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INITIAL REPORT OF THE TREASURY TRIBAL ADVISORY COMMITTEE, SUBCOMMITEE 

ON THE TRIBAL GENERAL WELFARE EXCLUSION ACT 

OCTOBER 26, 2022

On October 26, 2022, the Treasury Tribal Advisory Committee (TTAC), Subcommittee on the 

Tribal General Welfare Exclusion Act (GWE Subcommittee), submitted this document to the 

TTAC at its public meeting. 

This document was accepted by the TTAC and referred to the Department of Treasury for Tribal 

consultation before the report is finalized by the TTAC and submitted to the Secretary of the 

Treasury.

I. Core GWE principles for consideration and further input:

The following represent core General Welfare Exclusion (“GWE”) principles for which the GWE 

Subcommittee believes there is a high likelihood of consensus from tribal stakeholders based 

on initial public meetings and input, as well as subcommittee deliberations to date. This initial 

listing of core GWE principles is not intended to be an all-inclusive list as it is anticipated that the 

list will expand and be modified as additional input is gathered and considered. 

1. Flexibility: In accordance with federal tribal self-determination principles, GWE 

guidance must recognize tribal jurisdiction, sovereign discretion, and exclusive authority 

to budget for general welfare benefits and determine such programs and benefit levels in 

the design, development and administration of programs according to the unique 

circumstances, needs, customs, culture, traditions and government practices of Tribal 

governments. GWE definitions must not be used to narrow or restrict tribal rights 

otherwise provided under the Act. 

2. Deference: GWE guidance must reflect the canon of construction set forth in 

Section 2(c) of the Tribal General Welfare Exclusion Act (“TGWEA” or the “Act”): that 

ambiguities in Code Section 139E shall be resolved in favor of Tribal governments and 

deference shall be given to Tribal governments for the programs administered and 

authorized by the Tribe to benefit the distinctive general welfare needs of each Indian 

tribe.

3. Purpose: GWE guidance must reflect the Act’s purpose in promoting tribal 

traditions, culture, custom and government practices, as well as the promotion of selfdetermination and self-governance. Tribal budget dollars reserved for promoting the 

general welfare shall not be diminished by the payment of taxes or costs of compliance.

4. Expansion of the Common Law: GWE guidance must reflect the Act’s intent to 

build upon rather than supplant the common law. Thus, Tribes should be able to 
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continue to rely upon the common law as reflected in Revenue Procedure 2014-35 as 

well as Code Section 139E.

5. Prospective Enforcement: GWE guidance must confirm that it will be applied 

prospectively and that Tribes and Tribal citizens who have developed and administered 

programs in good faith will not be audited retroactively once the temporary suspension is 

lifted. 

6. The Term “lavish or extravagant” is Relative: GWE guidance must recognize 

that “lavish or extravagant” is a relative term that depends on the unique circumstances 

of each Indian tribe.

7. Use of “Safe Harbors”: GWE guidance must confirm that the use of “safe harbors” 

is optional and not a limitation on the statutory rights that Tribes have under the Act or 

Code Section 139E.

The GWE Subcommittee will take these core principles into account when developing proposed

GWE guidance. The GWE Subcommittee will refine and add to these principles as additional 

input is received and considered.

II. Specific Concepts under Consideration:

The following represent specific concepts under consideration for the possible development of 

guidance. This initial listing is not intended to be an all-inclusive list as it is anticipated that the 

list will expand and be modified as additional input is gathered and considered. 

1. GWE versus gaming per capita

Issue: 

Should GWE equal payments from gaming revenue be treated presumptively as per 

capita?

Answer: Tribal response is no. Many tribes develop general welfare programs with set 

amounts for specific benefits or budget a uniform amount per member to address 

tribally-approved general welfare purposes. 

Benefits designed to address special purposes or needs should not be presumed or 

taxed as “per capita.” 

Possible Guidance Solution: 

(1) Adhere to the Indian Gaming Regulatory Act of 1988 (IGRA), Pub. Law §2710 

(2)(B)(ii) which specifically allows tribes to set aside a portion of gaming revenue for

general welfare purposes, and 25 CFR § 290.2, which recognizes that per capita 
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under IGRA does not include payments set aside by a Tribe for special purposes or 

programs. 

(2) Amounts allocated by a Tribe from IGRA revenues for general welfare purposes, and 

paid under programs designed to address specific needs and purposes in promoting 

the general welfare, must be treated presumptively as general welfare and not taxed 

as IGRA per capita payments.

(3) For GWE paid with gaming revenue, a Tribe must be entitled to rely upon its 

approved Revenue Allocation Plan (RAP) in determining what will be treated as a per 

capita distribution or GWE. IRS must not take enforcement positions contrary to a 

Tribe’s approved RAP. 

(4) General welfare benefits can be uniform in amount. 

(5) Source of funds does not matter for purposes of GWE. 

Appendix Regulatory Language for Consideration: TTAC Prop Treas. Reg. § 1.139E-10. 

Coordination with IGRA; Presumptions.

