Tribal Tax and Investment Reform Act of 2016

Summary: Tribal Tax and Investment Reform Act of 2016 This bill amends the Internal Revenue Code (IRC) to include Indian tribal governments in an annual allocation of a national tax-exempt bond volume cap. The bill repeals provisions that limit an Indian tribal government's eligibility to issue tax-exempt bonds or to be exempt from specified excise taxes to transactions involving the exercise of an essential government function customarily performed by state and local governments.  The bill amends the IRC and the Employee Retirement Income Security Act of 1974 (ERISA) to treat employee benefit or pension plans maintained by Indian tribes and domestic relations orders issued pursuant to tribal law in the same manner as plans maintained by states and domestic relations orders issued pursuant to state law. The bill treats tribal charities and foundations in the same manner as charities and foundations funded and controlled by other governmental entities for purposes of the tax-exempt status of, and deduction for contributions to, such organizations. The bill amends the Social Security Act to give Indian tribes or tribal organizations access to the Federal Parent Locator Service if they are eligible for a grant to operate a child support enforcement program. It makes those tribes and tribal organizations eligible to participate in the program that collects past-due support from individual tax refunds.  An Indian tribal government may determine whether a child has special needs for the purpose of the tax credit for the adoption of a child with special needs. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tribal Tax and Investment Reform Act 
of 2016''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) There is a unique Federal legal and political 
        relationship between the United States and Indian tribes.
            (2) Indian tribes have the responsibility and authority to 
        provide governmental programs and services to tribal citizens, 
        develop tribal economies, and build community infrastructure to 
        ensure that Indian reservation lands serve as livable, 
        permanent homes.
            (3) The United States Constitution, U.S. Federal Court 
        decisions, Executive orders, and numerous other Federal laws 
        and regulations recognize that Indian tribes are governments, 
        retaining the inherent authority to tax and operate as other 
        governments, including (inter alia) financing projects with 
        government bonds and maintaining eligibility for general tax 
        exemptions via their government status.
            (4) Codifying tax parity with respect to tribal governments 
        is consistent with Federal treaties recognizing the sovereignty 
        of tribal governments.
            (5) That Indian tribes face historic disadvantages in 
        accessing the underlying capital to build the necessary 
        infrastructure for job creation, and that certain statutory 
        restrictions on tribal governance further inhibit tribes' 
        ability to develop strong governance and economies.
            (6) Indian tribes are sometimes excluded from the Internal 
        Revenue Code of 1986 in key provisions which results in unfair 
        tax treatment for tribal citizens or unequal enforcement 
        authority for tribal enforcement agencies.
            (7) Congress is vested with the authority to regulate 
        commerce with Indian tribes, and hereby exercises that 
        authority in a manner which furthers tribal self-governance, 
        and in doing so, further affirms the United States government-
        to-government relationship with Indian tribes.

SEC. 3. TREATMENT OF INDIAN TRIBES AS STATES WITH RESPECT TO BOND 
              ISSUANCE.

    (a) In General.--Subsection (c) of section 7871 of the Internal 
Revenue Code of 1986 (relating to Indian tribal governments treated as 
States for certain purposes) is amended to read as follows:
    ``(c) Special Rules for Tax-Exempt Bonds.--In applying section 146 
to bonds issued by Indian tribal governments (or subdivisions thereof) 
the Secretary of the Treasury shall annually--
            ``(1) establish a national bond volume cap based on the 
        greater of--
                    ``(A) the State population formula approach in 
                section 146(d)(1)(A) (using national tribal population 
                estimates supplied annually by the Department of the 
                Interior in consultation with the Census Bureau), and
                    ``(B) the minimum State ceiling amount in section 
                146(d)(1)(B) (as adjusted in accordance with the cost 
                of living provision in section 146(d)(2)), and
            ``(2) allocate such national bond volume cap among all 
        Indian tribal governments seeking such an allocation in a 
        particular year under regulations prescribed by the 
        Secretary.''.
    (b) Repeal of Essential Governmental Function Requirements.--
Section 7871 of such Code is further amended by striking subsections 
(b) and (e).
    (c) Effective Date.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to obligations issued in calendar years beginning 
        after the date of the enactment of this Act.
            (2) Subsection (b).--The repeals made by subsection (b) 
        shall apply to transactions after, and obligations issued in 
        calendar years beginning after, the date of the enactment of 
        this Act.

