Yellow Bird Steele, president of the Oglala Sioux Tribe, testifies at Senate Indian Affairs Committee hearing. June 14, 2012. Photo Courtesy Sen. Tim Johnson (D-South Dakota).

The Internal Revenue Service is auditing tribes for providing basic services to their members, tribal leaders said at a Senate Indian Affairs Committee hearing on Thursday.

Nearly every tribe in the Great Plains has been audited or has received an audit letter, Yellow Bird Steele, the president of the Oglala Sioux Tribe, told the committee. His tribe has been asked to provide records of payments made to its members under general welfare programs -- which are supposed to be exempt from federal taxation.

“We fix houses and they want us to put a value on how much that lumber cost to patch a hole in a roof or a floor, put shingling on. They want us to put a value on that and give the person a 1099?" Steele testified, the Associated Press reported. “The next year, where are those people going to find the money to pay the IRS?”

The Yakama Nation of Washington received an audit letter as well. Secretary Athena Sanchey Yallup said the IRS wants records related to per capita payments from the tribe's timber resources.

"My trust resources are not taxable," Sanchey Yallup told the committee.

An IRS official acknowledged that tribes have asked the agency to be more consistent and for more consultation. But Christie Jacobs, the director of the Office of Indian Tribal Governments, didn't provide specifics when asked whether audits have increased in the last few years as tribes have contended.

Jacobs suggested tribes obtain a "letter ruling" from the IRS if they are unsure about taxation and reporting requirements. But advocates said making such a request is essentially an invitation for an audit.

Get the Story:
Native Americans: IRS may tax tribal members social, cultural benefits, per capita payments (AP 6/15)
Tribes look to Congress to stop IRS from taxing government benefits (Cronkite News 6/14)

Committee Notice:
OVERSIGHT HEARING on New Tax Burdens on Tribal Self-Determination (June 14, 2012)

Related Stories:
Witness list for SCIA hearing on self-determination and taxation (6/13)