Turtle Talk: Tribal tax exempt bonds and stimulus

Business | Politics

Thursday, February 12, 2009

"The version of the American Recovery and Reinvestment Tax Act of 2009 (Stimulus Package) passed by the Senate on Tuesday contains language that comes closer to putting tribes on par with state and local governments for the purpose of issuing tax exempt bonds. This has long been a sore spot for tribes, as the IRS has interpreted existing law to prohibit tribes from issuing tax exempt bonds in the same manner as state and local governments.

The Stimulus Package addresses this issue by amending the Internal Revenue Code to allow tribes to issue “Tribal Economic Development Bonds.” (Note: The language of this amendment closely mirrors that of the Tribal Tax Exempt Bond Parity Act, which was introduced in the last Congress by Senators Max Baucus (D-MT) and Gordon Smith (R-OR).)

The amendment defines a “Tribal Economic Development Bond” as a bond issued by a tribe where the interest would be exempt from taxation if issued by a state or local government.

This amendment comes with three important caveats:

1.) The bonds cannot be used to finance any portion of a building in which Class II and Class III gaming is conducted, or any property used in the conduct of gaming;

2.) The bonds must be used to finance facilities located on the reservation; and,

3.) There is a national cap on the total value of Tribal Economic Development Bonds at $2 Billion, which must be allocated among tribal governments in the manner deemed appropriate by the Secretaries of Treasury and Interior."

Get the Story:
Economic Stimulus Bill Expands Tribal Tax Exempt Bonding (Turtle Talk 2/11)

American Recovery and Reinvestment Act:
H.R.1 | S.1