A new bill was introduced by Sen. Rob Portman to preserve jobs and encourage infrastructure development by expanding tax-exempt cooperative organizations’ access to government grants and assistance, including rural broadband grants and FEMA disaster relief. This legislation provides certainty for rural electric co-ops looking to utilize government resources to provide critical services to their members, such as broader access to high-speed internet or repairs to the electrical grid.
According to the American Farm Bureau Federation, Congress should quickly approve the Revitalizing Under-developed Rural Areas and Lands (RURAL) Act (H.R. 2147, S. 1032). The recently introduced legislation will ensure that electric cooperatives will not jeopardize their tax-exempt status when they accept government grants for activities like expanding broadband or restoring power after storms and disasters.
Most electric cooperatives are tax-exempt organizations that must receive at least 85% of their income from members to maintain their tax-exempt status. However, an unintended consequence of the Tax Cuts and Jobs Act, which re-characterized grants as income, is making it harder for cooperatives to meet the tax-exempt test.
“Farm Bureau works hand-in-hand with rural electric cooperatives on the shared goal of ensuring that rural America and the farmers and ranchers who live there have access to reliable power and high-speed internet. We encourage lawmakers to act quickly on this important measure to allow rural electric cooperatives to continue their critical work without risking their tax-exempt status,” said AFBF President Zippy Duvall.
“In today’s technology-dependent world, we must do more to bring high-speed internet and stronger grid infrastructure to the rural areas of our country. Tax-exempt rural co-ops provide these important services to parts of the country where access to reliable electricity and high-speed internet is the most limited, and they rely heavily on grants to perform these services. Without this legislation, many co-ops may miss out on grant income or disaster assistance, hurting our efforts to promote economic development and job creation in these rural areas,” said Portman.