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Part 21. Customer Account Services

Chapter 3. Taxpayer Contacts

Section 8. Tax Exempt/Government Entities (TE/GE) Customer Account Services (CAS) Telephone Operations (Cont. 4)

21.3.8  Tax Exempt/Government Entities (TE/GE) Customer Account Services (CAS) Telephone Operations (Cont. 4)

21.3.8.14 
SECTION 527 ORGANIZATIONS

21.3.8.14.6  (03-06-2007)
Filing Requirements for Political Organizations

  1. Refer to the following table for Political Organizations filing requirements:

    Section 527 Filing Chart
    ORGANIZATION Receipts Form 8871 Form 8872 Form 1120–POL Form 990
    EXEMPT 501(c) (see "note" below) Gross receipts of $25,000 or less NO NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    EXEMPT 501(c) (see "note" below) Gross receipts over $25,000 NO NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. YES
    REQUIRED TO REPORT UNDER FEDERAL ELECTION CAMPAIGN ACT (FECA) All Gross Receipts NO NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    CAMPAIGN COMMITTEES OF STATE AND LOCAL CANDIDATES All Gross Receipts NO NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    STATE OR LOCAL COMMITTEE OF POLITICAL PARTIES All Gross Receipts NO NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    QUALIFIED STATE OR LOCAL POLITICAL ORGANIZATION (QSLPO)
    Note: An organization may be both a QSLPO and a caucus or association of state or local officials. If so, it is not required to file Form 8872 or Form 990.     		Gross receipts between $25,000 and $100,000 YES NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    QUALIFIED STATE OR LOCAL POLITICAL ORGANIZATION (QSLPO)
    Note: An organization may be both a QSLPO and a caucus or association of state or local officials. If so, it is not required to file Form 8872 or Form 990.     		Gross receipts over $100,000 YES NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. YES
    CAUCUS OR ASSOCIATION OF STATE OR LOCAL OFFICIALS
    Note: An organization may be both a QSLPO and a caucus or association of state or local officials. If so, it is not required to file Form 8872 or Form 990.     		Gross receipts of $25,000 or less NO NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    CAUCUS OR ASSOCIATION OF STATE OR LOCAL OFFICIALS
    Note: An organization may be both a QSLPO and a caucus or association of state or local officials. If so, it is not required to file Form 8872 or Form 990.     		Gross receipts over $25,000 YES YES Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    OTHER 527 ORGANIZATIONS Gross receipts under $25,000 NO NO Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. NO
    OTHER 527 ORGANIZATIONS:
    Gross receipts over $25,000    		 YES YES Form 1120–POL is required if the political organization has taxable income over $100, regardless of its gross income amount. YES

  2. For due dates and other information relating to reporting, see Rev. Rul. 2003–49 or IRB 2003-20 and/or the applicable form and instructions.

    Note:

    501(c) organizations are taxed under IRC 527(f) only on their exempt function expenditures or their net investment income, whichever is less. 501(c) organizations must report this income on Form 1120–POL. 501(c)(3)'s are not permitted to intervene in any political campaigns.

21.3.8.14.7  (10-01-2007)
Penalty Reasons and Amounts for Political Organizations

  1. Use the following table to determine penalty reasons and amounts for Political Organizations:

    Form Reason for Penalty Amount of Penalty
    8871 Failing to file Form 8871 electronically and Form 8453–X authentication by paper within:

    • 24 hours of formation when the annual gross receipts are anticipated to be $25,000 or more.

    • 30 days from the date of receiving $25,000, when the annual gross receipts were originally anticipated to be less than $25,000.

    		 1. Organization is be treated as a section 527 organization for any period before the date Form 8871 is filed.
    2. The taxable income of the organization is its exempt function income (including contributions received, membership dues, and political fund raising receipts) minus any deductions directly connected with the production of that income.
    3. The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate.
    8872 1. Failing to file the form (when required to do so) by the due date.
    2. Filing the form but failing to report all of the information required or reporting incorrect information.     		The penalty is 35% of the total amount of contributions and expenditures to which a failure relates.
    1120–POL 1. Failing to file the form (when required to do so) by the due date.
    2. Filing the form but failing to report all of the information required or reporting incorrect information.     		1. For Organizations with gross receipts of $1,000,000 or less:

    • $20 per day for each day such failure continues up to a maximum for any one return of the lesser of $10,000 or 5% of the gross receipts of the organization for the year.


