75990 Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Proposed Rules 

beginning on or after [insert the first 

date of the calendar year that begins 

after the date of publication of final 

regulations in the Federal Register]. 

Paragraph (c)(4) of this section, as 

contained in 26 CFR part I edition 

revised as of April 1, 2024, applies to 

taxable years beginning after December 

31, 2016, and beginning before [insert 

the first date of the calendar year that 

begins after the date of publication of 

the final regulations in the Federal 

Register]. Paragraph (c)(5) of this 

section, as contained in 26 CFR part I 

edition revised as of April 1, 2024, 

applies to taxable years ending after 

December 31, 2013, and beginning 

before [insert the first date of the 

calendar year that begins after the date 

of publication of the final regulations in 

the Federal Register]. 

(4) Paragraph (d)(1)(i) of this section 

applies to taxable years beginning on or 

after [insert the first date of the calendar 

year that begins after the date of 

publication of the final regulations in 

the Federal Register]. Paragraph (d)(1)(i) 

of § 1.36B–3, as contained in 26 CFR 

part I edition revised as of April 1, 2016, 

applies to taxable years ending after 

December 31, 2013, and beginning 

before January 1, 2017. Paragraph 

(d)(1)(i) of § 1.36B–3, as contained in 26 

CFR part I edition revised as of April 1, 

2022, applies to taxable years beginning 

after December 31, 2016, and beginning 

before January 1, 2023. Paragraph 

(d)(1)(i) of § 1.36B–3, as contained in 26 

CFR part I edition revised as of April 1, 

2024, applies to taxable years beginning 

after December 31, 2022, and beginning 

before [insert the first date of the 

calendar year that begins after the date 

of publication of the final regulations in 

the Federal Register]. 

Douglas W. O’Donnell, 

Deputy Commissioner. 

[FR Doc. 2024–20758 Filed 9–16–24; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–106851–21] 

RIN 1545–BQ95 

Tribal General Welfare Benefits 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

and notice of public hearing. 

SUMMARY: This document contains 

proposed regulations regarding the 

exclusion from gross income of certain 

Tribal general welfare benefits. The 

proposed regulations address the 

requirements that would apply to 

determine whether the benefits that an 

Indian Tribal government program 

provides qualify as Tribal general 

welfare benefits. These proposed 

regulations would affect Indian Tribal 

governments, agencies or 

instrumentalities of such governments, 

Federally-recognized Tribes, members 

of such Tribes, such members’ spouses 

and dependents, and other Tribal 

program participants. This document 

also requests comments on certain 

provisions and provides a notice of a 

public hearing on the proposed 

regulations that will be in addition to 

Tribal consultation on the proposed 

regulations. 

DATES: 

Comments: Electronic or written 

comments on this proposed rule from 

the public must be received by 

December 16, 2024. 

Public Hearing: The public hearing is 

scheduled to be held on January 13, 

2025, at 10 a.m. Eastern time (ET). 

Requests to speak and outlines of topics 

to be discussed at the public hearing 

must be received by December 16, 2024. 

If no outlines are received by December 

16, 2024, the public hearing will be 

cancelled. Requests to attend the public 

hearing must be received by 5 p.m. ET 

on January 9, 2025. Requests for special 

assistance during the hearing must be 

received by 5 p.m. ET on January 8, 

2025. See the Comments and Public 

Hearing section of the SUPPLEMENTARY

INFORMATION for additional information. 

ADDRESSES: Commenters are strongly 

encouraged to submit public comments 

electronically. Submit electronic 

submissions via the Federal 

eRulemaking Portal at https://

www.regulations.gov (indicate IRS and 

REG–106851–21) by following the 

online instructions for submitting 

comments. Once submitted to the 

Federal eRulemaking Portal, comments 

cannot be edited or withdrawn. The 

Department of the Treasury (Treasury 

Department) and the IRS will publish 

any comments to the IRS’s public 

docket. Send paper submissions to: 

CC:PA:PR:01 (REG–106851–21), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Jonathan A. Dunlap of the Office of 

Associate Chief Counsel (Income Tax 

and Accounting), (202) 317–4718 (not a 

toll-free number); concerning 

submissions of comments or outlines, 

the hearing, or any questions to attend 

the hearing by teleconferencing, 

Publication and Regulations Section at 

(202) 317–6901 (not a toll-free number) 

or preferably by email to 

publichearings@irs.gov. If emailing, 

please include the following 

information in the subject line: Attend, 

Testify, or Question and REG–106851– 

21. 

SUPPLEMENTARY INFORMATION: 

Authority 

This document contains proposed 

amendments to the Income Tax 

Regulations (26 CFR part 1) under 

section 139E of the Internal Revenue 

Code (Code). Section 139E(c)(3) 

provides an express delegation of 

authority for the Secretary of the 

Treasury or her delegate (Secretary) to, 

‘‘in consultation with the Tribal 

Advisory Committee (as established 

under section 3(a) of the Tribal General 

Welfare Exclusion Act of 2014), 

establish guidelines for what constitutes 

lavish or extravagant benefits with 

respect to Indian tribal government 

programs.’’ The proposed regulations 

are also issued under the express 

delegation of authority under section 

7805(a) of the Code. 

Background 

This notice of proposed rulemaking 

contains proposed amendments to the 

Income Tax Regulations (26 CFR part 1) 

to implement section 139E of the 

Internal Revenue Code (Code). 

Section 61 of the Code provides that, 

except as otherwise provided by law, 

the term ‘‘gross income’’ means all 

income from whatever source derived. 

The term ‘‘income’’ is broadly defined 

as ‘‘instances of undeniable accessions 

to wealth, clearly realized, and over 

which the taxpayers have complete 

dominion.’’ Commissioner v. Glenshaw 

Glass Co., 348 U.S. 426, 431 (1955). As 

a general rule, exclusions from income 

are construed narrowly, and taxpayers 

must bring themselves within the clear 

scope of the exclusion for the exclusion 

to apply. Commissioner v. Schleier, 515 

U.S. 323, 328–329 (1995). Tribal 

members are subject to the same 

requirement to pay Federal income 

taxes as non-Tribal members, unless 

exempted by a treaty or agreement 

between the United States and the 

Tribal member’s Tribe or an Act of 

Congress dealing with Indian affairs. 

Squire v. Capoeman, 351 U.S. 1, 6 

(1956). 

