COLT Strongly Supports Proposed Guidance for Tax Treatment of Wholly-Owned Tribal Entities from U.S. Department of the Treasury

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By OJ Semans. Sr.

January 03, 2025

Guest Opinion. The Coalition of Large Tribes, an intertribal organization representing the interests of the more than 50 tribes with reservations of 100,000 acres or more, encompassing more than 95% of the Indian Country lands and more than half the Native American population, warmly welcomes today’s announcement that the U.S. Department of the Treasury and the Internal Revenue Service have issued a Notice of Proposed Rulemaking (NPRM) to implement guidance on the tax treatment of wholly-owned tribal entities. 

COLT’s member tribes span Washington, Oregon, Idaho, Montana, North Dakota, South Dakota, Utah, Wyoming, Colorado, Nevada, Arizona, New Mexico and Oklahoma.  The Proposed Rule will be important for Indian Country across those states if enacted.

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COLT Chairman J. Garret Renville joined a dozen COLT Tribal leaders in the U.S. Department of the Treasury’s Tribal consultation on December 17, 2024 to support the Proposed Rule.  “Supporting Treasury’s consideration of this Proposed Rule has been one of COLT’s top priorities because we know it will be transformative for economic development for ALL TRIBES, and especially large land base tribes,” Renville said.

COLT provided extensive comments to demonstrate that “Indians not taxed” is a fundamental textual phrase of the U.S. Constitution that has been largely ignored by federal courts and policymakers until the current U.S. Treasury returned to original principles and very recently adopted deference to Tribes in the proposed rule regarding the Tribal General Welfare Act and now proposes to clarify that there will be no federal income tax on wholly-owned tribally entities.

Renville also serves as Chair of the Sisseton-Wahpeton Oyate of the Lake Traverse Reservation, South Dakota.  “Getting this guidance is foundational to respecting tribal-federal treaties and “Indians not taxed,” protecting tribal control of revenue generation, and supporting tribal nations’ self-determination,” he said.  For over a century, Native Americans have been trapped in classic cases of taxation without representation that have unjustly crippled Native economies because of the litany of results-oriented federal court decisions and agency interpretations that drifted far afield from the sovereign-to-sovereign relationship between tribes and the United States enshrined in the Constitution and hundreds of tribal treaties.

Wholly-owned entities are the vast majority of reservation employers and generate the revenue that most tribes utilize to fund their basic services to citizens, outside of federal resources.

“This guidance will increase those tribal entities’ access to credit, the larger capital market, and provide the certainty we need to negotiate better terms and expand the breadth and depth of what these entities bring to tribal governments to fund basic services to tribal citizens,” said Prof. Joseph P. Kalt, Director of the Harvard Kennedy School Project on Indigenous Governance and Development.

The results of the Proposed Rules, if enacted, will be immediate and positive for all tribes and their neighboring communities.  Such catalytic positive change results from Treasury’s return to the Framers’ intent in the Constitution, referring to “Indians not taxed,” and recognizing tribal nations as co-equal sovereigns in our American system of federalism.  The Proposed Rules put us back on the Constitution’s doctrinal trail: where tribal nations were independent nations with established local economies and trade networks and sovereign-to-sovereign relationships that uplifted the inhabitants of the continent.

While we also welcome guidance on majority-owned entities, we agree with the Treasury's approach to address wholly owned tribal entities first, to set a foundation, and then analyze other tribal entities and that additional process will require more consultation and more time. 

Getting the guidance on wholly-owned tribal entities is foundational – tribal treaties, sovereignty, and self-determination are protected and enhanced as a result.

CONTACTS:

• COLT Chairman J. Garret Renville – (605) xxx-xxxx, [email protected] 
• COLT Executive Director OJ Semans - (605) 828-1422, [email protected]

COLT Counsel, Del Laverdure – (406) 850-1856, [email protected]