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ITG FAQ #7 Answer-What if an entity fails to satisfy any of the criteria of a "qualified Indian entity"?

What happens if an otherwise "qualified Indian entity" involved in the processing or transporting of fish falls below the requirement that 90 percent or more of its gross receipts be derived from fishing rights-related activities?

An entity that fails to satisfy any of the criteria of a "qualified Indian entity" is not eligible for the exemption from tax provided by IRC section 7873 nor is any employee of such an entity eligible for tax exemption on wages received from such entity.

Note: A "qualified Indian entity" will continue to be treated as such in the year that the 90 percent test is not met, solely due to an extraordinary and nonrecurring event (such as the sale of a boat or other property).

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Page Last Reviewed or Updated: 14-Aug-2014