Generally, if the provision of a benefit 

satisfies the requirements of section 

139E (discussed in part IV of this 

Background), section 139E will apply to 

exclude the value of the benefit from the 


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1Revenue Procedure 2014–35 was preceded by 

Notice 2012–75 (2012–51 I.R.B. 715). The IRS 

received over 40 comments in response to Notice 

2012–75, which informed the drafting of Revenue 

Procedure 2014–35. 

recipient’s gross income. If section 139E 

does not apply to exclude a benefit from 

a recipient’s gross income, the benefit 

may, depending on the facts and 

circumstances, separately qualify for 

exclusion from the recipient’s gross 

income under another Code provision or 

the administrative general welfare 

exclusion (discussed in part I of this 

Background), which pre-dates the 

enactment of section 139E. See Notice 

2015–34 (2015–18 I.R.B. 942), discussed 

in part V of this Background. 

I. Administrative General Welfare 

Exclusion 

The IRS generally has determined that 

payments made to or on behalf of 

individuals by governmental units 

under legislatively provided social 

benefit programs for the promotion of 

the general welfare are not includible in 

an individual recipient’s Federal gross 

income; this concept is referred to in 

this preamble as the ‘‘administrative 

general welfare exclusion.’’ See, e.g., 

Rev. Rul. 78–170, 1978–1 C.B. 24 

(concluding that amounts paid under 

the laws of the State of Ohio to lowincome elderly and disabled persons to 

help alleviate their cost of winter energy 

consumption are made for the 

promotion of general welfare, and are 

not includible in the recipients’ gross 

income for Federal income tax 

purposes); see also Rev. Rul. 76–395, 

1976–2 C.B. 16 (applying the general 

welfare exclusion to home rehabilitation 

grants to low-income families to correct 

substandard conditions). 

To qualify under the administrative 

general welfare exclusion, payments 

must (1) be paid from a governmental 

fund, (2) be for the promotion of the 

general welfare (that is, based on the 

need of the individual or family 

receiving such payments), and (3) not 

represent compensation for services 

absent a specific Federal income tax 

exclusion. See Notice 2023–56, 2023–38 

I.R.B. 824. 

Payments that are based on some 

criteria other than individual or family 

need do not qualify for the 

administrative general welfare 

exclusion. Compare Rev. Rul. 76–395, 

1976–2 C.B. 16 (home rehabilitation 

grants received by low-income 

homeowners residing in a defined area 

of a city under the city’s community 

development program funded under the 

Housing and Community Development 

Act of 1974 are in the nature of general 

welfare and are not includible in their 

gross income) with Rev. Rul. 76–131, 

1976–1 C.B. 16 (payments made by the 

State of Alaska to individuals at least 65 

years of age who have maintained an 

Alaska domicile for at least 25 years to 

encourage them to continue their 

residence in the State did not qualify 

under the general welfare exclusion 

because the payments were made to 

residents regardless of financial status, 

health, educational background, or 

employment status). 

The administrative general welfare 

exclusion does not generally apply to 

permit a business to exclude payments 

from gross income because such 

payments are not based on individual or 

family need. See Bailey v. 

Commissioner, 88 T.C. 1293, 1300–1301 

(1987), acq. 1989–2 C.B. 1; Revenue 

Ruling 2005–46 (2005–2 C.B. 120). 

II. Application of the Administrative 

General Welfare Exclusion to Indian 

Tribal Governments 

Indian Tribal governments have a 

unique legal status. They have 

sovereignty that pre-dates the United 

States and therefore have a governmentto-government relationship with the 

United States. Indian Tribal 

governments have developed a broad 

range of programs to address their 

unique social, cultural, and economic 

issues. The administrative general 

welfare exclusion applies to benefits 

provided by Indian Tribal governments 

no less favorably than it applies to 

benefits provided by Federal, State, or 

local governments. Thus, benefits 

provided by Indian Tribal governments 

qualify for the administrative general 

welfare exclusion if the benefits are (1) 

made pursuant to a governmental 

program of the Tribe; (2) for the 

promotion of general welfare (that is, 

based on individual or family need); 

and (3) not compensation for services. 

III. Revenue Procedure 2014–35 

In 2014, the Treasury Department and 

the IRS issued Revenue Procedure 

2014–35 (2014–26 I.R.B. 1110),1 which 

provides safe harbors under which the 

IRS conclusively presumes that the 

individual need requirement of the 

administrative general welfare exclusion 

is met for benefits provided under 

Indian Tribal governmental programs 

that meet the safe harbor requirements. 

The revenue procedure provides that 

the IRS will not assert that recipients of 

benefits under a safe harbor must 

include the value of those benefits in 

gross income or that the benefits are 

subject to the information reporting 

requirements of section 6041 of the 

Code. The safe harbors apply if the 

following requirements are met: (1) the 

benefit is provided pursuant to a 

specific Indian Tribal government 

program, (2) the program has written 

guidelines specifying how the 

individual qualifies for the benefit; (3) 

the benefit is available to any Tribal 

member and certain other individuals 

who satisfy the program’s guidelines; (4) 

the program does not discriminate in 

favor of members of the governing body; 

(5) the benefit is not lavish or 

extravagant under the circumstances, 

and (6) the benefit is not compensation 

for services. See section 5.02(1) of 

Revenue Procedure 2014–35. Categories 

of qualifying benefits include housing, 

education, elder and disabled person 

care, and cultural activities. See section 

5.02(2) of Revenue Procedure 2014–35. 

In addition, nominal cash honoraria and 

items of cultural significance that are 

not lavish or extravagant provided to 

religious or spiritual officials or leaders 

in connection with their participation in 

cultural, religious, and social events, are 

not treated as compensation for services 

(and therefore are not gross income) 

under the revenue procedure. See 

section 5.03 of Revenue Procedure 

2014–35. 

IV. The Tribal General Welfare 

Exclusion Act of 2014 

On August 2, 2013, H.R. 3043, 113th 

Cong. (2013), whose short title was the 

Tribal General Welfare Exclusion Act of 

2013, was introduced in the United 

States House of Representatives and 

referred to the Committee on Ways and 

Means. On that same date, an identical 

bill was introduced in the United States 

Senate and referred to the Committee on 

Finance. On September 16, 2014, after 

its short title was revised to the ‘‘Tribal 

General Welfare Exclusion Act of 2014,’’ 

H.R. 3043 was passed by the House of 

Representatives after a floor debate 

(House Debate). See Cong. Rec. H7599– 

7603 (September 16, 2014). On 

September 17, 2014, after being received 

by the Senate, H.R.3043 was the subject 

of a colloquy (Senate Colloquy). See 

Cong. Rec. S5686–5687 (September 17, 

2014). On September 18, 2024, H.R. 

