[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 768 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 768
To amend the Internal Revenue Code of 1986 to provide a broadband
Internet access tax credit.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 13, 2003
Mr. English (for himself, Mr. Matsui, Mr. Hayes, Mr. Ballenger, Mr.
McInnis, Mr. Dreier, Mr. Hayworth, Mr. Burr, Mr. Wicker, Mr. Weller,
Mr. Terry, Mr. Foley, Mrs. Jones of Ohio, Mr. Becerra, Mr. Honda, Ms.
DeLauro, Mr. Frost, Mr. Crowley, Mr. Peterson of Pennsylvania, Mrs.
Capps, Mr. Kind, Mr. Ross, Mr. Olver, Mr. McHugh, Mr. Grijalva, Mr.
Udall of New Mexico, Ms. Watson, Mr. Graves, Mr. Simmons, Mr. Moore,
Mr. Sweeney, Ms. Berkley, Mr. Filner, Mr. Janklow, Mr. Gordon, Mr.
McIntyre, Mr. King of Iowa, Mr. Paul, Ms. Norton, Mr. Quinn, Mr.
Bartlett of Maryland, Mr. Simpson, Mr. Shuster, Mr. Otter, Mr. Lucas of
Oklahoma, Mr. Hefley, Mr. Sessions, Mr. Dooley of California, Ms.
Eshoo, Mr. Cunningham, Mr. Dicks, Ms. Eddie Bernice Johnson of Texas,
Mr. Boehlert, Mr. Gonzalez, Mr. Reyes, Mr. Cramer, Mr. Green of
Wisconsin, Mr. Doolittle, Ms. Granger, Mr. Weldon of Pennsylvania, Mr.
Radanovich, Mr. Calvert, Mr. Isakson, Mr. Nethercutt, Mr. Walsh, Mr.
Hastings of Washington, Mr. Rehberg, Mr. Gillmor, Mr. Baird, Mrs.
Lowey, Mr. Thompson of California, Mr. Miller of North Carolina, Mr.
Saxton, Mr. Young of Alaska, Mr. Larson of Connecticut, Mr. Towns, Mr.
Schiff, Mr. Case, Ms. Woolsey, Mr. Cardoza, Mrs. Bono, Mr. Osborne, Mr.
Weiner, Mr. Fletcher, Mrs. Capito, Mr. Ose, Ms. Hart, Mr. Turner of
Texas, Mr. Pearce, Mr. Inslee, Mrs. Johnson of Connecticut, Mr. Pombo,
Mr. Rogers of Michigan, Mr. Berman, Mr. Upton, Mr. Tom Davis of
Virginia, Mr. Kennedy of Minnesota, Mr. LaTourette, Mr. Goodlatte, Mr.
Castle, Mr. Pomeroy, Ms. Slaughter, Mr. Lewis of Georgia, 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 a broadband
Internet access tax credit.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. BROADBAND INTERNET ACCESS TAX CREDIT.
(a) In General.--Subpart E of part IV of chapter 1 of the Internal
Revenue Code of 1986 (relating to rules for computing investment
credit) is amended by inserting after section 48 the following new
section:
``SEC. 48A. BROADBAND INTERNET ACCESS CREDIT.
``(a) General Rule.--For purposes of section 46, the broadband
credit for any taxable year is the sum of--
``(1) the current generation broadband credit, plus
``(2) the next generation broadband credit.
``(b) Current Generation Broadband Credit; Next Generation
Broadband Credit.--For purposes of this section--
``(1) Current generation broadband credit.--The current
generation broadband credit for any taxable year is equal to 10
percent of the qualified expenditures incurred with respect to
qualified equipment providing current generation broadband
services to qualified subscribers and taken into account with
respect to such taxable year.
``(2) Next generation broadband credit.--The next
generation broadband credit for any taxable year is equal to 20
percent of the qualified expenditures incurred with respect to
qualified equipment providing next generation broadband
services to qualified subscribers and taken into account with
respect to such taxable year.
``(c) When Expenditures Taken Into Account.--For purposes of this
section--
``(1) In general.--Qualified 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.
``(2) Limitation.--
``(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 December 31, 2002.
