Proposed regulations would support Tribal Nations in providing general welfare for Tribal communities
WASHINGTON – Today, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued a Notice of Proposed Rulemaking (NPRM) to implement section 139E of the Internal Revenue Code, created by the Tribal General Welfare Exclusion Act of 2014 (Act).
The Act enables Tribal governments to provide non-taxable assistance and benefits to Tribal members that are excludable from their gross income for federal income tax purposes. The announcement today supports Tribal Nations in advancing the wellbeing of their communities by the provision of general welfare support that ranges from housing aid to restoration of Native language. These proposed rules would provide that gross income does not include the value of any Indian general welfare benefit paid to or on behalf of a Tribal citizen of a Tribal Nation.
The proposed rules demonstrate an unprecedented recognition of Tribal self-determination and self-governance in tax regulations by providing deference to Tribes in how they establish their programs, the scope of benefits they provide, and determinations involving Tribal culture or ceremonial activities. These principles are the foundation of the Biden-Harris Administration’s recognition of the unique federal trust and treaty responsibility towards Tribal Nations as referenced in Presidential Executive Order 14112.
These proposed rules were the result of a historic level of three pre-regulation consultations with Tribal Nations and multi-year consultation with the Treasury Tribal Advisory Committee in partnership with Treasury’s Office of Tribal and Native Affairs, Office of Tax Policy, and the Internal Revenue Service.
“The Biden-Harris Administration has provided historic support to Tribal Nations and today’s announcement will provide clarity and certainty that is critical to economic opportunity,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “These proposed rules recognize that Tribal Nations know best how to serve their citizens and demonstrate the Biden-Harris Administration’s commitment to ensuring the voices of Tribal leaders are at the table.”
“The provision of general welfare is core to indigenous customs and practices and today’s rule incorporates respect for these values in our tax regulations” said U.S. Treasurer, Chief Lynn Malerba. “Treasury’s investment in its consultative process, and the expertise of the TTAC, were critical to improving the Department’s understanding of Tribal needs to support Tribal Nations. I want to thank Treasury’s Office of Tribal and Native Affairs, Office of Tax Policy, and the IRS for working collaboratively with all the offices within Treasury who worked diligently to draft and release this proposed rule.”
A decade ago, Congress passed the Tribal General Welfare Exclusion Act of 2014 to provide an expanded general welfare exclusion specifically for Tribal programs that improved upon the historical administrative general welfare exclusion. The Act also created the Treasury Tribal Advisory Committee to advise the Secretary on Tribal tax matters, and provided for audit suspensions on the Act’s enforcement until IRS field agents and Tribal Financial officers were trained on regulations.
Today’s proposed regulations build upon Treasury’s historic investment in developing policies that include feedback of Tribal governments. In response to input from Tribes, this Administration created Treasury’s first Office of Tribal and Native Affairs under the first Native American Treasurer, former TTAC member Chief Malerba. This Office has worked across the Department to support the administration of $30 billion in recovery set asides to Tribal Nations and support for Tribal access to the billions in clean energy tax credits through the Inflation Reduction Act, including through elective pay which enables Tribes to access certain clean energy tax credits for the first time.
Treasury is commencing Tribal consultation on these proposed regulations and looks forward to Tribal feedback. To learn more about this rule, see the Dear Tribal Leader Letter, Consultation and Federal Feedback Summary, and Tribal Fact Sheet.