Tribal Comment Summary: 

GWE payments may include uniform assistance/equal payments and are distinct from 

per capita. IGRA regulations (25 CFR § 290.2) provide that per capita distributions do 

not include “payments which have been set aside by the tribe for special purposes or 

programs, such as payments made for social welfare, medical assistance, education, 

housing or other similar, specifically identified needs.” Thus, if the GWE program meets 

GWE criteria, the payments are tax exempt regardless of whether the payment is 

uniform. A Tribe shall be entitled to rely on its approved Revenue Allocation Plan. In 

addition to the general rule of prospective enforcement following GWE guidance, in the 

event of a perceived conflict between IGRA or the Tribe’s RAP and Code Section 139E, 

the Service shall consult with the Tribal government in an effort to resolve the perceived 

conflict. Subsequent enforcement contrary to an approved RAP will be prospective only. 

2. Minors Trusts:

Issue: 

Can the Tribe direct that a portion of minors trust assets be set aside for specific GWE 

program purposes?

Answer: Tribal response is yes. When Tribes pay benefits from an IGRA trust, they 

should be entitled to structure those payments to comply with the GWE. 

Proposed Guidance Solution: 
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(1) For minors’ trusts covered by an IGRA Revenue Allocation Plan (RAP), the RAP 

should be looked to in determining whether the payment is properly characterized as 

per capita or whether it may qualify for GWE if the payments otherwise satisfy 139E.

(2) Tribes retain the sovereign discretion to structure minors trust payments under an 

IGRA trust in compliance with the TGWEA.

(3) IGRA specifically contemplates the ability of Tribal governments to pay health, 

education, and welfare (“HEW”) from minors trust accounts despite the fact that 

amounts contributed into the trust would have been paid as per capita but for the 

individual’s age. 

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 1.139E-11. 

Trusts; Health Education and Other Welfare Payments.

Tribal Comment Summary:

As Tribes may pay health education and welfare benefits under an IGRA trust, Tribes 

may also structure such payments to comply with the GWE. GWE treatment is 

determined based on compliance with Code Section 139E at the time of distribution.

3. Substantiating GWE Expenses:

Issue:

GWE contemplates that payments will be used consistent with program guidelines and 

tribal custom or government practices to “promote the general welfare”. How does the 

Tribe need to “substantiate” that funds were used for a qualified purpose?

Proposed Guidance Solution: 

(1) Code Section 139E does not require Tribes to require members to submit receipts. 

The standard would be what is approved by the Tribe to meet general welfare 

needs/purposes; that is, the tribal government has evaluated and determined what 

the need is, the best way to address it, the feasible means by which they can address 

it, and the determination that the program, as designed, can achieve its goals. 

(2) Promotion of general welfare should be presumed when a Tribe can show that (a) 

GWE benefits meet general welfare needs/purposes; and (b) the method of 

distribution can achieve program goals. 

(3) Tribal governments may show that benefits are calculated to meet general welfare 

needs/purposes by relying on data or studies corroborating such expenses. Without 
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limitation, this would include national or regional studies, member surveys, or 

amounts deemed reasonable by federal or state program guidelines. 

(4) Tribes may show that the method of distribution is expected to achieve program goals 

by establishing Tribe-approved verification procedures such as but not limited to: 

direct pay arrangements, applications in which recipients agree to specified program 

requirements, or end-of-year certifications. 

(5) Tribes must be afforded flexibility with regard to substantiating expenses that relate to 

tribal cultural traditions and religious expenses.

(6) IRS must recognize that some GWE benefits address historical need which will not 

require substantiation by the tribal citizen. For example, benefits paid only to elders 

to make up for historic economic deprivation and shorter life expectancy. 

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 1.139E-8. 

Substantiation.

Tribal Comment Summary:

Determining substantiation is a sovereign function of the Tribe. Substantiation should be 

presumed when a Tribe can show that (a) GWE benefits meet general welfare 

needs/purposes; and (b) the method of distribution can achieve program goals. Tribes 

should be granted deference to create tribal substantiation processes that incorporate 

flexibility, including without limitation use of annual certifications by GWE benefit 

recipients, reliance on member studies or surveys, reference to state or federal program 

guidelines, reliance on tribal, national, state or local agency living expenses data, and 

exceptions for cultural assistance or other payments to address historic economic 

deprivation.

4. Code Section 139E versus Rev Proc 2014-35:

Issue: 

Rev Proc 2014-35 is arguably broader in some respects. For example, it contemplates 

qualified non-tribal citizens (such as lineal descendants and domestic partners). Code 

Section 139E contemplates benefits to or on behalf of tribal citizens, spouses, and 

dependents.

Possible Guidance Solution: 

(1) Confirm that Tribes may continue to rely on both 139E and Rev Proc 2014-35 as 

139E is a statutory benefit and Rev Proc 2014-35 reflects the “common law.” 
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Consider guidance confirming that 139E expands rather than supplants the common 

law. This is supported by the GWE Congressional intent as reflected in the statutory 

provisions and legislative history. Any guidance must clearly incorporate language 

specifically stating Congressional intent preserved in a colloquy between Senator 

Jerry Moran (R-KS) and Senator Heidi Heitkamp (D-ND), the original co-sponsors of 

the Tribal General Welfare Exclusion Act (TGWEA) (P.L.113-168), and the Chairman 

of the Senate Finance Committee, Senator Ron Wyden (D-OR). See the Colloquy of 

Senator Ron Wyden (D-OR), Senator Heidi Heitkamp (D-ND), and Senator Jerry 

Moran (R-KS), Cong. Rec. S5686 (September 17, 2014) (emphasis added); also see 

the Statement of Senator Heidi Heitkamp (D-ND), Cong. Rec. S5686 (September 17, 

2014). 

