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July 2013 Edition of Indian Tribal Governments News

ITG News Home Page

Contents

  • Director’s message
  • Tribally sponsored self-insured group plans and the Affordable Care Act
  • Reporting abuses and schemes
  • Tribes: have you filed your Form 11-C?
  • Noncash payouts
  • Ten things to know about the Taxpayer Advocate Service (TAS)
  • Low Income Taxpayer Clinics
  • ITG thanks the Volunteer Income Tax Assistance (VITA) volunteers!
  • Outreach successes
  • Arizona training opportunities
  • Washington training opportunities

 

Director’s message

I want to personally thank all of you who have contributed to the Volunteer Income Tax Assistance program. You are providing a valuable service to Indian Country.

By now Tribal leaders should have received the annual ITG Customer Satisfaction survey. Encourage your leaders to complete the survey – we want to hear from you!

If you have any suggestions about how we can provide additional support, please don’t hesitate to let us know. Just send an e-mail to us at  tege.ask.itg@irs.gov

Sincerely,
Christie Jacobs, Director

 

Tribally sponsored self-insured group plans and the Affordable Care Act

The IRS and the Treasury Department have issued final regulations on the fees that will be used to fund the Patient-Centered Outcomes Research Trust Fund. These fees generally apply to issuers of certain health insurance policies and employers that provide their employees with an benefits under a self-insured health plan, HRA or FSA (unless exempt).  The fees do not apply to exempt government programs.  Exempt government programs include, but are not limited to, any program established by Federal law for providing medical care (other than through insurance) to members of Indian tribes (as defined in section 4(d) of the Indian Health Care Improvement Act).  However, a self-insured health plan sponsored by an Indian tribe may be subject to the fee.  The fee applies beginning with the first policy or plan year ending on or after October 1, 2012 and must be paid no later than the July 31 of the following calendar year using IRS Form 720.  

The trust fund provides support for Patient-Centered Outcomes Research Institute (PCORI). The Affordable Care Act established the institute to assist patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing clinical effectiveness research.

Visit IRS.gov for information on the fee and to find questions and answers plus a chart that summarizes the application of the fee.  The IRS revised Form 720, Quarterly Federal Excise Tax Return, was revised to provide for the reporting and payment of the PCORI fee.

 

Reporting abuses and schemes

Tribal members and employees: you may be the target of a financial abuse or scheme that’s being promoted to your tribe. If you are aware of financial impropriety or a promoter advocating a scheme that appears highly suspect, you can contact the ITG Abuse Detection and Prevention Team at (503) 415-7080, or via e-mail at tege.itg.schemes@irs.gov

ITG has been successful in prohibiting the marketing of abusive schemes in Indian Country. Partnering with other agencies, ITG obtains court injunctions against these promoters. Promoter schemes include marketing or selling tax avoidance material that are contrary to federal tax laws. The IRS’s Small Business Self Employed Lead Development Center, the United States Department of Justice and ITG work together to stop abuse in its tracks and protect you.

Often these schemes appear too good to be true. The tragedy is that these schemes can cost your tribe a lot of money and affect you.

ITG will continue to work with you to identify and stop financial abuses and schemes being promoted in Indian Country. Working together, we can help ensure the integrity of your tribe’s finances and eliminate the threats posed by the promoters of these schemes.

 

Tribes: have you filed your Form 11-C?

Tribes selling pull-tabs were required to file this form by July 1 for the period July 1, 2013 through June 30, 2014. Tribal governments and agents (persons who accept taxable wagers on behalf of the tribe) should complete this form as soon as possible. Read the April 2013 edition of the ITG News for more information.

 

Noncash payouts

Casinos often offer noncash prizes such as cars, boats and motorcycles for drawings or other promotional gaming activities. When these payouts exceed certain amounts they must be carefully tracked to comply with reporting and withholding requirements.

The following offers guidance for issuing the proper information returns and reporting the correct amount of withholding when necessary.

Form W-2G

Casinos use this form when awarding a noncash payment due to a wager. The fair market value (FMV) of the win determines the reporting and withholding. If the FMV exceeds $5,000 after deducting the price of the wager, the winnings are subject to 25% regular gambling withholding. You can determine the amount you must withhold and pay using one of the following two methods.

1) The winner pays the withholding tax to the payer. The appropriate withholding amount equals the FMV of the noncash payment minus the amount of the wager times 25%.

(FMV – Wager) X 25%

2) The payer pays the withholding tax. The appropriate withholding amount equals the FMV of the noncash payment minus the amount of the wager times 33.33%

(FMV – Wager) X 33.33%

Example:  A patron buys a chance to win a car with a fair market value of $10,010 for $10. The casino awards the car to the winning patron and pays the applicable tax for the patron.  

$10,010 - $10 = $10,000
$10,000 + (33.33% X $10,000)
$10,000 + $3,333
$13,333 - amount of winning reported on the W-2G
$3,333 - amount of withholding tax paid for the patron and reported on the W-2G

Form 1099-MISC

Report a noncash payment on this form when no wager is made and the prize’s fair market value is $600 or more. Include the amount in Box 3 Other Income. Though not required, the payee can choose to withhold.  

