[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2597 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2597

  To amend the Internal Revenue Code of 1986 to provide incentives to 
   ensure that all Americans gain timely and equitable access to the 
Internet and to promote employer and employee participation in telework 
                             arrangements.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 23, 2001

 Mr. McInnis (for himself, Mr. Tanner, Mr. Foley, and Mr. Blagojevich) 
 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 incentives to 
   ensure that all Americans gain timely and equitable access to the 
Internet and to promote employer and employee participation in telework 
                             arrangements.

    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 and Telework 
Incentive Act of 2001''.

 SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) The Internet has been the single greatest contributor 
        to the unprecedented economic expansion experienced by the 
        United States over the last 8 years.
            (2) Today, most residential Internet users, especially 
        those located in rural and urban areas, are extremely limited 
        in the type of information they can send and receive over the 
        Internet because their means of access is limited to 
        ``narrowband'' communications media, typically conventional 
        phone lines at a maximum speed of 56,000 bits per second.
            (3) Similarly, small businesses in rural and urban areas 
        are also deprived of full information access because of their 
        dependence on narrowband facilities.
            (4) The result is a growing disparity in the speed of 
        access to the Internet and the opportunities it creates between 
        subscribers located in certain rural and urban areas and 
        subscribers located in other areas.
            (5) The disparity in current broadband access to the 
        Internet and the slow pace of deployment of broadband 
        capability in certain areas will likely prove detrimental to 
        the on-going economic expansion.
            (6) Federal, State, and local governments spend billions of 
        dollars annually on the Nation's transportation needs.
            (7) Congestion on the Nation's roads costs over 
        $74,000,000,000 annually in lost work time, fuel consumption, 
        and costs of infrastructure and equipment repair.
            (8) On average on-road-vehicles contribute 30 percent of 
        nitrogen oxides emissions.
            (9) It is estimated that staying at home to work requires 3 
        times less energy consumption than commuting to work.
            (10) It was recently reported that if an identified 10 to 
        20 percent of commuters switched to teleworking, 1,800,000 tons 
        of regulated pollutants would be eliminated, 3,500,000,000 
        gallons of gas would be saved, 3,100,000,000 hours of personal 
        time would be freed up, and maintenance and infrastructure 
        costs would decrease by $500,000,000 annually because of 
        reduced congestion and reduced vehicle miles traveled.
            (11) The average American daily commute is 62 minutes for a 
        44-mile round-trip (a total of 6 days per year and 5,808 miles 
        per year).
            (12) The increase in work from 1969 to 1996, the increase 
        in hours mothers spend in paid work, combined with a shift 
        toward single-parent families resulted in families on average 
        experiencing a decrease of 22 hours a week (14 percent) in 
        parental time available outside of paid work they could spend 
        with their children.
            (13) Companies with teleworking programs have found that 
        teleworking can boost employee productivity 5 percent to 20 
        percent.
            (14) Today 60 percent of the workforce is involved in 
        information work (an increase of 43 percent since 1990) 
        allowing and encouraging decentralization of paid work to 
        occur.
            (15) In recent years, studies performed in the United 
        States have shown a marked expansion of teleworking, with an 
        estimate of 19,000,000 Americans teleworking by the year 2002, 
        5 times the amount in 1990.
            (16) It is, therefore, appropriate for Congress to take 
        action to narrow the current and future disparity in the level 
        of broadband access to the Internet, to accelerate deployment 
        of broadband capability, and to promote broad employer and 
        employee participation in telework arrangements.
    (b) Purpose.--The purpose of this Act is to accelerate deployment 
of broadband access to the Internet for those Americans located in 
certain rural and urban areas and to promote employer and employee 
participation in telework arrangements.

 SEC. 3. CREDIT FOR TELEWORKING.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to foreign tax credit, 
etc.) is amended by inserting after section 30A the following new 
section:

``SEC. 30B. TELEWORK CREDIT.