3043 was passed by the Senate by 

unanimous consent. See Cong. Rec. 

S5862 (September 18, 2014). On 

September 26, 2014, the President of the 

United States approved the United 

States Congress’s enactment of the 

Tribal General Welfare Exclusion Act of 

2014 (Act), Public Law 113–168, 128 

Stat. 1883 (2014). 

The Act, among other things, 

amended the Code by adding section 

139E. Under section 139E, gross income 

does not include the value of any 

‘‘Indian general welfare benefit,’’ which 

this notice of proposed rulemaking 


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2However, a few Tribal Comments argued that 

Congress has not specifically directed the Treasury 

Department and the IRS to publish regulations 

under section 139E. 

refers to as a ‘‘Tribal General Welfare 

Benefit.’’ Section 139E(b) defines a 

Tribal general welfare benefit as any 

payment made or services provided to 

or on behalf of a member of a Tribe (or 

any spouse or dependent of such a 

member) pursuant to an Indian Tribal 

government program, but only if: (1) the 

program is administered under specified 

guidelines and does not discriminate in 

favor of members of the governing body 

of the Tribe, and (2) the benefits 

provided under such program are (A) 

available to any Tribal member who 

meets such guidelines, (B) for the 

promotion of general welfare, (C) not 

lavish or extravagant, and (D) not 

compensation for services. Further, 

section 139E(c)(5) provides that any 

items of cultural significance, 

reimbursement of costs, or cash 

honorarium for participation in cultural 

or ceremonial activities for the 

transmission of Tribal culture ‘‘shall not 

be treated as compensation for 

services.’’ 

Section 2(c) of the Act provides that 

ambiguities in section 139E are to be 

resolved in favor of Indian Tribal 

governments. Section 2(c) of the Act 

also requires that deference be given to 

Indian Tribal governments for the 

programs administered and authorized 

by the Tribe to benefit the general 

welfare of the Tribal community. 

Section 2(d)(1) of the Act provides 

that section 139E shall apply to taxable 

years for which the period of limitation 

on refund or credit under section 6511 

of the Code of 1986 has not expired. 

Section 2(d)(2) of the Act provides that 

if the period of limitation on a credit or 

refund resulting from the enactment of 

section 139E expires before the end of 

the 1-year period beginning on the date 

of the enactment of the Act, refund or 

credit of such overpayment (to the 

extent attributable to such amendments) 

may, nevertheless, be made or allowed 

if claim therefor is filed before the close 

of such 1-year period. 

Section 3 of the Act requires the 

Secretary of the Treasury to establish a 

Tribal Advisory Committee. The 

Department of the Treasury Tribal 

Advisory Committee (TTAC) held its 

inaugural meeting on June 20, 2019. 

Under section 3(b) of the Act, the 

TTAC’s mandate is to advise the 

Secretary of the Treasury on matters 

relating to the taxation of Indians, and 

the Secretary of the Treasury is required 

to consult with the TTAC to establish 

and require training and education for 

internal revenue field agents who 

administer and enforce internal revenue 

laws. This includes (A) training and 

education with respect to Federal Indian 

law and the Federal Government’s 

unique legal treaty and trust 

relationship with Indian Tribal 

governments, and (B) training of such 

internal revenue field agents, and 

provision of training and technical 

assistance to Tribal financial officers, 

about implementation of the Act and the 

amendments made by the Act. 

Section 4(a) of the Act requires the 

Secretary of the Treasury to temporarily 

suspend ‘‘all audits and examinations of 

Indian Tribal governments and members 

of Tribes (or any spouse or dependent 

of such a member), to the extent such 

an audit or examination relates to the 

exclusion of a payment or benefit from 

an Indian Tribal government under the 

general welfare exclusion’’ until the 

training and education described above 

is completed. Section 4(a) further 

provides that the period of limitation 

under section 6501 of the Code is 

suspended during the period of 

suspension. 

V. Notice 2015–34 

Following the addition of section 

139E to the Code, the IRS published 

Notice 2015–34 (2015–18 I.R.B. 942), 

providing guidance to taxpayers 

regarding the effect of section 139E on 

Revenue Procedure 2014–35. Notice 

2015–34 provides that section 139E 

codifies (but does not supplant) the 

administrative general welfare exclusion 

for certain benefits provided under 

Indian Tribal government programs. 

Notice 2015–34 provides that taxpayers 

can rely on Revenue Procedure 2014–35 

for the safe harbors under which certain 

benefits provided by Indian Tribal 

government programs may be excluded 

from gross income under the 

administrative general welfare 

exclusion. Additionally, Notice 2015–34 

requested comments on (1) what 

guidelines may be helpful to Indian 

Tribal governments to determine 

whether benefits are lavish or 

extravagant under section 139E(b); (2) 

what Tribal customs or government 

practices may establish an Indian Tribal 

government program administered 

through specific guidelines under 

section 139E(b)(1) and (c)(4) and how 

such programs may be identified; and 

(3) how items of cultural significance, 

cash honoraria, and cultural or 

ceremonial activities for the 

transmission of Tribal culture under 

section 139E(c)(5) should be defined. 

VI. TTAC Report and Tribal 

Consultations on Section 139E 

Members of the TTAC formed a 

Subcommittee on the Act’s General 

Welfare Exclusion (GWE Subcommittee) 

in 2019 to provide the TTAC with 

technical expertise on recommendations 

for the implementation of the Act. On 

June 16, 2021, the GWE Subcommittee 

submitted to the TTAC a report (TTAC 

Report) containing the GWE 

Subcommittee’s interpretation of the 

core principles underlying section 139E, 

and an Appendix containing draft 

proposed regulations interpreting 

section 139E (TTAC draft proposed 

regulations), consistent with those core 

principles. On October 26, 2022, the 

TTAC formally recommended and 

approved the TTAC Report to be 

submitted for the record and published 

for Tribal comment. 

The Treasury Department sent a 

Tribal consultation letter, dated October 

27, 2022 (Dear Tribal Leader Letter), to 

Tribal leaders to request consultation on 

the Act and the TTAC Report. The Dear 

Tribal Leader Letter announced 

consultation meetings to be held on 

December 14, 15, and 16, 2022 

(December 2022 Consultations), to 

discuss the Act and the TTAC Report. 

