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WASHINGTON, D.C. – U.S. Senator Jerry Moran (R-Kan.) and U.S. Senator Heidi Heitkamp (D-N.D.), a member of the Committee on Indian Affairs, today announced they introduced legislation to end the U.S. Internal Revenue Service’s (IRS) practice of taxing crucial programs and services that aim to support the health and safety of Native families.

The Tribal General Welfare Exclusion Act would fully recognize that Indian tribes – as sovereign nations – are responsible for making certain their government programs and services best fit the needs of their citizens, just as other local governments across the country do. But for years, Indian tribes have been taxed for providing health care, education, housing, or legal aid to those in need. Local and state governments throughout the United States frequently offer such services to those who need assistance, but the people receiving help are not taxed by the IRS.

“Tribes are sovereign governments with the responsibility to provide services to their citizens,” Sen. Moran said. “By clarifying the definition of general welfare programs, this bill respects tribal sovereignty while making certain tribal citizens are not unfairly taxed. This legislation will also enhance economic development and the quality of life in Indian Country.”

“This bill levels the playing field by recognizing the inherent sovereignty of tribal governments to provide programs and services to its citizens, without subjecting them to heightened scrutiny from the IRS,” said Senator Heitkamp.  “Just as state and local governments are able to determine what programs best help their citizens -- like scholarships, elder or child care, or housing assistance – we must recognize tribal governments also have those same rights.  With this bill, we’re supporting tribal self-determination and taking a step toward living up to our trust and treaty obligations to tribes.”

The Tribal General Welfare Exclusion Act would:

  • Mandate tribal government programs, services and benefits authorized or administered by tribes for tribal citizens, spouses and dependents are excluded from income as a “general welfare exclusion”;
  • Clarify that items of cultural significance (e.g., paying someone to lead sacred Indian ceremonies) or cash honoraria provided by tribal governments shall not represent compensation for services and shall be excluded from taxable income;
  • Direct the Secretary of Treasury to require education and training of IRS field agents on federal Indian law and the unique legal treaty and trust relationship between the government and tribes;
  • Establish a Tribal Advisory Committee within the Treasury to advise the Secretary on matters of Indian tax policy;
  • Temporarily suspend all audits and examinations of tribal governments and members until the education and training measures are completed;
  • Authorize the Secretary to waive any penalties or interest imposed on Indian tribal governments or members; and
  • Direct the Secretary that any ambiguities in applying this Act shall be resolved in favor of tribal governments and deference shall be given to tribal governments for the programs administered and authorized by the tribe to benefit the general welfare.

In July, companion legislation, H.R. 3043, was introduced in the U.S. House of Representatives by Rep. Devin Nunes (R-CA22).

H.R. 3043 is supported by 20 tribal organizations including: United South and Eastern Tribes; CATG Board of Directors; National Indian Education Association; Native American Finance Officers Association; Midwest Alliance of Sovereign Tribes; Alaska Federation of Natives; Indian Land Tenure Foundation; National Indian Gaming Association; Great Plains Tribal Chairman Association; National Center for American Indian Enterprise; Alaska Inter-Tribal Council; Inter Tribal Council of Arizona; Americans for Indian Opportunity; National Congress of American Indians; Intertribal Agriculture Council; National Indian Health Board; Affiliated Tribes of Northwest Indians; Southern California Tribal Chairman’s Association; Self-Governance Communication & Education Tribal Consortium; United Indian Nations of Oklahoma, Kansas & Texas; Montana-Wyoming Tribal Leaders Council; and United Tribes of Michigan.