    2. For Organizations with gross receipts exceeding $1,000,000:

    • $100 per day for each day such failure continues up to a maximum for any one return of $50,000.
      Failing to pay the tax when due. One half (1/2) of 1% of the unpaid tax for each month or part of a month the tax is not paid up to a maximum of 25% of the unpaid tax.

    • The penalty will not be imposed if the organization can show that the failure to pay on time was due to reasonable cause.
    990/990–EZ 1. Failing to file the form (when required to do so) by the due date.
    2. Filing the form but failing to report all of the information required or reporting incorrect information.     		1. For Organizations with gross receipts of $1,000,000 or less:

    • $20 per day for each day such failure continues up to a maximum for any one return of the lesser of $10,000 or 5% of the gross receipts of the organization for the year.


    2. For Organizations with gross receipts exceeding $1,000,000:

    • $100 per day for each day such failure continues up to a maximum for any one return of $50,000.

  2. Rev. Proc. 2007–27, found in IRB 2007–14, sets forth the elements of a safe harbor under section 527(l) of the Internal Revenue Code for waiver of amounts due for failure to comply with certain reporting requirements due to reasonable cause but not to willful neglect.

21.3.8.14.8  (05-17-2007)
Requests for 527 Web Updates and Troubleshooting Calls

  1. If a phone call is received requesting miscellaneous Web updates or reporting problems, proceed as follows:

    If a political organization calls Then
    Regarding how to utilize/search the www.irs.gov/polorgs Web site, Refer the caller to AFFINA (IRS.gov help desk) at (800) 876-1715 for assistance.
    Regarding computer difficulties, error messages, password input generated incorrect EIN and/or name, filing does not appear on the Web and a confirmation was received, etc. 1. Obtain the following information from the caller:

    • Name

    • EIN

    • Phone Number

    • Problem Description


    2. Give the information to management who will contact ACCENTURE at (703) 947-3334 from 8:30 a.m. - 5:30 p.m. M-F eastern time with the information contained in (1) above.

    Note:

    This phone number is for internal use and should NOT be given to the public.


    3. Advise the caller he/she will be contacted by ACCENTURE no later than the next business day.
    Regarding an unanswered E-mailthat was sent to tege.eo.527@irs.gov 1. Prepare a Form 4442, Referral, capturing the day, time, and contents of the E-mail message.
    2. Fax Form 4442 to EO Entity at (801) 620-3249.
    3. Advise the caller that he/she will be contacted within 30 days.
    Requesting an address change 1. Advise the caller to E-mail the requested change to tege.eo.527@irs.gov.
    2. If the organization prefers, prepare a Form 4442 requesting the change be made to Master File and/or the ORACLE database.
    3. Fax the completed Form 4442 to EO Entity at (801) 620-3249.
    4. Advise the caller the correction will be made within 30 days of receipt of the request.
    Requesting a name change 1. Advise the caller to submit the request, along with any required information (e.g., amended organizing documents, etc.), in writing to EO Entity at IRS, MS 6273, Ogden, UT 84201.
    2. If preferred, the caller may fax the request to EO Entity at (801) 620-3249.
    3. Advise the caller the correction will be made within 30 days of receipt unless additional information is required.
    Requesting a password 1. If the organization has not filed Form 8871 or Form 8453-X, advise the caller he/she must file both forms to receive a password.
    2. If the organization has filed only a Form 8871, advise the caller he/she must file Form 8453-X to receive a password.
    3. If the organization has filed both Form 8871 and Form 8453-X and has not received his/her password or needs a new password reissued:

    1. Advise the caller to fax a written request to EO Entity at (801) 620-3249.

    2. If the organization prefers, prepare a Form 4442 requesting a password be issued to the organization.

    3. Fax the completed Form 4442 to EO Entity at (801) 620-3249.

    4. Advise the caller he/she will receive a password by mail within 30 days of receipt of request.

  2. Send all written requests to:

    Sent via US Postal Service:
    Internal Revenue Service
    Ogden, UT 84201     		Sent via private delivery service (e.g., UPS, Fed Ex, etc.):
    Internal Revenue Service
    1973 N Rulon White Blvd
    Ogden, UT 84404

21.3.8.15  (10-01-2006)
FEDERAL, STATE, AND LOCAL GOVERNMENTS (FSLG)

  1. This section serves as a guide for performing tasks involved in addressing general issues related to the office of Federal, State, and Local Governments (FSLG).

