Monetary Offices, Treasury

by paying the recipient, by notifying
the recipient of the receipt of the order
or by otherwise becoming obligated to
carry out the order.

(b) At one time. For purposes of § 103.23
of this part, a person who transports,
mails, ships or receives; is about to or
attempts to transport, mail or ship; or
causes the transportation, mailing,
shipment or receipt of monetary in-
struments, is deemed to do so ‘‘at one
time”’ if:

(1) That person either alone, in con-
junction with or on behalf of others;

(2) Transports, mails, ships or re-
ceives in any manner; is about to
transport, mail or ship in any manner;
or causes the transportation, mailing,
shipment or receipt in any manner of;

(3) Monetary instruments;

(4) Into the United States or out of
the United States;

(6) Totaling more than $10,000;

(6)(i) On one calendar day or (ii) if for
the purpose of evading the reporting
requirements of § 103.23, on one or more

days.

() Bank. Each agent, agency, branch
or office within the United States of
any person doing business in one or
more of the capacities listed below:

(1) A commercial bank or trust com-
pany organized under the laws of any
State or of the United States;

(2) A private bank;

(3) A savings and loan association or
a building and loan association orga-
nized under the laws of any State or of
the United States;

(4) An insured institution as defined
in section 401 of the National Housing
Act;

(5) A savings bank, industrial bank or
other thrift institution;

(6) A credit union organized under
the law of any State or of the United
States;

(2) Any other organization (except a
money services business) chartered
under the banking laws of any state
and subject to the supervision of the
bank supervisory authorities of a
State;

(8) A bank organized under foreign
law;

(9) Any national banking association
or corporation acting under the provi-
sions of section 25(a) of the Act of Dec.
23, 1913, as added by the Act of Dec. 24,

§ 103.11

1919, ch. 18, 41 Stat. 378, as amended (12
U.S.C. 611-32).

(d) Beneficiary. The person to be paid
by the beneficiary's bank.

(©) Beneficiary’s bank. The bank or
foreign bank identified in a payment
order in which an account of the bene-
ficiary is to be credited pursuant to the
order or which otherwise is to make
payment to the beneficiary if the order
does not provide for payment to an ac-
count.

() Broker or dealer in securities. A
broker or dealer in securities, reg-
istered or required to be registered
with the Securities and Exchange Com-
mission under the Securities Exchange
Act of 1934.

(g) Common carrier. Any person en-
gaged in the business of transporting
individuals or goods for a fee who holds
himself out as ready to engage in such
transportation for hire and who under-
takes to do so indiscriminately for all
persons who are prepared to pay the fee
for the particular service offered.

(h) Currency. The coin and paper
money of the United States or of any
other country that is designated as
legal tender and that circulates and is
customarily used and accepted as a me-
dium of exchange in the country of
issuance. Currency includes U.S. silver
certificates, U.S. notes and Federal Re-
serve notes. Currency also includes of-
ficial foreign bank notes that are cus-
tomarily used and accepted as a me-
dium of exchange in a foreign country.

(i) [Reserved]

(j) Deposit account. Deposit accounts
include transaction accounts described
in paragraph (q) of this section, savings
accounts, and other time deposits.

(k) Domestic. When used herein, refers
to the doing of business within the
United States, and limits the applica-
bility of the provision where it appears
to the performance by such institu-
tions or agencies of functions within
the United States.

(1) Established customer. A person with
an account with the financial institu-
tion, including a loan account or de-
posit or other asset account, or a per-
son with respect to which the financial
institution has obtained and maintains
on file the person's name and address,
as well as taxpayer identification num-
ber (e.g., social security or employer

315


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Endnotes

" See: http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?dbname=2000_register&position=all&page=67249, for a
copy of EO 13175.

? For example, the Treasury Financial Crimes Enforcement Network (FinCEN) guidance to gaming organizations is
highly specialized, and it directly targets a relatively small number of organizations. Therefore routine requests for
comments and guidance that includes brief mention of Indian gaming activities is often sufficient to fulfill EO
13175. For example, see FIN-2990-G004, “Frequently Asked Questions, Casino Recordkeeping, Reporting and
Compliance Reporting Requirements, September 30, 2009, extracted 070110 from
http://www.fincen.gov/news_room/nr/html/19960222.html ,

> A summary of IRS ITG tribal consultation procedures are described in Appendix E and further details on their
regular consultation process can be found on their website www. irs.gov/tribes.

‘ Brief descriptions of relevant activities in Treasury Offices and Bureaus are provided in Appendix A.

* This information will provide the basis for annual reports that the Treasury Department is required to submit to
OMB under EO 13175.

© The workshop schedule is available at a link titled “ITG Education and Training,” at the left of the ITG web site
http://www. irs.gov/tribes/index.htm! .

7 The workshop schedule, including links to registration sites, is posted at

http://www. frbsf.org/community/resources/events
5 A summary report from the IRS is included in Appendix E,

° This Federal Register notice is included in Appendix D.

10 See “Anti-Money Laundering Controls for Indian Tribal Casinos,” February 22, 1996, posted at
http://www. fincen.gov/news_room/nr/html/19960222

14


Monetary Offices, Treasury

transfer, or any other payment, trans-
fer, or delivery by, through, or to a fi-
nancial institution, by whatever means
effected.

(2) For purposes of § 103.22, and other
provisions of this part relating solely
to the report required by that section,
the term "transaction in currency’
shall mean a transaction involving the
physical transfer of currency from one
person to another. A transaction which
is a transfer of funds by means of bank
check, bank draft, wire transfer, or
other written order, and which does not
include the physical transfer of cur-
rency, is not a transaction in currency
for this purpose.

(jj) Transmittal of funds. A series of
transactions beginning with the
transmittor’s transmittal order, made
for the purpose of making payment to
the recipient of the order. The term in-
cludes any transmittal order issued by
the transmittor’s financial institution
or an intermediary financial institu-
tion intended to carry out the
transmittor’s transmittal order. The
term transmittal of funds includes a
funds transfer. A transmittal of funds
is completed by acceptance by the re-
cipient’s financial institution of a
transmittal order for the benefit of the
recipient of the transmittor’s trans-
mittal order. Funds transfers governed
by the Electronic Fund Transfer Act of
1978 (Title XX, Pub. L. 95-630, 92 Stat.
3728, 15 U.S.C. 1693, et seqg.), as well as
any other funds transfers that are
made through an automated clearing-
house, an automated teller machine, or
a point-of-sale system, are excluded
from this definition.

(kk) Transmittal order. The term
transmittal order includes a payment
order and is an instruction of a sender
to a receiving financial institution,
transmitted orally, electronically, or
in writing, to pay, or cause another fi-
nancial institution or foreign financial
agency to pay, a fixed or determinable
amount of money to a recipient if:

(1) The instruction does not state a
condition to payment to the recipient
other than time of payment;

(2) The receiving financial institu-
tion is to be reimbursed by debiting an
account of, or otherwise receiving pay-
ment from, the sender; and

§ 103.11

(3) The instruction is transmitted by
the sender directly to the receiving fi-
nancial institution or to an agent or
communication system for transmittal
to the receiving financial institution.

(il) Transmittor. The sender of the
first transmittal order in a transmittal
of funds. The term transmittor in-
cludes an originator, except where the
transmittor’s financial institution is a
financial institution or foreign finan-
cial agency other than a bank or for-
eign bank.

(mm) Transmittor's financial institu-
tion. The receiving financial institu-
tion to which the transmittal order of
the transmittor is issued if the
transmittor is not a financial institu-
tion or foreign financial agency, or the
transmittor if the transmittor is a fi-
nancial institution or foreign financial
agency. The term transmittor’s finan-
cial institution includes an originator's
bank, except where the originator is a
transmittor’s financial institution
other than a bank or foreign bank.

(nn) United States. The States of the
United States, the District of Colum-
bia, the Indian lands (as that term is
defined in the Indian Gaming Regu-
latory Act), and the Territories and In-
sular Possessions of the United States.

(00) Business day. Business day, as
used in this part with respect to banks,
means that day, as normally commu-
nicated to its depository customers, on
which a bank routinely posts a par-
ticular transaction to its customer's
account.

(pp) Postal Service. The United States
Postal Service.

(qq) FinCEN. FinCEN means the Fi-
nancial Crimes Enforcement Network,
an office within the Office of the Under
Secretary (Enforcement) of the Depart-
ment of the Treasury.

(rr) Indian Gaming Regulatory Act.
The Indian Gaming Regulatory Act of
1988, codified at 25 U.S.C. 2701-2721 and
18 U.S.C. 1166-68.

(ss) State. The States of the United
States and, wherever necessary to
carry out the provisions of this part,
the District of Columbia.

(tt) Territories and Insular Possessions.
The Commonwealth of Puerto Rico, the
United States Virgin Islands, Guam,
the Commonwealth of the Northern

319


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Open process: An open process should be explicitly identified through which tribal
governments may proactively consult with each Treasury Bureau or Office, on a government-to-
government basis, regarding matters that involve tribal and Federal law regulations, and
administrative practice.

e Tribal.Consult@do.treas.gov. Tribal governments may channel information or concerns
to the Treasury Department email address Tribal.Consult@do.treas.gov, or to the
POCTC. These points of contact may be used only for general information and concerns.
Specific cases involving particular tribal governments and tribal members must be
referred to the Bureau(s) or Office(s) with direct jurisdiction.

= Meetings and workshops. Intra- and inter-agency sponsorship of meetings to address
areas of concern is encouraged, to conserve resources and ensure comprehensive
coverage.

o The IRS Office of Indian Tribal Governments (ITG) has scheduled a series of training
workshops during the months of June through September 2010. Workshop topics
include employment taxes, casino-related topics, and gaming information returns.°

o The Community Development Financial Institutions (CDFI) Fund and the Seattle
Branch of the Federal Reserve Bank of San Francisco are co-sponsoring a series of
workshops on the theme "Economic Development Strategies in Indian Country."
Workshops are being held from June 30, 2010 to September 16, 2010.’

