IRC section 7871(e) states that the term "essential governmental function" shall not include any function which is not customarily performed by State and local governments with general taxing powers.
Treasury Regulation 305.7871-1(d) provides that an essential governmental function of an Indian tribal government (or portion thereof) is a function of a type which is:
- Eligible for funding under 25 U.S.C. 13 and the regulations thereunder;
- Eligible for grants or contracts under 25 U.S.C. 450 (f), (g), and (h) and the regulations thereunder; or
- An essential governmental function under IRC section 115 and the regulations thereunder when conducted by a State or political subdivision thereof.