Law | National | Trust

IRS issues tax guidance on per capita payouts from trust funds

Monday, March 10, 2014

The Internal Revenue Service issued guidance today regarding the taxation of per capita payments from tribal trust funds.

In September 2012, the IRS issued guidance regarding per caps from recent tribal trust fund settlements. The agency affirmed that such payments are not taxable as long as the money hadn't been invested prior to distribution.

The new guidance takes a broader look at the issue and attempts to resolve some questions that tribes raised about other sources of trust funds. For example, a per cap from the proceeds of a tribal timber sale is not taxable, as long as the proceeds were deposited into the tribe's trust account, the IRS said.

“Today’s notice provides uniform, clear guidance regarding the tax treatment of per capita distributions of tribal trust assets,” Assistant Secretary for Tax Policy Mark J. Mazur said in a press release. “This announcement and our ongoing tribal consultation process underscore the Administration’s commitment to understanding and addressing the issues facing the Native American community.”

The guidance is open to public comments. They must be sent to the IRS by September 17.

Relevant Documents:
Notice 2014-17: Per Capita Distributions of Funds Held in Trust by the Secretary of the Interior (March 2014)
Notice 2012-60: Per Capita Payments from Proceeds of Settlements of Indian Tribal Trust Cases (September 2012)