WASHINGTON (dpa-AFX) - The U.S. Department of the Treasury and the IRS issued a Notice of Proposed Rulemaking clarifying that wholly-owned Tribal entities chartered or organized by one or more Tribes have the same tax status of their owning Tribes. This means that these Tribal entities - businesses entirely owned by a Tribe - would not be subject to federal income tax.
The proposed rule recognizes that Tribal economies are unique and rely on Tribal businesses to generate government revenue. The rule also would make these Tribal entities eligible for certain Inflation Reduction Act clean energy tax credits through a payment mechanism known as elective pay. Commonly referred to as direct pay, that allows entities without federal tax liability to receive the full benefit of these incentives.
'For far too long, tax uncertainty has held back tribes' economic opportunity, and the Biden-Harris Administration is reversing that trend. Tribally chartered entities generate critical revenue for their communities, and today's rules recognize their tax status to enable them to further their contributions to economic development,' said U.S. Deputy Secretary of the Treasury Wally Adeyemo.
'The Biden-Harris Administration's new policy clarifying that Tribally chartered businesses are exempt from income taxes is a crucial step in the development of Native communities,' said Senator Catherine Cortez Masto. 'This will give tribes the certainty they need to use new tools, including the Inflation Reduction Act, to expand opportunity and support economic development on Tribal lands.
'For over 30 years, Tribal Nations have been awaiting confirmation that Tribally chartered corporations and entities are not subject to federal income tax. Uncertainty regarding the tax status of Tribal entities has been a significant federal policy barrier faced by Tribal Nations as we seek to build our economies and generate our own governmental revenues. Today, Treasury and IRS are taking historic steps to remove this barrier to economic development in Indian Country,' said United South and Eastern Tribes Sovereignty Protection Fund President, Chief Kirk Francis.
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