Update on Department-Level Tribal Consultation Process: All Treasury Offices and Bureaus
have received copies of EO 13175 and President Obama's November 5, 2009 Memorandum on
tribal consultation. Treasury Offices and Bureaus that deal with American Indian or Alaska
Native tribal governments have identified themselves to the Office of Economic Policy.
Descriptions of targeted programs and tribal outreach associated with Treasury Offices and
Bureaus have been compiled (see Appendix A).

= Inearly January 2010, Treasury Deputy Secretary Wolin sent a letter to leaders of
Federally-recognized Indian tribes and regional tribal organizations, inviting participation
in a series of conference calls and requesting comments on ways to improve consultation.

= The Treasury Department conducted two conference calls and one videoconference with
tribal representatives during the months of January through March 2010. Treasury
officials have engaged in repeated outreach, attending and presenting a description of the
Treasury consultation process at conferences, including the National Congress of
American Indian (NCAI) Executive Council Winter Session in Washington D.C., the
National Indian Gaming Association Conference (Washington, DC), the United South


§ 103.11

identification number) or, if none,
alien identification number or passport
number and country of issuance, and to
which the financial institution pro-
vides financial services relying on that
information.

(m) Execution date. The day on which
the receiving financial institution may
properly issue a transmittal order in
execution of the sender’s order. The
execution date may be determined by
instruction of the sender but cannot be
earlier than the day the order is re-
ceived, and, unless otherwise deter-
mined, is the day the order is received.
If the sender's instruction states a pay-
ment date, the execution date is the
payment date or an earlier date on
which execution is reasonably nec-
essary to allow payment to the recipi-
ent on the payment date.

(n) Financial institution. Each agent,
agency, branch, or office within the
United States of any person doing busi-
ness, whether or not on a regular basis
or as an organized business concern, in
one or more of the capacities listed
below:

(1) A bank (except bank credit card
systems);

(2) A broker or dealer in securities;

(3) A money services business as de-
fined in paragraph (uu) of this section;

(4) A telegraph company;

(5)(i) Casino. A casino or gambling ca-
sino that: Is duly licensed or author-
ized to do business as such in the
United States, whether under the laws
of a State or of a Territory or Insular
Possession of the United States, or
under the Indian Gaming Regulatory
Act or other federal, state, or tribal
law or arrangement affecting Indian
lands (including, without limitation, a
casino operating on the assumption or
under the view that no such authoriza-
tion is required for casino operation on
Indian lands); and has gross annual
gaming revenue in excess of $1 million.
The term includes the principal head-
quarters and every domestic branch or
place of business of the casino.

(ii) For purposes of this paragraph
()(@, “gross annual gaming revenue”’
means the gross gaming revenue re-
ceived by a casino, during either the
previous business year or the current
business year of the casino. A casino or
gambling casino which is a casino for

31 CFR Ch. | (7-1-00 Edition)

purposes of this part solely because its
gross annual gaming revenue exceeds
$1,000,000 during its current business
year, shall not be considered a casino
for purposes of this part prior to the
time in its current business year that
its gross annual gaming revenue ex-
ceeds $1,000,000.

(iii) Any reference in this part, other
than in this paragraph (n)(7) and in
paragraph (n)(8) of this section, to a ca-
sino shall also include a reference to a
card club, unless the provision in ques-
tion contains specific language varying
its application to card clubs or exclud-
ing card clubs from its application;

(6)(i) Card club. A card club, gaming
club, card room, gaming room, or simi-
lar gaming establishment that is duly
licensed or authorized to do business as
such in the United States, whether
under the laws of a State, of a Terri-
tory or Insular Possession of the
United States, or of a political subdivi-
sion of any of the foregoing, or under
the Indian Gaming Regulatory Act or
other federal, state, or tribal law or ar-
rangement affecting Indian lands (in-
cluding, without limitation, an estab-
lishment operating on the assumption
or under the view that no such author-
ization is required for operation on In-
dian lands for an establishment of such
type), and that has gross annual gam-
ing revenue in excess of $1,000,000. The
term includes the principal head-
quarters and every domestic branch or
place of business of the establishment.
The term “‘casino,”’ as used in this Part
shall include a reference to "card club”
to the extent provided in paragraph
(n) (7) ii) of this section.

(ii) For purposes of this paragraph
(n)(8), gross annual gaming revenue
means the gross revenue derived from
or generated by customer gaming ac-
tivity (whether in the form of per-game
or per-table fees, however computed,
rentals, or otherwise) and received by
an establishment, during either the es-
tablishment'’s previous business year or
its current business year. A card club
that is a financial institution for pur-
poses of this Part solely because its
gross annual revenue exceeds $1,000,000
during its current business year, shall
not be considered a financial institu-
tion for purposes of this Part prior to
the time in its current business year

316


ITG accepted the recommendations and embarked upon a series of working meetings
with tribal leaders using an iterative process to draft consultation principles for use at
the IRS. The individual tribal leaders participation varied over time. Items discussed with
the tribal leaders included communications protocols, determining the appropriate party
to contact within a Tribal Government, possible procedures to follow, and the necessity
of a periodic review of any process implemented. Tribal leaders thought it was very
important for the procedures to apply to the entire IRS and not just the Indian Tribal
Governments Office. They also recommended that the IRS allow for both relational and
issue-based consultation, with reasonable time frames for responses from the tribes.
Finally, on matters involving specific Federal tax disputes, the tribal leaders highlighted
the need to respect privacy and disclosure rules under Section 6103 of the Internal
Revenue Code. They agreed with the IRS that such matters should not fall within any
procedures developed.

Although formal procedures were never implemented, principles developed in the
process are utilized in ITG business practices. For example, ITG holds several regional
“listening meetings” each year in order to gather feedback directly from tribes on
Federal tax issues that affect them. ITG has also coordinated with other IRS functions to
draft and implement Internal Revenue Manual (IRM) procedures relating to tribal
interactions.

However, ITG does not have jurisdiction over every Federal tax matter that may be
related to tribes. For example, ITG does not have jurisdiction over tribal member issues,
collection procedures, charities, pensions, nor provisions relating to Alaska Native
Claims Settlement Act corporations. Thus, a review of each operating division within the
IRS was deemed necessary in order to capture all matters related to tribes.

Due to the unique role of ITG within the IRS, the Commissioner of the IRS designated
the TE/GE Division and the ITG Office to lead a Service-wide review of agency
practices and procedures in order to identify any policies, procedures, actions or issues
that are underway or under consideration, which may result in an impact upon an Indian
tribe.

Methodology

Each Operating Division within the IRS and the Office of Chief Counsel was asked to
identify any current or pending policy, action, issue or procedure that may impact tribal
individuals, organizations, governments, or businesses. The review requested was
intentionally broad to ensure all potential items were identified. To facilitate the review,
each division was provided with an explanatory letter and a template. The purpose of
the template was to capture the issue, the timing of the issue, the external or internal
impact of the issue on tribes or the IRS, and whether any consultation on the issue had
occurred or was proposed.


§ 103.11

earlier than the day the order is re-
ceived by the recipient's financial in-
stitution and, unless otherwise pre-
scribed by instruction, is the date the
order is received by the recipient's fi-
nancial institution.

(y) Payment order. An instruction of a
sender to a receiving bank, transmitted
orally, electronically, or in writing, to
pay, or to cause another bank or for-
eign bank to pay, a fixed or deter-
minable amount of money to a bene-
ficiary if:

(1) The instruction does not state a
condition to payment to the bene-
ficiary other than time of payment;

(2) The receiving bank is to be reim-
bursed by debiting an account of, or
otherwise receiving payment from, the
sender; and

(3) The instruction is transmitted by
the sender directly to the receiving
bank or to an agent, funds transfer sys-
tem, or communication system for
transmittal to the receiving bank.

(2) Person. An individual, a corpora-
tion, a partnership, a trust or estate, a
joint stock company, an association, a
syndicate, joint venture, or other unin-
corporated organization or group, an
Indian Tribe (as that term is defined in
the Indian Gaming Regulatory Act),
and all entities cognizable as legal per-
sonalities.

(aa) Receiving bank. The bank or for-
eign bank to which the sender's in-
struction is addressed.

(bb) Receiving financial institution.
The financial institution or foreign fi-
nancial agency to which the sender's
instruction is addressed. The term re-
ceiving financial institution includes a
receiving bank.

(cc) Recipient. The person to be paid
by the recipient's financial institution.
The term recipient includes a bene-
ficiary, except where the recipient's fi-
nancial institution is a financial insti-
tution other than a bank.

(dd) Recipient's financial institution.
The financial institution or foreign fi-
nancial agency identified in a trans-
mittal order in which an account of the
recipient is to be credited pursuant to
the transmittal order or which other-
wise is to make payment to the recipi-
ent if the order does not provide for
payment to an account. The term re-
cipient’s financial institution includes

31 CFR Ch. | (7-1-00 Edition)

a beneficiary's bank, except where the
beneficiary is a recipient's financial in-
stitution.

(ee) Secretary. The Secretary of the
Treasury or any person duly authorized
by the Secretary to perform the func-
tion mentioned.

(ff) Sender. The person giving the in-
struction to the receiving financial in-
stitution.

(gg) Structure (structuring). For pur-
poses of section 103.53, a person struc-
tures a transaction if that person, act-
ing alone, or in conjunction with, or on
behalf of, other persons, conducts or
attempts to conduct one or more trans-
actions in currency, in any amount, at
one or more financial institutions, on
one or more days, in any manner, for
the purpose of evading the reporting
requirements under section 103.22 of
this part. ‘In any manner’’ includes,
but is not limited to, the breaking
down of a single sum of currency ex-
ceeding $10,000 into smaller sums, in-
cluding sums at or below $10,000, or the
conduct of a transaction, or series of
currency transactions, including trans-
actions at or below $10,000. The trans-
action or transactions need not exceed
the $10,000 reporting threshold at any
single financial institution on any sin-
gle day in order to constitute struc-
turing within the meaning of this defi-
nition.

(hh) Transaction account. Transaction
accounts include those accounts de-
scribed in 12 U.S.C. 461(b)(1)(C), money
market accounts and similar accounts
that take deposits and are subject to
withdrawal by check or other nego-
tiable order.