    ``(a) General Rule.--There shall be allowed as a credit against the 
tax imposed by this chapter for any taxable year an amount equal to the 
sum of--
            ``(1) the employer telework tax credit, plus
            ``(2) the telework equipment tax credit.
    ``(b) Employer Telework Tax Credit; Telework Equipment Tax 
Credit.--For purposes of this section--
            ``(1) Employer telework tax credit.--Except as provided for 
        in subsection (c)(1), the employer telework tax credit for any 
        taxable year is equal to $500 for each employee who 
participates in an employer sponsored telework arrangement during the 
taxable year.
            ``(2) Telework equipment tax credit.--Except as provided 
        for in subsection (c)(2), the telework equipment tax credit for 
        any taxable year is equal to 10% of qualified telework expenses 
        paid or incurred during the taxable year by either the employer 
        on behalf of the employee, or directly by the employee, 
        pursuant to an employer sponsored telework arrangement.
    ``(c) Special Rule for Disabled Employees and Employees of Small 
Businesses.--For purposes of this section--
            ``(1) For each employee who is covered under the Americans 
        with Disabilities Act of 1990 (42 U.S.C. 1201), or for each 
        employee of a small business, the employer telework tax credit 
        for any taxable year is equal to $1,000 for each employee who 
        participates in an employer sponsored telework arrangement 
        during the taxable year.
            ``(2) For each employee who is covered under the Americans 
        with Disabilities Act of 1990 (42 U.S.C. 1201), or for each 
        employee of a small businesses, the telework equipment tax 
        credit for any taxable year is equal to 20% of qualified 
        telework expenses paid or incurred during the taxable year by 
        either the employer on behalf of the employee, or directly by 
        the employee, pursuant to an employer sponsored telework 
        arrangement.
    ``(d) Credit Adjustments and Limitations.--
            ``(1) Credit adjustments.--In computing the credit allowed 
        under subsection (b)(1) or (c)(1) for any taxable year, the 
        following adjustments shall apply--
                    ``(A) In the case of an employee who participates 
                in an employer sponsored telework arrangement for less 
                than the full taxable year, the credit amount 
                identified in subsection (b)(1) or (c)(1), whichever is 
                applicable, shall be multiplied by a fraction, the 
                numerator of which is the total number of months in the 
                taxable year that the employee participates in an 
                employer sponsored telework arrangement and the 
                denominator of which is 12. For purposes of the 
                preceding sentence, an employee is considered to be 
                participating in an employer sponsored telework 
                arrangement for a month if the employee teleworks for 
                at least one day of such month.
                    ``(B) In the case of an employee who participates 
                in an employer sponsored telework arrangement but does 
                not telework every day of the taxable year that the 
                employee is required by his or her employer to work, 
                the credit amount identified in subsection (b)(1) or 
                (c)(1), whichever is applicable, shall be multiplied by 
                a fraction, the numerator of which is the total number 
                days in the taxable year that the employee teleworks 
                and the denominator of which is the total number of 
                days in the taxable year that the employee is required 
                by his or her employer to work.
            ``(2) Credit limitations.--
                    ``(A) Except as otherwise provided in subparagraph 
                (2)(B) of this subsection, in computing the credit 
                allowed under subsection (b)(2) or (c)(2) for any 
                taxable year the following limitations shall apply--
                            ``(i) The maximum credit claimed by any 
                        employer with respect to qualified telework 
                        expenses paid or incurred on behalf of an 
                        employee shall not exceed $500 for each 
                        employee who participates in an employer 
                        sponsored telework arrangement.
                            ``(ii) The maximum credit claimed by any 
                        employee with respect to qualified telework 
                        expenses paid or incurred directly by the 
                        employee pursuant to an employer sponsored 
                        telework arrangement shall not exceed $500.
                    ``(B) In computing the credit allowed under 
                subsection (c)(2) for any taxable year with respect to 
