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Treasury, IRS issue proposed regulations on Tribal General Welfare Benefits 

WASHINGTON — Today the Department of the Treasury and the Internal Revenue Service issued proposed regulations for Tribal General Welfare Benefits. Section 139E of the Internal Revenue Code was enacted by the Tribal General Welfare Exclusion Act of 2014 (Act) and excludes from gross income the value of any Tribal General Welfare Benefit. 

As described in the Consultation and Federal Feedback summary, the proposed regulations are the result of long-term efforts by Treasury, IRS, the Treasury Tribal Advisory Committee (TTAC), Tribes and Tribal Leaders.  

Deference to Indian Tribal governments

Reflecting constructive input from the TTAC and Tribal Leaders, the proposed regulations affirm the views of Treasury and IRS that the Indian Tribal governments themselves are in the best position to determine support for their Tribal citizens. Thus, under the proposed regulations, Indian Tribal governments have flexibility to design general welfare programs that consider the Tribe’s unique cultural practices, history and traditions. In addition, the proposed regulations provide deference to Indian Tribal governments on certain issues, including whether benefits are for the promotion of general welfare and whether benefits are provided in exchange for participation in cultural or ceremonial activities. 

The proposed regulations also address the statutory prohibition of “lavish or extravagant” Tribal general welfare benefits. Treasury and IRS agree with the TTAC and Tribal Leaders that whether a benefit is lavish or extravagant should be based on the facts and circumstances at the time the benefit is provided, including the Tribe’s culture, cultural practices, history, geographic area, traditions, resources and economic conditions or factors. The proposed regulations therefore provide that a benefit will be presumed to not be lavish or extravagant if it is described in, and provided in accordance with, written specified guidelines that Indian Tribal governments establish for their programs. 

Audit suspension and training

Section 3(b)(2) of the Act requires consultation with the TTAC in establishing the required education and training of IRS employees and the provision of training and technical assistance to Tribal financial officers. Section 4 of the Act includes a temporary suspension of certain IRS enforcement actions. 

Consistent with the TTAC and Tribal Leader comments, the proposed regulations provide that the temporary suspension of audits and examinations described in section 4 of the Act will not be lifted until the education and training prescribed by section 3(b)(2) of the Act is completed. 

Treasury and IRS request comments on proposed regulations

Comments may be submitted through the Federal Register. Tribal leaders may also submit comments through the Tribal consultation process. Please see the Dear Tribal Leader Letter for details on the Tribal consultations. For an overview of the rule, please see the Tribal Fact Sheet.