``(B) Sale-leasebacks.--For purposes of
subparagraph (A), if property--
``(i) is originally placed in service after
December 31, 2002, 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 current generation broadband credit 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 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 next generation broadband credit under
subsection (a)(2) 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 1,000,000 bits per second to
the subscriber and at least 128,000 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 22,000,000 bits per second to the
subscriber and at least 5,000,000 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 wireless
transmission of energy through radio or light waves.
``(10) Packet switching.--The term `packet switching' means
controlling or routing the path of a digitized transmission
signal which is assembled into packets or cells.
``(11) Provider.--The term `provider' means, with respect
to any qualified equipment any--
``(A) cable operator,
``(B) commercial mobile service carrier,
``(C) open video system operator,
``(D) satellite carrier,
``(E) telecommunications carrier, or
``(F) 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 credit 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 expenditure.--
``(A) In general.--The term `qualified expenditure'
means any amount--
``(i) chargeable to capital account with
respect to the purchase and installation of
qualified equipment (including any upgrades
thereto) for which depreciation is allowable
under section 168, and
``(ii) incurred after December 31, 2002,
and before January 1, 2008.
``(B) Certain satellite expenditures excluded.--
Such term shall not include any expenditure with
respect to the launching of any satellite equipment.
``(C) Leased equipment.--Such term shall include so
much of the purchase price paid by the lessor of
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
subparagraph (A).
``(15) 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.
``(16) Residential subscriber.--The term `residential
subscriber' means any individual who purchases broadband
services which are delivered to such individual's dwelling.
``(17) 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.
``(18) 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.
``(19) 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 distribution.
``(20) 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 credit is allowed under subsection
(a)(1).
``(21) Subscriber.--The term `subscriber' means any person
who purchases current generation broadband services or next
generation broadband services.
``(22) 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 any commercial mobile
service carrier.
``(23) 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.
``(24) Underserved area.--The term `underserved area' means
any census tract which is located in--
``(A) an empowerment zone or enterprise community
designated under section 1391,
``(B) the District of Columbia Enterprise Zone
established under section 1400,
``(C) a renewal community designated under section
1400E, or
``(D) a low-income community designated under
section 45D.
``(25) 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.''.
(b) Credit To Be Part of Investment Credit.--Section 46 of the
Internal Revenue Code of 1986 (relating to the amount of investment
credit) is amended by striking ``and'' at the end of paragraph (2), by
striking the period at the end of paragraph (3) and inserting ``,
and'', and by adding at the end the following:
``(4) the broadband Internet access credit.''
(c) Special Rule for Mutual or Cooperative Telephone Companies.--
Section 501(c)(12)(B) of the Internal Revenue Code of 1986 (relating to
list of exempt organizations) is amended by striking ``or'' at the end
of clause (iii), by striking the period at the end of clause (iv) and
inserting ``, or'', and by adding at the end the following new clause:
``(v) from the sale of property subject to
a lease described in section 48A(c)(2)(B), but
only to the extent such income does not in any
year exceed an amount equal to the credit for
qualified expenditures which would be
determined under section 48A for such year if
the mutual or cooperative telephone company was
not exempt from taxation and was treated as the
owner of the property subject to such lease.''.
(d) Conforming Amendment.--The table of sections for subpart E of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 48 the
following:
``Sec. 48A. Broadband internet access credit.''.
(e) 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 (17) and (24) of section 48A(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.
(2) Saturated market.--
(A) In general.--For purposes of designating and
publishing those census tracts meeting the criteria
described in subsection (e)(20) of such section 48A--
(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
submitted 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).
(C) Authority to disregard false submissions.--In
addition to imposing any other applicable penalties,
the Secretary of the Treasury shall have the discretion
to disregard any form described in subparagraph (A)(i)
on which a provider knowingly submitted false
information.
(f) Other Regulatory Matters.--
(1) Prohibition.--No Federal or State agency or
instrumentality shall adopt regulations or ratemaking
procedures that would have the effect of confiscating any
credit or portion thereof allowed under section 48A 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 broadband Internet access credit
under section 48A 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
48A of such Code, including--
(A) regulations to determine how and when a
taxpayer that incurs qualified expenditures satisfies
the requirements of section 48A 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 48A of such Code.
(g) Effective Date.--The amendments made by this section shall
apply to expenditures incurred after December 31, 2002.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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