IRS Issues Procedural Change on Interim Guidance on the Taxation  of HEARTH Act Leases


IRS Issues Procedural Change on Interim Guidance on the Taxation of HEARTH Act Leases

June 13, 2017

Clarifies Leases from BIA-Direct Pay and HEARTH Act Will Receive the Same Tax Treatment

The Department of the Treasury and the Internal Revenue Service (IRS) has issued procedural changes to the Interim Guidance. The procedural change makes clear that the tax treatment of leases under the Helping Expedite and Advance Responsible Tribal Home Ownership Act (HEARTH Act) are generally excluded from taxation since they will be viewed the same as the Bureau of Indian Affairs (BIA) approved direct-pay leases.

The procedural change for the Interim Guidance represents an important first step. It comes after a listening session in December where several tribal governments, NAFOA, and other organizations requested that the IRS extend the existing guidance (Notice 2015-67) to HEARTH Act leases as a natural extension of tribal self-determination. Direct pay arrangements allow tribal governments to receive payments faster and monitor late payments and non-payments of its numerous lessees without the Department of the Interior being the go-between.

The HEARTH Act was passed as a way for tribal governments to negotiate and enter into their own land leasing process once their governing leasing regulations have been approved by the Secretary of the Interior. It allows tribes to develop and implement their own leasing regulations to drive revenue growth and community development without having to obtain BIA approval of every lease.

For questions or comments please contact Jennifer Parisien at  or (202) 558-8040. 

Interim Guidance Change
Notice 2015-67
HEARTH Act of 2012