(2) In addition, Notice 2015-34 reaffirming the validity for Rev. Proc. 2014-35 should 

also be incorporated in any guidance. 

a. The phrase “on behalf of” the tribal citizen must be read broadly. For 

example, depending on particular tribal culture, custom and tradition, a tribal 

citizen may have obligations to care for extended family, and a Tribe may 

determine that such assistance promotes the general welfare. 

(3) Consider guidance that adopts Rev. Proc. 2014-35 flexibility for both payments and 

reimbursements. 

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 1.139E-5. 

Continued Reliance on Rev Proc 2014-35. 

Tribal Comment Summary:

Code Section 139 E incorporates Rev. Proc. 2014-35. This was confirmed in IRS Notice 

2015-34. IRS GWE guidance must confirm that continued interpretation. Note: the 

subcommittee commented that there may be legislative history further supporting a 

broader interpretation of eligible program recipients that follows 2014-35.

5. Flexible “Safe Harbor” Plans:

Issue: 

Tribes may want to develop programs to reflect that tribal citizens will have different 

needs. For example, a Tribe may budget up to a certain amount for annual GWE 

benefits per tribal citizen. A tribal citizen with a home may use all of it for roof repairs. 

Another tribal citizen who is a renter may need deposit assistance for an apartment 

instead.

Possible Guidance Solution: 
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(1) Confirm that Tribes may develop flexible programs that allow tribal citizens to select 

from among pre-approved GWE program purposes subject to budget limits and 

program guidelines. This helps with tribal budgets and allows tribal citizens to 

prioritize GWE needs. 

(2) Confirm that the “safe harbors” in Rev. Proc. 2014-35 are not exclusive and that 

Tribal Governments can establish their own “safe harbors.”

(3) Provide that such Tribal Government “safe harbors” shall be given the same status 

and effect as the “safe harbors” in Rev. Proc. 2014-35.

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 139E-6. 

Flexible Safe Harbor Programs.

Tribal Comment Summary:

Tribal citizens must be permitted to elect how they can use GWE benefits within the 

parameters of a tribal GWE program.

6. Compensation for Services:

Issue: 

Code Section 139E prohibits “compensation for services” from being treated as GWE. 

Some tribes, however, have traditionally tied certain types of assistance to community 

service. Rev. Proc. 2014-35 mentions honoraria for ceremonial events but fails to 

describe larger tribal wide cultural, ceremonial and community service General Welfare 

programs.

Possible Guidance Solution: 

(1) Confirm that “compensation for services” is not intended to prohibit Tribal custom or 

tradition with regard to community service.

(2) Confirm that “compensation for services” never includes cultural and ceremonial gifts

and payments as determined by each Tribe.

(3) Confirm that payments as part of a training program are not compensation for 

services.

See, for example: Revenue Ruling 75-246 (Payment for services rendered under a 

work-training program was not “compensation” when payments were in the nature of 

relief payments made for the promotion of the general welfare). See also Revenue 

Ruling 63-136 (Manpower Development and Training Act of 1962 payments are 
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intended to aid the recipients in efforts to acquire new skills and promote the general 

welfare); Revenue Ruling 68-38 (Basic purpose training program is to train 

unemployed and underemployed residents and payment is not compensation for 

services); Revenue Ruling 68-133 (stipend received by "job service corpsmen" is 

intended to aid in efforts to acquire skills and characterized as employment 

promoting the general welfare); Revenue Ruling 72-340 (stipends intended to aid in 

acquiring training skills made for the promotion of the general welfare).

Tribal Comment Summary: 

Assistance that includes, but is not limited to, training, community service, cultural and 

traditional practices and ceremonial activities shall not be considered compensation for 

services. 

7. Prospective Enforcement:

Issue: 

The GWE includes a temporary audit suspension pending IRS education and training. 

However, it also extends the statute of limitations for assessments. It is critical that 

Tribes with established general welfare benefit programs, prior to the issuance of any 

new guidance, not be penalized for their reasonable interpretations of then-applicable 

authority and administration of general welfare benefit programs.

Possible Guidance Solution:

(1) Confirm that the GWE guidance, once developed, will be applied prospectively only, 

not retroactively.

(2) Establish a grace period of not less than one year for Tribes to comply with the new 

guidance before it applies. 

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 1.139E-1. 

Suspension of Audits; Prospective Enforcement.

Tribal Comment Summary: 

Same as possible guidance solution.

8. Lavish and Extravagant:

Issue: 
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The Act calls for the development of guidance on what will be treated as “lavish or 

extravagant” for purposes of GWE. 