                employees who are covered under the Americans with 
                Disabilities Act of 1990 (42 U.S.C. 1201), or for each 
                employee of a small business, the following limitations 
                shall apply--
                            ``(i) The maximum credit claimed by any 
                        employer with respect to qualified telework 
                        expenses paid or incurred on behalf of an 
                        employee shall not exceed $1,000 for each 
                        employee who participates in an employer 
                        sponsored telework arrangement.
                            ``(ii) The maximum credit claimed by any 
                        employee with respect to qualified telework 
                        expenses paid or incurred directly by the 
                        employee pursuant to an employer sponsored 
                        telework arrangement shall not exceed $1,000.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Employer sponsored telework arrangement.--The term 
        `employer sponsored telework arrangement' means an arrangement 
        established by an employer that enables employees of the 
        employer to telework for a minimum of 25 days per taxable year. 
        Such an arrangement shall be supported by a written agreement 
        between the employer and each teleworking employee that 
        describes the terms of the employer sponsored telework 
        arrangement.
            ``(2) Qualified telework expenses.--
                    ``(A) In general.--The term `qualified telework 
                expenses' shall include, but not be limited to, 
                expenses paid or incurred for computers, computer-
                related hardware and software, modems, data processing 
                equipment, telecommunications equipment, and access to 
                Internet or broadband technologies, including 
                applicable taxes and other expenses for the delivery, 
                installation, or maintenance of such equipment.
                    ``(B) Only certain expenses taken into account.--
                Expenses shall be taken into account under subparagraph 
(A) only to the extent they are authorized by the employer pursuant to 
an employer sponsored telework arrangement and are necessary to enable 
the employee to telework.
            ``(3) Small business.--The term `small business' means a 
        business with an average of 100 or fewer employees during the 
        taxable year.
            ``(4) Telework.--The term `telework' means to perform 
        normal and regular work functions at locations other than the 
        traditional work place of the employer thereby eliminating or 
        substantially reducing the physical commute to and from that 
        traditional work place.
    ``(f) Special Rules.--
            ``(1) Limitation based on amount of tax.--
                    ``(A) Liability for tax.--The credit allowable 
                under subsection (a) for any taxable year shall not 
                exceed the excess (if any) of--
                            ``(i) the regular tax for the taxable year, 
                        reduced by the sum of the credits allowable 
                        under subpart A and the preceding sections of 
                        this subpart, over
                            ``(ii) the tentative minimum tax for the 
                        taxable year.
                    ``(B) Carryforward of unused credit.--If the amount 
                of the credit allowable under subsection (a) for any 
                taxable year exceeds the limitation under paragraph 
                (1)(A) for the taxable year, the excess shall be 
                carried to the succeeding taxable year and added to the 
                amount allowable as a credit under subsection (a) for 
                such succeeding taxable year.
            ``(2) Basis reduction.--The basis of any property for which 
        a credit is allowable under subsection (a) shall be reduced by 
        the amount of such credit (determined without regard to 
        paragraph (1)).
            ``(3) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit.
            ``(4) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(5) Election not to take credits.--No credits shall be 
        allowed under subsection (a) for any expense if the taxpayer 
        elects to not have this section apply with respect to such 
        expense.
            ``(6) Denial of double benefit.--No deduction or credit 
        (other than under this section) shall be allowed under this 
        chapter with respect to any expense which is taken into account 
        in determining the credit under this section.
            ``(7) Documentation.--Employers and employees are 
        responsible for maintaining adequate documentation to support 
        any credits claimed under this section.''
    (b) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 30A the following new 
item:

                              ``Sec. 30B. Telework credit.''
    (c) 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 sections 30B of the 
        Internal Revenue Code of 1986 (as added by this Act) or 
        otherwise subverting the purpose of this Act.
            (2) Treasury regulatory authority.--It is the intent of 
        Congress in providing the telework tax credit under section 30B 
        of the Internal Revenue Code of 1986 (as added by this Act) to 
        promote broad participation in employer sponsored telework 
        arrangements by providing incentives to both employers and 
        employees. Accordingly, the Secretary of the Treasury shall 
        prescribe such regulations as may be necessary or appropriate 
        to carry out the purposes of section 30B of such Code, 
        including regulations describing the information, records, and 
        data that employers and employees are required to provide the 
        Secretary to substantiate compliance with the requirements of 
        section and 30B of such Code. Until the Secretary prescribes 
        such regulations, employers and employees may base such 
        determinations on any reasonable method that is consistent with 
        the purposes of section 30B of such Code.
    (d) Effective Date.--The amendments made by this section shall be 
effective for the taxable years beginning after December 31, 2001.

 SEC. 4. DEDUCTION FOR CERTAIN DEPRECIABLE BUSINESS ASSETS.

    (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 
179A the following new section:

``SEC. 179B. DEDUCTION FOR BROADBAND TELECOMMUNICATION EQUIPMENT.

    ``(a) General Rule.--A taxpayer may elect to treat as an expense 
the cost of any qualified equipment capable of providing current 
generation broadband services to rural subscribers or urban 
subscribers. Any cost so treated shall be allowed as a deduction for 
the taxable year in which the cost is paid or incurred by the taxpayer.
    ``(b) Election.--
            ``(1) An election under this section for any taxable year 
        shall--
                    ``(A) specify the qualified equipment and 
                associated cost to which the election applies, and
                    ``(B) be made on the taxpayer's return of the tax 
                imposed by this chapter for the taxable year.
``Such election shall be made in such manner as the Secretary may by 
regulations prescribe.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked without the consent of the 
        Secretary.
    ``(c) Definitions.--For purposes of this section--
            ``(1) 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)).
            ``(2) 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.
            ``(3) Cost.--
                    ``(A) In general.--The term `cost' means any amount 
                that may otherwise be chargeable to a capital account 
                with respect to the purchase, upgrade, maintenance, or 
                installation of qualified equipment, that is incurred 
                after December 31, 2001 and before January 1, 2007.
                    ``(B) Certain satellite expenditures excluded.--The 
                term `cost' shall not include any expenditure with 
                respect to the launching or insuring of any satellite 
                equipment.
            ``(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) Nonresidential subscriber.--The term `nonresidential 
        subscriber' means a subscriber who purchases current generation 
        broadband service which are delivered to the permanent place of 
        business of such subscriber.
            ``(6) 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).
            ``(7) 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 to subscribers through 
        the radio transmission of energy.
            ``(8) Qualified equipment.--
                    ``(A) In general.--The term `qualified equipment' 
                means equipment capable of providing current generation 
                broadband service to each subscriber who is utilizing 
                such service.
                    ``(B) Only certain equipment taken into account.--
                Qualified equipment shall be taken into account under 