(ii) Transaction. (1) Except as pro-
vided in paragraph (ii)(2) of this sec-
tion, transaction means a_ purchase,
sale, loan, pledge, gift, transfer, deliv-
ery, or other disposition, and with re-
spect to a financial institution includes
a deposit, withdrawal, transfer between
accounts, exchange of currency, loan,
extension of credit, purchase or sale of
any stock, bond, certificate of deposit,
or other monetary instrument or in-
vestment security, purchase or redemp-
tion of any money order, payment or
order for any money remittance or

318


Federal Register/Vol. 75, No. 132/Monday, July 12, 2010/ Notices

39733

Considerations Regarding the
Restriction Against Financing Gaming
Facilities

Section 7871(f)(3)(B){i) prohibits the
use of Tribal Economic Development
Bonds to finance any portion of a
building in which class II or class III
gaming (as defined in section 4 of the
Indian Gaming Regulatory Act) is
conducted or housed or any other
property actually used in the conduct of
such gaming.

8. Should the prohibition on the use
of Tribal Economic Development Bonds
to finance gaming facilities be modified
to address special needs or unique
circumstances of Indian tribal
governments?

Additional General Comments on
Special Needs or Unique Circumstances
of Indian Tribal Governments

9. Are there additional factors that
should be considered in refining the
statutory scope of tax-exempt bond
financing for Indian tribal governments
to better address the special needs or
unique circumstances of Indian tribal
governments? Such factors might
include, for example, special sources of
revenue, priority government-like
activities, geographic distribution and
legal status of land associated with
Indian tribal governments, or credit
market access considerations.

Certain Identifying Information

When submitting comments, please
include your name, affiliation, address,
e-mail address, and telephone number.

Comments are Public Information

All comments received, including
attachments and other supporting
materials, are part of the public record
and are subject to public disclosure.
Commentators should submit only
information that they wish to make
available publicly.

ADDRESSES: Please submit comments
electronically through
Tribal.Consult@do.treas.gov.
Alternatively, comments may be mailed
to: Tribal Economic Development Bond
Comments, Department of the Treasury,
1500 Pennsylvania Avenue, NW., Room
3454, Washington, DC 20220.

Dated: July 6, 2010.
Michael F. Mundaca,
Assistant Secretary for Tax Policy, U.S.
Department of the Treasury.
(FR Doc. 2010-16881 Filed 7-910; 8:45 am]

BILLING CODE 4810-25-P

DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade
Bureau

Proposed Information Collections;
Comment Request

AGENCY: Alcohol and Tobacco Tax and
Trade Bureau, Treasury.

ACTION: Notice and request for
comments.

SUMMARY: As part of our continuing
effort to reduce paperwork and
respondent burden, and as required by
the Paperwork Reduction Act of 1995,
we invite comments on the proposed or
continuing information collections
listed below in this notice.
DATES: We must receive your written
comments on or before September 10,
2010.
ADDRESSES: You may send comments to
Mary A. Wood, Alcohol and Tobacco
Tax and Trade Bureau, at any of these
addresses:

© P.O. Box 14412, Washington, DC
20044-4412;

© 202-453-2686 (facsimile); or

© formcomments@ttb.gov (e-mail).

Please send separate comments for
each specific information collection
listed below. You must reference the
information collection’s title, form or
recordkeeping requirement number, and
OMB number (if any) in your comment.
If you submit your comment via
facsimile, send no more than five 8.5 x
11 inch pages in order to ensure
electronic access to our equipment.
FOR FURTHER INFORMATION CONTACT: To
obtain additional information, copies of
the information collection and its
instructions, or copies of any comments
received, contact Mary A. Wood,
Alcohol and Tobacco Tax and Trade
Bureau, P.O. Box 14412, Washington,
DC 20044-4412; or telephone 202-453-
2265.
SUPPLEMENTARY INFORMATION:

Request for Comments

The Department of the Treasury and
its Alcohol and Tobacco Tax and Trade
Bureau (TTB), as part of their
continuing effort to reduce paperwork
and respondent burden, invite the
general public and other Federal
agencies to comment on the proposed or
continuing information collections
listed below in this notice, as required
by the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.).

Comments submitted in response to
this notice will be included or
summarized in our request for Office of
Management and Budget (OMB)
approval of the relevant information

collection. All comments are part of the
public record and subject to disclosure.
Please do not include any confidential
or inappropriate material in your
comments.

We invite comments on: (a) Whether
this information collection is necessary
for the proper performance of the
agency’s functions, including whether
the information has practical utility; (b)
the accuracy of the agency's estimate of
the information collection’s burden; (c)
ways to enhance the quality, utility, and
clarity of the information collected; (d)
ways to minimize the information
collection’s burden on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and (e)
estimates of capital or start-up costs and
costs of operation, maintenance, and
purchase of services to provide the
requested information.

Information Collections Open for
Comment

Currently, we are seeking comments
on the following forms and
recordkeeping requirements:

Title: Brewer’s Report of Operations
and Brewpub Report of Operations.

OMB Control Number: 1513-0007.

TTB Form Numbers: 5130.9 and
5130.26.

Abstract: Brewers periodically file
these reports of their operations to
account for activity relating to taxable
commodities. TTB uses this information.
primarily for revenue protection, for
audit purposes, and to determine
whether an activity is in compliance
with the requirements of law. We also
use this information to publish
periodical statistical releases of use and
interest to the industry.

Current Actions: We are submitting
this information collection as a revision.
We are correcting the number of
respondents and burden hours;
however, the information collection
instruments remain unchanged.

Type of Review: Revision of a
currently approved collection.

Affected Public: Business or other for-
profit.

Estimated Number of Respondents:
2,026.

Estimated Total Annual Burden
Hours: 12,152.

Title: Brewer’s Bond; Brewer's Bond
Continuation Certificate; Brewer's
Collateral Bond; and Brewer's Collateral
Bond Continuation Certificate.

OMB Control Number: 1513-0015.

TTB Form Numbers: 5130.22,
5130.23, 5130.25, and 5130.27,
respectively,

Abstract: The Internal Revenue Code
requires brewers to give a bond to


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

For an example of FR consultation initiated by CDFI, see March 8, 2010 (Volume 75, Number 44)] CDFI
request for comments. Also see March 11, 2010 (vol 75, No. 47).

Financial Crimes Enforcement Network

http://www.fincen.gov

The Financial Crimes Enforcement Network (FinCEN) typically deals with complex and/or sophisticated
financial matters that affect a small number of well-known constituent groups. Casinos are included in this
category because they are vulnerable to exploitation through money laundering activities. FinCEN staff
working closely with tribally-owned casinos for this reason. An example of FinCEN’s outreach through
FR notices is included in Appendix D.

Financial Management Services
http://www.fincen.gov

Within the Financial Management Services (FMS), some outreach to tribal governments and businesses has
been undertaken by Customer Relationship Managers (CRMs), who serve as the central point of contact for
Federal Program Agencies (FPAs). CRMs can help FPAs to improve government-wide cash management
practices.

FMS Surety FMS administers the surety bond program for the federal government under 31 U.S.C. 9304-
9308 for companies who wish to: direct write federal bonds, reinsure federal bonds, and/or be recognized as
an Admitted Reinsurer. This spring the POCTC, on the advice of staff from the Office of Domestic
Finance, has directed consulting parties to FMS for further information.

Internal Revenue Service

http://www.irs.gov/tribes

The overall goal of the IRS’ Indian Tribal Governments Office (ITG) is to use partnership opportunities
with Indian tribal governments, tribal associations, and other federal agencies to respectfully and
cooperatively meet the tax administration needs of both the Indian tribal governments and the federal
government. ITG field groups consist of tribal government specialists who work in locations near the seats
of tribal governments. ITG specialists can address issues that relate to tribal governments as employers,
distributions to tribal members, and the establishment of governmental programs, trusts and businesses.
ITG has consulted extensively with tribal governments throughout the development of its programs and is
currently leading a review of the IRS to ensure the agency complies with EO 13175. A full description of
the current IRS consultation review is included in Appendix E.

10


ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES
(ACT)

II. TRIBAL CONSULTATION POLICY
PROJECT GRouP

DAVID MULLON, PROJECT LEADER

JAYNE FAWCETT
PERRY ISRAEL

JUNE 21, 2002


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

= Tax treatment of services provided by tribal governments, tribal goods, and culturally
relevant activities.

= The restrictive existing standard for tax-exempt bond financing by Indian tribal
governments and the future of the more flexible standard for such financing reflected in
the Tribal Economic Development Bond program under the Recovery Act.

= The transparency of the administration of tribal trust funds.

The concerns identified to date and described above are being taken into account. The
importance of consulting directly with tribal leaders, rather than broader groups not authorized to
represent tribal governments, is noted in the first section of this report. An IRS tribal
consultation review confirms greater coordination between the Indian Tribal Governments group
and regular IRS field staff is indicated.* The Office of Tax Policy issued a Federal Register
notice on July 2010 to request comments on the Tribal Economic Development Bond program
under the Recovery Act for purposes of Treasury’s study of this provision, including comments
regarding possible permanent revisions to tax-exempt bond eligibility criteria to give Indian
tribal governments more flexible access to tax-favored bonds under standards comparable to
State and local governments.” The POCTC has consulted with Treasury staff in the Bureau of
Public Debt, the Departmental Office for Financial Markets, and the Deputy Solicitor for Indian
Affairs at the U.S. Department of the Interior on the administration of tribal trust funds.

The revision of bureaucratic procedures can admittedly be a slow process, but revision of
Treasury’s tribal consultation process is underway.


July 23, 2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

and Eastern Tribes Annual Impact Week (Washington, DC) and the NCAI Mid-Year
Conference (Rapid City, S.D).

= Deputy Secretary Wolin sent a memo to all Treasury Office and Bureau heads on March
9, 2010, reminding them of their responsibilities under EO 13175 and asking them to
contact the POCTC if they had questions regarding whether a policy matter required
consultation or needed assistance in establishing the policy consultation process.