The Dear Tribal Leader Letter also 

requested responses to certain questions 

related to the interpretation of particular 

provisions of section 139E, as well as 

comments on the TTAC Report. In 

response to the Dear Tribal Leader 

Letter, and after the December 2022 

Consultations, the Treasury Department 

received 65 written comments from 

Tribes and two Tribal organizations 

(collectively, Tribal Comments). 

The Tribal Comments were broadly 

supportive of the recommendations in 

the TTAC Report,2 including the TTAC 

draft proposed regulations. In general, 

the Tribal Comments emphasized that 

the Act, particularly section 2(c) of the 

Act, requires the Treasury Department 

to recognize the sovereignty of Tribes by 

granting broad deference to Indian 

Tribal governments in the design and 

implementation of their general welfare 

programs, as well as with respect to any 

ambiguities in the statute. Deference to 

Indian Tribal governments was a 

guiding principle in the Tribal 

Comments addressing each of the 

questions for which the Treasury 

Department requested comment. For 

example, many Tribal Comments stated 

that any Treasury Department and IRS 

guidance imposing specific 

requirements for a general welfare 

program, such as what constitutes ‘‘the 

promotion of the general welfare,’’ what 

is a ‘‘lavish or extravagant’’ benefit, or 

what are ‘‘cultural or ceremonial 

activities,’’ would infringe upon Indian 

Tribal sovereignty. Many Tribal 


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Comments urged that section 2(c) of the 

Act be expressly cited in the proposed 

regulations. 

Another area of significant concern 

raised in the Tribal Comments was 

ensuring that the regulations under 

section 139E do not presumptively treat 

benefits as outside the scope of section 

139E solely because the benefits are 

provided to all eligible recipients in an 

equal amount, or that the benefits are 

funded from gaming revenues. This 

concern was primarily raised in relation 

to amounts that are set aside and paid 

from net gaming revenues to provide for 

the general welfare of the Indian Tribe 

and its members. See 25 U.S.C. 2710(b). 

Finally, the Tribal Comments 

addressed various other issues, 

including the effective date of the 

proposed regulations, training of IRS 

agents, and coordination with other 

Federal agencies. After considering 

these and other Tribal Comments and 

the TTAC Report, and after consultation 

with the TTAC and the GWE 

Subcommittee, the Treasury Department 

and the IRS propose to adopt new 

§ 1.139E–1 to provide guidance under 

section 139E (proposed § 1.139E–1). The 

following Explanation of Provisions 

discusses the Tribal Comments in more 

detail in relation to each proposed 

provision in proposed § 1.139E–1. 

Explanation of Provisions 

The proposed regulations would 

provide that the gross income of a Tribal 

program participant does not include 

the value of any Tribal general welfare 

benefit provided by an Indian Tribal 

government program. 

The provisions of proposed § 1.139E– 

1 would provide (1) definitions of terms 

used in section 139E and proposed 

§ 1.139E–1 (see proposed § 1.139E–1(b)); 

(2) requirements for a program to qualify 

as an ‘‘Indian Tribal Government 

Program’’ (see proposed § 1.139E–1(c)); 

(3) requirements for a benefit to qualify 

as a ‘‘Tribal General Welfare Benefit’’ 

(see proposed § 1.139E–1(d)); (4) special 

rules related to cultural or ceremonial 

activities (see proposed § 1.139E–1(e)); 

(5) clarification of the audit suspension 

required by section 4(a) of the Act 

(proposed § 1.139E–1(f)); and (6) the 

proposed date of applicability of the 

final regulations (see proposed 

§ 1.139E–1(g)). The Treasury 

Department and the IRS will publish 

final regulations under section 139E 

after consideration of oral and written 

comments received in connection with 

Tribal consultation on these proposed 

regulations, consideration of any other 

comments received in response to the 

proposed regulations, and further 

consultation with the TTAC, including 

through the GWE Subcommittee. 

I. Section 139E Definitions 

Section 139E(a) provides that gross 

income does not include the value of 

any Tribal general welfare benefit. 

Section 139E(b) defines a Tribal general 

welfare benefit, in relevant part, as any 

payment made or services provided to 

or on behalf of a member of a Tribe (or 

any spouse or dependent of such a 

member) pursuant to a program that is 

established by an Indian Tribal 

government and that satisfies specified 

requirements. Proposed § 1.139E–1(b) 

would define an Indian Tribal 

government, a Tribe, and the 

individuals, including a Tribal member, 

spouse, and dependent, who may be 

determined by the Indian Tribal 

government to be eligible for a general 

welfare benefit under section 139E. 

A. Definition of Indian Tribal 

Government 

Section 139E(c)(1) provides that the 

term ‘‘Indian Tribal government’’ 

includes any agencies or 

instrumentalities of an Indian Tribal 

government and any Alaska Native 

regional or village corporation, as 

defined in, or established pursuant to, 

the Alaska Native Claims Settlement Act 

(ANCSA) (43 U.S.C. 1601 et seq.) 

(Alaska Native Corporations). Revenue 

Procedure 2014–35 provides that the 

term ‘‘Indian Tribal government’’ has 

the same meaning as in section 

7701(a)(40)(A) but for purposes of the 

revenue procedure includes agencies or 

instrumentalities of the Indian Tribal 

government. The TTAC Report and the 

Tribal Comments did not provide any 

recommendations on the definition of 

Indian Tribal government and did not 

specifically address Alaska Native 

Corporations. 

If used in a provision of the Code and 

not otherwise distinctly expressed or 

manifestly incompatible with the intent 

thereof, section 7701(a)(40)(A) defines 

the term ‘‘Indian Tribal government’’ to 

mean the governing body of any Tribe, 

band, community, village, or group of 

Indians, or (if applicable) Alaska 

Natives, which is determined by the 

Secretary, after consultation with the 

Secretary of the Interior, to exercise 

governmental functions. Under the 

Federally Recognized Indian Tribe List 

Act of 1994, Public Law 103–454, 108 

Stat. 4791 (List Act), the Secretary of the 

Interior is required to publish annually 

a list of all Federally-recognized Tribes. 

In Revenue Procedure 2008–55 (2008– 

39 I.R.B. 768), after consultation with 

the Department of Interior (DOI), the 

Treasury Department and the IRS 

determined that the Indian Tribal 

entities that appear on the current or 

future lists of Federally-recognized 

Tribes published annually under the 

List Act by the DOI, Bureau of Indian 

Affairs, are designated as Indian Tribal 

governments for purposes of section 

7701(a)(40). See 89 FR 944 (January 8, 

2024) for the most current list published 

by the DOI, Bureau of Indian Affairs. 