Payouts with elements of wagering and non-wagering

When contests involve both wagering transactions and giveaways, you must carefully determine which information return should be issued.  Generally, you report the noncash item on a Form W-2G.  However, if you can clearly demonstrate that no amount of the entry fee or wager is being used to pay for the noncash item, give the recipient a Form 1099-MISC. The noncash prize must clearly be a separate and distinct add-on to the wagering transaction to be reported on a Form 1099-MISC.  

Remember: If the winning is due to a wager, report the winnings on a Form W-2G.

 

Ten things to know about the Taxpayer Advocate Service (TAS)

Here are ten reasons why Indian Tribal Governments and every taxpayer, whether an individual, a business, an employer or other entity that deals with the IRS should know about the Taxpayer Advocate Service.

 

Low Income Taxpayer Clinics

The Low Income Taxpayer Clinics (LITCs) serve individuals who have a problem with the Internal Revenue Service and whose income is below a certain level. LITCs are independent from the IRS. Most LITCs can provide representation before the IRS or in court on audits, tax collection disputes, and other issues for free or for a small fee. If an individual’s native language is not English, some clinics can provide multilingual information about taxpayer rights and responsibilities. For more information please read this article.

 

ITG thanks the Volunteer Income Tax Assistance (VITA) volunteers!

The IRS offices of Indian Tribal Governments (ITG) and Stakeholder Partnerships, Education and Communication (SPEC) would like to thank all partners who provided tax assistance this year.

Despite the tax season’s late start, the tribal VITA sites increased the number of prepared returns by 5%, while the non-tribal VITA sites had an overall reduction. Without the volunteers at the VITA sites, the IRS could not continue to provide this extremely valuable free service to our customers.  

Alaska

  • Kenaitze Indian Tribe
  • Tlingit Haida Regional Housing Authority
  • Tongass Federal Credit Union in Metlakatla

Arizona

  • Colorado River Indian Tribes (CRIT)
  • Cornfields Chapter of the Navajo Nation and its satellite office in Chinle
  • DNA OFFICES Chinle Chapter Compound
  • DNA OFFICES Window Rock Gallup Catholic Charities
  • Gila River Indian Community (GRIC)
  • Inter-Tribal Governments
  • Native American Connections
  • Pascua Yaqui Tribe
  • Paiute Neighborhood Center
  • Quechan Indian Tribe
  • San Carlos Housing Authority
  • San Lucy District of the Tohono O’odham Nation
  • Show Low Pioneer College
  • Tohono O’odham Nation
  • Tuba City Bik’eh Hozho
  • White Mountain Apache Housing Authority
  • White River Masonic Lodge 62

Kansas

  • Iowa Tribe of Kansas and Nebraska
  • Kicakapoo Tribe of Kansas

Minnesota

  • Fond Du Lac Indian Reservation
  • Mille Lacs Indian Reservation
  • Leech Lake Band of Ojibwe
  • Red Lake Housing Authority

New Mexico

  • Jade Tax Aide
  • New Mexico Legal Aid
  • Catholic Charities
  • Native (Navajo) Community Finance
  • Northern Pueblos Housing
  • Ojo Encino
  • Ramah
  • Zuni Housing Authority

North Carolina

  • Eastern Band of Cherokee Indians, QFF (Qualla Financial Freedom)

North Dakota

  • Sitting Bull College

Oklahoma

  • Chickasaw Nation
  • Cherokee Nation – 9 VITA sites
  • Pawnee Nation

South Dakota

  • Rosebud Sioux Tribe

Utah

  • Blanding VITA Site
  • Mexican Water Chapter

Washington

  • Chehalis Tribal Loan Fund
  • Colville Tribal VITA at Nespelem
  • Port Gamble S’Kallam Tribe
  • Squaxin Island Tribal VITA

The IRS needs you: become a volunteer 

Are you interested in giving back to your community, but are unsure how? The IRS has the Volunteer Income Tax Assistance (VITA) program available just for you.
  
In order to become a volunteer at one of these existing sites, you will need to complete a tax law training program. The volunteer tax law preparation training is performance-based and uses a process-based approach to engage each student in the return preparation process. Role-playing and demonstrations on how to use the technical tools to complete an accurate return are used extensively. Students will require one of the following kits for training in the Basic, Intermediate, Advanced, Military and International courses:

  • Publication 4480 - Link & Learn Taxes Kit consists of the exercise workbook (Publication 4491-W); Volunteer Resource Guide (Publication 4012) which should also be used at the site; and Form 6744 - Test/Retest. Publication 4480 is the cover transmittal for the kit. The electronic course evaluation form is part of Link & Learn Taxes online.
  • Publication 4491 - Student Training Kit consists of the Student Training Guide (Publication 4491), workbook (Publication 4491-W), Volunteer Resource Guide (Publication 4012) , Form 6744 - Test/Retest and a carrying bag (Publication 1278). Students and instructors can evaluate the materials in the kits using the electronic course evaluation module in Link & Learn Taxes online.