= Ane-mail address, Tribal.Consult@do.treas.gov, has been established to facilitate the receipt of
comments from tribal governments and members. Comments received to date have been
reviewed and summarized. A summary of key comments is available upon request. The
Treasury Department will continue to monitor this email address.

= A web site has been established to report on consultation between tribal governments and
Treasury Department Bureaus and Offices. A link labeled Tribal Policy is on the main
Treasury web site, www.treas.gov.

= Representatives from the IRS’s Advisory Committee on Tax Exempt and Government
Entities, who advise on Indian tribal government issues, have offered advice and
background information, based on their earlier experience developing recommendations
on tribal consultation process for the IRS.

= The American Recovery and Reinvestment Act of 2009 (Recovery Act) directs the
Treasury Department to conduct a study of a $2 billion stimulus program for tax-favored
bonds, called “Tribal Economic Development Bonds,” created under the Recovery Act to
allow more flexible access to lower cost borrowing for Indian tribal governments and to
report back to Congress with recommendations regarding this provision. The Treasury
Department published a Notice and Request for Comments in the Federal Register (75
Fed. Reg. 39730 (July 12, 2010)), seeking comments from Indian tribal governments to
assist the Treasury Department in developing recommendations for this study and in
furtherance of the tribal consultation process required by EO13175.

= The Treasury Department is participating in the Federal agency review of the United
Nations Declaration on the Rights of Indigenous Peoples.

During initial outreach, beginning in January 2010, the following concerns have been raised:

= Clear recognition of tribal government sovereignty and the importance of communicating
directly with tribal governments when conducting the tribal consultation process.

6


Pt. 103

bullion to the petitioner or when the
Secretary is not convinced that the
petitoner was an innocent purchaser or
holder without knowledge that the
gold coins were counterfeit.

PART 103—FINANCIAL RECORD-
KEEPING AND REPORTING OF
CURRENCY AND _ FOREIGN
TRANSACTIONS

Subpart A—Definitions

Sec.
103.11 Meaning of terms.

Subpart B—Reports Required To Be Made

103.15 Determination by the Secretary.

103.18 Reports by banks of suspicious trans-
actions.

103.20 Reports by money services businesses
of suspicious transactions.

103.22 Reports of transactions in currency.

103.23 Reports of transportation of currency
or monetary instruments.

103.24 Reports of foreign financial accounts.

103.25 Reports of transactions with foreign
financial agencies.

103.26 Reports of certain domestic coin and
currency transactions.

103.27 Filing of reports.

103.28 Identification required.

103.29 Purchases of bank checks and drafts,
cashier's checks, money orders and trav-
eler's checks.

Subpart C—Records Required To Be
Maintained

103.31 Determination by the Secretary.

103.32 Records to be made and retained by
persons having financial interests in for-
eign financial accounts.

103.33 Records to be made and retained by
financial institutions.

103.34 Additional records to be made and re-
tained by banks.

103.35 Additional records to be made and re-
tained by brokers or dealers in securi-
ties.

103.36 Additional records to be made and re-
tained by casinos.

103.37 Additional records to be made and re-
tained by currency dealers or exchang-

ers.

103.38 Nature of records and retention pe-
riod.

103.39 Person outside the United States.

Subpart D—Speciai Rules for Money
Services Businesses

103.41 Registration of money services busi-
nesses.

31 CFR Ch. | (7-1-00 Edition)

Subpart E—General Provisions

103.51 Dollars as including foreign currency.

103.52 Photographic or other reproductions
of Government obligations.

103.53 Availability of information.

103.54 Disclosure.

103.55 Exceptions, exemptions, and reports.

103.56 Enforcement.

103.57 Civil penalty.

103.58 Forfeiture of currency or monetary
instruments.

103.59 Criminal penalty.

103.60 Enforcement authority with respect
to transportation of currency or mone-
tary instruments.

103.61 “Access to records.

2 Rewards for informants.

Structured transactions.

Special rules for casinos.

Subpart F—Summons

General.

Persons who may issue summons.

Contents of summons.

Service of summons.

Examination of,
records.

103.76 Enforcement of summons.

103.77 Payment of expenses.

Subpart G—Administrative Rulings

103.80
103.81
103.82
103.83
103.84
103.85

witnesses and

Scope.
Submitting requests.
Nonconforming requests.
Oral communications.
Withdrawing requests.
Issuing rulings.
103.86 Modifying or rescinding rulings.
103.87 Disclosing information.
APPENDIX TO PART 103—ADMINISTRATIVE RUL-
INGS
AUTHORITY: 12 U.S.C. 1829b and 1951-1959; 31
U.S.C. 5311-5330.

SOURCE: 37 FR 6912, Apr. 5, 1972, unless oth-
erwise no!

Subpart A—Definitions

§103.11 Meaning of terms.

When used in this part and in forms
prescribed under this part, where not
otherwise distinctly expressed or mani-
festly incompatible with the intent
thereof, terms shall have the meanings
ascribed in this section.

(a) Accept. A receiving financial insti-
tution, other than the recipient's fi-
nancial institution, accepts a trans-
mittal order by executing the trans-
mittal order. A recipient's financial in-
stitution accepts a transmittal order

314


July 23, 2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Community Development Financial Institutions Fund

http://cdfifund.gov

The Community Development Financial Institutions (CDFI) Fund’s Native American CDFI Assistance
(NACA) Program serves economically distressed Native American, Alaska Native, and Native Hawaiian
communities across the nation. As of June 30, 2010, there are 57 certified Native CDFIs.

CDFIs are non-government financial entities whose primary mission is to promote community
development, principally by serving and being accountable to a low-income community, and by providing
development services. To be certified as a Native CDFI an organization must meet the CDF] eligibility
requirements and direct more than 50 percent of its activities to Native communities and/or Native persons.

The CDFI Fund provides two types of funding through the NACA Program. Financial Assistance awards,
used primarily for financial capital, are available only to entities that have been certified as Native CDFls.
Technical Assistance grants are available to certified Native CDFIs, Emerging Native CDFls, and
Sponsoring Entities.

e Technical Assistance grants are usually used to acquire products or services including computer
technology, staff training, and professional services such as market analysis, and support for other
general capacity-building activities.

e Sponsoring entities are unique to the NACA Program. They create and support fledgling Native
organizations as they move toward CDFI certification.

On April 30, 2010, the CDFI Fund announced awards totaling $10.3 million to NACA Program participants
in the FY2010 funding round. Awardees’ primary financing activities are small business/venture capital
(23 awardees), affordable housing (12), and consumer loans (12). In FY2009, awards were made with both
ARRA and standard appropriated FY2009 funds. ARRA funded $8 million in Financial Assistance and
Technical Assistance awards to 10 Native CDFIs through the NACA Program. These awards averaged
$800,000 and ranged from $590,000 to $878,000. In addition, standard appropriated FY2009 funds
provided $7.7 million in Technical Assistance and Financial Assistance awards to 36 Native institutions.
The NACA Program itself is not new, but funding and Native participation increased significantly in 2009
and 2010.

The CDFI fund Native Initiatives website includes a link to a helpful Treasury study on barriers to
economic development in Indian Country, and a Native Initiatives Strategic Plan for 2009-2014.

As noted above, the CDFI and Federal Reserve Bank San Francisco Branch, Seattle Office are sponsoring a
series of workshops on Economic Development in Indian Country. See
http://www.cdfifund.gov/news_events/CDFI-2010-

31CDFIFundAnnouncesNewNativelnitiativesWorkshopSeries.asp



§ 103.15

Mariana Islands, and all other terri-
tories and possessions of the United
States other than the Indian lands and
the District of Columbia.

(uu) Money services business. Each
agent, agency, branch, or office within
the United States of any person doing
business, whether or not on a regular
basis or as an organized business con-
cern, in one or more of the capacities
listed in paragraphs (uu)(1) through
(uu) (6) of this section. Notwithstanding
the preceding sentence, the term
“money services business” shall not in-
clude a bank, nor shall it include a per-
son registered with, and regulated or
examined by, the Securities and Ex-
change Commission or the Commodity
Futures Trading Commission.

(1) Currency dealer or exchanger. A
currency dealer or exchanger (other
than a person who does not exchange
currency in an amount greater than
$1,000 in currency or monetary or other
instruments for any person on any day
in one or more transactions).

(2) Check casher. A person engaged in
the business of a check casher (other
than a person who does not cash checks
in an amount greater than $1,000 in
currency or monetary or other instru-
ments for any person on any day in one
or more transactions).

(3) Issuer of traveler's checks, money or-
ders, or stored value. An issuer of trav-
eler's checks, money orders, or, stored
value (other than a person who does
not issue such checks or money orders
or stored value in an amount greater
than $1,000 in currency or monetary or
other instruments to any person on
any day in one or more transactions).

(4) Seller or redeemer of traveler's
checks, money orders, or stored value. A
seller or redeemer of traveler's checks,
money orders, or stored value (other
than a person who does not sell such
checks or money orders or stored value
in an amount greater than $1,000 in
currency or monetary or other instru-
ments to or redeem such instruments
for an amount greater than $1,000 in
currency or monetary or other instru-
ments from, any person on any day in
one or more transactions).

(5) Money transmitter—(i) In general.
Money transmitter:

(A) Any person, whether or not li-
censed or required to be licensed, who

31 CFR Ch. | (7-1-00 Edition)

engages as a business in accepting cur-
rency, or funds denominated in cur-
rency, and transmits the currency or
funds, or the value of the currency or
funds, by any means through a finan-
cial agency or institution, a Federal
Reserve Bank or other facility of one
or more Federal Reserve Banks, the
Board of Governors of the Federal Re-
serve System, or both, or an electronic
funds transfer network; or

(B) Any other person engaged as a
business in the transfer of funds.

(ii) Facts and circumstances; Limita-
tion. Whether a person “engages as a
business” in the activities described in
paragraph (uu)(5)(i) of this section is a
matter of facts and circumstances.
Generally, the acceptance and trans-
mission of funds as an integral part of
the execution and settlement of a
transaction other than the funds trans-
mission itself (for example, in connec-
tion with a bona fide sale of securities
or other property), will not cause a per-
son to be a money transmitter within
the meaning of paragraph (uu)(5)(i) of
this section.