Proposed § 1.139E–1(b)(4) would 

define the term ‘‘Indian Tribal 

Government’’ by reference to section 

7701(a)(40). In addition, in accordance 

with section 139E(c)(1), the definition of 

Indian Tribal government for purposes 

of proposed § 1.139E–1(b)(4) also would 

include agencies and instrumentalities 

of the Indian Tribal government. This 

definition is consistent with Revenue 

Procedure 2014–35. 

Although the definition of Indian 

Tribal government under section 

139E(c)(1) includes Alaska Native 

Corporations, these proposed 

regulations would not include Alaska 

Native Corporations in the definition of 

Indian Tribal government for purposes 

of these rules and instead reserve 

proposed § 1.139E–2 for the rules to 

apply section 139E to benefits provided 

by Alaska Native Corporations. The 

Treasury Department and the IRS intend 

on holding consultation before issuing 

future guidance on issues related to the 

application of section 139E to benefits 

provided by Alaska Native 

Corporations. 

B. Definition of Tribe 

Section 139E does not define the term 

‘‘Indian Tribe,’’ but section 4(c)(2) of the 

Act defines it by cross-reference to that 

term as defined in section 45A(c)(6) of 

the Code. Revenue Procedure 2014–35 

also defines ‘‘Indian Tribe’’ by crossreference to section 45A(c)(6). The 

TTAC Report and the Tribal Comments 

did not provide any recommendations 

on the definition of ‘‘Indian Tribe,’’ 

which, for purposes of these proposed 

regulations, is referred to as simply 

‘‘Tribe.’’ 

Section 45A relates to the Indian 

employment credit, which was 

applicable for taxable years prior to 

January 1, 2022. Section 45A(c)(6) 

defines ‘‘Indian Tribe’’ to mean any 

Indian Tribe, band, nation, pueblo, or 

other organized group or community, 

including any Alaska Native village, or 

regional or village corporation, as 

defined in, or established pursuant to, 

ANCSA that is recognized as eligible for 

the special programs and services 

provided by the United States to Indians 

because of their status as Indians. 

Proposed § 1.139E–1(b)(7) generally 

would define ‘‘Tribe’’ using the 


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75994 Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Proposed Rules 

definition of Indian Tribe in section 

45A(c)(6). However, for ease of 

readability and to prevent confusion 

arising from citing to an expired Code 

provision, the proposed regulations 

would recite the language of section 

45A(c)(6) rather than incorporating the 

definition by cross-reference. As noted, 

proposed § 1.139E–2 is reserved because 

the Treasury Department and the IRS 

intend to issue future guidance under 

section 139E applicable to benefits 

provided by Alaska Native 

Corporations. Accordingly, the 

proposed regulations would exclude 

section 45A(c)(6)’s reference to Alaska 

Native regional and village corporations 

as defined in and established pursuant 

to ANCSA for purposes of these rules. 

C. Definition of Tribal Program 

Participant 

Section 139E(b) provides that a Tribal 

general welfare benefit means any 

payment made or services provided to 

or on behalf of a member of the Tribe 

(or any spouse or dependent of such a 

member) pursuant to a program that 

satisfies specified requirements. 

Revenue Procedure 2014–35 allows 

benefits to be provided to a member of 

the Tribe, as well as a ‘‘qualified 

nonmember,’’ meaning a spouse, former 

spouse, legally recognized domestic 

partner or former domestic partner, 

ancestor, descendant, or dependent of a 

member of a Tribe. 

The TTAC Report and many Tribal 

Comments recommend that the 

proposed regulations provide that 

individuals eligible for benefits not be 

limited to Tribal members and their 

spouses and dependents, instead 

supporting the use of the more 

expansive term ‘‘qualified nonmember’’ 

from Revenue Procedure 2014–35. The 

TTAC Report and many Tribal 

Comments state that using this more 

expansive definition of ‘‘qualified 

nonmember’’ would be consistent with 

the House Debate and Senate Colloquy 

that explain the Act, and that section 

139E should be viewed no less favorably 

than Revenue Procedure 2014–35. 

Moreover, several Tribal Comments 

suggest that the language ‘‘to or on 

behalf of’’ in section 139E(b) is 

ambiguous and thus supports the 

proposed regulations adopting the 

definition of ‘‘qualified nonmember’’ 

from Revenue Procedure 2014–35. In 

addition, the TTAC Report explains that 

depending on Tribal culture, custom, or 

tradition, a member of a Tribe may have 

obligations to care for extended family, 

and that existing Tribal general welfare 

programs may provide assistance to 

these extended family members. 

The Treasury Department and the IRS 

have considered the TTAC Report and 

the Tribal Comments and agree that an 

expansive definition of eligible 

individuals is appropriate. Accordingly, 

proposed § 1.139E–1(b)(8) would define 

the term ‘‘Tribal Program Participant’’ to 

mean a Tribal member, spouse of a 

Tribal member (including a spouse of a 

Tribal member within the meaning of 

§ 301.7701–18, or a spouse of a Tribal 

member under applicable Tribal law), 

dependent of a Tribal member, or other 

individual who has been determined by 

the Indian Tribal government to be 

eligible for a Tribal general welfare 

benefit because such individual is, with 

respect to a Tribal member, an ancestor, 

descendant, former spouse, widow or 

widower, or legally recognized domestic 

partner or former domestic partner. This 

definition is intended to encompass the 

categories of ‘‘qualified nonmember’’ 

that are covered by Revenue Procedure 

2014–35, with the clarification that a 

spouse may be a spouse under 

applicable Tribal law. 

The Treasury Department and the IRS 

note that the phrase ‘‘on behalf of’’ in 

section 139E(b) does not make the 

section 139E exclusion applicable to the 

direct recipient of a payment which was 

made by the Indian Tribal government 

‘‘on behalf of’’ the Tribal program 

participant. For example, a Tribal 

program participant who receives a 

Tribal general welfare benefit from an 

Indian Tribal government program to 

provide rental assistance can exclude 

the payment from the Tribal program 

participant’s gross income under section 

139E regardless of whether the 

assistance is paid directly to the Tribal 

program participant or paid to the 

landlord on behalf of the Tribal program 

participant. In either case, however, 

section 139E does not apply to permit 

the landlord to exclude the rental 

assistance payment from the landlord’s 

gross income. 