Possible Guidance Solution: 

(1) GWE guidance must recognize that “lavish or extravagant” is a relative term that 

depends on the unique circumstances of each Indian tribe and the type of benefit 

provided (e.g., one-time down payment vs. monthly utility assistance). 

(2) Relevant circumstances include, without limitation, an Indian tribal government’s 

economic conditions or factors, culture and cultural practices, history, geographic 

areas, traditions, resources, and other considerations such as a tribe’s process to 

meet goals and objectives for general welfare purposes.

(3) Recognizing that tribal governments are best situated to determine what constitutes 

“lavish or extravagant,” the IRS should establish a rebuttable presumption that defers 

to a tribal government’s interpretation of this term. 

(4) When claiming a benefit is lavish or extravagant, the IRS must not utilize guidance in 

other areas of the law (such as under the “innocent spouse” doctrine) because those 

areas do not reflect the circumstances unique to tribal governments and GWE. 

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 1.139E-3. 

Lavish or Extravagant.

Tribal Comment Summary: 

Same as possible guidance solution.

9. Wellness and Health-related Programs:

Issue: 

Rev. Proc. 2014-35 states that it “does not address certain benefits that tribal 

citizens of an Indian tribe may exclude from income under a specific provision of the 

Code” such as Section 139D (generally limited to health-related expenses that meet 

the definition of a deductible “medical expense” under Code Sections 213 and 105). 

Wellness incentive programs have also been recognized as promoting the welfare of 

individuals under Section 4108 of the Affordable Care Act. Numerous Tribes offer health 

and wellness programs. Given the constant litigation surrounding the Affordable Care 

Act that included Section 139D, separate General Welfare treatment should be included 

for health-related expenditures and other unique programs like “wellness” that may not fit 

within a traditional health plan.
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Possible Guidance Solution:

(1) Confirm that wellness and health-related programs, including wellness incentive 

programs, qualify under GWE. 

(2) Clarify that the Code Section 139E exclusion for wellness and health-related 

programs is independent of, and not limited by, Code Section 139D (Indian health 

care benefits).

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 1.139E-9. 

Wellness and Health-Related Programs; Coordination With Section 139D. 

Tribal Comment Summary: 

Many commenters expressed that they have health and wellness programs to improve 

the physical and mental welfare of their community. 

10. Accumulated or Deferred GWE benefits:

Issue: 

A Tribe with a small annual GWE budget may want to allow citizens to defer annual 

benefits in favor of larger GWE expenses down the road (such as a housing down 

payment or college tuition).

Possible Guidance Solution: 

(1) Consider guidance confirming that GWE benefits can be deferred to future dates. 

(2) Allow for accumulation of GWE benefits prior to distribution which will still meet 

requirements of 139E(b)(2)(A) and (C).

Appendix Regulatory Language for Consideration: TTAC Prop. Treas. Reg. § 1.139E-12. 

Deferred Benefits.

Tribal Comment Summary:

Commenters felt that programs should be able to provide for rolling over GWE benefits 

and elective conversion from per-capita to GWE. 

11. Coordination with SSI and Other Federal “Needs Based” Programs:

Issue: 
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While the GWE presumes need, some federal programs such as the Social Security 

Administration’s (SSA) Supplemental Security Income (SSI) program still require means 

testing. Thus, tribal GWE program benefits may be used to disqualify tribal citizens from 

federal program benefits.

Possible Guidance Solution: 

(1) Consider SSI change in policy that TGWEA benefits are deemed to meet SSA 

Assistance Based on Need (ABON) standards.

(2) Confirm with SSA that Tribes can establish a means based general welfare program 

utilizing their own financial standards, not necessarily federal standards, which will 

qualify for existing SSA ABON standards

(3) Support legislation to amend 139E to clarify that amounts exempt under GWE should 

not be counted as a resource or treated as income for other federal programs.

Appendix Proposed Regulatory Language: TTAC Prop. Treas. Reg. § 1.139E-13. 

Coordination with SSI and Other Federal “Needs Based” Programs.

Tribal Comment Summary: 

Many commenters requested that Treasury engage in inter-agency assistance to 

educate other federal departments that tribal general welfare benefits are not income 

and should not be included in eligibility determinations for assistance like Supplemental 

Social Security Income or Supplemental Nutrition Assistance. In addition to asking for 

inter-agency support, commenters also supported an amendment to the TGWEA to 

confirm that GWE benefits are not counted against individuals for purposes of federal 

assistance.

12. Items of Cultural Significance, Reimbursement of Costs and Honorariums:

Issue: 

The TGWEA provides that any items of cultural significance, reimbursement of costs, or 

cash honorarium for participation in cultural or ceremonial activities for the transmission 

of tribal culture shall not be treated as compensation for services.

Possible Guidance Solution: 

(1) Consider guidance that confirms that IRS must defer to tribal determinations on what 

it means to participate in cultural or ceremonial activities for the transmission of tribal 

culture.
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(2) Consider guidance that recognizes the Congressional decision to eliminate the 

qualifier that honorariums must be “nominal” cash value as per Revenue Procedure 

2014-35. A Tribe’s determination of the proper amount of honorarium should be 

presumptively reasonable and fair value.