(6) United States Postal Service. The
United States Postal Service, except
with respect to the sale of postage or
philatelic products.

(vv) Stored value. Funds or monetary
value represented in digital electronics
format (whether or not specially
encrypted) and stored or capable of
storage on electronic media in such a
way as to be retrievable and transfer-
able electronically.

[52 FR 11441, Apr. 8, 1987; 52 FR 12641, Apr. 17,
1987, as amended at 53 FR 777, Jan. 13, 1988;
53 FR 4138, Feb. 12, 1988; 54 FR 3027, Jan. 23,
1989; 54 FR 28418, July 6, 1989; 55 FR 20143,
May 15, 1990; 58 FR 13546, Mar. 12, 1993; 60 FR
228, Jan. 3, 1995; 61 FR 4331, Feb. 5, 1996; 61 FR
7055, Feb. 23, 1996; 61 FR 14249, 14385, Apr. 1,
1996; 63 FR 1923, Jan. 13, 1998; 64 FR 45450,
Aug. 20, 1999; 65 FR 13692, Mar. 14, 2000]

Subpart B—Reports Required To
Be Made

§103.15 Determination by the Sec-
retary,
The Secretary hereby determines
that the reports required by this sub-
part have a high degree of usefulness in

320


Tribal Consultation Progress Report

The Treasury Department’s consultation plan focuses on issues and regulatory or legislative
activities that are likely to have direct and identifiable economic impacts on Indian tribes, or to
preempt tribal law.

Guiding Principles: In addition to the overarching Fundamental Principles stated in Section 2

of Executive Order 13175, three principles are guiding the development of the Treasury action
1

plan.

e The Treasury Department is committed to the establishment of a comprehensive
consultation process leading to meaningful dialogue with Indian tribes on Treasury
policies that have tribal implications for such tribes, including those policies that have a
direct and identifiable economic impact on Indian tribes or preempt tribal law.

e Tribal consultation will assist Treasury in development of policy, regulation and
legislative activities as it will increase Treasury’s understanding of the issues and
potential impacts of activities on tribes and American Indians and Alaskan Natives.

e The Treasury Department is also committed to developing and issuing regulations and
guidance in a timely and efficient manner.

Agency point of contact: The agency point of contact for Executive Order 13175 (EO 13175)
and tribal consultation is the Deputy Assistant Secretary for Policy Coordination in the Office of
Economic Policy (hereafter the Point Of Contact for Tribal Consultation or POCTC). The
POCTC relies on the Departmental Office’s Executive Secretariat (ES) and the Office of the
General Counsel (OGC) to assist program and legislative staff with identifying issues that could
require consultation prior to issuance of Treasury policy, and, in the initial stages of
policymaking, relies on each Treasury Department Bureau and Office to undertake tribal
consultation in accordance with EO 13175.

New laws, regulations, and administrative practices, including changes to existing policies,
require consultation to the extent that they affect tribal governments and/or tribal members
exclusively or in a significantly disproportionate manner relative to the majority of U.S.
residents, or to the extent that Native Americans and Alaskan Natives are targeted explicitly by
these policies.

In some cases, Offices and Bureaus may routinely incorporate tribal consultation into Federal
Register (FR) notices and Department guidance. This process may be sufficient, for example,
when program staff deal exclusively with highly-complex and/or sophisticated financial matters
affecting a small number of well-known constituent groups.” In other cases Offices and Bureaus
that work directly with a variety of tribal governments and tribal members may develop, in


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Appendix B: Possible Criteria for Tribal Consultation

Specific criteria that Treasury Offices and Bureaus may use to identify legislation and
regulations requiring consultation with sovereign American Indian and Alaskan Native tribes are
suggested below, together with illustrative examples.

1. Programs or policies that target AI/ANs explicitly or directly, and programs that target
groups and activities in which AI/ANs are disproportionately represented, should engage
in consultation early in the regulation drafting process. For example:

© Policies that related to the definition of permissible uses for which tribal
governments can issue tax exempt debt;

© Policies that specifically deal with the taxation of benefits provided by tribal
governments, such as health care;

o Programs that seek to increase the availability of capital to Native American
owned or controlled financial institutions through additional support for Native
American owned CDFIs, directly or as part of a targeted initiative toward
similarly situated CDFIs; and

o Programs that seek to prevent exploitation of Native American tribes and tribal
businesses through criminal and terrorist activities, such as money laundering
activities that target tribally-owned gambling institutions.”

2. Tribal consultation process may be required when AI/AN tribes request consultation on
substantive issues that are unique to tribal governments, when consultation is requested to
address regulatory or legislative activities that are likely to have direct and identifiable
economic impacts on Indian tribes, or when it is evident, or should be evident, that the
contemplated regulations or legislation could preempt tribal law.

12


July 23, 2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Office of Thrift Supervision
http://www. financialstability.gov

The Troubled Asset Relief Program Public-Private Investment Program and Community Development
Capital Initiative (TARP PPIP and CDCI) programs, established under the Emergency Economic
Stabilization Act of 2008 (EESA), were designed to address the financial crisis that developed in that year.
Under ESSA authority, Treasury contracted with established financial management institutions to evaluate
and manage portfolios of troubled assets.

e Treasury contracts strongly encouraged PPIP fund managers to establish sub-contracting relationships
with leading small businesses, including veteran-, minority-, and women-owned financial services
businesses. The Los Angeles private-equity fund Oaktree Capital Management LP (Oaktree), one of
Treasury’s primary PPIP contractors, sub-contracted with Inupiat Eskimo-owned Arctic Slope Regional
Corporation (Arctic Slope). Oaktree partners and consults with Artic Slope in investment decisions.

e CDCI, a separate component of TARP, invests lower-cost capital in specified CDFls that lend to small
businesses in the country’s hardest-hit communities. Through CDCI, certified NACA CDFIs
(described above) may be eligible to receive capital investments at a dividend rate of 2 percent for eight
years.

United States Mint
https://www.usmint.gov

The Mint’s Citizens' Coinage Advisory Committee reviews and discussion of candidate designs for coins
and currency. The Mint consults with Native American and Alaskan Native tribes on the design of coins
and currency when indicated. For example, consultation has addressed the reverse of the 2011 Native
American $1 Coin.

il


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Appendix A: List of Programs in Various Treasury Offices and Bureaus that are Actively
Involved in Issues affecting Tribal Governments and Members

Comptroller of the Currency
http://www.occ.treas.gov/Cdd/Nativeam

The Office of the Comptroller of the Currency (OCC) participated in two initial conference calls with tribal
leaders, and is reviewing its process independently.

Bureau of the Public Debt
Domestic Finance/ Office of Financial Markets

http://www. publicdebt.treas.gov/
http://www.treas.gov/offices/domestic-finance/financial-markets

Treasury is required by current statute to invest five Indian tribal funds and one “tribally-related” fund from
which payments will be made to several Indian tribes as well as to non-Indian entities. The Office of
Financial Markets works closely with the Bureau of the Public Debt with regard to the investment of these
six funds. Three of these funds have been established and are capitalized. The other three funds have been
established, but are not yet fully capitalized.

Three of the aforementioned funds are currently being invested in by Treasury. These funds are the
Cheyenne River Sioux and the Lower Brule Sioux Tribes’ Terrestrial Wildlife Habitat Restoration Trust
Funds (the “Title VI Funds”) and the Lower Colorado River Basin Development Trust Fund.

Treasury consulted extensively with Cheyenne River Sioux and the Lower Brule Sioux Tribes to develop
mutually agreed-upon amendments to the then-existing, technically deficient statutory investment
provisions for their respective Title VI Funds. These amendments were enacted into law in November
2007. Among other things, they require Treasury to review the investment of the funds with the two tribes
involved on at least an annual basis, which is in addition to Treasury’s monthly reports to the tribes on the
investment activities of their funds.

As with the tribal funds invested by Interior, by statute, Treasury is required to distribute certain monies in
the aforementioned funds to the tribes involved only for certain statutorily-prescribed purposes. Treasury
is currently reviewing its existing statutory investment authority with respect to the Lower Colorado River
Basin Development Trust Fund and certain other tribal and/or tribally-related funds. . If Treasury
considers any legislative amendments with respect to current law, it will continue its active consultation
process with the tribes involved.


Monetary Offices, Treasury

when its gross annual revenue exceeds
$1,000,000;

(7) A person subject to supervision by
any state or federal bank supervisory
authority.

(0) Foreign bank. A bank organized
under foreign law, or an agency, branch
or office located outside the United
States of a bank. The term does not in-
clude an agent, agency, branch or of-
fice within the United States of a bank
organized under foreign law.

(p) Foreign financial agency. A person
acting outside the United States for a
person (except for a country, a mone-
tary or financial authority acting as a
monetary or financial authority, or an
international financial institution of
which the United States Government is
a member) as a financial institution,
bailee, depository trustee, or agent, or
acting in a similar way related to
money, credit, securities, gold, or a
transaction in money, credit, securi-
ties, or gold.

(q) Funds transfer. The series of trans-
actions, beginning with the origina-
tor’s payment order, made for the pur-
pose of making payment to the bene-
ficiary of the order. The term includes
any payment order issued by the origi-
nator's bank or an intermediary bank
intended to carry out the originators
payment order. A funds transfer is
completed by acceptance by the bene-
ficiary’s bank of a payment order for
the benefit of the beneficiary of the
originator’s payment order. Funds
transfers governed by the Electronic
Fund Transfer Act of 1978 (Title XX,
Pub. L. 95-630, 92 Stat. 3728, 15 U.S.C.
1693, et seq.), as well as any other funds
transfers that are made through an
automated clearinghouse, an auto-
mated teller machine, or a point-of-
sale system, are excluded from this def-
inition.

(t) Intermediary bank. A receiving
bank other than the originator’s bank
or the beneficiary's bank.

(s) Intermediary financial institution. A
receiving financial institution, other
than the transmittor’s financial insti-
tution or the recipient's financial insti-
tution. The term intermediary finan-
cial institution includes an_inter-
mediary bank.

