Yesterday, the Department of the Treasury and Internal Revenue Service (IRS) announced important rule language that will clarify Tribally Chartered Corporations have the same tax status as the owning Tribe. The notice of proposed rulemaking addressed longstanding issues regarding the tax status of tribally chartered entities. This proposed rule recognizes that wholly owned tribal entities chartered or organized by one or more Tribes have the tax status of their owning tribes. This means business entities entirely owned by a Tribe will not be subject to federal income tax.
In addition to the important announcement around tribally chartered entities, there was also an eligibility clarification around Inflation Reduction Act (IRA) tax credits, which would make tribal entities eligible for Elect/Direct pay tax credits.
From the Department of the Treasury:
This proposed rule incorporates significant Tribal consultation and Treasury Tribal Advisory Committee feedback and demonstrates Treasury’s recognition, support, and protection of principles of Tribal sovereignty, sovereign immunity, and self-governance. These principles have been repeatedly reaffirmed by the Supreme Court and are outlined in Executive Order 14112.
In addition to the proposed rules, Treasury announced it will hold Tribal consultations on December 16th, 17th, and 18th. Treasury will also be accepting written comments until January 7th, 2025. If you are interested in submitting comments, please do so at tribal.consult@treasury.gov.
ADDITIONAL RESOURCES
For any other questions or concerns, please contact Nicholas Lovesee, Director of Policy, at nicholas@nafoa.org