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Congress Passes the Indian Tax Extenders

December 17, 2014

The Indian Tax Extenders, found in the Tax Increase Prevention Act of 2014, [H.R. 5771], cleared the Senate yesterday by a vote of 76-16. The Tax Prevention Act provides a one-year extension to a number of tax incentives that expired in December of 2013. The so-called Indian Extenders included in the legislation are designed to incentivize direct investment in projects on Indian lands and the hiring of Indian people. The New Markets Tax Credit program, included in the legislation, will also impact tribal development. 

The Provisions Affecting Indian Tribes Include:

1.
Accelerated Depreciation for Business Property on Indian Reservations

This provision provides an incentive for private businesses to locate on Indian reservations. It provides qualifying property and infrastructure investments with a faster write-off than such property would otherwise receive under the regular tax code depreciation schedules. Accelerated Depreciation is a critical component of attracting capital-intensive projects to reservations and can bring higher-skilled jobs to Indian communities. 

2.

Indian Employment Tax Credit

This provision provides a 20-percent tax credit for the first $20,000 of wages for any tribal member or spouse employed by a private business operating on an Indian reservation. The provision is not applicable to tribal government jobs, high-wage jobs (defined as jobs paying more than $45,000 per year), or gaming jobs, which limits its value

3.

The Indian Coal Production Tax Credit

This provision provides a production tax credit equivalent to $2.00 per ton to coal produced on land owned by an Indian tribe. 

4.  New Market Tax Credit

This provision extends the New Markets Tax Credit (NMTC) Program for FY 2014. The NMTC Program was established by Congress in 2000 to spur investments in projects located in low-income communities. While this provision holds promise for Indian Country, tribes have not received a fair share of investments from the popular incentive.

 

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