(t) Investment security. An instrument
which:

§ 103.11

(1) Is issued in bearer or registered
form;

(2) Is of a type commonly dealt in
upon securities exchanges or markets
or commonly recognized in any area in
which it is issued or dealt in as a me-
dium for investment;

(3) Is either one of a class or series or
by its terms is divisible into a class or
series of instruments; and

(4) Evidences a share, participation
or other interest in property or in an
enterprise or evidences an obligation of
the issuer.

(u) Monetary instruments. (1) Mone-
tary instruments include:

(i) Currency;

(ii) Traveler's checks in any form;

(iii) All negotiable instruments (in-
cluding personal checks, business
checks, official bank checks, cashier's
checks, third-party checks, promissory
notes (as that term is defined in the
Uniform Commercial Code), and money
orders) that are either in bearer form,
endorsed without restriction, made out
to a fictitious payee (for the purposes
of §103.23), or otherwise in such form
that title thereto passes upon delivery;

(iv) Incomplete instruments (includ-
ing personal checks, business checks,
official bank checks, cashier's checks,
third-party checks, promissory notes
(as that term is defined in the Uniform
Commercial Code), and money orders)
signed but with the payee’s name omit-
ted; and

(v) Securities or stock in bearer form
or otherwise in such form that title
thereto passes upon delivery.

(2) Monetary instruments do not in-
clude warehouse receipts or bills of lad-
ing.

(v) Originator. The sender of the first
payment order in a funds transfer.

(w) Originator's bank. The receiving
bank to which the payment order of
the originator is issued if the origi-
nator is not a bank or foreign bank, or
the originator if the originator is a
bank or foreign bank.

(x) Payment date. The day on which
the amount of the transmittal order is
payable to the recipient by the recipi-
ent’s financial institution. The pay-
ment date may be determined by in-
struction of the sender, but cannot be

317


Summary of Resul!

Information gathered includes technical and legal issues, as well as process and
procedural aspects of IRS matters. The information gathered can generally be divided
into three categories: 1) Items that have a clear and direct impact upon tribes; 2) Items.
that have a disparate impact upon tribes; and 3) items that have no unique impact upon
tribes.

in addition to the level of impact, the information gathered indicates that approximately
one third of the issues raised relate to the lack of clarity regarding how a particular piece
of tax authority applies to tribes. This lack of clarity creates a challenge for both the IRS
and the tribes.

The review reflects a diversity of activities and understanding across the Service
regarding matters with tribal impact, and reinforces the need to craft procedures
carefully. The review indicates that the Office of Chief Counsel may be uniquely situated
to spot and address tribal issues as a result of regulatory or guidance development. The
review also revealed that IRM procedures currently in place are used by the Service’s
field agents in their interactions with the tribes only when placed in the portion of the
IRM relevant to them.

Conclusion

While the IRS does have an Office of Indian Tribal Governments (ITG) with
knowledgeable staff to address many tribal tax matters, ITG does not have jurisdiction
over every issue or program with potential tribal impact. Due to the wide range of issues
and procedures identified in the IRS review, we believe it will be necessary to put
additional internal procedures and guidelines in place to ensure IRS compliance with
any consultation policy the Treasury Department adopts.

Attachment


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Methods of Consultation: Each Office and Bureau may develop its own method of consultation
to best achieve the guiding principles above. The POCTC will maintain a record of the Treasury
Department’s consultation efforts and will make available to the Office or Bureau descriptions of
various methods that have been used in the past. The POCTC will assist the Office or Bureau in
developing a consultation plan. Consultation plans may include, but are not limited to, the
following.

Federal Register notices soliciting comment on the proposed idea. FR notices requesting
comments from tribal governments and members regarding proposed changes in law or
regulation should be published as soon as practicable after Treasury staff have
determined that tribal consultation is necessary, and ideally within 30 days. When tribal
consultation is indicated, a 60- to 120-day minimum comment period should be specified
in the FR notice whenever practicable to allow sufficient time for tribal leaders to consult
with their members and legal counsel on any matters of particular concern, and to
formulate a response to the notice. Copies of all FR notices requesting comments from
tribal governments and members, together with brief descriptions of other tribal
consultation activities, should be sent to the POCTC to become part of a comprehensive
record of Treasury activity.°

Meetings, conference calls, videoconferences and workshops to encourage and exchange
of views. When Treasury policies explicitly target Native American and Alaskan Native
governments, organizations and members, or when the issue is complex with a
disproportionate effect on tribes and tribal members, consultation should extend beyond
FR notices to the extent practicable. Consultation may be conducted through email,
regular mail, telephone calls, video conferences and in-person meetings or conferences,
as schedules and resources permit. Disparities in time zones and travel costs should be
taken into account when scheduling phone calls and conferences, noting that Alaskan
Native tribes are located to the extreme west.

Targeted outreach. Contact information for Federally-recognized tribes is available on
the Bureau of Indian Affairs (BIA) web site| The POCTC will also maintain a
Treasury-specific list, including contact points for tribal organizations that sponsor
potentially-useful conferences.”



39730

Federal Register/Vol. 75, No. 132/Monday, July 12, 2010/Notices

the public because the Treasury
Department requires frank and full
advice from representatives of the
financial community prior to making its
final decisions on major financing
operations. Historically, this advice has
been offered by debt management
advisory committees established by the
several major segments of the financial
community. When so utilized, such a
committee is recognized to be an
advisory committee under 5 U.S.C. App.

2,§3.

Although the Treasury's final
announcement of financing plans may
not reflect the recommendations
provided in reports of the Committee,
premature disclosure of the Committee’s
deliberations and reports would be
likely to lead to significant financial
speculation in the securities market.
Thus, this meeting falls within the
exemption covered by 5 U.S.C.
552b(c)(9)(A).

Treasury staff will provide a technical
briefing to the press on the day before
the Committee meeting, following the
release of a statement of economic
conditions and financing estimates. This
briefing will give the press an
opportunity to ask questions about
financing projections. The day after the
Committee meeting, Treasury will
release the minutes of the meeting, any
charts that were discussed at the
meeting, and the Committee’s report to
the Secretary.

The Office of Debt Management is
responsible for maintaining records of
debt management advisory committee
meetings and for providing annual
reports setting forth a summary of
Committee activities and such other
matters as may be informative to the
public consistent with the policy of 5
U.S.C. 552(b). The Designated Federal
Officer or other responsible agency
official who may be contacted for
additional information is Fred
Pietrangeli, Deputy Director for Office of
Debt Management (202) 622-1876.

Dated: July 2, 2010.

Mary Miller,

Assistant Secretary, (Financial Markets).
[FR Doc, 2010-16750 Filed 7-910; 8:45 am]
BILLING CODE 4810-25-M

DEPARTMENT OF THE TREASURY

Tribal Economic Development Bonds

AGENCY: Department of the Treasury,
Departmental Offices.

ACTION: Notice and request for
comments.

SUMMARY: The Department of the
Treasury (“Treasury”) seeks comments

from Indian Tribal Governments
regarding the Tribal Economic
Development Bond provision in Section
7871(f) of the Internal Revenue Code.
The purpose of this solicitation of
comments is to assist Treasury in
developing recommendations regarding
this bond provision for a
Congressionally-directed study under
the American Recovery and
Reinvestment Act of 2009. This
solicitation of comments is in
furtherance of the objectives of
Executive Order 13175 under which
Treasury consults with tribal officials in
the development of Federal policies that
have tribal implications, to reinforce the
United States government-to-
government relationships with Indian
tribes, and to reduce the imposition of
unfunded mandates upon Indian tribes.
Additional comments from the general
public related to this matter are also
welcome.

DATES: Please submit comments on or
before September 10, 2010.

FOR FURTHER INFORMATION CONTACT: John
J. Cross III, Office of Tax Policy, at (202)
622-1322.

‘SUPPLEMENTARY INFORMATION:

Introduction and Background

Section 1402 of Title I of Division B
of the American Recovery and
Reinvestment Act of 2009, Public Law
No, 111-5, 123 Stat. 115 (2009)
(“ARRA”), added a $2 billion bond
authorization for a new temporary
category of tax-exempt bonds with
lower borrowing costs for Indian tribal
governments, known as “Tribal
Economic Development Bonds,” under
Section 7871(f) of the Internal Revenue
Code (“Code”) to promote economic
development on tribal lands. (Except as
noted, section references in this Notice
are to the Code.) Section 1402(b) of
ARRA directs the Secretary of the
Treasury or the Secretary’s delegate to
conduct a study of the Tribal Economic
Development Bond provision and to
report back to Congress with
recommendations regarding this
provision. In a summary of this ARRA
provision, the House Ways and Means
Committee and the Senate Finance
Committee indicated that, in particular,
Treasury should study whether to repeal
on a permanent basis the existing more
restrictive “essential governmental
function” standard for tax-exempt
governmental bond financing by Indian
tribal governments under Section
7871(c). See http://
waysandmeans.house.gov/media/pdf/
111/arra.pdf.

The more restrictive existing standard
under Section 7871(c) generally limits

the use of tax-exempt bonds by Indian
tribal governments to the financing of
certain activities that constitute
“essential governmental functions”
customarily performed by State and
local governments with general taxing
powers and certain manufacturing
facilities. The essential governmental
function standard under Section 7871(c)
was enacted originally in 1982 as part
of the Indian Tribal Government Tax
Status Act, Public Law No. 97-473
(1983), 96 Stat. 2605 (“Tribal Tax Act”).
The legislative history to the Tribal Tax
Act indicated that essential
governmental functions for this purpose
included activities such as schools,
streets, or sewers, but did not include
activities financed with private activity
bonds or other commercial or industrial
activities. See H.R. Rep. No. 97-982,
97th Cong. 2d Sess. 17 (1982) and S.
Rep. No. 97-646, 97th Cong. 2d. Sess. at
13-14 (1982).