Appendix Proposed Regulatory Language: TTAC Prop. Treas. Reg. § 1.139E-4. Cash 

Honoraria, Items of Cultural Significance for Transmission of Tribal Culture.

Tribal Comment Summary: 

Same as possible guidance solution.

13. Disaster Relief and Similar Assistance:

Issue: 

Tribal governments provide disaster relief and similar assistance to promote the welfare 

and address emergencies as well as the public health and safety. While rulings on 

disaster relief were referenced in prior IRS safe harbor guidance, disaster relief itself 

was not expressly identified. 

Proposed Guidance Solution: 

(1) Expressly recognize disaster relief and similar assistance as a presumed GWE 

benefit. 

(2) Clarify that disaster relief and similar assistance paid with funds from the CARES Act 

or American Rescue Plan Act and similar future legislation qualify as appropriate

uses of those funds.

(3) Suspend audits of CARES Act and American Rescue Plan Act and similar 

expenditures to the extent such audits relate to GWE assistance.

Regulatory Language for Consideration: TTAC Proposed Treas. Reg. § 1.139E-7. 

Disaster Relief and Similar Assistance.

Tribal Comment Summary:

Many commenters stated that their Tribes have disaster relief programs which have 

been critical during the pandemic and during natural disasters which are increasing due 

to climate change. 
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14. Grants to Indian-Owned Enterprises:

Issue:

Rev. Proc. 2014-35 cites Rev. Rul. 77-77 for the proposition that non-reimbursable 

grants made under the Indian Financing Act of 1974 to Indians to expand profit-making 

Indian-owned economic enterprises on or near reservations are excludable from gross 

income under the general welfare exclusion. In at least one subsequent private letter 

ruling, the IRS expanded the ruling to business grants made outside the authority of the 

Indian Financing Act of 1974. Further, in a Frequently Asked Question published in 

2020 in connection with the CARES Act, the IRS stated that “a grant made by the 

government of a federally recognized Indian tribe to a member to expand an Indianowned business on or near reservations is excluded from the member's gross income 

under the general welfare exclusion.”

Proposed Guidance Solution:

(1) Recognize that all grants to establish or expand Indian-owned enterprises are 

excludable from gross income as GWE.

(2) Clarify that “expanding” a business includes assistance to help a business remain in 

operation or recover from losses. 

(3) Permit the tribe making the grant establish what it means to be an “Indian-owned 

enterprise.”

Regulatory Language for Consideration: TTAC Proposed Treas. Reg. § 1.139E-14. 

Grants to Indian-Owned Enterprises.

Tribal Comment Summary:

Several tribes requested that future general welfare guidance explicitly recognize the 

application of the GWE to Indian-owned enterprises. Commenters also noted that the 

reference to “expanding” an enterprise should include assistance to help a business 

remain in operation or recover from losses. This language is of particular concern due to 

COVID-19, which has adversely affected many businesses owned by Native Americans. 

15. Rules of Construction:

Issue: 

The TGWE includes a special rule of construction requiring ambiguity to be construed in 

favor of tribes, but this rule is in Code Section 139E. 

Proposed Guidance Solution: 
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(1) Add regulatory requirements for IRS to comply with the TGWEA special rule of 

construction. 

(2) Add a rule of deference and burden standards to implement the rule of construction.

Regulatory Language for Consideration: TTAC Prop Treas. Reg. § 1.139E-2. Rules of 

Construction.

Tribal Comment Summary: Same as possible guidance solution.

APPENDIX A

The TTAC recommends that Treasury not rely on United States of America v. Sally Jim, 

Miccosukee Tribe of Indians of Fla., Intervenor, 891 F.3d 1242 (11th Cir. 2018) in developing 

guidance under the TGWEA because: (1) The case addressed tax years that predated Code 

Section 139E, (2) the case is limited to unique facts that are not generally applicable, and (3) 

rulings in private litigation do not reflect government-to-government consultation and informed 

rulemaking. 

APPENDIX B

DRAFT IRC 139E TTAC PROPOSED REGULATIONS

INDEX OF TTAC PROPOSED REGULATIONS

0- TTAC Prop Treas. Reg. § 1.139E-0. Core Principles.

(a) flexibility

(b) deference

(c) purpose

(d) expansion of common law

(e) prospective enforcement

(f) lavish or extravagant as relative term

(g) safe harbors as optional 

1- TTAC Prop. Treas. Reg. § 1.139E-1. Suspension of Audits; Prospective 

Enforcement.

(a) Suspension of Audits. 

(b) Prospective Enforcement.

2- TTAC Prop Treas. Reg. § 1.139E-2. Rules of Construction. 
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(a) Ambiguity in favor of Indian tribal governments.

(b) Standard of Review; Presumptions and Burden of Proof. 

3- TTAC Prop. Treas. Reg. § 1.139E-3. Lavish or Extravagant. 

(a) Relative Term. 

(b) Rebuttable Presumption. 

(c) Reasonably Calculated. 

4- TTAC Prop. Treas. Reg. § 1.139E-4. Cash Honoraria, Items of Cultural 

Significance for Transmission of Tribal Culture.

5- TTAC Prop. Treas. Reg. § 1.139E-5. Continued Reliance on Rev Proc 2014-35.

