Indian Tribal Governments News

The IRS office of Indian Tribal Governments has updated Publication 4268, Employment Tax for Indian Tribal Governments (PDF). The revised publication:

• Provides information to tribes regarding employment tax matters as they pertain to federally recognized Indian tribes and their wholly-owned entities.
• Assists tribal entities in meeting their federal employment tax responsibilities.
• Provides key information on special topics related to tribal entities.
• Includes tips for maintaining good records and hyperlinks to the IRS publications and forms mentioned in the guide.

Includes information about the Tribal Social Security Fairness Act of 2018.

Impact of the Tribal Social Security Fairness Act on Worker Status for Tribal Council Members

This issue snapshot addresses questions concerning whether an Indian tribe's decision to enter into a 218A agreement and elect Social Security coverage for its tribal council members, or not enter such an agreement, affects the classification of those workers for other purposes of the Internal Revenue Code (IRC) such as income tax and retirement plan participation.

Indian Tribal Governments and Tax Exempt Bonds Reorganization

Effective November 24, 2019, the Office of Government Entities (GE) was reestablished and now includes separate offices for Tax Exempt Bonds (TEB) and Indian Tribal Governments (ITG). GE also has responsibilities for Federal, State and Local-Employment Tax (FSL-ET) and two correspondence units. The reorganization will help us serve our customers more efficiently. Angela Gartland is the acting Director of Government Entities. Allyson Belsome is the program manager for TEB. Telly Meier is the program manager for ITG. 

New Downloadable Assistant Helps Small Businesses Withhold the Right Amount of Income Tax

The Internal Revenue Service launched a new online assistant designed to help employers, especially small businesses, easily determine the right amount of federal income tax to withhold from their workers’ pay. Known as the Income Tax Withholding Assistant for Employers, this new spreadsheet-based tool is designed to help employers easily transition to the redesigned withholding system (no longer based on withholding allowances), which went into effect on January 1.

More information about the Income Tax Withholding Assistant for Employers, the redesigned 2020 Form W-4, and other tax topics of interest to employers and small businesses can be found on IRS.gov.

The IRS offers several free programs to help many taxpayers prepare their tax returns, including the Voluntary Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

ITG’s webpage, Volunteer Tax Assistance Resources for Indian Country, provides resources that can help taxpayers situated in or near Indian Country to prepare their income tax returns.

The webpage also includes a VITA-Site Locater which identifies some sites operating in or near Indian Country, which typically are staffed with volunteers familiar with the unique tax issues affecting Indian tribal members.

New IRS Publication 5343, Helpful Hints for Indian Tribes and Tribal Entities to Avoid Penalties on Federal Tax Deposits and Information Returns (PDF) , is now available on IRS.gov. This publication addresses common employment tax and information return penalties, including penalties for late or insufficient employment deposits and name and taxpayer identification mismatches. Publication 5343 also provides tips for responding to notices related to these penalties and avoiding similar future notices.  

Recently revised Publication 3908, Gaming Tax Law and Bank Secrecy Act Issues for Indian Tribal Governments (PDF) , is available on IRS.gov. This publication provides a guide for tribal casinos’ responsibilities related to federal employment taxes, Title 31 (Bank Secrecy Act), customer and vendor information return filing, and other federal tax responsibilities.

Issue Snapshots

Issue Snapshots provide IRS analysis and resources along with audit tips or issue indicators for technical tax issues. The snapshots are designed for IRS employees, but the information is also helpful for people interested in these issues. The most recent Issue Snapshots for Indian tribal governments are:

Availability of the Work Opportunity Tax Credit to Tribes and Tribal Entities

The Work Opportunity Tax Credit (WOTC) provides a business tax credit to certain employers who hire workers from certain targeted groups. The WOTC is generally claimed as a credit against income tax.

Per Capita Distributions on Net Gaming Profits and the Kiddie Tax

Per capita distributions from net casino profits made to certain children are subject to a special tax calculation commonly referred to as the “kiddie tax”. For taxable years before 2018, the tax is based on the parent’s rate if the parent’s rate is higher than the child’s rate. For taxable years 2018 through 2025, children required to make this calculation may be subject to tax based on tax rates normally applicable to trusts and estates.

Notice 2019-39 (PDF)

Notice 2019-39 clarifies the rules that apply to current refundings for targeted bond programs, including Tribal Economic Development Bonds (TEDBs). This notice is in response to requests for clarification on whether bonds for certain targeted bond programs may be refinanced without applying for a new allocation of volume cap.

It provides guidance on refinancings of TEDBs and targeted bonds for disaster relief bond programs, generally eliminating the need to provide guidance on a program-by-program basis.

This notice applies to all current refunding issues that are issued on or after May 22, 2019. Issuers may also apply this notice to current refunding issues that are issued before May 22, 2019.

The IRS Indian Tribal Governments office added new links to Social Security information for American Indians and Alaska Natives at IRS.gov/tribes .

