ITG FAQ #1 Answer-What types of Abusive Schemes are found in Indian Country?


One of the Internal Revenue Service's priorities is to combat abusive tax avoidance schemes and the individuals who promote them. The office of Indian Tribal Governments has identified various abuses and schemes that cause financial risk to tribes and tribal members. Examples of current abuses and schemes are listed below:

  • Claiming that Indians are not U.S. citizens and are therefore not subject to federal income taxation
  • Claiming membership in an unrecognized tribe that purports to have a special exemption from taxation
  • Disguising of enterprises to appear as tribally-owned in the belief that this will exempt them from federal or state regulation
  • Embezzlement from tribal enterprises
  • Use of tribal credit cards for personal gain
  • Use of a casino comp program for purposes unrelated to gaming play
  • Illegal activities (i.e. Bribes and Kickbacks)
  • Improper tax treatment of the use of net gaming revenue, including misclassified distributions to tribal members
  • Misrepresentation of federal status of tribe to attempt to obtain tax advantages
  • Misrepresentation of treaty provisions to claim improper tax relief
  • Claiming nonresident alien status through the filing of false Forms W-8BEN
  • Schemes related to Income derived from the land

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