A corporation formed by a tribe may be subject to federal income tax, depending on the form of the corporation. A tribe may incorporate in several ways, including:
- Indian Reorganization Act of 1934 - A corporation formed under section 17 of this act is not subject to federal income tax.
- Oklahoma Indian Welfare Act - A corporation formed by an Oklahoma tribe under section 3 of this act is not subject to federal income tax. Oklahoma tribes are not eligible to incorporate under the Indian Reorganization Act of 1934.
- State Chartered Corporation - A corporation formed under state law is ordinarily subject to federal income tax on income earned after October 1, 1994. Income earned before October 1, 1994 is not subject to tax.
- Tribal Law - This issue is currently under review by IRS Counsel and guidance will be issued in the near future.
Partner in a Partnership - A tribe that is a partner is not subject to federal income tax. However, a tribally owned state chartered corporation that is a partner is subject to tax on the distributive share of partnership income.