On September 26, 2014, President Obama signed HR 3043, the Tribal General Welfare Exclusion Act, into law as PL 113-168. The week prior, HR 3043 had passed the Senate under Unanimous Consent and the House by voice vote under Suspension of the Rules. The new law follows on the heels of the Treasury Department and Internal Revenue Service’s (IRS) June 3, issuance of Revenue Procedure 2014-35: Application of the General Welfare Exclusion to Indian Tribal Government Programs That Provide Benefits to Tribal Members. (See our General Memorandum 14-042 of June 13, 2014.)
PL 113-168 contains a number of important provisions. Notably, the law for the first time codifies the Indian canon of treaty and statutory construction, providing “[a]mbiguities in [the new law] shall be resolved in favor of Indian tribal governments and deference shall be given to Indian tribal governments for the programs administered and authorized by the tribe to benefit the general welfare of the tribal community.” The law requires the Secretary of the Treasury to establish a Tribal Advisory Committee (TAC) to advise the Secretary on matters relating to the taxation of Indians and to assist the Secretary in developing education and training for IRS field agents.
The law also suspends the audits and examinations of Indian tribal governments and members of Indian tribes related to the provision or receipt of general welfare benefits until IRS field agents complete the training and education developed by the Secretary as advised by the TAC.
Attachments include: (1) the statement made by the bill’s sponsor Representative Nunes (R-CA) in lieu of a Committee Report and (2) the colloquy between Senate Finance Committee Chairman Wyden and Senators Moran (R-KY) and Heitkamp (D-ND) (chief sponsors of the Senate’s companion bill to HR 3043) affirming that the intent of HR 3043 is “to expand rather than restrict the safe harbor provisions in Revenue Procedure 2014-35” and that the IRS should apply the law “in a manner no less favorable than the safe harbor approach in Revenue Procedure 2014-34.”
Please let us know if we may provide additional information regarding the Tribal General Welfare Exclusion Act or Revenue Procedure 2014-35.