D. Definition of Tribal Member 

Section 139E does not define who is 

a ‘‘member of an Indian Tribe’’ or 

‘‘Tribal member.’’ Revenue Procedure 

2014–35 defines who is a member of a 

Tribe by cross-reference to 25 CFR 

290.2, which defines a member of a 

Tribe as an individual who meets the 

requirements established by applicable 

Tribal law for enrollment in the Tribe 

and (1) is listed on the Tribal rolls of 

that Tribe if such rolls are kept, or (2) 

is recognized as a member by the Tribal 

governing body if Tribal rolls are not 

kept. The TTAC Report and the Tribal 

Comments did not provide any 

recommendations on the definition of a 

member of a Tribe. 

Proposed § 1.139E–1(b)(9) would 

define the term ‘‘Tribal Member’’ in a 

manner similar to Revenue Procedure 

2014–35’s definition of ‘‘member of an 

Indian Tribe.’’ The proposed regulations 

would adopt the same definition but, for 

ease of readability, would incorporate 

the language from 25 CFR 290.2 rather 

than providing a cross-reference. Thus, 

the proposed regulations would define 

‘‘Tribal Member’’ as an individual who 

is a member or citizen of the Tribe that 

establishes or maintains the Indian 

Tribal government program because the 

individual meets the requirements 

established by applicable Tribal law for 

enrollment in the Tribe and (1) is listed 

on the Tribal rolls of that Tribe if such 

rolls are kept, or (2) is recognized as a 

member by the Tribal governing body if 

Tribal rolls are not kept. In addition, the 

Treasury Department and the IRS are 

aware that some Tribes temporarily 

close their rolls for enrollment or do not 

enroll children until they reach a certain 

age. These Tribes may provide benefits 

to an individual on the basis that the 

individual may be eligible for benefits, 

even though not formally a Tribal 

member. In particular, Tribes may 

provide benefits to an Indian child 

under the Indian Child Welfare Act of 

1978, Public Law 95–608, 92 Stat. 3069 

(1978), codified at 25 U.S.C. 1903(4). 

The Indian Child Welfare Act defines 

‘‘Indian child’’ as any unmarried person 

who is under age eighteen and is either 

(a) a member of a Tribe or (b) is eligible 

for membership in a Tribe and is the 

biological child of a member of a Tribe. 

To ensure that Indian Tribal 

governments may provide general 

welfare benefits to an Indian child 

under section 139E, the proposed 

regulations also would include in the 

definition of Tribal member an ‘‘Indian 

child’’ as defined in 25 U.S.C. 1903. 

The Treasury Department and the IRS 

recognize that an Indian Tribal 

government generally develops 

programs with the intention of 

providing general welfare benefits to or 

for the benefit of its own Tribal 

members. The Treasury Department and 

the IRS interpret section 139E(b) as 

providing a relationship nexus between 

the Indian Tribal government providing 

the general welfare benefit and the 

individual receiving the benefit. Thus, 

the proposed regulations would define 

the term Tribal member to mean a 

member of the Tribe that establishes or 

maintains the Indian Tribal government 

program. However, solely for purposes 

of the rule in section 139E(c)(5) relating 

to benefits provided for participation in 

ceremonial or cultural activities, 

proposed § 1.139E–1(b)(8)(ii) would 


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Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Proposed Rules 75995 

3For taxable years in which the exemption 

amount is zero, the section 151(d) exemption 

amount is generally the inflation-adjusted section 

152(d)(1)(B) exemption amount in the annual 

revenue procedure setting forth inflation-adjusted 

items that is published in the Internal Revenue 

Bulletin. 

provide that the recipient of such 

benefits may be a member of a Tribe that 

is different from the Tribe that 

establishes or maintains the program. 

E. Definition of Spouse 

Section 139E does not define the term 

‘‘spouse,’’ nor does Revenue Procedure 

2014–35. The TTAC Report and the 

Tribal Comments did not provide any 

recommendations on the definition of 

spouse for purposes of section 139E. 

Section 301.7701–18(a) of the 

Procedure and Administration 

Regulations (26 CFR part 301) provides 

that, for Federal tax purposes, the term 

spouse means an individual lawfully 

married to another individual. Section 

301.7701–18(b) generally provides that a 

marriage of two individuals is 

recognized for Federal tax purposes if 

the marriage is recognized by the state, 

possession, or territory of the United 

States in which the marriage is entered 

into, regardless of domicile. Section 

301.7701–18(a) does not specifically 

refer to a marriage recognized under 

Tribal law because Tribal lands are not 

states, possessions or territories of the 

United States or foreign jurisdictions. 

However, the term ‘‘spouse’’ would 

include individuals married under 

Tribal law if the marriage would be 

recognized under the laws of any state, 

possession, or territory of the United 

States. See also 1 U.S.C. 7. 

Because § 301.7701–18(a) defines 

spouse for Federal tax purposes, that 

definition applies for purposes of 

section 139E and would apply by 

default under proposed regulations. 

However, as noted in part I.C. of this 

Explanation of Provisions section, the 

proposed regulations would include in 

the definition of Tribal program 

participant the spouse of a Tribal 

member, as determined under 

applicable Tribal law, whether or not 

recognized under § 301.7701–18(a) and 

1 U.S.C. 7. 

F. Definition of Dependent 

Section 139E(c)(2) defines the term 

‘‘dependent’’ to mean a dependent as 

defined in section 152 of the Code, 

determined without regard to section 

152(b)(1), (b)(2), and (d)(1)(B). Revenue 

Procedure 2014–35 does not define 

dependent, and the TTAC Report and 

the Tribal Comments did not provide 

any recommendations on the definition 

of dependent for purposes of section 

139E. 

Section 152(a) defines dependent to 

mean an individual who is a qualifying 

child or qualifying relative of the 

taxpayer. Section 152(b) provides that 

an individual who is a qualifying child 

or a qualifying relative of a taxpayer is 

not a taxpayer’s dependent in certain 

circumstances. Section 152(b)(1) 

provides that if an individual is a 

dependent of a taxpayer, that individual 

is treated as having no dependents. 

Section 152(b)(2) provides that, to be a 

dependent of a taxpayer, an individual 

must not have filed a joint return with 

his or her spouse. Section 152(d)(1)(B) 

provides that qualifying relative does 

not include an individual whose income 

is not less than the exemption amount 

set forth in section 151(d) of the Code.3

For purposes of section 139E, an 

individual who for the year is a 

dependent of a taxpayer who is him or 

herself a dependent, who files a joint 

return with the individual’s spouse, or 

whose income is not less than the 

applicable limit for section 152(d)(1)(B) 

($5,050 for 2024) is a dependent of a 

Tribal member if the other requirements 

of section 152 are satisfied, pursuant to 

section 139E(c)(2). 

