United South and Eastern Tribes, Inc.

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1 United South and Eastern Tribes, Inc. Nashville, TN Office: Washington, DC Office: 711 Stewarts Ferry Pike, Suite North Capitol Street, Suite 585 Nashville, TN Washington, D.C., Phone: (615) Phone: (202) Fax: (615) Fax: (202) October 14, 2015 Submitted via to: Dr. Elaine Buckberg Deputy Assistant Secretary for Policy Point of Contact for Tribal Consultation Office of Economic Policy U.S. Department of the Treasury 1500 Pennsylvania Avenue, NW, Room 3449 Washington, D.C Dear Dr. Buckberg, On behalf of United South and Eastern Tribes, Inc. (USET) we are pleased to submit the following comments in response to IRS Notice and issues arising under the Tribal General Welfare Exclusion Act (26 U.S.C. 139E). USET is a non-profit, inter-tribal organization representing 26 federally recognized Indian Tribes from Texas to Florida and up to Maine. 1 USET is dedicated to enhancing the development of federally recognized Indian Tribes, to improving the capabilities of Tribal governments, and assisting USET Member Tribes in dealing effectively with public policy issues and in serving the broad needs of Indian people. USET appreciates the efforts of the Treasury Department and Internal Revenue Service (IRS) to seek Tribal comments regarding the implementation of the Tribal General Welfare Exclusion Act, including the Department's desire to issue additional guidance to IRS field agents. In the past, insufficient guidance from the Department and inconsistent interpretation by IRS field agents on the application of the General Welfare Exclusion (GWE) to Tribal government programs resulted in improper federal intrusions into matters of Tribal sovereignty, imposed federal taxes where none were due, and prompted the Department, IRS and, ultimately, Congress, to work with Tribal governments to clarify GWE standards that reaffirm that Tribal Nations are in the best position to determine the needs of their citizens and communities. USET agrees that all parties deserve to have clear direction, consistent with the provisions set forth in the Tribal General Welfare Exclusion Act. Among the terms set forth in the Act is the requirement that Tribal government benefits cannot be lavish or extravagant. The Act requires the Secretary, in consultation with the Tribal Advisory Committee (TAC), to establish guidelines for what constitutes lavish and extravagant benefits with respect to Indian Tribal government programs. The Act also recognizes that Tribal 1 USET member Tribes include: Alabama-Coushatta Tribe of Texas (TX), Aroostook Band of Micmac Indians (ME), Catawba Indian Nation (SC), Cayuga Nation (NY), Chitimacha Tribe of Louisiana (LA), Coushatta Tribe of Louisiana (LA), Eastern Band of Cherokee Indians (NC), Houlton Band of Maliseet Indians (ME), Jena Band of Choctaw Indians (LA), Mashantucket Pequot Indian Tribe (CT), Mashpee Wampanoag Tribe (MA), Miccosukee Tribe of Indians of Florida (FL), Mississippi Band of Choctaw Indians (MS), Mohegan Tribe of Indians of Connecticut (CT), Narragansett Indian Tribe (RI), Oneida Indian Nation (NY), Passamaquoddy Tribe at Indian Township (ME), Passamaquoddy Tribe at Pleasant Point (ME), Penobscot Indian Nation (ME), Poarch Band of Creek Indians (AL), Saint Regis Mohawk Tribe (NY), Seminole Tribe of Florida (FL), Seneca Nation of Indians (NY), Shinnecock Indian Nation (NY), Tunica-Biloxi Tribe of Louisiana (LA), and the Wampanoag Tribe of Gay Head (Aquinnah) (MA).