SEC. 4. TREATMENT OF PENSION AND EMPLOYEE BENEFIT PLANS MAINTAINED BY 
              TRIBAL GOVERNMENTS.

    (a) Amendments to the Internal Revenue Code of 1986.--
            (1) Qualified public safety employee.--Section 72(t)(10)(B) 
        of the Internal Revenue Code of 1986 (defining qualified public 
        safety employee) is amended by--
                    (A) striking ``or political subdivision of a 
                State'' and inserting ``, political subdivision of a 
                State, or Indian tribe''; and
                    (B) striking ``such State or political 
                subdivision'' and inserting ``such State, political 
                subdivision, or tribe''.
            (2) Governmental plan.--The last sentence of section 414(d) 
        of such Code (defining governmental plan) is amended to read as 
        follows: ``The term `governmental plan' includes a plan 
        established or maintained for its employees by an Indian tribal 
        government (as defined in section 7701(a)(40)), a subdivision 
        of an Indian tribal government (determined in accordance with 
        section 7871(d)), an agency, instrumentality, or subdivision of 
        an Indian tribal government, or an entity established under 
        Federal, State, or tribal law which is wholly owned or 
        controlled by any of the foregoing.''.
            (3) Domestic relations order.--Section 414(p)(1)(B)(ii) of 
        such Code (defining domestic relations order) is amended by 
        inserting ``or tribal'' after ``State''.
            (4) Exempt governmental deferred compensation plan.--
        Section 3121(v)(3) of such Code (defining governmental deferred 
        compensation plan) is amended by inserting ``by an Indian 
        tribal government or subdivision thereof,'' after ``political 
        subdivision thereof,''.
            (5) Grandfather of certain deferred compensation plans.--
        Section 457 of the Internal Revenue Code is amended by adding 
        at the end the following new subsection:
    ``(h) Certain Tribal Government Plans Grandfathered.--Plans 
established before the date of enactment of this subsection and 
maintained by an Indian tribal government (as defined in section 
7701(a)(40)), a subdivision of an Indian tribal government (determined 
in accordance with section 7871(d)), an agency, instrumentality, or 
subdivision of an Indian tribal government, or an entity established 
under Federal, State, or tribal law which is wholly owned or controlled 
by any of the foregoing, in compliance with subsection (b) or (f) shall 
be treated as if established by an eligible employer under subsection 
(e)(1)(A).''.
    (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) In general.--The last sentence of section 3(32) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(32)) is amended to read as follows: ``The term 
        `governmental plan' includes a plan established or maintained 
        for its employees by an Indian tribal government (as defined in 
        section 7701(a)(40) of the Internal Revenue Code of 1986), a 
        subdivision of an Indian tribal government (determined in 
        accordance with section 7871(d) of such Code), an agency, 
        instrumentality, or subdivision of an Indian tribal government, 
        or an entity established under Federal, State, or tribal law 
        which is wholly owned or controlled by any of the foregoing.''.
            (2) Domestic relations order.--Section 206(d)(3)(B)(ii)(II) 
        of such Act (29 U.S.C. 1056(d)(3)(B)(ii)(II)) is amended by 
        inserting ``or tribal'' after ``State''.
            (3) Conforming amendments.--
                    (A) Section 4021(b) of such Act (29 U.S.C. 1321(b)) 
                is amended by striking ``or'' at the end of paragraph 
                (12), by striking the period at the end of paragraph 
                (13) and inserting ``; or'', and by inserting after 
                paragraph (13) the following new paragraph:
            ``(14) established or maintained for its employees by an 
        Indian tribal government (as defined in section 7701(a)(40) of 
        the Internal Revenue Code of 1986), a subdivision of an Indian 
        tribal government (determined in accordance with section 
        7871(d) of such Code), an agency, instrumentality, or 
        subdivision of an Indian tribal government, or an entity 
        established under Federal, State, or tribal law which is wholly 
        owned or controlled by any of the foregoing.''.
                    (B) Section 4021(b)(2) of such Act (29 U.S.C. 
                1321(b)(2)) is amended by striking ``, or which is 
                described in the last sentence of section 3(32)'' and 
                inserting a comma.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after the date of the enactment of this Act.

