YAKAMA, Wash. – A potential change to federal tax laws concerning per capita payments has tribes around the country sitting up and taking notice.
The Internal Revenue Service has been meeting with tribes to establish and clarify rules on what is taxable under the General Welfare Doctrine, which governs whether the assistance tribal citizens receive should be counted as income and be taxed.
However, several tribes that offer per capita payments have found themselves subject to federal audits this year, with the IRS inquiring whether proper tax forms were sent out to citizens.
Among the tribes under scrutiny is the Confederated Tribes and Bands of the Yakama Nation, headquartered in Toppenish, Wash. The 10,400-citizen tribe distributes a per capita payment from income generated by trust resources on its 1.4 million-acre reservation. On June 14, the executive secretary of the tribe’s legislative branch, Athena Sanchey Yallup, testified before the Senate Committee on Indian Affairs.
“What the IRS is now attempting to do is an extraordinary, overreaching action that is contrary to the express intent of this Congress and the promises of the Treaty of 1855,” she said. “We would never have ceded away nearly all of our aboriginal land had we understood that we would eventually be asked to give one-third of the modest earnings from reservation natural resources back to the government in the form of a tax.”
John Yellow Bird Steele, president of the Oglala Sioux, shared Sanchey Yallup’s concerns about the IRS’ perceived disrespect for tribal sovereignty.
“One of my tribal presidents told me an IRS person showed up at his reservation,” Steele said. “He told him (the IRS agent) he had a treaty. He (the IRS agent) told him he could read it in prison.”