  2. The office of Federal, State, and Local Governments has responsibility for providing Federal tax compliance assistance to four distinct customer market segments:

    1. Federal agencies

    2. State agencies

    3. Local government

    4. Quasi-governmental entities

21.3.8.15.1  (10-01-2006)
Governmental Employers by State

  1. A list of documented government employers can be found in the Statistical Abstract, U.S. Bureau of the Census (www.census.gov). To identify the specific entities, locate a list of state departments in the state and identify who works with employers. Start with the obvious, such as the state department of labor and employment, and contact others, such as the Department of Local Affairs (Intergovernmental Agency). Determine if any government types are not included in the existing lists and gather lists from appropriate source(s), such as school districts.

21.3.8.15.2  (10-01-2006)
Employment Codes for Government Entities

  1. FSLG agencies have an employment code of "F," "G," or "T."

    Alpha Code Numeric Code Type of Employer
    F 6 Federal Employer
    G 7 State or Local Government Agency
    T 1 State or Local Government Agency covered under Section 218 agreement

  2. Employment Code "F" is assigned to an executive department of the U.S. government or component agency of the government, such as:

    • Billeting Funds

    • Department of Agriculture

    • Department of Commerce

    • Department of Defense

    • Department of Education

    • Department of Health and Human Services

    • Department of Housing and Urban Development

    • Department of Justice

    • Department of Labor

    • Department of State

    • Department of the Air Force

    • Department of the Army

    • Department of the Interior

    • Department of the Navy

    • Department of the Treasury

    • Department of Transportation

    • Department of Veterans Affairs

    • Enlisted Men's Club

    • Federal Deposit Insurance Corporation

    • Federal Home Loan Bank

    • Federal instrumentalities, such as Army and Air Force Post Exchange, Navy or Coast Guard Ship Stores, and Army and Air Force Motion Picture Services and the Navy counterpart

    • Federal Power Commission

    • Federal Reserve Board

      Exception:

      Individual Regional Federal Reserve Banks

    • Federal Trade Commission

    • General Accounting Office

    • General Services Administration

    • Interstate Commerce Commission

    • Library of Congress

    • National Aeronautics and Space Administration

    • NCO Clubs

    • NCOs Open Mess

    • Office of Economic Opportunity

    • Officers Clubs

    • Officers Open Messes

    • Securities and Exchange Commission

    • Smithsonian Institution

    • Tennessee Valley Authority

    • U.S. Atomic Energy Commission

    • U.S. Court of Appeals

    • U.S. District Court

    • U.S. Postal Service

    • U.S. Small Business Administration

    • U.S. Tax Court

  3. Employment Code "G" is assigned to all state and local government agencies, such as:

    • Agency, bureau or department of a state or commonwealth

    • Agency, bureau, board, or department of a county

    • Agency of a local government, such as a school district, board of education, public school, sanitation district, transit authority, welfare department, housing authority, cemetery, soil or water conservation district, water district, community service district health department

    • County

    • Municipality, town, village, township or any like unit of local government, such as a fire department or police department

    • State or commonwealth

  4. The G-coded agency determines if it is responsible for Social Security or Medicare taxes. No section 218 agreement is entered into.

    Note:

    If a state or local government instrumentality requests and receives an exemption under section 501(c)(3) of the I.R.C., Employment Code will remain a "G." See IRM 3.13.12, Exempt Organization Account Numbers (Entity), for additional information.

    Caution:

    A coding error in the field may have occurred during the exemption closing process resulting in an Employment Code "W" being assigned. If a nongovernmental entity's name appears governmental in nature, it may erroneously be "G" coded (e.g., State of Ohio Boys League could mistakenly be identified as a governmental entity).

  5. Employment Code "T" is assigned to state and local governmental agencies that obtain Social Security coverage for employees under a section 218 agreement between the state and the Commission of Social Security. Under 42 U.S.C. 418, they pay Social Security tax directly to IRS.

    • This employment code is established after OSPC receives notification from National Office that a Section 218 Agreement has been entered into by a state or local government agency.

    • This code may also be established if correspondence is received from a state administrator.

21.3.8.15.3  (10-01-2006)
Miscellaneous FSLG Calls and Written Referrals

  1. After giving the telephone number for the FSLG Management Assistant, advise the customer that if he/she receives a voice mail, he/she should leave a message. Advise the caller that he/she will be contacted within two business days.

  2. If a customer calls, indicating it has been over 4 business days since he/she left a message and he/she has not received a return call, refer the matter to your manager.

