Treatment of Indian Tribal Natural Resource Income Act of 1995

Summary: Treatment of Indian Tribal Natural Resource Income Act of 1995 - Amends the Internal Revenue Code to exempt from Federal income tax income derived from a natural resources-related activity by Indians or a qualified Indian entity.  Prohibits a tax on remuneration paid for services performed in a natural resources-related activity by one member of a tribe for another member of such tribe.  Defines natural resources-related activity and qualified Indian entity.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Treatment of Indian Tribal Natural 
Resource Income Act of 1995''.

SEC. 2. FEDERAL TAX TREATMENT OF INCOME DERIVED BY INDIANS FROM NATURAL 
              RESOURCES ACTIVITIES.

    (a) In General.--Subchapter C of chapter 80 of the Internal Revenue 
Code of 1986 (relating to provisions affecting more than one subtitle) 
is amended by adding at the end the following new section:

``SEC. 7874. FEDERAL TAX TREATMENT OF INCOME DERIVED BY INDIANS FROM 
              THE HARVEST OF TRIBALLY OWNED NATURAL RESOURCES.

    ``(a) In General.--
            ``(1) Income and self-employment taxes.--No tax shall be 
        imposed by subtitle A on income derived from a natural 
        resources-related activity conducted--
                    ``(A) by a member of an Indian tribe directly or 
                through a qualified Indian entity; or
                    ``(B) by a qualified Indian entity.
            ``(2) Employment taxes.--No tax shall be imposed by 
        subtitle C on remuneration paid for services performed in 
        natural resources-related activity by one member of a tribe for 
        another member of such tribe or for a qualified Indian entity.
    ``(b) Definitions.--For purposes of this section:
            ``(1) Natural resources-related activity.--The term 
        `natural resources-related activity' means, with respect to an 
        Indian tribe, any activity directly related to cultivating, 
        harvesting, processing, extracting, or transporting natural 
        resources held in trust by the United States for the benefit of 
        such tribe or directly related to selling such natural 
        resources but only if substantially all of the selling activity 
        is performed by members of such tribe.
            ``(2) Qualified indian entity.--
                    ``(A) In general.--The term `qualified Indian 
                entity' means an entity--
                            ``(i) engaged in a natural resources-
                        related activity of one or more Indian tribes;
                            ``(ii) all of whose equity interests are 
                        owned by such tribes or members of such tribes; 
                        and
                            ``(iii) substantially all of the management 
                        functions of the entity are performed by 
                        members of such tribes.
                    ``(B) Entities engaged in processing or 
                transportation.--Except as provided in regulations 
                similar to regulations in effect under section 
                7873(b)(3)(A)(iii) on the date of the enactment of this 
                section, if an entity is engaged to any extent in any 
                processing or transporting of natural resources, the 
                term `qualified Indian entity' shall also include an 
                entity whose annual gross receipts are 90 percent or 
                more derived from natural resources-related activities 
                of one or more Indian tribes each of which owns at 
                least 10 percent of the equity interests in the entity. 
                For purposes of this subparagraph, equity interests 
                owned by a member of such a tribe shall be treated as 
                owned by the tribe.
    ``(c) Special Rules.--
            ``(1) Distributions from qualified indian entity.--For 
        purposes of this section, any distribution with respect to an 
        equity interest in a qualified Indian entity of one or more 
        Indian tribes to a member of one of such tribes shall be 
        treated as derived by such member from a natural resources-
        related activity to the extent such distribution is 
        attributable to income derived by such entity from a natural 
        resources-related activity.
            ``(2) De minimis unrelated amounts may be excluded.--If, 
        but for this paragraph, all but a de minimis amount derived by 
        a qualified Indian tribal entity or by a tribal member through 
        such entity, or paid to an individual for services, would be 
        entitled to the benefits of subsection (a), then the entire 
        amount shall be so entitled.
    ``(d) No Inference Created.--Nothing in this title shall create any 
inference as to the existence or non-existence or scope of any 
exemption from tax for income derived from tribal rights secured as of 
January 1, 1995, by any treaty, law, or Executive Order.''.
    (b) Conforming Amendment.--The table of sections for subchapter C 
of chapter 80 of such Code is amended by adding at the end the 
following new item:

``Sec. 7874. Federal tax treatment of income derived by Indians from 
                            the harvest of tribally owned natural 
                            resources.''
    (c) Effective Date.--The amendments made by this section shall 
apply to periods before, on, or after the date of the enactment of this 
Act.