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IRS & Treasury Release Interim Guidance on Per Capita Distributions

March 10, 2014

Earlier today the Internal Revenue Service (IRS) and the Department of Treasury (Treasury) issued "Interim Guidance" [Notice 2014-17] on per capita distributions of funds held in trust by the Secretary of the Interior. The interim guidance was issued in order to provide Indian tribes with a chance to review and submit comments prior to the IRS and Treasury issuing final guidance.

The interim guidance provides that the IRS and Treasury will treat eligible per capita distributions, made from funds the Secretary of the Interior holds in a Trust Account for the benefit of a tribe, as generally excluded from the gross income of the members of the tribe receiving the per capita distributions.

 However, the interim guidance states that if a Trust Account is used to mischaracterize taxable income as nontaxable per capita distributions, those distributions will constitute as gross income. This includes the mischaracterization of compensation for services as per capita distributions; the mischaracterization of business profits as per capita distributions; and the mischaracterization of gaming revenues as per capita distributions.

Comments may be submitted before September 17, 2014. Comments should be submitted to Internal Revenue Service electronically atnotice.comments@irscounsel.treas.gov. Please include "Notice 2014-17" in the subject line of any electronic communications. Comments can also be submitted in writing at CC:PA:LPD:PR (Notice 2014-17), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.  

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