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ITG FAQ #3 Answer-For what purposes can Indian tribal governments issue tax-exempt bonds?

Section 7871(c) provides that tax-exempt bonds may be issued by tribal governments to finance both the provision of "essential governmental functions" and the construction of certain qualified manufacturing facilities. Section 7871(c)(1) states that "subsection (a) of section 103 shall apply to any obligation issued by an Indian tribal government (or subdivision thereof) only if such obligation is part of an issue substantially all of the proceeds of which are to be used in the exercise of any essential governmental function." Section 7871(c)(3)(B) provides that tax-exempt bonds can be issued to finance the acquisition, construction, reconstruction, or improvement of property which is of a character subject to the allowance for depreciation and which is part of a manufacturing facility (as defined in section 144(a)(12)(C) provided that certain use, location, ownership, and employment requirements are satisfied.

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Page Last Reviewed or Updated: 18-Oct-2013