ITG FAQ #5 Answer-How are tribal council member payments reported on Form W-2, Wage and Tax Statement?
Council members’ salaries will be shown in box 1, Wages, tips, other compensation, of the Form W-2. Additionally, in box 14, other, you should indicate Revenue Ruling 59-354. This will show why there are no amounts listed in the boxes for federal income tax withheld (box 2) or FICA (boxes 3, 4, and 7).
Part of your responsibility as an employer is to provide the council member with either a copy of the revenue ruling or a statement advising them that their Form W-2 is treated differently – salaries do not constitute wages for purposes of FICA or federal withholding taxes per Revenue Ruling 59-354. The council member should then attach a copy of the revenue ruling or statement to their individual tax return.