(a) Optional reliance on Rev. Proc 2014-35. 

(b) Qualified nonmembers. 

(c) Expansion of Safe Harbors.

6- TTAC Prop. Treas. Reg. § 139E-6. Flexible Safe Harbor Programs.

(a) General Rule.

(b) Deferred Benefits; Accumulation. 

(c) Elections Flexibility. 

7- TTAC Proposed Treas. Reg. § 1.139E-7. Disaster Relief and Similar Assistance.

(a) General Rule. 

(b) Coordination with CARES Act. 

8- TTAC Prop. Treas. Reg. § 1.139E-8. Substantiation.

(a) General Rule. 

(b) Reasonableness of Amount Presumed. 

(c) Achievement of Program Goals Presumed. 

(d) Exempt Programs. 

9- TTAC Prop. Treas. Reg. § 1.139E-9. Wellness and Health-Related Programs; 

Coordination With Section 139D.

(a) Wellness and Health-Related Programs. 

(b) Coordination with Section 139D. 

10- TTAC Prop Treas. Reg. § 1.139E-10. Coordination with IGRA; Presumptions.

(a) Presumptions.
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(b) Reliance on approved Revenue Allocation Plan. 

(c) Perceived Conflicts with Revenue Allocation Plan; Consultation. 

11- TTAC Prop. Treas. Reg. § 1.139E-11. Trusts; Health Education and Other 

Welfare Payments.

(a) General welfare payments from trusts. 

(b) Determination Upon Payment. 

12- TTAC Prop. Treas. Reg. § 1.139E-12. Deferred Benefits.

(a) Deferral. 

(b) Elections Flexibility. 

13- TTAC Prop. Treas. Reg. § 1.139E-13. Coordination with SSI and Other Federal 

“Needs Based” Programs.

TTAC PROPOSED REGULATIONS:

TTAC Prop Treas. Reg. § 1.139E-0. Core Principles. In administering the Tribal 

General Welfare Exclusion Act (the “Act”) and Internal Revenue Code (the “Code”) 

Section 139E, the IRS shall take into account certain core principles reflected in the 

legislative history to the Act, including:

(a) flexibility for Indian tribal governments to design and administer programs 

to meet the circumstances, needs, customs, culture, traditions and government 

practices unique to each Indian tribal government, 

(b) deference to Indian tribal governments consistent with the tribal canon of 

construction set forth in Section 2(c) of the Act, 

(c) purpose of the Act to promote tribal traditions, culture, custom and 

government practices, as well as the promotion of self-determination and selfgovernance, 

(d) expand and build upon rather than supplant the sovereign right of each 

Indian tribal government to provide general welfare under the common law and 

Revenue Procedure 2014-35, 

(e) prospective enforcement following notice, comment and tribal 

consultation, as well as the opportunity of tribal governments to amend programs to 

meet new regulatory requirements or other subsequent guidance under the Act, 
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(f) relative nature and uniqueness of each tribe recognized when determining 

what is “lavish or extravagant”, and 

(g) safe harbors are optional and not a limitation on the statutory rights that 

individual Indian tribal governments have under the Act or Code Section 139E.

TTAC Prop. Treas. Reg. § 1.139E-1. Suspension of Audits; Prospective 

Enforcement.

(a) Suspension of Audits. The Secretary shall suspend all audits and 

examinations of Indian tribal governments, members of Indian tribal governments, and 

qualified nonmembers to the extent such an audit or examination relates to the reporting 

or exclusion of Indian general welfare benefits, until satisfaction of the requirements for 

prospective enforcement under subparagraph (b).

(b) Prospective Enforcement. Once the training and guidance prescribed by 

Section 3(b)(2) the Act is completed, the Secretary shall publish notice in the Federal 

Register. The notice shall stipulate that Indian tribal governments have one year to 

modify their programs as necessary to comply with such guidance before general 

welfare audits or examinations of Indian tribal governments, members of Indian tribal 

governments, and qualified nonmembers commence. Once audits commence, they 

shall only relate to periods beginning on or after the one-year period referred to in the 

previous sentence has passed.

TTAC Prop Treas. Reg. § 1.139E-2. Rules of Construction.

(a) General Rule. Ambiguity under Code Section 139E shall be resolved in 

favor of Indian tribal governments and deference shall be afforded to Indian tribal 

governments for the programs administered and authorized by the tribe to benefit the 

general welfare of the tribal community. When implementing the foregoing rule of 

statutory construction, IRS shall take into account that Indian tribal governments are 

vested with the sovereign right and discretion to determine the types and amount of 

general welfare benefits best suited to promote the general welfare needs of each tribe, 

as well as the means to implement and substantiate the use of such assistance. 

(b) Standard of Review; Presumptions and Burden of Proof. An Indian tribal 

government will be presumed to have properly exercised its discretion under Code 

Section 139E if it can demonstrate that it has acted consistently with either written 

general welfare program guidelines or unwritten tribal custom or government practices 

(per Code Section 139E(c)(4)). Matters within the sovereign discretion of tribal 

governments under Code Section 139E shall not be challenged or overturned except 
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upon the showing of an abuse of discretion. In audit, the IRS shall have the burden of 

proving an abuse of discretion by reference to the Indian tribal government’s written 

program guidelines (or unwritten tribal custom or government practices), as applicable, 

and the unique goals and statutory construction requirements of the Act. 