Proposed § 1.139E–1(b)(10) would 

define the term ‘‘dependent’’ in 

accordance with the definition in 

section 139E(c)(2). However, for ease of 

readability, the proposed regulations 

would not cite the specific Code 

sections, but instead would describe the 

rules for determining who is a 

dependent under section 152 without 

regard to section 152(b)(1), (b)(2), and 

(d)(1)(B). 

II. Indian Tribal Government Program 

Under section 139E(b), a benefit is a 

Tribal general welfare benefit if it meets 

certain requirements and is provided 

pursuant to an Indian Tribal 

government program, but only if the 

program is administered under specified 

guidelines and does not discriminate in 

favor of members of the governing body 

of the Tribe. Section 139E(c)(4) provides 

that a program will not fail to be treated 

as an Indian Tribal government program 

solely by reason of the program being 

established by Tribal custom or 

government practice. Revenue 

Procedure 2014–35 provides that, to 

qualify for the safe harbors provided 

therein, there must be a specific Tribal 

program, the program must have written 

guidelines specifying how an individual 

qualifies for the benefit, and the 

program cannot discriminate in favor of 

members of the governing body. 

Some Tribal Comments suggest that 

programs established by Tribal custom 

or government practice without written 

documentation (that is, programs 

established under oral and unwritten 

customs or traditions) should satisfy the 

statutory requirement in section 

139E(b)(1) that the program be 

administered under specified 

guidelines. These Tribal Comments 

recommend that the proposed 

regulations allow Indian Tribal 

governments to demonstrate the 

existence of ‘‘specified guidelines’’ for 

these programs through statements, 

affidavits, or declarations that describe 

how the Tribe has operated the program 

in the past. Other Tribal Comments 

argue that section 139E(b)(1) neither 

specifies who establishes the ‘‘specified 

guidelines’’ nor defines the term 

‘‘specified,’’ and that the proposed 

regulations should presume that a 

program administered by or pursuant to 

Tribal resolution or other action by a 

Tribe’s governing body is ‘‘administered 

under specified guidelines.’’ The TTAC 

Report and the Tribal Comments did not 

specifically address the requirement 

that the program not discriminate in 

favor of members of the governing body. 

The Treasury Department and the IRS 

read section 139E(b) as requiring both 

that a program be established by an 

Indian Tribal government, and that the 

program be administered under 

specified guidelines. This reading is 

similar to the requirements in Revenue 

Procedure 2014–35 that there must be a 

specific Tribal program, and that the 

program must have guidelines 

specifying how an individual qualifies 

for the benefit. Proposed § 1.139E–1(c) 

generally would adopt these two 

requirements and would explain how an 

Indian Tribal government program can 

meet these requirements. The proposed 

regulations also would address the 

requirement that the program not 

discriminate in favor of members of the 

governing body. 

A. Program Must Be Established 

Proposed § 1.139E–1(c)(2) would 

provide that a program must be 

established by an Indian Tribal 

government and that the program may 

be established by Tribal custom, 

government practice, or formal action of 

the Indian Tribal government under 

applicable Tribal law. The proposed 

regulations also would provide that to 

the extent permitted by applicable 

Tribal law, an Indian Tribal government 

may delegate authority to establish 

general welfare programs to a 

designated individual or entity of the 

Indian Tribal government. 

While an Indian Tribal government 

may find it helpful to set forth the 

creation of a program through a written 

document, the proposed regulations 


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75996 Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Proposed Rules 

would not specifically require a written 

document to memorialize the 

establishment of the program. However, 

the proposed regulations would refer to 

applicable Tribal law to determine 

whether a writing is required for formal 

actions of the Indian Tribal government. 

For example, if Tribal law requires all 

formal actions of the Indian Tribal 

government to be in writing, then 

proposed § 1.139E–1(c)(2) would also 

require the establishment of the program 

to be in writing. If written 

documentation of the Indian Tribal 

government program is not required 

under Tribal law, and the Indian Tribal 

government does not provide written 

documentation of the Indian Tribal 

government program, the use of 

affidavits or Indian Tribal government 

declarations, whether oral or written, 

may be used to substantiate the 

establishment of the program. For 

example, the transcript of the minutes of 

an Indian Tribal government session 

that describe the creation of the program 

may be sufficient to establish an Indian 

Tribal government program under these 

proposed regulations. 

B. Program Must Be Administered 

Under Specified Guidelines 

Proposed § 1.139E–1(c)(3) would 

provide the requirements for the 

administration of the program under 

specified guidelines. In general, the 

specified guidelines of the program 

represent the framework for the 

program’s operations. Thus, the 

proposed regulations would provide 

that the specified guidelines of the 

program must include, at a minimum, a 

description of the program to provide 

Tribal general welfare benefits, the 

benefits provided by the program 

(including how benefits are 

determined), the eligibility requirements 

for the program, and the process for 

receiving benefits under the program. 

The Treasury Department and the IRS 

agree with the TTAC Report and the 

Tribal Comments that section 139E does 

not require the specified guidelines of 

the program to be memorialized in a 

written document. However, Indian 

Tribal governments are encouraged to 

set forth the specified guidelines in 

writing to assist recipients in 

determining whether a benefit received 

under the program is excludable from 

gross income under section 139E. In 

particular, recipients of Tribal general 

welfare benefits who are contacted by 

the IRS will need to substantiate that the 

benefit is excludable from gross income 

under section 139E and may not have 

any written documentation in their 

possession to do so. If the Indian Tribal 

government has documented in writing 

the specific guidelines of the program, 

the individual recipient of the benefit 

may use the written documentation to 

substantiate that the benefit received is 

intended to be a Tribal general welfare 

benefit that is excludable from gross 

income under section 139E. 