  3. If the customer does not want to place a toll call to contact an FSLG Management Assistant, complete a referral Form 4442 and fax it to the FSLG Management Assistant. Refer to your Ready Reference Guide for a list of FSLG Management Assistant referral numbers.

  4. See IRM 21.3.8.15.9, "FSLG Telephone Calls," for examples and additional information.

21.3.8.15.4  (10-01-2007)
Publications for FSLG

  1. A useful publication for FSLG customers is Publication 963, Federal-State Reference Guide.

  2. The Federal-State Reference Guide provides state and local government employers a comprehensive reference source for social security and Medicare coverage and Federal Insurance Contributions Act (FICA) tax withholding issues. This guide is a cooperative effort of the Social Security Administration (SSA), the Internal Revenue Service (IRS), and the National Conference of State Social Security Administrators (NCSSSA). Topics addressed in this publication include determining worker status, public retirement systems, social security and Medicare coverage and benefits, Section 218 Agreements, employment tax laws and other tax issues. This publication also contains contact telephone numbers and an address where customers can write for additional information.

21.3.8.15.5  (10-01-2007)
Quasi-Governmental Entities

  1. The following are examples of Quasi-Governmental Entities:

    • African Development Foundation

    • Commodity Credit Corporation

    • Export-Import Bank of the United States

    • Federal Election Commission

    • Government National Mortgage Association

    • National Credit Union Administration Central Liquidity Facility

    • National Railroad Passenger Corp. (Amtrak)

    • Overseas Private Investment Corp.

    • Rural Telephone Bank

    • St. Lawrence Seaway Development Corp.

  2. When issuing a letter, use Letter 4076C (Affirm Instrumentality Letter) for all FSLG entities without EO submodules, regardless of their employment code.

21.3.8.15.6  (10-01-2006)
Revenue Procedure 91-40

  1. Revenue Procedure 91–40 sets forth rules relating to the minimum retirement benefit requirement prescribed under section 31.3121(b)(7)-2 of the Employment Tax Regulations.

21.3.8.15.7  (11-24-2006)
State Social Security Administrator Responsibilities

  1. Each state designates, in statute, a State official (State Social Security Administrator) to act for the State in negotiations with the SSA and the administrator. This official acts for the State with respect to the initial Federal-State (Section 218) Agreement, modifications, the performance of the State's responsibilities under the agreement, and in all State dealings concerning the administration of the Agreement. Each State's Section 218 Agreement and Social Security Regulations section 404.1204 provide a legal obligation for each state to designate such an official.

  2. The Administrator serves as the main source to state and local employers for information and advice about Social Security coverage, taxation and reporting issues that could not be easily obtained elsewhere.

  3. A list of the State Social Security Administrators can be found at www.ncsssa.org.

21.3.8.15.8  (05-01-2007)
Telephone Tax Refunds for Government Entities

  1. State and local government entities are exempt from all telephone taxes for their governmental functions under section 4253(i).

  2. Government entities that paid the excise tax in error may request a refund directly from their telephone service provider.

  3. If the government entity chooses to request the refund of erroneously-paid telecommunications excise tax from the IRS, it must:

    1. Fill out Form 8849 Schedule 6 with the amount to be refunded, completing a separate line for each period for which it is requesting a refund.

    2. Annotate the top of Form 8849 in red with "Not a Notice 2006-50 Claim."

    3. Complete the identifying information at the top of the form, check the box for Schedule 6, and sign and date the return.

    4. Indicate on the form that the request is being filed pursuant to IRC section 4253(i). Attach Schedule 6 to Form 8849 and mail to:
      Internal Revenue Service
      Cincinnati, OH 45999-0002

    5. Indicate that the telephone service provider erroneously imposed the telecommunications excise tax on the government entity.

      Note:

      The government entity should disregard the "caution" on page 2 of the Form 8849 instructions, as this is directed to Notice 2006-50 requests.

  4. Federal credit unions and Indian tribal governments are also exempt from the telecommunications excise tax and must follow this same procedure to request a refund.

  5. Government entities, Federal credit unions, and Indian tribal governments cannot use Form 990-T to request a refund of the telephone tax.