TTAC Prop. Treas. Reg. § 1.139E-3. Lavish or Extravagant.

(a) Relative Term. “Lavish or extravagant” is a relative term that depends on 

the unique circumstances of each tribal community and the type of benefit provided. 

Relevant circumstances include, without limitation, an Indian tribal government’s 

economic conditions or factors, culture and cultural practices, history, geographic areas, 

traditions, resources, and other considerations such as a tribe’s process to meet goals 

and objectives for general welfare purposes. 

(b) Rebuttable Presumption. Tribal governments are best situated to 

determine what constitutes “lavish or extravagant.” Accordingly, the Secretary shall 

defer to a tribal government’s interpretation of the term. Any rebuttal must overcome 

the rule of statutory construction set forth in Section 2(c) of the Act and Section 1.139E2 (Rules of Construction), and must rely on the specific purposes of the Act. 

(c) Reasonably Calculated. Program amounts that have been reasonably

calculated in accordance with Section 1.139E-9 (Substantiation) shall not by definition 

be considered lavish or extravagant. Nothing within this subsection shall relieve IRS’ 

burden of proof as set forth in subsection (b).

TTAC Prop. Treas. Reg. § 1.139E-4. Cash Honoraria, Items of Cultural 

Significance for Transmission of Tribal Culture.

Any items of cultural significance, reimbursement of costs, or cash honorarium for 

participation in cultural or ceremonial activities for the transmission of tribal culture shall

not be treated as compensation for services. The Secretary shall defer to the tribal 

government in determining which activities constitute participating in cultural or 

ceremonial activities for the transmission of tribal culture. 

TTAC Prop. Treas. Reg. § 1.139E-5. Continued Reliance on Rev Proc 2014-35.

(a) General Rule. Without limiting any additional rights that an Indian tribal 

government may have under the Act or Code Section 139E, each tribal government 

shall be entitled to continued reliance on programs that meet the safe harbor 

requirements of Revenue Procedure 2014-35. 
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(b) Qualified nonmembers. The phrase “on behalf of” under Code Section 

139E(b) shall be read broadly to achieve the purposes and goals of the Indian tribal 

government program, and associated Indian general welfare benefits, including, without 

limitation, benefits for qualified nonmembers per Revenue Procedure 2014-35.

(c) Expansion of Safe Harbors. The expense categories addressed in 

Section 1.139E-7 (parity), Section 1.139E-8 (disaster relief and similar assistance), and 

Section 1.139E-10 (wellness and health-related programs) shall be treated as if 

identified as separate safe harbor categories in Revenue Procedure 2014-35. The safe 

harbors in Revenue Procedure 2014-35 shall be read as examples and not as a list of 

limitation. Tribes may expand these safe harbors, and establish new ones, to the extent 

consistent with the Act. 

TTAC Prop. Treas. Reg. § 139E-6. Flexible Safe Harbor Programs.

(a) General Rule. Indian tribal governments may offer flexible programs 

that allow tribal recipients to select from among tribal pre-approved Indian general 

welfare benefits. Pre-approved benefits may include, but are not limited to IRS safe 

harbor benefits under Revenue Procedure 2014-35, tribal programs described in 

Sections 1.139E-5(c) (expansion of safe harbors), or other Indian tribal programs 

approved by a tribe under Code Section 139E. 

(b) Deferred Benefits; Accumulation. Indian tribal governments may establish 

programs that allow Indian general welfare benefits to be deferred and accumulated for 

larger safe harbor and other general welfare purposes approved by the tribe such as, by 

way of example and not limitation, home ownership, catastrophic care, assisted living 

and nursing homes, and college tuition and associated expenses. 

(c) Elections Flexibility. Each Indian tribal government may make the 

determination on the methods and timing for benefit elections and deferrals based on 

the unique needs of each tribe. Deferral of tax exempt benefits under Code Section 

139E shall not be limited by constructive receipt and economic benefit restrictions that 

apply to the deferral of taxable income or benefits. 

TTAC Proposed Treas. Reg. § 1.139E-7. Disaster Relief and Similar Assistance.

(a) General Rule. Disaster relief and similar assistance provided by an Indian 

tribal government in response to tribal, national, state or local government declarations 

of emergency shall be deemed to satisfy Code Section 139E. 

(b) Coordination with CARES Act and American Rescue Plan Act. Disaster 

relief and similar assistance that satisfies Code Section 139E shall qualify as an 
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appropriate use of Coronavirus Relief Funds provided to tribal governments pursuant to 

Title V of the Coronavirus Aid, Relief, and Economic Security Act, and Coronavirus 

Fiscal Recovery Funds provided pursuant to Section 9901 of the American Rescue Plan 

Act.

TTAC Prop. Treas. Reg. § 1.139E-8. Substantiation.

(a) General Rule. Substantiation should be presumed when an Indian tribal 

government can show that (a) Indian general welfare benefits are reasonably calculated 

to meet general welfare needs/purposes; and (b) the method of distribution is 

reasonably expected to achieve program goals. 