SEC. 5. TREATMENT OF TRIBAL FOUNDATIONS AND CHARITIES LIKE CHARITIES 
              FUNDED AND CONTROLLED BY OTHER GOVERNMENTAL FUNDERS AND 
              SPONSORS.

    (a) In General.--Section 170(b)(1)(A) of the Internal Revenue Code 
of 1986 is amended by adding at the end the following: ``For purposes 
of clause (vi), the term `governmental unit' includes an Indian tribal 
government (determined in accordance with section 7871(d) of such 
Code), an agency, instrumentality, or subdivision of an Indian tribal 
government, or an entity established under Federal, State, or tribal 
law which is wholly owned or controlled by any of the foregoing.''.
    (b) Certain Supporting Organizations.--Section 509(a) of such Code 
is amended by adding at the end the following: ``For purposes of 
paragraph (3), an organization described in paragraph (2) shall be 
deemed to include an Indian tribal government (determined in accordance 
with section 7871(d) of such Code), an agency, instrumentality, or 
subdivision of an Indian tribal government, or an entity established 
under Federal, State, or tribal law which is wholly owned or controlled 
by any of the foregoing.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 6. IMPROVING EFFECTIVENESS OF TRIBAL CHILD SUPPORT ENFORCEMENT 
              AGENCIES BY PARITY OF ACCESS TO THE FEDERAL PARENT 
              LOCATOR SERVICE AND FEDERAL TAX REFUND OFFSETS.

    (a) Access to Federal Parent Locator Service.--Section 453(c) of 
the Social Security Act (42 U.S.C. 653(c)) is amended--
            (1) by striking ``and'' at the end of paragraph (4);
            (2) by striking the period at the end of paragraph (5) and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(6) the child support enforcement agency of an Indian 
        tribe or tribal organization that is eligible for a grant under 
        section 455(f).''.
    (b) Improving the Collection of Past-Due Child Support From Federal 
Tax Refunds.--
            (1) Amendment to the social security act.--Section 464 of 
        the Social Security Act (42 U.S.C. 664) is amended by adding at 
        the end the following:
    ``(d) Applicability to Indian Tribes and Tribal Organizations 
Eligible for a Grant Under This Part.--This section, except for the 
requirement to distribute amounts in accordance with section 457, shall 
apply to an Indian tribe or tribal organization eligible for a grant 
under section 455(f) in the same manner in which this section applies 
to a State with a plan approved under this part.''.
            (2) Amendment to the internal revenue code.--Subsection (c) 
        of section 6402 of the Internal Revenue Code of 1986 is amended 
        by adding at the end the following: ``For purposes of this 
        subsection, any reference to a State shall include a reference 
        to any Indian tribe or tribal organization described in section 
        464(d) of the Social Security Act.''.

SEC. 7. RECOGNIZING INDIAN TRIBAL GOVERNMENTS FOR PURPOSES OF 
              DETERMINING UNDER THE ADOPTION CREDIT WHETHER A CHILD HAS 
              SPECIAL NEEDS.

    (a) In General.--Section 23(d)(3) of the Internal Revenue Code of 
1986 (defining child with special needs) is amended--
            (1) in subparagraph (A), by inserting ``or Indian tribal 
        government'' after ``a State''; and
            (2) in subparagraph (B), by inserting ``or Indian tribal 
        government'' after ``such State''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.