  6. Additional details are available at www.irs.gov.

21.3.8.15.9  (10-01-2007)
FSLG Telephone Calls

  1. Use the following text for guidelines concerning FSLG inquiries:

    Frequently Asked Questions
    If the Customer Then
    Is questioning provisions of a Section 218 Agreement Provide the customer the telephone number and the name of the FSLG Management Assistant for the state where the employer is located.
    Wants to know if he/she is covered by a Section 218 Agreement Research IDRS for Employment Code "T" If no employment code "T" , provide the customer the telephone number and name of the FSLG Management Assistant for the state where the employer is located.
    Is questioning if certain categories of employees are covered under Social Security Question the customer as to whether the employer(s) has entered into a Section 218 Agreement.
    If NO, Transfer the call to the Employment Tax Application using the TTG (Telephone Transfer Guide).
    If YES, provide the customer the telephone number and name of the FSLG Management Assistant for the state where the employer is located.
    Is a governmental or a quasi-governmental agency and is requesting a tax exemption letter or an affirmation letter of tax exemption Ask the customer the basis for the entity's exemption or exclusion from income tax. Generally, a governmental or quasi-governmental agency has an exemption or exclusion from income tax if it is a state or political subdivision of a state or it is an organization to which section 115 applies.
    STATEorPOLITICAL SUBDIVISION:
    The IRC does not generally impose federal income tax on a state, a political subdivision of a state, or an agency that is an integral part of a state. A letter ruling or a general information letter may be requested, but is not required.
    SECTION 115:
    Organizations to which Section 115 applies are not required to pay federal income tax. Section 115 applies to an organization that performs an essential governmental function and whose income accrues to a state or a political subdivision of a state. Organizations within the scope of Section 115 include insurance risk pools that insure city or county governments, local economic development agencies and associations whose members are all political subdivisions or other government bodies. A letter ruling may be requested, but is not required.
    Issue the appropriate instrumentality or affirmation letter if necessary. See IRM 21.3.8.7.3, "Choosing the Appropriate Letter."
    Provide the customer the telephone number and name of the Management Assistant for his/her state for future reference.
    Wants to know how to apply for a Section 218 Agreement Go to www.ncsssa.org, click on the menu item "State Administrators" and then provide the customer the telephone number and name of the State Social Security Administrator for his/her state.
    Is inquiring about his/her filing requirement for filing Form 940 (Federal Unemployment Tax Return) Transfer the call to the Employment Tax Application using the TTG.
    Is inquiring about the deposit requirements for Form 941 (Employer's QUARTERLY Federal Tax Return) Transfer the call to the Employment Tax Application using the TTG.
    Is inquiring about withholding requirements for non resident aliens Transfer the call to the Employment Tax Application using the TTG.
    Is inquiring how to handle advance earned income credit for his/her employee Transfer the call to the Employment Tax Application using the TTG.
    Is requesting information on Backup Withholding Requirements Transfer the call to the Employment Tax Application using the TTG.
    Is inquiring if he/she is liable for excise tax Transfer the call to the Excise Application using the TTG. If unable to transfer, provide the customer the toll free number: 1–866–699–4096.
    Is requesting to contact the specialist in his/her respective state Provide the customer the telephone number and name of the FSLG Management Assistant for the state where the employer is located.
    Is requesting information on technical or procedural issues relating to FSLG Provide the customer the telephone number and name of the FSLG Management Assistant for the state where the employer is located.

21.3.8.16  (10-01-2007)
INDIAN TRIBAL GOVERNMENTS (ITG)

  1. This section serves as a guide for performing tasks involved in addressing general issues related to Indian Tribal Governments and related entities.

21.3.8.16.1  (10-01-2007)
Mission of Indian Tribal Governments

  1. The mission of the office of Indian Tribal Governments (ITG) is to provide ITG customers top quality service by helping them understand and comply with applicable tax laws and to protect the public interest by applying the tax law with integrity and fairness to all. The office of ITG is actively developing a functional and interactive government-to-government relationship between the IRS and Indian Tribal Governments.

  2. ITG continues working with tribes to minimize intrusions. While the IRS has enforcement authority, it is ITG's objective to work with tribes to mitigate the need for enforcement.

21.3.8.16.2  (10-01-2007)
Role of Indian Tribal Governments

  1. The office of ITG has responsibility for all aspects of Federal tax administration as it applies to tribal governments. This includes:

    • Employment tax

    • Excise tax

    • Information reporting returns

    • Identification and education of tribal entities which are subject to anti-money laundering statutes and regulations

    • Any other Federal return filed by a tribal government

  2. In some cases, the ITG specialist may be involved in income tax problems.

  3. The office of ITG also conducts specialized outreach presentations.

  4. Additional information can be found on ITG's Web site at www.irs.gov/tribes.

21.3.8.16.3  (10-01-2007)
ITG Tax Issues

  1. Income of Indian tribal governments — Generally, the income of Indian tribal governments is not subject to federal income tax. (It is not accurate to say that it is "exempt." )

  2. Deductibility of contributions — A contribution to an Indian tribal government for a public purpose is a charitable contribution deductible under IRC section 170(c)(1).