(b) Reasonableness of Amount Presumed. An Indian tribal government shall 

be presumed to have established benefits in an amount reasonably calculated to meet 

general welfare needs/purposes by relying on data or studies corroborating such 

expenses. Without limitation, this would include national or regional studies, member 

surveys, tribal, national, state or local agency living expense data, or amounts based on 

federal, state or local government program guidelines per Section 1.139E-7.

(c) Achievement of Program Goals Presumed. An Indian tribal government 

shall be presumed to have established a method of distribution that is reasonably 

expected to achieve program goals by establishing reasonable verification procedures 

such as, but not limited to: payments made directly to a vendor or service provider, 

applications in which recipients agree to specified program requirements, and/or end of 

year certifications.

(d) Exempt Programs. Further substantiation is not required for Indian 

general welfare benefits approved by a tribe to promote tribal culture, traditions and 

religion. Nor is further substantiation required for Indian general welfare benefits 

approved by a tribe to address historical need or economic deprivation such as, but not 

limited to, elder benefits designed to make up for historic barriers to economic or 

employment opportunities, and the associated lack of social security or retirement 

savings. 

TTAC Prop. Treas. Reg. § 1.139E-9. Wellness and Health-Related Programs; 

Coordination With Section 139D

(a) Wellness and Health-Related Programs. Wellness and health-related 

programs, including wellness programs and/or incentive payments, qualify as Indian 

general welfare benefits. 
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(b) Coordination With Code Section 139D. The exclusion for wellness and 

health-related programs under Code Section 139E is independent of, and not limited by, 

Code Section 139D.

TTAC Prop Treas. Reg. § 1.139E-10. Coordination with IGRA; Presumptions.

(a) Presumptions: Amounts allocated by an Indian tribal government for 

general welfare purposes shall be treated presumptively as Indian general welfare 

benefits, rather than taxable per capita payments under the Indian Gaming Regulatory 

Act (IGRA), when paid under programs designed to address specific needs and 

purposes in promoting the general welfare.

(b) Reliance on Revenue Allocation Plan. An Indian tribal government shall be 

entitled to rely upon its approved Revenue Allocation Plan in determining what gaming 

revenues will be treated as a per capita distributions or general welfare payments 

eligible for treatment under Code Section 139E. 

(c) Perceived Conflicts with Revenue Allocation Plan; Consultation. The IRS

shall not take enforcement actions contrary to an Indian tribal government’s approved 

Revenue Allocation plan contrary to this paragraph (c). In the event of a perceived 

conflict between IGRA or the Indian tribal government’s Revenue Allocation Plan and 

Code Section 139E, the IRS shall consult with the tribe in an effort to resolve the 

perceived conflict on a government-to-government basis. Any subsequent enforcement 

contrary to an approved Revenue Allocation Plan will be prospective only, and with 

sufficient time for the Indian tribal government to secure changes and government 

approvals of the Revenue Allocation Plan, as necessary. All consultation shall take into 

account the purposes of the Act, including the special rule of statutory construction set 

forth in Section 2(c) of the Act and Section 1.139E-2. In the event that the Indian tribal 

government and IRS are not able to agree, all Tribal appeal and litigation rights are 

reserved. 

TTAC Prop. Treas. Reg. § 1.139E-11. Trusts; Health Education and Other Welfare 

Payments.

(a) General welfare payments. An Indian tribal government may pay Indian 

general welfare benefits from trust arrangements including, without limitation, payments 

set aside for the health, education and welfare of trust beneficiaries under IGRA.

(b) Determination Upon Payment. General welfare determinations are made 

at the time of payment from a trust based solely on whether the payments meet Code 
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Section 139E. Treatment under Code Section 139E is not limited because contributions 

are made into the trust on a per capita basis. 

TTAC Prop. Treas. Reg. § 1.139E-12. Deferred Benefits.

(a) Deferral. Indian tribal governments may establish general welfare 

programs which allow individual beneficiaries to defer and accumulate benefits for 

future payment. Deferred amounts which meet the requirements of Section 1.139E-3 

(lavish or extravagant) upon funding by the tribe will be treated as meeting the 

requirements of Code Section 139E when distributed to the individual tribal member 

beneficiary. 

(b) Elections Flexibility. Each Indian tribal government may make the 

determination on the methods and timing for benefit elections and deferrals based on 

the unique needs of each tribe. Deferral of tax exempt benefits under Code Section 

139E shall not be limited by constructive receipt and economic benefit restrictions that 

apply to the deferral of taxable income or benefits.

TTAC Prop. Treas. Reg. § 1.139E-13. Coordination with SSI and Other Federal 

“Needs Based” Programs.

Need shall be presumed for all Indian general welfare benefits that meet the 

requirements of Code Section 139E. The Secretary and IRS shall, to the fullest extent 

possible, coordinate with other federal agencies to ensure that Indian general welfare 

benefits are not counted as income or a disqualifying resource for purposes of program 

eligibility, including, without limitation, supplemental security income benefits under 42 

U.S.C. § 1381 et seq.