2 government programs may be established by Tribal government practice or Tribal custom and clarifies that the receipt of cultural items, the reimbursement of costs, and cash honorarium for participation in Tribal cultural or ceremonial activities is not to be treated as compensation for services. USET acknowledges that the three questions in IRS Notice on which the Department seeks comment appear to have been intended to advance a dialogue to obtain mutual understanding of how these provisions of the Act should be implemented. USET is greatly concerned, however, that Treasury's notice seeking public comment is premature and fails to comply with the explicit direction Congress has provided on implementation of the Tribal General Welfare Exclusion Act. While we recognize the time constraints facing this Administration, we urge Treasury to abide by Congress' instruction requiring ongoing dialogue with Tribes including through its Tribal Advisory Committee and to honor Executive Order requiring deference "to Indian Tribes to establish standards"; and to "consult with Tribal officials" to ensure those standards "preserve the prerogatives and authority of Indian Tribes." Ex. Order 13175, Sec. 3(c). 2 We also draw the Department s attention to Section 2(c) of the Act, which explicitly requires that any ambiguity be resolved in favor of Tribal governments. Through the Tribal General Welfare Exclusion Act, Congress created the Tribal Advisory Committee (TAC) to advise the Department on the taxation of Indians. This includes ensuring that treaty rights and principles of self-governance are properly balanced with the Department and the Internal Revenue Service's (IRS) policies as they affect Tribes and their citizens. Indeed, Congress suspended audits of Tribal GWE programs until after the Secretary, in consultation with the TAC, has established and required "training and education for Internal Revenue field agents on Federal Indian law and the Federal Government's unique legal treaty and trust relationship with Indian tribal governments." 26 U.S.C. 139E (note). As Treasury well knows, the Tribal Nations of the United States have widely diverse cultures, language, customs, religious traditions, and community needs. In an April 28th letter to Treasury, USET requested that as Treasury considers its three appointments to the TAC, it choose qualified Tribal leader candidates reflective of the enormous diversity within Indian Country. With the announcement of the appointees forthcoming, we believe that the TAC is best positioned to provide initial guidance to the Department regarding the questions posed in IRS Notice Matters of this nature are precisely within the TAC s purview. As noted above, 139E stipulates that, the Secretary shall, in consultation with the Tribal Advisory Committee (as established under section 3(a) of the Tribal General Welfare Exclusion Act of 2013), establish guidelines for what constitutes lavish or extravagant benefits with respect to Indian Tribal government programs. 3 Further, the TAC s anticipated level of expertise and range of representation will allow for focused, thorough, and meaningful dialogue with the Department on these topics. We expect that this sort of intensive collaboration would produce draft guidance, which will then be released for further Tribal consultation. While consultation with the TAC is not a substitute for broader consultation with Tribes, USET is concerned that, due to the wide range of experience and tradition among Tribal Nations, Treasury may not receive any consensus guidance as a result of the current inquiry. USET urges Treasury to schedule a meeting of the TAC immediately after the announcement of appointees so this congressionally-mandated consultation process may begin. Ultimately, any guidance associated with Tribal General Welfare Exclusion Act must fully implement the intent of Congress. To do so, that guidance must reflect Indian Country s rich diversity, provide a high level 2 Please see USET Resolution No. 2015:034 (attached) for further detail U.S.C. 139E(c)(3).

3 flexibility in implementation, and seek to uphold the sovereign right of Tribal governments to determine what is best for their people. USET looks forward to working with Treasury, IRS, and the TAC toward that goal. Should you have questions or require additional information, please do not hesitate to contact Ms. Liz Malerba, USET Director of Policy and Legislative Affairs, at (202) or by at Sincerely, Brian Patterson President Kitcki Carroll USET Executive Director Enclosure CC: USET member Tribes Wanda Janes, USET Deputy Director Liz Malerba, USET Director of Policy and Legislative Affairs File