In 1987, Section 7871(e) was added to
the Code to limit the essential
governmental functions standard further
to provide that an essential
governmental function does not include
any function which is not customarily
performed by State and local
governments with general taxing
powers. See The Omnibus Budget
Reconciliation Act of 1987, Public Law
No. 100-203, 101 Stat. 1330, § 10632(a)
(1987). Further, in the legislative history
to this provision, the House Ways and
Means Committee criticized 1984
Temporary Treasury Regulations under
section 7871(c) for treating certain
commercial and industrial activities
eligible for Federal funding as essential
governmental functions and indicated
that these regulations were invalid to
that extent. H.R. Rep. No. 100-391,
100th Cong. 1st Sess. at 1139 (1987).
However, in 1987, Section 7871(c)(3)
was added to the Code to allow Indian
tribal governments to use tax-exempt
bond financing for manufacturing
facilities under certain parameters.

The custom-based essential
governmental function standard under
Section 7871(e) has proven to be a
difficult administrative standard and
has led to audit disputes, based on
difficulties in determining customs, the
evolving nature of the functions
customarily performed by State and
local governments, and increasing
involvement of State and local
governments in quasi-commercial
activities.

In 2006, Treasury and the Internal
Revenue Service (“IRS”) promulgated an
Advance Notice of Proposed
Rulemaking regarding the essential
governmental function standard for the
issuance of tax-exempt bonds by Indian


39732

Federal Register/Vol. 75, No. 132/Monday, July 12, 2010/ Notices

announced the results of the two phases
of Tribal Economic Development Bond
allocations in IRS News Release 2009—
81 (September 15, 2009) and IRS News
Release 2010-20 (February 11, 2010).
For further information regarding these
bond allocations, see http://www. irs.gov
under the heading “Tax-exempt Bon
Community” and subheading “IRS
Announces Tribal Economic
Development Bond Allocations.”

Request for Comment on Particular
Questions

In order to assist Treasury in
developing recommendations for its
study of the Tribal Economic
Development Bond provision, Treasury
seeks public comment on the following
particular questions.

Whether the State or Local
Governmental Standard for Tax-
Exempt Governmental Bond Status
Should Replace the Essential
Governmental Function Standard

A State or local governmental bond is
treated as a tax-exempt governmental
bond (rather than a private activity
bond) under Section 141 if either 90
percent or more of the bond proceeds
are used for governmental use (i.e., not
private business use) or 90 percent or
more of the debt service on the bonds
is payable or secured from governmental
payments or property, as previously
described herein. In treating Indian
tribal government use of facilities
financed with Tribal Economic
Development Bonds as governmental
use under Section 141, the Tribal
Economic Development Bond provision
effectively applies this standard.

1. In general, should consideration be
given to changing the law permanently
to apply the standard described above,
applicable to State and local
governments under Section 141, with
respect to tax-exempt bond financing for
Indian tribal governments (rather than
the existing essential governmental
function standard under Section
7871(c))?

2. Would focusing on Indian tribal
governmental use of bond-financed
facilities (rather than essential
governmental functions) under the
standard applicable to State and local
governments provide Indian tribal
governments with a sufficiently
workable and flexible standard for tax-
exempt governmental bond financing?

3. In determining qualified
governmental sources of payment for
tax-exempt governmental bonds for
Indian tribal governments, should
special consideration be given to any
unique sources of revenue for Indian
tribal governments, including (i) income

derived from tribal lands held in trust
by the Department of the Interior, (ii)
state and local government revenues
from oil, gas, or other natural resources
on Indian tribal government lands, or
(iii) revenue derived from gaming or
other tribally owned corporate interests,
in comparison to the general tax-based
sources of revenue for State and local
governments?

Types of Projects and Activities Eligible
for Financing With Private Activity
Bonds

For State and local governments,
Section 141 provides that certain
specific types of projects and activities
may be financed with qualified tax-
exempt private activity bonds, as
described previously herein.

4, Should consideration be given to
changing the law permanently to
authorize Indian tribal governments to
use qualified tax-exempt private activity
bonds for the same types of projects and
activities as are allowed for State and
loca] governments?

5. Are there any specific additional
types of projects or activities beyond
those allowed for State and local
governments for which Indian tribal
governments should be authorized (or
not authorized) to use qualified tax-
exempt private activity bonds (i.e., in
which private business ownership,
leasing, or other private business use of
the bond-financed projects would be
permitted) in light of their special needs
or unique circumstances? For example,
would federal corporations chartered
under Section 17 of the Indian
Reorganization Act of 1934 (25 U.S.C.
477) require special provisions to use
qualified tax-exempt private activity
bonds?

Private Activity Bond Volume Cap
Considerations

In the case of State and local
governments, an annual State bond
volume cap applies to qualified tax-
exempt private activity bonds based on
State populations. For 2010, each State’s
private activity bond volume cap is
equal to the greater of: (1) $90
multiplied by the State population; or
(2) $273,775,000. In the case of Indian
tribal governments, the new Tribal
Economic Development Bond provision
under Section 7871(f) included a $2
billion total national bond volume cap
on these bonds.

6. If Congress were to determine that
it was necessary to impose some form of
bond volume cap on the use of qualified
tax-exempt private activity bonds by
Indian tribal governments similar to that
imposed on State and local
governments, how specifically should

such a bond volume cap be structured
to best promote fair, effective, and
workable use? One option would be to
allocate the private activity bond
volume cap among Indian tribal
governments based on population,
coupled with some minimum allocation
for small Indian tribal governments.
Another option, similar to that used for
the $2 billion Tribal Economic
Development Bond authorization,
would be for Treasury (or another
Federal agency, such as the Department
of the Interior’s Bureau of Indian
Affairs) to allocate the volume cap using
some prescribed method, such as a
population-based allocation method that
incorporates an adjustment factor to
take into account holdings of land and
other natural resources in the case of
tribes with small populations.
Suggestions for other alternative
allocation methods are welcome.

Considerations Regarding the
Restriction Against Financing Projects
Located Outside of Indian Reservations

Section 7871(£)(3)(B)(ii) includes a
restriction that limits the use of Tribal
Economic Development Bonds to the
financing of projects that are located on
Indian reservations (as defined in
Section 168(j)(6)). Section 168(j)(6)
provides that the term “Indian
reservation” means a reservation as
defined in § 3(d) of the Indian Financing
Act of 1974, 25 U.S.C. 1452(d), applied
by treating the term “Indian reservations
in Oklahoma” as including only lands
that are within the jurisdictional area of
an Oklahoma Indian tribe (as
determined by the Secretary of the
Interior) and which are recognized by
the Secretary of the Interior as eligible
for trust land status under 25 CFR part
151 (as in effect on August 5, 1997 or
a reservation defined in § 4(10) of the
Indian Child Welfare Act of 1978, 25
U.S.C. 1903(10).

7. Should the limitation on use of
Tribal Economic Development Bonds to
finance projects that are located outside
of Indian reservations be modified to
address special needs or unique
circumstances of Indian tribal
governments? For example, should
consideration be given to allowing the
use of Tribal Economic Development
Bonds to finance projects within some
prescribed reasonable proximity to
Indian reservations or projects located
on land owned by Indian tribal
governments which has not formally
been designated in trust as part of an
Indian reservation?


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

OGC. Documents describing these criteria should be forwarded to the POCTC as they
are completed, for reference when drafting future reports.

" Indicators of disproportionate effects on tribal governments and members will be specific
to each Treasury Office or Bureau. Illustrative examples are suggested in Appendix B.
Offices and Bureaus are encouraged to revise or replace these examples, as appropriate,
so that they may be used by program staff and legal counsel to identify issues within their
program mandate that are likely to require tribal consultation. Also see actual examples
in Appendices C, D and E.

Timely process for determining whether consultation is required

Each Office and Bureau is responsible for complying with EO 13175 and initiating consultation
at the earliest stage possible. In general, program or legislative staff in each Treasury Office and
Bureau should inform the POCTC regarding all pending legislation, regulations and/or
administrative practices that may require tribal consultation. If that Office or Bureau is unsure
as to whether consultation is required, it shall ask the POCTC and OGC whether or not
consultation is required. The POCTC is available to assist Treasury Bureaus and Offices in the
identification of laws, regulations, and administrative practices that require tribal consultation, if
the application of the requirements of EO 13175 is questionable in the view of program staff. In
such cases the POCTC will respond to the inquiry within 15 days. If the POCTC and Treasury
Bureau or Office subsequently agree that consultation is required, consultation should be
initiated within 30 days. If the POCTC and Treasury Bureau or Office disagree on the need for
tribal consultation, the question will be referred to OGC.

To ensure that EO 13175 is followed, ES and OGC shall ask each Office or Bureau, at the
earliest stage that it becomes aware of an activity that might require consultation, whether or not
a consultation decision has been made. If the associated clearance documents do not indicate
explicitly that tribal consultation is planned or under way, then OGC and ES will return the
documents to program staff for clarification and also alert the POCTC that there is a potential
need for consultation.

Ongoing, Proactive Tribal Consultation Process

Target Audience: Treasury Bureaus and Offices should consult directly with tribes and tribal
governing officials on matters that disproportionately affect such tribes and officials. When it is
appropriate and useful, organizations representing the interests of tribes and American Indians
and Alaskan Natives should be consulted as well. However, consultation with tribal
governments and tribal leaders is required, and discussions solely with non-tribal organizations
that represent tribes do not constitute consultation under EO 13175.


DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
Washington, D.C. 20224

JUL 272010

COMMISSIONER
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

MEMORANDUM FOR AARON KLEIN
DEPUTY ASSISTANT SECRETARY FOR POLICY
COORDINATION (OFFICE FOR ECONOMIC POLICY)

FROM: Sarah Hall wneram La GM,

Commissioner, Tax Exempt and rmment Entities

SUBJECT: Summary of Internal Revenue Service
Tribal Consultation Review

This memorandum responds to Deputy Secretary Wolin’s March 9, 2010, request that
the Internal Revenue Service (IRS) conduct a review of operations and initiatives for
potential tribal implications. This review was requested as part of the Treasury
Department's effort to develop and implement a comprehensive consultation process.
This memorandum provides a summary of the IRS review.