  3. Tax-exempt bonds — A tribal government can issue tax-exempt bonds. However, it cannot issue tax-exempt obligations of every kind (IRC section 7871(c)).

  4. Excise Taxes — Indian tribes are not exempt from Federal excise tax. Absent a specific statutory exemption, Indian tribal governments must pay tax on their sale or use of taxable articles or services. See Rev. Rul. 94–81, 1994–2 C.B. 412, for additional information. See IRM 21.3.8.16.6, Wagering Excise Taxes — Sections 4401(a)(1) and 4411, for additional information.

    Note:

    Indian Tribal Governments are exempt, in some cases, from the Federal telecommunications excise tax imposed by section 4251(a) on amounts paid for communication services. See sections 4253(i) and 7871(a)(2)(C). The exemption applies only when the underlying transaction involves the exercise of an essential government function of the Indian tribal government. See section 7871(b). See IRM 21.3.8.15.8. for the procedure for requesting a refund of erroneously-paid tax.

21.3.8.16.4  (10-01-2006)
Employment Codes for Indian Tribal Governments

  1. Employment Code "I" on CC INOLE indicates that the entity is either the tribe itself or any wholly-owned subsidiary or entity.

  2. If the tribal government entity is exempt under IRC section 501(c)(3) and has paid employees, the Employment code will be "W." A tribal entity exempt under IRC section 501(c)(3) with an employment code of "W" is a customer of Exempt Organizations (EO), not ITG.

  3. In most cases the Form 940 filing requirement code will be "3," indicating that the organization has elected not to be subject to Federal Unemployment Tax Act (FUTA) and is paying into the state unemployment system.

21.3.8.16.5  (10-01-2006)
Exemption from FUTA

  1. Under current law, Federally-recognized Indian tribal governments and their subdivisions, subsidiaries, and wholly-owned business enterprises are exempt from FUTA and can elect to participate in a state unemployment fund (SUTA) or in a reimbursement program. The SUTA exemption is an entity-by-entity election. If an election is made, the entity is exempt from FUTA only if it is a full participant in SUTA or in a reimbursement option with the state, and all SUTA liabilities are fully paid. For guidance, refer customers to Announcement 2001-16, 2001-I C.B.71. ITG has furnished a helpful reference in Q & A format which is available at the ITG Web site at www.irs.gov/tribes.

  2. See IRM 4.88.1.2.2, Indian Tribal Governments Examination Issues and Procedures - Federal Unemployment Tax Act (FUTA), for additional information.

21.3.8.16.6  (10-01-2006)
Publications for Indian Tribal Governments

  1. Some useful publications for ITG customers include:

    1. Pub. 3747, Indian Tribal Governments

    2. Pub. 3908, Gaming Tax Law for Indian Tribal Governments

    3. Pub 4268, Employment Tax Desk Guide for Indian Tribal Governments (this publication is not in print but can be found on the ITG Web site at www.irs.gov/tribes).

  2. These publications contain contact telephone numbers and an address where customers can write for additional information.

21.3.8.16.7  (10-01-2006)
Tax Liabilities of Tribal Members

  1. Generally, individual tribal members are subject to Federal income and Social Security taxes on their earnings, but there are exceptions. For example, compensation paid by tribes to tribal council members is exempt from FICA, Federal Income tax withholding, and Medicare (Revenue Ruling 59-354, 1959-2 C.B. 24). This is a complex subject, and should normally be referred to an ITG Specialist or an ITG manager.

  2. If an Indian tribal member is requesting information on Federal tax-exemption of income, refer to the following table:

    If requesting information on Then respond as follows
    How income relates to the tribal government itself Monies received directly by a Federally-recognized Indian tribe are not generally subject to Federal income taxation at the tribal level, regardless of the source. However, any distributions made from such funds to individuals (including tribal members) may be taxable. If a distribution to an individual is at issue, post-route the caller using the TTG.
    How to apply for tax-exempt recognition of a new organization that is not an integral part of the tribal government Determine the type of organization that is being established to determine whether it might qualify for tax-exempt recognition. Refer caller to the appropriate application. Also offer to order forms/pubs for the caller.
    On his or her own personal tax liability (i.e., 1040 questions) Post-route the caller using the TTG.

  3. The exemption of Na