4 United South and Eastern Tribes, Inc. Nashville, TN Office: Washington, DC Office: 711 Stewarts Ferry Pike, Suite North Capitol Street, Suite 585 Nashville, TN Washington, D.C., Phone: (615) Phone: (202) Fax: (615) Fax: (202) USET Resolution No. 2015:034 FAILURE OF INTERNAL REVENUE SERVICE NOTICE TO COMPLY WITH TRIBAL GENERAL WELFARE EXCLUSION ACT OR EXECUTIVE ORDERS ON CONSULTATION United South and Eastern Tribes Incorporated (USET) is an intertribal organization comprised of twenty-six (26) federally recognized Tribes; and the actions taken by the USET Board of Directors officially represent the intentions of each member Tribe, as the Board of Directors comprises delegates from the member Tribes leadership; and in September 2014, Congress enacted and the President signed P.L , the Tribal General Welfare Exclusion Act (GWE Act), which Congress developed in consultation with Tribal Nations across the country; and the GWE Act recognizes that payments or benefits provided by tribal governments to their citizens to promote the general welfare of their community are excluded from gross income for individual federal income tax purposes; and the GWE Act recognizes that Tribal Nations, not the Internal Revenue Service (IRS) or other offices or bureaus at the Department of the Treasury, are in the best position to determine the needs of their citizens and communities; and the GWE Act requires the Treasury Department to establish a Tribal Advisory Committee (TAC) to advise the Secretary of the Treasury about implementation of the GWE Act as well as general matters relating to the taxation of Indians; and the GWE Act provides that tribal government benefits cannot be lavish or extravagant, and requires the Secretary, in consultation with the TAC, to establish guidelines for what constitutes lavish and extravagant benefits with respect to Indian tribal government programs ; and the GWE Act recognizes that tribal government programs may be established by tribal government practice or tribal custom; and the GWE Act clarifies that the receipt of cultural items, the reimbursement of costs, and cash honorarium for participation in tribal cultural or ceremonial activities is not to be treated as compensation for services, and thus not subject to federal income taxation; and the Secretary of the Treasury has not yet formed the TAC, to develop guidelines for the term lavish and extravagant as required by the GWE Act or conducted meaningful consultation with Tribal Nations to otherwise establish these guidelines consistent with the spirit of the Act, nor has the Secretary consulted with Tribal Nations to determine implementation of the GWE Act for tribal

5 United South and Eastern Tribes, Inc. USET Resolution No. 2015:034 government programs created through practice or custom, or for the receipt of cultural items, reimbursement, or honorarium for participation in tribal cultural or ceremonial activities; and RESOLVED RESOLVED Section 3(c) of Executive Order requires federal agencies formulating policies that have tribal implications to "defer to Indian tribes to establish standards"; and to "consult with tribal officials as to the need for Federal standards and any alternatives that would limit the scope of Federal standards or otherwise preserve the prerogatives and authority of Indian tribes; and on April 16, 2015, the IRS issued Notice requesting public comments on issues that may be addressed in future public guidance, including the guidelines for lavish and extravagant benefits from tribal government programs, even though Congress in the GWE Act expressly delegated the development of these guidelines to the Secretary in consultation with the TAC; and Notice also requests public comments on the development of guidelines for tribal government programs created through tribal government practice or custom; and the receipt of cultural items, reimbursement for costs, or honorarium for participation in tribal cultural or ceremonial activities, each of which has tribal implications and, under Executive Order 13175, requires the Secretary to "defer to Indian tribes to establish standards"; and to "consult with tribal officials as to the need for Federal standards"; and the Treasury Department has engaged in a repeated pattern of failing to conduct appropriate consultation prior to taking actions that directly impact tribal governments and that these illconsidered federal actions have triggered widespread tribal opposition, including actions related to tribal general welfare benefits; and USET has called upon the Treasury Department to chart a new course where collaborative government-to-government dialogue is established and relied upon to formulate policies and practices within the Department that are aligned with the federal policy of Indian Self- Determination; and in December 2010, the United States recognized the rights of its First Peoples through its support of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), whose provisions and principles support and promote the purposes of this resolution; therefore, be it the USET Board of Directors calls upon the Treasury Department, including the Internal Revenue Service, to engage in meaningful consultations with the Tribal Advisory Committee pursuant to the General Welfare Exclusion Act and with Tribal Nations pursuant to Executive Orders and before implementing any provision of the General Welfare Exclusion Act, including the items listed in Internal Revenue Service Notice ; and be it further the USET Board of Directors calls upon the United States Congress to direct the Treasury Department and the Administration to ensure that the General Welfare Exclusion Act is fully implemented as intended. Because there is strength in Unity USET 2015 Semi-Annual Meeting Mashantucket, CT May 18-20

6 United South and Eastern Tribes, Inc. USET Resolution No. 2015:034 CERTIFICATION This resolution was duly passed at the USET Semi-Annual Meeting, at which a quorum was present, in Mashantucket, CT, May 20, Brian Patterson, President United South and Eastern Tribes, Inc. Brenda Lintinger, Secretary United South and Eastern Tribes, Inc. Because there is strength in Unity USET 2015 Semi-Annual Meeting Mashantucket, CT May 18-20

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