(Washington, D.C.) -- A bill from Iowa Third District Congresswoman Cindy Axne would eliminate taxes on federal aid received by health care providers during the COVID-19 pandemic.

Axne -- along with Florida Republican Representative and retired Army Surgeon Neal Dunn -- introduced the Eliminating the Provider Relief Fund Tax Penalties Act of 2020 Wednesday. Axne says aid distributed to health care providers through the Provider Relief Fund earlier this year were subject to taxes for some hospitals.

"Some of the people who are receiving these funds -- and this applies to some hospitals in Iowa -- through the CARES Act will see that funding being taxed," said Axne. "The American Medical Association estimates that could mean 20% or more of the aid they received wouldn't be available to help put a nursing shift or a bed, it would go to taxes. We've got to put this toward health care and not towards taxes."

Axne says the PRF was designed to provide critical resources to health care providers during the ongoing COVID-19 pandemic and that those funds should not be taxed, as well.

"We appropriated $175 billion in Congress that was meant to help our health care providers stay fully staffed and equipped so we could make sure that we're fighting this pandemic," said Axne. "It's critical that every single dollar goes to assistance with our health care providers and goes as far as possible."

Calling it common sense legislation, Axne says the loophole was created by the PRF rules not lining up with how grants are taxed for health care providers.

"I spent a decade in state government actually dealing with these kinds of things where policy on top of policy can create unintended outcomes," said Axne. "It's good policy to make sure that we make sure we get the hospitals this money and make sure that our health care providers in Iowa can help the people in our state. At the same time, these underlying rules and policies within these departments sometimes contradict what we're trying to do on a legal level."

The bill has the backing of a number of health care groups, incluing the American College of Physicians, the Federation of American Hospitals and the American Medical Association.

"When you have that kind of support from the people who are actually on the ground utilizing the funds and implementing the services, there's a tendency for lawmakers to realize that this is something that's necessary because the subject-matter experts are agreeing with it," said Axne. "This isn't a political move. This is common sense. I think we're going to get a lot of traction."

In addition to eliminating taxes on funds received from the PRF, the bill would guarantee that expenses attributable to the PRF were also tax deductible. Axne made her comments on KMA's Morning Line program Wednesday. You can hear the full interview below.

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Axne introduces bill eliminating taxes on federal aid for health care providers - KMAland