Tax-Exempt Benefit Regs Would Give Tribes Overdue Power

Native American Law attorney Kenneth Parsons spoke to Law360 about the recently proposed regulations on Tribal general welfare benefits that would grant Tribes sole discretion to determine which programs and services are tax-exempt benefits. The proposal, introduced in September, would shift decision-making power from the federal government to Tribes, recognizing their unique position to identify programs that best serve their members' needs under Internal Revenue Code Section 139E. This change would acknowledge the constitutional sovereignty of over 500 Tribes and once finalized, allow for more flexibility to create programs that align with their unique cultures, values and other needs.

In 2021, U.S. Department of the Treasury and the Treasury Tribal Advisory Committee released a report outlining the interpretation of the core principles of Section 139E and solicited feedback on them. The report and the feedback served as the foundation for this year's proposed regulations, said Mr. Parsons, who presented last month at the Native American Finance Officers Association's (NAFAO) listening session on the proposed rules.

The advisory committee "was really key to getting these proposed regulations published," Mr. Parsons said. "Treasury really did listen to those comments and took them to heart. They defer to Tribes."

READ: Tax-Exempt Benefit Regs Would Give Tribes Overdue Power