                subparagraph (A) only to the extent it--
                            ``(i) is located on or within a central 
                        switching office, cable hub, head end, or other 
                        similar network gateway or delivery point,
                            ``(ii) extends from the subscriber side of 
                        the point or points described in (B)(i) to the 
                        outside of the unit, building, dwelling, or 
                        office owned or leased by a subscriber, or
                            ``(iii) is located on the outside of the 
                        unit, building, dwelling, or office owned or 
                        leased by a subscriber.
            ``(9) Rural area.--The term `rural area' means any census 
        tract--
                    ``(A) which is not within 10 miles of any 
                incorporated or census designated place containing more 
                than 25,000 people and is not within a county or county 
                equivalent which has an overall population density of 
                more than 500 people per square mile of land,
                    ``(B) that is designated as a rural enterprise 
                community or rural empowerment zone by the Secretary of 
                Agriculture pursuant to section 1391, or
                    ``(C) that is designated by Congress as a rural 
                area for purposes of this section.
            ``(10) Rural subscriber.--The term `rural subscriber' means 
        a 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.
            ``(11) 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 point-to-multipoint distribution of signals, 
        and owning or leasing a capacity or service on a satellite in 
        order to provide such point-to-multipoint distribution.
            ``(12) Subscriber.--The term `subscriber' means a person 
        who purchases current generation broadband service from a 
        taxpayer.
            ``(13) Taxpayer.--The term `taxpayer' means--
                    ``(A) a cable operator,
                    ``(B) a commercial mobile service carrier,
                    ``(C) an open video system operator, or
                    ``(D) a satellite carrier, telecommunications 
                carrier, or other wireless carrier.
            ``(14) 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.
            ``(15) Urban area.--The term `urban area' means any census 
        tract--
                    ``(A) the poverty level of which is at least 30% 
                (based on the most recent census data),
                    ``(B) 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, or
                            ``(ii) in the case of a census tract 
                        located in a nonmetropolitan statistical area, 
                        70% of the nonmetropolitan statewide median 
                        family income,
                    ``(C) that is designated as an urban enterprise 
                community or urban empowerment zone by the Secretary of 
                Housing and Urban Development pursuant to section 1391,
                    ``(D) that represents the District of Columbia 
                Enterprise Zone established under section 1400,
                    ``(E) that is designated as a renewal community 
                pursuant to section 1400E,
                    ``(F) that is designated as a low-income community 
                pursuant to section 45D, or
                    ``(G) that is designated by Congress as an urban 
                area for purposes of this section.
            ``(16) Urban subscriber.--The term `urban subscriber' means 
        a residential subscriber residing in a dwelling located in an 
        urban area or nonresidential subscriber maintaining a permanent 
        place of business located in an urban area.
    ``(d) Designation of Census Tracts.--The Secretary shall, not later 
than 90 days after the date of the enactment of this section, designate 
and publish those census tracts meeting the criteria described in 
paragraphs (9) and (15) of subsection (c).''
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of such Code is amended by inserting after 
the item relating to section 179A the following new item:

                              ``Sec. 179B. Deduction for broadband 
                                        telecommunications equipment.''
    (c) 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 
        expense or portion thereof allowed under section 179B 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 expense under section 179B 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 rural and 
        urban areas of the United States 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 179B of 
        such Code, including--
                    (A) regulations to determine how and when a 
                taxpayer that incurs qualified expenditures satisfies 
                the requirements of section 179B 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 179B of such Code.
        Until the Secretary prescribes such regulations, taxpayers may 
        base such determinations on any reasonable method that is 
        consistent with the purposes of section 179B of such Code.
    (d) Effective Date.--The amendments made by this section shall 
apply to expenditures incurred after December 31, 2001.

 SEC. 5. BROADBAND 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 CREDIT.

    ``(a) In General.--For purposes of section 46, the broadband credit 
for any taxable year is equal to 20 percent of the cost of qualified 
equipment capable of providing next generation broadband services to 
rural subscribers or urban subscribers. Qualified expenditures shall be 
taken into account during the taxable year in which such expenditures 
are paid or incurred by the taxpayer.
    ``(b) Special Allocation Rules.--For purposes of determining the 
next generation broadband credit under subsection (a), if the qualified 
equipment is capable of serving rural, urban, and other subscribers, 
the qualified expenditures shall be multiplied by a fraction--
            ``(1) the numerator of which is the sum of the total 
        potential subscriber populations within the rural areas and 
        urban areas which the equipment is capable of serving with next 
        generation broadband services, and
            ``(2) 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.
    ``(c) Definitions.--For purposes of this section--
            ``(1) 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)).
            ``(2) 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.
            ``(3) Cost.--
                    ``(A) In general.--The term `cost' means any amount 
                that may otherwise be chargeable to a capital account 
                with respect to the purchase, upgrade, maintenance, or 
                installation of qualified equipment, that is incurred 
                after December 31, 2001 and before January 1, 2007.
                    ``(B) Certain satellite expenditures excluded.--The 
                term `cost' shall not include any expenditure with 
                respect to the launching or insuring of any satellite 
                equipment.
            ``(4) 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.
            ``(5) Nonresidential subscriber.--The term `nonresidential 
        subscriber' means a subscriber who purchases next generation 
        broadband service which are delivered to the permanent place of 
        business of such subscriber.
            ``(6) 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).
            ``(7) 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 to subscribers through 
        the radio transmission of energy.
            ``(8) Qualified equipment.--
                    ``(A) In general.--The term `qualified equipment' 
                means equipment capable of providing next generation 
                broadband service to each subscriber who is utilizing 
                such service.
                    ``(B) Only certain equipment taken into account.--
                Qualified equipment shall be taken into account under 
                subparagraph (A) only to the extent it--
                            ``(i) is located on or within a central 
                        switching office, cable hub, head end, or other 
                        similar network gateway or delivery point,
                            ``(ii) extends from the subscriber side of 
                        the point or points described in (B)(i) to the 
                        outside of the unit, building, dwelling, or 
                        office owned or leased by a subscriber, or
                            ``(iii) is located on the outside of the 
                        unit, building, dwelling, or office owned or 
                        leased by a subscriber.
            ``(9) Rural area.--The term `rural area' means any census 
        tract--
                    ``(A) which is not within 10 miles of any 
                incorporated or census designated place containing more 
                than 25,000 people and is not within a county or county 
                equivalent which has an overall population density of 
                more than 500 people per square mile of land,
                    ``(B) that is designated as a rural enterprise 
                community or rural empowerment zone by the Secretary of 
                Agriculture pursuant to section 1391, or
                    ``(C) that is designated by Congress as a rural 
                area for purposes of this section.
            ``(10) Rural subscriber.--The term `rural subscriber' means 
        a 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.
            ``(11) 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 point-to-multipoint distribution of signals, 
        and owning or leasing a capacity or service on a satellite in 
        order to provide such point-to-multipoint distribution.
            ``(12) Subscriber.--The term `subscriber' means a person 
        who purchases next generation broadband service from a 
        taxpayer.
            ``(13) Taxpayer.--The term `taxpayer' means--
                    ``(A) a cable operator,
                    ``(B) a commercial mobile service carrier,
                    ``(C) an open video system operator, or
                    ``(D) a satellite carrier, telecommunications 
                carrier, or other wireless carrier.
            ``(14) 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.
            ``(15) 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.
            ``(16) Urban area.--The term `urban area' means any census 
        tract--
                    ``(A) the poverty level of which is at least 30% 
                (based on the most recent census data),
                    ``(B) 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, or
                            ``(ii) in the case of a census tract 
                        located in a nonmetropolitan statistical area, 
                        70% of the nonmetropolitan statewide median 
                        family income,
                    ``(C) that is designated as an urban enterprise 
                community or urban empowerment zone by the Secretary of 
                Housing and Urban Development pursuant to section 1391,
                    ``(D) that represents the District of Columbia 
                Enterprise Zone established under section 1400,
                    ``(E) that is designated as a renewal community 
                pursuant to section 1400E,
                    ``(F) that is designated as a low-income community 
                pursuant to section 45D, or
                    ``(G) that is designated by Congress as an urban 
                area for purposes of this section.
            ``(17) Urban subscriber.--The term `urban subscriber' means 
        a residential subscriber residing in a dwelling located in an 
        urban area or nonresidential subscriber maintaining a permanent 
        place of business located in an urban area.
    ``(d) Designation of Census Tracts.--The Secretary shall, not later 
than 90 days after the date of the enactment of this section, designate 
and publish those census tracts meeting the criteria described in 
paragraphs (9) and (16) of subsection (c).''
    (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 new paragraph:
            ``(4) the broadband 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 sources not described in subparagraph (A), 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.''
    (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 new item:

                              ``Sec. 48A. Broadband credit.''
    (e) 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 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 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.
Until the Secretary prescribes such regulations, taxpayers may base 
such determinations on any reasonable method that is consistent with 
the purposes of section 48A of such Code.
    (f) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to expenditures 
        incurred after December 31, 2001.
            (2) Special rule.--The amendments made by subsection (c) 
        shall apply to amounts received after December 31, 2001.
                                 <all>