• American Indians and Alaska Natives (AIAN) connects American Indians and Alaska Natives to information about their Social Security benefits.
• Tribal Social Security Fairness Act of 2018 (PDF) provides more information about the Tribal Social Security Fairness Act of 2018, including regional contact information for Indian tribes wishing to offer Social Security coverage to tribal council members.

National Tax Security Awareness Week
The IRS released a series of News Releases and Tax Tips to encourage individual and business taxpayers to take steps to protect data and identities in advance of the 2019 filing season.

Tribal Social Security Fairness Act of 2018

The Tribal Social Security Fairness Act of 2018 authorizes the Social Security Administration (SSA) to enter into voluntary agreements with Indian tribes to provide individual tribal council members with Social Security benefits.

As SSA releases more details on how to enter into a voluntary agreement, IRS will provide you with additional information.

Publication 5287, Employment Tax Video Guides for Indian Tribal Governments (CD-ROM)

Order the Publication 5287 CD-ROM, with 12 employment tax video guides for Indian tribal employers, by calling 800-829-3676 . You can also view these guides online at Indian Tribal Governments Resources .

Indian Tribal Governments Gaming Compliance Tools

Check out these interactive web tools to help the tribal gaming community comply with federal reporting rules.

• Title 31, Bank Secrecy Act - Tribal casinos meet Title 31 recordkeeping and reporting obligations.
• Tip Income Reporting - Tribal employers and employees record and report tip income.
• Information Return Reporting - Tribal casinos meet recordkeeping and reporting obligations.

Issue Snapshots

Issue Snapshots are IRS employee job aids that provide analysis and resources along with audit tips or issue indicators for technical tax issues. The most recent Issue Snapshots for Indian tribal governments are:

IRC Section 7873 – Treaty Fishing Rights-Related Income
Certain income from a tribal fishing rights-related activity that’s earned by a qualified Indian entity, or by a tribal member directly or through a qualified Indian entity, is exempt from federal, state and local taxes.

IRC Section 414(d) – Governmental Plans for Tribes
This snapshot discusses the types of retirement plans an Indian tribal government may offer and when those plans may be treated as governmental plans.

Revenue Ruling 59-354 – Tribal Council Members’ Wages
Amounts paid to Indian tribal council members for their tribal council service is includible in gross income; however, they are not considered wages subject to withholding for Social Security, Medicare and federal income tax reporting.

FUTA Exemption for Indian Tribal Governments
Indian tribal governments are exempt from tax under the Federal Unemployment Tax Act (FUTA), provided the tribes are fully compliant with the applicable State Unemployment Insurance. This exemption applies to any subdivision, subsidiary or business enterprise wholly owned by the tribe.

Indian Tribal Governments Gaming Compliance Tools

The IRS office of Indian Tribal Governments has three new interactive web tools to help the Indian tribal gaming community comply with federal reporting rules.

• Title 31, Bank Secrecy Act - This module provides information and links to additional resources to help tribal casinos determine their Title 31 recordkeeping and reporting obligations.
• Tip Income Reporting - This module provides information and links to additional resources to help tribal employers and employees properly record and report tip income.
• Information Return Reporting - This module provides information and links to additional resources to help tribal casinos meet their recordkeeping and reporting obligations.

These tools and other information for Indian tribes and tribal casinos are available at Indian Tribal Government Resources and IRS.gov/tribes .

Form 1042-S Webinars

Watch the latest recorded webinars for Indian tribal governments. Find these presentations and more on the IRS Video Portal .

• Form 1042-S Filing Tips for Tribes - Learn about Form 1042-S pitfalls, consequences of Form 1042-S errors and filing procedures to avoid mistakes.
• Income Tax Withholding on Foreign Persons Forms 1042-S and 1042  - Learn about the tax treatment of payments to non-resident aliens and foreign persons.

Issue Snapshots

Issue Snapshots are IRS employee job aids that provide analysis and resources along with audit tips or issue indicators for technical tax issues. The most recent Issue Snapshot for tribal governments is:

• IRC Section 7871 – Treatment of Indian Tribes as States - Indian Tribes are treated as states for certain purposes in the Internal Revenue Code. Indian tribes and their wholly owned entities are not subject to income tax, except for businesses incorporated under state law.

Join the IRS for a National Paycheck Checkup Thunderclap

We invite you or your group to join @IRSnews in support of the IRS Thunderclap effort promoting a national “Paycheck Checkup” on March 29. Following major tax law changes, workers should review their withholding to make sure they have the right amount of tax taken out of their paychecks.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable credit. Workers may get money back even if they have no tax withheld. Each year, millions of eligible workers don’t claim the EITC because they are newly qualified or don’t otherwise need to file a tax return.

