Thursday, June 14, 2012

IRS May Tax Per Capita Payments, Benefits

Those of us who lived off the reservation know we paid federal and state taxes, here is a Washington Post article on the IRS looking for revenue.   What are your thoughts?

John Yellowbird Steele, chief of the Ogalala Sioux Tribe, said the Internal Revenue Service is failing to recognize tribal sovereignty by trying to tax government-funded assistance such as housing, school clothes and burial aid that tribes give their members.
Speaking to a Senate panel Thursday, Steele invoked the treaties between the U.S. and his South Dakota tribe as he criticized the IRS for what seems to be a stepped-up effort to tax tribal assistance.
“We fix houses, and they want us to put a value on how much that lumber cost to patch a hole in a roof or a floor, put shingling on, they want us to put a value on that and give the person a 1099” tax form to possibly be taxed on the help, Steele said. “The next year, where are those people going to find the money to pay the IRS?”

The IRS over the years has narrowed its tax exemptions for federally, state and locally funded social benefits for tribe members so that only those with significant financial need do not have to pay taxes on the benefits, tribal leaders said.

The agency has been meeting with tribes to develop and clarify rules on what is taxable under the General Welfare Doctrine, which governs whether the assistance tribal members receive should be counted as income and be taxed. But as the meetings have gone on, tribes are getting notices that they are being audited, Steele said.

Steele said the tribal assistance helps members raise their living standard and in some cases survive. He accused the IRS of launching a fishing expedition, saying his tribe has been asked to provide documentation on payments to employees, council and tribal members; petty cash and bank records; health care benefits to tribal members and employees, and Pow Wow prizes, among other things.
“The IRS violates our treaties when it seeks to tax the basic government services that our tribal government provides our citizens,” Steele said in written testimony.

Sen. Daniel Akaka, D-Hawaii, who chairs the committee, said providing for tribal members is “truly critical to the self-determination of tribal governments.”
The IRS has been reviewing per capita payments that tribes make to members from trust money raised through tribal businesses.

Athena Sanchey Yallup, executive secretary of the Confederated Tribes and Bands of the Yakima Nation in Washington State, said the IRS has been seeking to tax her nation’s distribution of earnings from the timber on its land to each of its 10,400 tribal members for the first time in its history. The IRS’ taxation of the trust payments is a “radical change in policy,” she said.

All of this comes as the Obama administration has won accolades from Native American tribes and Alaska natives for recognizing their sovereignty and requiring federal agencies to do a better job of explaining changes in policy or adoption of new policies. IRS officials said many of the concerns have been raised as the agency has been meeting with tribes to develop guidance on the exemptions.

The IRS defended its work with tribes. Deputy Assistant Secretary Aaron Klein described meetings on the issue and has been gathering comments and recommendations on what can be taxed as income. Klein said the discussions show that additional guidance is needed, as well as clarification of rules governing when such benefits can be taxed.

Christine Jacobs, director of the Office of Indian Tribal Governments at the IRS, said the exemption for social welfare benefits is not in the federal tax code but is an administrative exemption. She said to be excluded from taxes, benefits and payments must be made under a governmental program, promote the general welfare and not represent compensation for services.


Anonymous said...

The tribes with Casinos should be taxed to the fullest and should not receive any benefits from the federal government.....when the tribes pushed for casinos, they promised to share the wealth with other tribes...instead they kick out members to fatten the per cap the reported tune of over $100,000 per month at San Manuel and at one time $30,000 a month to Pechanga members....
Look behind the smoke screen to see through all the lies the tribes tell.

Luiseno said...

"tribes are getting notices that they are being audited,"

Interesting, these auditors are able to find all kinds of hidden and crooked dealings, they are very very good at what they do (and I say that in a scarey way).

Who cares about them taxing per capita, I think it is far more interesting that they maybe able sneak there auditors and shine the light on these cockroaches. Watch them scurry as they try in vain to hide from the light.

Tukumay said...

but but but...what about tribal sovereignty? I thought the Federal Government was powerless to do anything?

This could get interesting. If the Feds are willing to push their way in to tax tribes then what's stopping them from pushing their way in to protect those tribal members who have had their rights violated?

Don't tell me tribal soveriegnty - if they can audit and tax then they can audit the tribe's governance.

If this goes much further I would expect an avalanche of cash to flow from gamiing tribes to the lobbyists who will flood Congress like a Tsunami screaming "tribal sovereignty tribal sovereignty!"

Anonymous said...

The Federal government should only give to tribes that need it. Gaming tribes do not need it, that is why they have gaming, "to help their own". It is a fact that the feds pay millions upon millions to these gaming tribes yearly. South Dakota is a poor tribe (I think) and yes they do need the money and tax free benefits.

Anonymous said...

so they took our lands and said they are exempted from all taxes so thats why we are souvern citizens,,,we just let the government do unto us as they did when taking of our lands thru treaties they already have broken i can't wait to kick the irs out of indian country because they are attacking our country inside of there country which used to be our country way before the english world came to our world it don't make sense to me ..i don't see the irs taxing canada why is it they can tax our souvernty canada is a souvern country too why don't they get taxed as well..u can't tax a souvern country,plus why do the orgen residents don't get charged taxes when they go to another state that star can't tax oregan residents..we indians should hold the same card as them oregonians....not fair to tax the tribes after all the territories we gave up to the englishman

Anonymous said...

That is stupid....your big casinos are a business...and the per cap is should be taxed by both the Feds and hide behind the sovereign banner only when it suits you....during the war, the Japanese were stripped of their property in the U.S. and put in camps.....they weren't made sovereign or handed money for the rest of their lives....besides, the tribes probably didn't "own" the whole United States.....we are taxed to pay for all the benefits we receive and for roads and use all of the same resources, yet you shouldn't be taxed?...that's the problem with tribes...that's why you are having so many internal forget that it was the voters of California that allowed gambling and the same voters can start a new petition to take it away!..quit being so are even screwing your own out of deserved will cause a huge backlash if you aren't smarter.

Anonymous said...

Lawyers and lobbyists will run up giant fees fighting the IRS despite the certainty that the IRS will win. It would be much cheaper just to give the IRS it's pound of flesh. The real problem is that the IRS will look at the tribal and casino books, and a bunch of tribal leaders and their lawyers and lobbyist and pet politicians and BIA Officials will go to jail. That is, of course the the reason for the IRS interest. The Government is out to nail organized crime and crooked tribal and government officials and the IRS is the traditional tool for draining the swamp. Many of the Pechanga tribal officials know this and they are ratting each other out, and voting each other off of the Island.

Anonymous said...

IRS may tax per capita payments?
You racist pig!
All Native Americans pay federal taxes!
If a Native American lives on their own reservation and the income was earned on the reservation the state can't tax it!
Just like California can't impose their state tax on Nevada, Arizona or Oregan!
Ask Erik!

Unknown said...

I think they should think twice about this taxation process cause I can foresee that it'll face a lot of opposition from the involve parties that's why they must take in consideration every options they've got it's like saying that whatever kind of 2290 form they've got in Washington should also be the same with the Hawaii or to every state to show equality towards everyone.

certified financial planner program said...

That is, of course the reason for the IRS interest program. The Government is out to nail organized crime and government officials and the IRS is the traditional tool for draining the swamp. Government depends on the certified financial planner and their tax program per capita payments and benefits.