Payments Native Americans receive from tribal trust accounts will generally not be considered gross income subject to federal taxes, according to a final notice issued by the Internal Revenue Service. The notice provides clarification and guidance on concerns that arose after some tribes reported receiving letters in April 2012 from the IRS saying that per capita payments from trust accounts are taxable contrary to the Per Capita Act of 1983.
The IRS previously issued a notice saying that per capita trust account payments from a $1 billion settlement the Obama administration made with 41 tribes in April 2012 would not be taxed by the federal government. However, the 2012 notice did not provide guidance on whether other per capita payments made by either the U.S. Department of the Interior or Indian tribes from the trust accounts are subject to tax. Mark Mazur, the U.S. Department of the Treasury’s assistant secretary for tax policy, said the new notice was informed by “extensive consultation with tribal governments, illustrating the value of these discussions to help us better understand the needs of tribal governments.”