October 8, 2024

The U.S. Department of the Treasury has issued a proposed rule for the federal tax status of tribally chartered entities, clarifying that wholly-owned tribal entities are not subject to federal income tax. This rule would also affect eligibility for certain clean energy tax credits through the Inflation Reduction Act reserved for entities without federal tax liability. This is the second set of proposed rules coming from the Treasury over the past few weeks regarding the sovereignty and self-determination of Tribal Nations and their economies.

"Sovereigns do not tax other sovereigns; governments do not tax other governments. This second tranche of new draft regulations respects tribal sovereignty as a foundation and puts a premium on tribal self-determination. The federal government understands that tribal revenue generation should not be taxed," said NCAI President Mark Macarro. "These draft rules make clear that the U.S. Treasury Department and the IRS value the input of Tribal Nations and tribal leadership it has received through the years. This tilt toward embracing tribal sovereignty in federal rulemaking should not be anomalous. With the leadership Treasury has shown, now other agencies' leadership will see that the primacy of tribal government decision-making is valued."

This proposed rule comes after 30 years of Tribal Nations requesting clarification and consultations with Tribal Nations and the Treasury Tribal Advisory Committee.

The U.S. Department of the Treasury will hold virtual tribal consultations on December 16-18, and we urge Tribal Nations to participate in these historic conversations. Register for one of the consultations here.

The Treasury is accepting public comments in writing or electronically until January 7, 2025, 11:59 p.m. AT. Written comments should be sent to tribal.consult@treasury.gov.

Read the Treasury's press release here.

Read the Dear Tribal Leader Letter here.