March 6, 2020

House Ways and Means Holds Long-Overdue Hearing on Tribal Tax Issues

Holland & Knight Alert
Kayla Gebeck Carroll | Nicole M. Elliott | Kenneth W. Parsons | Philip Baker-Shenk


  • House members and tribal witnesses testified at a House Committee on Ways and Means hearing regarding the many ways that the federal tax code does not support tribal parity, self-governance and self-determination. The hearing revealed that more must be done to educate and engage Congress on these issues.
  • Parity in tax treatment is sought by Indian tribal governments on a wide range of issues.
  • It has been 25 years since the House Ways and Means last convened a hearing on tribal tax issues.

The House Ways and Means Subcommittee on Select Revenue Measures, under the leadership of Chairman Mike Thompson (D-Calif.), held a hearing, "Examining the Impact of the Tax Code on Native American Tribes." It was the committee's first hearing on tribal tax issues in 25 years.

The March 4, 2020, hearing was divided into two witness panels. The first panel was comprised of the four members of Congress who are enrolled members of federally recognized tribes – Reps. Deb Haaland (D-N.M.), Sharice Davids (D-Kan.) and Markwayne Mullin (R-Okla.). Invited witness Rep. Tom Cole (R-Okla.) was unable to attend but submitted written remarks for the record.

The second panel was comprised of five tribal leaders – Fawn Sharp, president of the National Congress of American Indians and the Quinault Indian Nation; Cristina Danforth, president of the board, Native American Finance Officers Association; Kenneth Khan, chairman of the Santa Ynez Band of Chumash Indians; Rodney Butler, chairman of the Mashantucket Pequot Tribal Nation; and Matthew Wesaw, chairman of the Pokagon Band of Potawatomi Indians.

What Was Discussed?

Lawmakers and tribal representatives discussed a wide range of tax issues that negatively impact tribal governments and their communities. The hearing focused on the failure of the federal government to protect tribal governments against dual taxation on their lands, the allocation process of New Markets Tax Credits (NMTC) and Low-Income Housing Tax Credits (LIHTC) that have historically left Indian Country behind, and the lack of tribal access to tax-exempt and private activity bond financing because of restrictions including the essential governmental function test that only restricts tribal governments. Other issues discussed included burdensome and costly rules that necessitate a bifurcation in tribal pension plans, the need for extension and expansion of the Indian employment tax credit to boost private sector jobs in Indian Country, the need to make adoption tax credits available to families using tribal courts for their adoption cases, equitable tax treatment for tribally created and supported organizations as public charities rather than private foundations, tax code provisions to support the effective enforcement of Indian child support payments, and the removal of all tribal transfers of taxable distributions to tribal youth from the penalty rates associated with the "kiddie tax."

The Subcommittee hearing was well attended by many House members, including a handful who are not on the Subcommittee but expressed interest and support for moving legislation to address these many accumulated issues. The members in attendance included Reps. Mike Thompson (D-Calif.), John Larson (D-Conn.), Gwen Moore (D-Wis.), Suzan DelBene (D-Wash.), Don Beyer (D-Va.), Thomas Suozzi (D-N.Y.), Ron Kind (D-Wisc.), Daniel Kildee (D-Mich.), Stephanie Murphy (D-Fla.), Adrian Smith (R-Neb.), David Schweikert (R-Ariz.), Darin LaHood (R-Ill.), Jodey Arrington (R-Texas), Jason Smith (R-Mo.), Tom Rice (R-S.C.), Jacqueline Walorski (R-Ind.) and Tom Reed (R-N.Y.).

Key Takeaways

The March 4 hearing was a good first step to reestablish dialogue between Congress and Indian Country. However, immediate congressional action is needed to correct the pervasive inequalities created by the federal tax code.

Members asked questions regarding the impact of these inequalities in Indian Country, questions seeking specific solutions to these inequalities, and repeatedly asked witnesses to prioritize the issues discussed. It was clear from the questioning that more must be done to engage and educate members on these issues.

Supporting Resources

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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