For ordering guidance and other information, please consult your local IRS-SPEC tax consultant.

 

Outreach successes

Southwest

Basic Employment Tax Training Workshops at the University of New Mexico West campus in Rio Rancho. These training sessions were a great success, with over 70 individuals attending representing 45 Navajo Nation Tribal Chapter Governments from the Eastern, Ft. Defiance, and Northern Agencies.

ITG Specialists from the Albuquerque IRS office presented the workshop and covered topics such as defining employees vs. independent contractors, payroll taxes, making federal tax deposits, due dates and avoiding penalties.

During the week, participants were offered an “open assistance day” to receive assistance with becoming current with any delinquent employment tax reporting obligations including: completing and filing delinquent returns, addressing reconciliation issues resulting in additional taxes and/or penalties and any other outstanding collection issues. The open assistance day was a great success with many chapters becoming fully compliant with employment tax obligations.

Gaming Issues and Reporting Workshop in Tucson, Ariz. In April, ITG held the workshop at the Federal Building. Thirty-Eight representatives from various tribes and tribal entities attended the workshop. ITG specialists from the Tucson IRS office presented the workshop. Covered topics included required tax reporting for gaming-related payments/activities, completing various IRS forms, tax deposit schedules and how to avoid penalties and interest.

Mini-Advanced Employment Tax Workshop in Tucson, Ariz. In May, ITG held the three-day workshop at the Federal Building. Nineteen representatives from various tribes and tribal entities attended. ITG specialists from the Tucson IRS office covered different topics such as defining employees vs. independent contractors, payroll taxes, making federal tax deposits, due dates and avoiding penalties.

Title 31 Training in Towac, Colo. In May, an ITG specialist from the Albuquerque office presented Title 31 training at the Ute Mountain Casino in Towac. Over 375 attended the training sessions. Covered topics included historical background, suspicious activities, money laundering, and recordkeeping requirements.

Pacific Northwest

The group held combined Basic/Advanced Employment Tax workshops in Portland, Oregon on May 21st and 22nd.  ITG specialists presented to four tribes in the Pacific Northwest, covering such topics as: computing the correct taxes for payroll, making federal tax deposits and due dates on tax returns.

 

Arizona training opportunities

ITG will be offering the following workshops at the IRS office located at 300 West Congress Street, Conference Room B, Tucson, Arizona 85701.

Gaming Issues and Reporting Workshop:
July 31, 2013; 9 a.m. to 4 p.m.

Topics:

    • Required tax reporting for gaming-related payments/activities
    • U.S. residents – W-2Gs, Forms 1099-MISC, 1096, and 5754
    • Foreign persons – Forms 1042, 1042-S, 1042-T, W-7, W-8BEN, and Pub 515
    • Tax deposit schedules
    • Avoiding penalties and interest
    • End of year reconciliation of Forms 945 to W-2G and 1099-MISC and the various 1042 Forms
    • TIP compliance – Form 8027, TRDA and GITCA Tip Agreements
    • Title 31

 

Please contact Tricia Miller for additional information or to register.

 

Washington training opportunities

Basic/Advanced Payroll Tax/Information Returns Workshop
Location to be determined
September 10-11, 8:30 p.m. – 4:30 p.m. Pacific Time

Topics

    • How to avoid penalties and interest
    • Independent contractors versus employees
    • The IRS collections and notice process
    • Calculating employment tax liabilities
    • How to handle travel expenses
    • Employment tax deposit schedules
    • Preparation and filing of Forms 941, 945, W-2s and 1099s
    • End of year reconciliation of Form 941s and W-2s
    • Social Security – how to file W-2s electronically
    • Time is set aside on the second day to discuss any issues or problems you may have with IRS
    • Proper reporting of employee related payments:
      • 3rd party sick pay
      • Fringe benefits
      • Expense reimbursement
    • Proper reporting for non-employee payments:
      • Work experience/training payments
      • Scholarships
      • Expense reimbursement
      • Foreign workers
    • TIN matching
    • IRS exams and information document requests

 

Gaming Information Return Workshop
Location to be determined
September 12, 8:30 p.m. – 4:30 p.m. Pacific Time

Topics

    • Tax reporting for gaming related payments/activities: payments made to:
      • U.S. residents – Forms W-2G, 1099-Misc, 1096, W-9, 5754
      • Foreign persons – Forms 1042, 1042-S and T, W-7, W-8BEN,  Pub. 515
    • Tax deposit schedules
    • How to avoid penalties and interest
    • End of year reconciliation of Form 945 to W-2G and 1099-Misc and various 1042 forms
    • TIP compliance – Form 8027, TRDA and GITCA tip agreements

Please call (509) 623-4858 or e-mail Melodie Gren for additional information or to register.

Page Last Reviewed or Updated: 17-Oct-2013