Background

The IRS established the Indian Tribal Governments Office (ITG) in 2000 as part of the
overall restructuring of the Service. ITG is part of the Tax Exempt and Govemment
Entities Division (TE/GE) and is charged with both education and compliance efforts
related to federally recognized tribes and the Internal Revenue Code. ITG is also
designated as the single point of contact for tribes in order to ensure that the IRS
interacts on a government-to-government basis with the tribal governments. ITG staff
receives specialized training in Federal indian Law and Protocol.

In 2002, the Advisory Committee to Tax Exempt and Government Entities (ACT) issued
a public report titled “Recommended Process for the Internal Revenue Service to Follow
in Developing a Tribal Consultation Policy” (copy attached). The purpose of the ACT
report was to provide recommendations to the IRS on steps the agency should take to
develop and implement tribal consultation procedures. The ACT reviewed policies and
procedures of various Federal agencies, which had been put in place following issuance
of Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments, and used those to;formulate best practice recommendations for the
Service.


July 23,2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

consultation with tribal governments and members, detailed guidelines on tribal consultation
practices, regular schedules for consultation meetings during regional conferences, and a
dedicated staff.> Current examples of each approach are attached in Appendices C, D, and E.
The POCTC will maintain examples that Bureaus and Offices may review when revising their
own consultation guidelines.

Treasury-Wide Policy on Tribal Consultation: The tasks undertaken by different Treasury
Offices and Bureaus are complex and varied. Findings during internal and external review of
current tribal consultation practices are consistent with this view.’ Therefore, the Treasury
Department will not prescribe a single, uniform approach to tribal consultation. Rather, each
Office and Bureau is responsible for maintaining its own well-defined set of procedures to
achieve the core objectives listed below.

= Timely identification of matters that may require tribal consultation, to include regulative
and legislative activities that fall within the span of Bureau and/or Office operations as
well as direct program responsibilities;

= Timely process for determining whether consultation is required, to include timely notice
to the POCTC on non-routine issues of importance regarding legislative activities,
regulations, and administrative practices that may require tribal consultation; and
consultation on the consultation process as needed; and

= Ongoing, proactive tribal consultation processes, to include early outreach to solicit
comments from tribal governments and members who may be substantially affected by
changes in laws, regulations or policies under consideration, when it has been determined
that consultation is required by EO 13175. Outreach should incorporate an open process
through which tribal governments may proactively consult with the Treasury Bureau or
Office, on a government-to-government basis, regarding matters that involve tribal and
Federal law regulations, and administrative practice.

Each Treasury Office and Bureau shall explicitly identify consultation procedures to meet these
core objectives, as discussed below.

Timely identification of matters that may require tribal consultation

Program and/or legislative staff in each Treasury Office and Bureau are responsible for
identifying pending legislation and regulations that may disproportionately affect tribal
governments and members.

= Explicit criteria consistent with the mandate of the Bureau or Office should be developed
and made clear to program and legislative staff, and to the appropriate points of contact in


ADVISORY COMMITTEE
ON
| TAX EXEMPT AND GOVERNMENT ENTITIES

(ACT)
PUBLIC MEETING

1111 Constitution Ave., NW
Washington, DC
June 21, 2002



July 23, 2010 DRAFT PROGRESS REPORT ON TRIBAL CONSULTATION

Appendix C: July 2010 Federal Register Notice on Tribal Economic Development Bonds
(Tax Policy) (Attached in PDF Format)

Appendix D: January 2009 Federal Register Notice on Financial Reports (FinCEN)
(Attached in PDF Format)

Appendix E: Summary of IRS Tribal Consultation Review (Attached in PDF Format)

13


Federal Register/Vol. 75, No. 132/Monday, July 12, 2010/ Notices

39731

tribal governments under Section 7871.
See 71 FR 45474 (August 9, 2006) (the
“2006 Advance Notice”). In the 2006
Advance Notice, Treasury and the IRS
indicated that proposed regulations will
treat an activity as an essential
governmental function that is
customarily performed by State and
local governments under Section
7871(c) and Section 7871(e) if: (1) There
are numerous State and local
governments with general taxing powers
that have been conducting the activity
and financing it with tax-exempt
governmental bonds, (2) State and local
governments with general taxing powers
have been conducting the activity and
financing it with tax-exempt
overnmental bonds for many years, and
(3) the activity is not a commercial or
industrial activity. The 2006 Advance
Notice further indicated that examples
of activities customarily performed by
State and local governments will
include, but will not be limited to,
public works projects such as roads,
schools, and government buildings.

In general, new Section 7871(f)
regarding Tribal Economic Development
Bonds gives Indian tribal governments
greater flexibility to use tax-exempt
bonds to finance economic development
projects than is allowable under the
existing standard of Section 7871(c).
The more flexible standard under new
Section 7871(f) generally allows Indian
tribal governments to use tax-exempt
bonds under a new $2 billion volume
cap to finance economic development
projects (excluding certain gaming
facilities and excluding projects located
outside of Indian reservations under
Section 7871(f)(3)(B)) or other activities
under comparable standards for which
State or local governments are eligible to
use tax-exempt bonds under Section
103.

State and local governments generally
can use tax-exempt “governmental”
bonds (as contrasted with “private
activity bonds,” as further described
herein) to finance an unspecified broad
range of projects and activities so long

's private involvement is limited
sufficiently to avoid classification as
private activity bonds. Bonds are
classified as private activity bonds if

rivate involvement exceeds both of the

following thresholds: (1) More than 10
percent of the bond proceeds are used
for private business use; and (2) the debt
service on more than 10 percent of bond
proceeds is payable or secured from

ayments or property used for private
Business use. Thus, under this general
standard for State and local
governments, bonds qualify as tax-
exempt governmental bonds if the bond
proceeds are used predominantly for

State or local governmental use. Special
tules under Sections 141(b)(3) and
141(c) further limit the use of tax-
exempt governmental bonds in certain
circumstances involving
disproportionate or unrelated private
business use and private loans.

By contrast, private business use
generally arises from private business
ownership, leasing, or certain other
arrangements involving private business
use of bond-financed facilities. Certain
safe harbors allow private businesses to
manage governmental facilities under
management contracts with prescribed
compensation arrangements without
resulting in private business use. See
Rev. Proc. 97-13, 1997-1 C.B. 632.

Bonds also qualify as tax-exempt
governmental bonds if, despite private
business use, the bonds are payable
predominantly from State or local
governmental sources of payment, such

is generally applicable taxes.

tate and local governments also are

eligible to use tax-exempt qualified
private activity bonds under Section
141(e) and related provisions without
regard to private business use or the
level of private involvement to finance
certain specified types of projects and
activities, including the following: (1)
Airports, (2) docks and wharves, (3)
mass commuting facilities, (4) facilities
for the furnishing of water, (5) sewage
facilities, (6) solid waste disposal
facilities, (7) qualified low-income
residential rental multifamily housing
projects, (8) facilities for the local
furnishing of electric energy or gas, (9)
local district heating or cooling
facilities, (10) qualified hazardous waste
facilities, (11) high-speed intercity rail
facilities, (12) environmental
enhancements of hydroelectric
generating facilities, (13) qualified
public educational facilities, (14)
qualified green buildings and
sustainable design projects, (15)
qualified highway or surface freight
transfer facilities, (16) qualified
mortgage bonds or qualified veterans
mortgage bonds for certain single-family
housing mortgage loans, (17) qualified
small issue bonds for certain
manufacturing facilities, (18) qualified
student loan bonds, (19) qualified
redevelopment bonds, and (20) qualified
501(c)(3) bonds for exempt charitable
and educational activities of Section
501(c)(3) nonprofit organizations.

Subject to certain exceptions, most
types of tax-exempt qualified private
activity bonds are subject to annual
State bond volume caps based on State
populations, with adjustments for
inflation and minimum allocations for
smaller States, and with three-year
carryforward periods for unused

allocations. For 2010, each State’s
private activity bond volume cap is
equal to the greater of: (1) $90
multiplied by the State population; or
(2) $273,775,000. Exceptions to the State
private activity bond volume caps apply
to certain governmentally-owned
projects (including airports, docks and
wharves, environmental enhancements
of hydroelectric generating facilities,
high-speed intercity rail facilities, and
solid waste disposal facilities), qualified
veterans mortgage bonds, and qualified
501(c)(3) bonds.

In general, the new $2 billion bond
authorization for Tribal Economic
Development Bonds under Section
7871(f) allows Indian tribal governments
to use tax-exempt bonds to finance an
unspecified broad range of
governmentally-used projects, including

‘otels or convention centers, as well as
projects involving certain qualified
private activities, to the same extent and
subject to the same limitations imposed
on State and local governments under
Section 103. In addition, Tribal
Economic Development Bonds may be
issued as Build America Bonds under
Section 54AA upon satisfaction of the
additional eligibility requirements for
Build America Bonds. See IRS Chief
Counsel Advice No. AM 2009-14
(October 26, 2009).

Section 7871(f)(3)(B) includes certain
limitations on Tribal Economic
Development Bonds that prohibit the
use of any proceeds of these bonds to
finance either of the following: (1) Any
portion of a building in which class IT
or class II gaming (as defined in section
4 of the Indian Gaming Regulatory Act)
is conducted or housed or any other
property actually used in the conduct of
such gaming; or (2) any facility located
outside the Indian reservation (as
defined in Section 168(j)(6)).

Section 7871(f)(1) requires Treasury to
allocate the $2 billion national volume
cap for Tribal Economic Development
Bonds among Indian tribal governments
in such manner as Treasury, in
consultation with the Secretary of the
Interior, determines to be appropriate.

Pursuant to Notice 2009-51, 2009-28
IRB 128 (July 13, 2009), Treasury and
the IRS solicited applications for
allocation of the $2 billion in bond
volume cap of Tribal Economic
Development Bonds and provided
guidance on the application procedures,
deadlines, forms, and methodology for
allocating this bond volume cap.
Generally, Treasury employed a pro rata
allocation method to allocate this bond
volume cap in two separate $1 billion
phases, subject to specified maximum
allocations for any particular Indian
tribal government. Treasury and the IRS