Workers who work for someone else or own or run their own business or farm and earned $53,930 or less in 2017 should use the EITC Assistant to see if they qualify for the credit. You must file a return and specifically claim the EITC even if you aren’t required to file.

It’s not too late to file prior year returns to claim EITC if you were eligible, but time is running out:

• For 2014, file or amend your tax return by April 17, 2018;
• For 2015, file or amend your tax return by April 18, 2019;
• For 2016, file or amend your tax return by April 18, 2020.

Refunds Worth $1.1 Billion Waiting to be Claimed

Unclaimed federal income tax refunds totaling $1.1 billion may be waiting for one million taxpayers who did not file a 2014 federal income tax return. Time is running out. To collect these refunds , taxpayers must file their 2014 tax return by April 17, 2018.

Protect Yourself from Identity Theft

The IRS reminds you that every year, people fall prey to tax scams. Three of the scams on the list of 2018 Dirty Dozen Tax Scams include:

• Phone Scams - Callers claiming to be IRS officials threaten police arrest, deportation or license revocation if the victim doesn’t pay a bogus tax bill.
• Phishing - Taxpayers need to be on guard against fake emails or websites looking to steal personal information. Criminals may pose as a person in your organization you trust or recognize, requesting sensitive information.
• Identity Theft - Criminals sometimes file fraudulent returns using information from a phishing scam, with a refund being deposited into the taxpayer’s bank account. They then use a phone scam to claim to be the IRS and ask for that money back.

Publication 5287, Employment Tax Video Guides for Indian Tribal Governments (CD-ROM)

The IRS office of Indian Tribal Governments has released a new CD-ROM with 12 employment tax video guides to help Indian tribal employers properly withhold, deposit and report federal taxes for their employees. Learn more about what to do when you hire and pay employees, including how to:

• distinguish between employees and contractors,
• withhold taxes and make payments to the U.S. Treasury, and
• meet all your reporting requirements.

Order the Publication 5287 CD-ROM by calling 800-829-3676 . You can also view these guides online at Indian Tribal Governments Resources . Please share this information with tribes that may not be receiving our ITG news.

Tuition and Other Educational Benefits Provided by Tribes, Form 1098-T

Tuition and other educational benefits provided by Indian tribes to tribal members pursuant to the Tribal General Welfare Exclusion Act of 2014 (the Act) are not taxable and not subject to information reporting requirements if such benefits meet the requirements of the Act. Tribal students that receive these educational benefits paid by the tribe should not include them on their federal tax return even if they’re shown on a Form 1098-T, Tuition Statement, from the educational institution. Read this article for a complete discussion.

EITC Awareness Day Thunderclap

The IRS office of Indian Tribal Governments invites you to join us in raising awareness of the Earned Income Tax Credit by signing up for our EITC Awareness Day Thunderclap before January 26 (by noon). Our Native American communities are especially at risk for overlooking this important tax credit.

Thunderclap is a crowd speaking social media platform that allows people to support a tweet, Facebook or Tumblr message all at the same time. Think of it as a massive flash mob on social media. It’s completely safe and will automatically post one message on your own social media account. Here’s how to sign up for the EITC Awareness Day Thunderclap:

1. Follow this link: http://bit.ly/2D2FlXR
2. Click on “Support with” … Facebook, Facebook Page, Twitter or Tumblr
3. Authorize Thunderclap to post this one-time message to your social media platform by clicking on the “Add My Support” tab. You’ll need to input your social media username and password.

A message will be set to go out on EITC Awareness Day, Friday, January 26, 2018, at 1:00 p.m. EST . It will blast out automatically to each organization and person who backed the cause, which in turn reaches every one of their friends, followers and beyond…all at the same time. Thunderclap will amplify the message throughout all social media. Please consider participating.

We will flood Twitter, Facebook and Tumblr with this message:

“On #EITCAwarenessDay, help #IRS put money in the pockets of working Americans who are eligible. http://thndr.me/7qYUfl ”

The link in the message takes you to the IRS EITC resources webpage. It couldn’t be any easier to get the word out about this important tax credit. The more people who sign up, the louder our Thunderclap will be.

IRS will also issue several EITC news releases aimed at working grandparents, Tribal and rural communities, and military families. These news releases will be available at www.irs.gov/newsroom as part of EITC Awareness. Thank you for your consideration and continued partnership.

Senior Treasury officials and the Internal Revenue Service will host an in-person listening session on Monday, December 4, from 9:30 – 11:30 a.m. EST, to discuss general federal tax issues related to current tax reform efforts. The issues may include: 

• economic development incentives in Indian country
• permanent extension of Indian employment tax credit and acceleration depreciation on Indian lands
• tax constraints on tribal lands and tribal businesses
• financing tools and the need for tribal parity

Registration is required by Tuesday, November 28th. Please email your contact information to TRIBAL.CONSULT@treasury.gov . You will receive a phone call to collect your personal information for clearance into the Treasury building. This event will not be accessible by phone.