based on the
most recent census data), and
`(ii) the median family income of which does not exceed--
`(I) in the case of a census tract located in a metropolitan statistical
area, 70 percent of the greater of the metropolitan area median
family income or the statewide median family income, and
`(II) in the case of a census tract located in a nonmetropolitan
statistical area, 70 percent of the nonmetropolitan statewide median
family income.
`(24) UNDERSERVED SUBSCRIBER- The term `underserved subscriber' means
any residential subscriber residing in a dwelling located in an underserved
area or nonresidential subscriber maintaining a permanent place of business
located in an underserved area.
`(1) PROPERTY USED OUTSIDE THE UNITED STATES, ETC., NOT QUALIFIED- No
expenditures shall be taken into account under subsection (a)(1) with
respect to the portion of the cost of any property referred to in section
50(b) or with respect to the portion of the cost of any property specified
in an election under section 179.
`(A) IN GENERAL- For purposes of this title, the basis of any property
shall be reduced by the portion of the cost of such property taken into
account under subsection (a)(1).
`(B) ORDINARY INCOME RECAPTURE- For purposes of section 1245, the amount
of the deduction allowable under subsection (a)(1) with respect to any
property which is of a character subject to the allowance for depreciation
shall be treated as a deduction allowed for depreciation under section
167.
`(3) COORDINATION WITH SECTION 38- No credit shall be allowed under section
38 with respect to any amount for which a deduction is allowed under subsection
(a)(1).'.
(b) Special Rule for Mutual or Cooperative Telephone Companies- Section
512(b) of the Internal Revenue Code of 1986 (relating to modifications)
is amended by adding at the end the following new paragraph:
`(20) SPECIAL RULE FOR MUTUAL OR COOPERATIVE TELEPHONE COMPANIES- A mutual
or cooperative telephone company which for the taxable year satisfies
the requirements of section 501(c)(12)(A) may elect to reduce its unrelated
business taxable income for such year, if any, by an amount that does
not exceed the qualified broadband expenditures which would be taken into
account under section 191 for such year by such company if such company
was not exempt from taxation. Any amount which is allowed as a deduction
under this paragraph shall not be allowed as a deduction under section
191 and the basis of any property to which this paragraph applies shall
be reduced under section 1016(a)(38).'.
(c) Conforming Amendments-
(1) Section 263(a)(1) of the Internal Revenue Code of 1986 (relating to
capital expenditures) is amended by striking `or' at the end of subparagraph
(J), by striking the period at the end of subparagraph (K) and inserting
`, or', and by adding at the end the following new subparagraph:
`(L) expenditures for which a deduction is allowed under section 191.'.
(2) Section 1016(a) of such Code is amended by striking `and' at the end
of paragraph (36), by striking the period at the end of paragraph (37)
and inserting `, and', and by adding at the end the following new paragraph:
`(38) to the extent provided in section 191(f)(2).'.
(3) The table of sections for part VI of subchapter A of chapter 1 of
such Code is amended by inserting after the item relating to section 190
the following new item:
`Sec. 191. Broadband expenditures.'.
(d) Designation of Census Tracts-
(1) IN GENERAL- The Secretary of the Treasury shall, not later than 90
days after the date of the enactment of this Act, designate and publish
those census tracts meeting the criteria described in paragraphs (16),
(22), and (23) of section 191(e) of the Internal Revenue Code of 1986
(as added by this section). In making such designations, the Secretary
of the Treasury shall consult with such other departments and agencies
as the Secretary determines appropriate.
(A) IN GENERAL- For purposes of designating and publishing those census
tracts meeting the criteria described in subsection (e)(19) of such
section 191--
(i) the Secretary of the Treasury shall prescribe not later than 30
days after the date of the enactment of this Act the form upon which
any provider which takes the position that it meets such criteria
with respect to any census tract shall submit a list of such census
tracts (and any other information required by the Secretary) not later
than 60 days after the date of the publication of such form, and
(ii) the Secretary of the Treasury shall publish an aggregate list
of such census tracts and the applicable providers not later than
30 days after the last date such submissions are allowed under clause
(i).
(B) NO SUBSEQUENT LISTS REQUIRED- The Secretary of the Treasury shall
not be required to publish any list of census tracts meeting such criteria
subsequent to the list described in subparagraph (A)(ii).
(e) Other Regulatory Matters-
(1) PROHIBITION- No Federal or State agency or instrumentality shall adopt
regulations or ratemaking procedures that would have the effect of eliminating
or reducing any deduction or portion thereof allowed under section 191
of the Internal Revenue Code of 1986 (as added by this section) or otherwise
subverting the purpose of this section.
(2) TREASURY REGULATORY AUTHORITY- It is the intent of Congress in providing
the election to deduct qualified broadband expenditures under section
191 of the Internal Revenue Code of 1986 (as added by this section) to
provide incentives for the purchase, installation, and connection of equipment
and facilities offering expanded broadband access to the Internet for
users in certain low income and rural areas of the United States, as well
as to residential users nationwide, in a manner that maintains competitive
neutrality among the various classes of providers of broadband services.
Accordingly, the Secretary of the Treasury shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of section
191 of such Code, including--
(A) regulations to determine how and when a taxpayer that incurs qualified
broadband expenditures satisfies the requirements of section 191 of
such Code to provide broadband services, and
(B) regulations describing the information, records, and data taxpayers
are required to provide the Secretary to substantiate compliance with
the requirements of section 191 of such Code.
(f) Effective Date- The amendments made by this section shall apply to expenditures
incurred after the date of the enactment of this Act.
END