C. Program Cannot Discriminate in 

Favor of Members of the Governing 

Body 

In accordance with section 139E(b)(1), 

proposed § 1.139E–1(c)(4) would 

provide that one of the requirements for 

an Indian Tribal government program is 

that the program not discriminate in 

favor of members of the governing body 

of the Tribe (non-discrimination 

requirement). Proposed § 1.139E– 

1(c)(4)(i) would generally define a 

governing body as the legislative body 

of the Tribe, such as the Tribal Council, 

or the representative equivalent of the 

legislative body of the Tribe. However, 

the Treasury Department and the IRS 

are aware that the form and membership 

of the governing body of a Tribe may 

vary between Tribes. For example, a 

Tribe may form its governing body to 

include all Tribal members, known as a 

general council Tribe. To ensure that a 

general council Tribe is not prevented 

from satisfying this requirement, 

proposed § 1.139E–1(c)(4)(ii) would 

provide that a program is treated as 

being in compliance with the nondiscrimination requirement if the 

governing body of the Tribe consists of 

the entire adult membership of the 

Tribe. 

Proposed § 1.139E–1(c)(4)(iii) would 

provide a facts and circumstances test to 

determine whether a program, either by 

its terms or in its administration, 

discriminates in favor of members of the 

governing body of the Tribe. For 

example, the administration of a 

program would discriminate in favor of 

members of the governing body if, based 

on the facts and circumstances, the 

benefits provided during the taxable 

year disproportionately favor members 

of the governing body of the Tribe 

because of their status as members of 

the governing body. Thus, for example, 

a program established to provide 

benefits solely to the children of 

members of the governing body of the 

Tribe (unless the Tribe is a general 

council Tribe) and thus defrays costs 

otherwise borne by members of the 

governing body would fail to satisfy the 

non-discrimination requirement. 

D. No Limitation on Source of Funds 

Section 139E does not provide 

restrictions on how an Indian Tribal 

government may fund an Indian Tribal 

government program. Section 2.03 of 

Revenue Procedure 2014–35 provides 

that revenues that the Indian Tribal 

government derives from levies, taxes, 

service fees, tribally-owned businesses, 

or other sources are permissible to fund 

a Tribal general welfare program. 

The TTAC Report and the Tribal 

Comments argue that the source of 

funds used for general welfare benefits 

does not matter for compliance with 

section 139E. The TTAC Report and the 

Tribal Comments request that the 

proposed regulations confirm that the 

source of funding is irrelevant and, in 

particular, that a Tribe’s gaming 

revenues may be used to fund Tribal 

general welfare benefits under an Indian 

Tribal government program. 

The Treasury Department and the IRS 

agree with the TTAC Report and the 

Tribal Comments that section 139E does 

not prohibit an Indian Tribal 

government from funding a general 

welfare program with net gaming 

revenues, or revenues from any other 

particular source. Thus, proposed 

§ 1.139E–1(c)(5) would provide that 

benefits under the Indian Tribal 

government program may be funded by 

any source of revenue or funds, 

including net gaming revenues. 

However, an Indian Tribal government 

is permitted to restrict the source and 

amount of funds available to provide 

benefits under an Indian Tribal 

government program. 

E. Benefits Funded by Net Gaming 

Revenues 

Under the Indian Gaming Regulatory 

Act, 25 U.S.C. 2701–2721 (IGRA), a 

Federally-recognized Tribe is permitted 

to engage in gaming activities and 

provide net gaming revenues to its 

members. See 25 U.S.C. 2710(b). Section 

25 CFR 502.16 defines ‘‘net gaming 

revenue’’ as gross gaming revenues of an 

‘‘Indian gaming operation’’ less: (a) 

amounts paid out as, or paid for, prizes; 

and (b) total gaming-related operating 

expenses, including all those expenses 

of the gaming operation commonly 

known as operating expenses and nonoperating expenses consistent with 

professional accounting 

pronouncements, excluding 

management fees. IGRA allows Tribes to 

use their net gaming revenues consistent 

with one or more of the following 

purposes: (1) to fund Tribal government 

operations or programs; (2) to provide 

for the general welfare of the Tribe or its 

members; (3) to promote Tribal 

economic development; (4) to donate to 

charitable organizations; or (5) to help 

fund operations of local government. 

IGRA also allows Tribes to use their 

net gaming revenues to distribute per 

capita payments. See 25 U.S.C. 


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2710(b)(3). Under 25 CFR 290.2, ‘‘per 

capita payment’’ means the distribution 

of money or other thing of value to all 

members of the Tribe, or to identified 

groups of members, which is paid 

directly from the net revenues of any 

Tribal gaming activity, but does not 

include payments that have been set 

aside by a Tribe for special purposes or 

programs, such as payments made for 

social welfare, medical assistance, 

education, housing, or other similar, 

specifically identified needs. 

Under IGRA, a Tribe cannot distribute 

per capita payments unless it has a 

Revenue Allocation Plan (RAP) that is 

approved by the DOI prior to 

distributing per capita payments. See 25 

U.S.C. 2710(b)(3) and 25 CFR 290.11. A 

Tribe does not need a RAP if no per 

capita payments are made or planned to 

be made to its members. See 25 CFR 

290.10. Thus, no RAP is required if a 

Tribe intends to use its gaming revenues 

solely for special purposes or programs, 

such as payments made for social 

welfare, medical assistance, education, 

housing, or other similar, specifically 

identified needs. These types of 

payments are not per capita payments as 

defined under IGRA. 

Section 25 U.S.C. 2710(b)(3)(D) 

provides that net revenues may be used 

to make per capita payments to 

members of the Tribe only if the per 

capita payments are subject to Federal 

taxation and Tribes notify members of 

such tax liability when payments are 

made. Under section 6041 and § 1.6041– 

1, the Tribe generally is required to 

report per capita payments of $600 or 

more in any taxable year on Form 1099– 

MISC, Miscellaneous Information. 

Section 3402(r)(1) requires every 

person, including an Indian Tribe, 

making a payment to a member of an 

Indian Tribe from the net revenues of 

any class II or class III gaming activity 

conducted or licensed by such tribe to 

deduct and withhold from such 

payment a tax in an amount equal to 

such payment’s proportionate share of 

the annualized tax. A payment that 

constitutes a per capita payment under 

IGRA is gross income under section 61 

and continues to be subject to 

withholding under section 3402(r)(1) to 

the extent not otherwise excepted. See 

25 U.S.C. 2701–2721 and 25 CFR part 

290. These provisions, which are 

intended to ensure adequate 

withholding on gross income arising 

from the distribution of class II and 

class III gaming activity, are not 

intended to and do not extend the scope 

of what is gross income. Thus, 

withholding under section 3402(r) is not 

imposed merely by reason of the 

payment being sourced in class II or 

class III gaming activities but rather by 

reason of the payment being gross 

income and made in the form described 

in section 3402(r). Accordingly, if a 

payment is made under an Indian Tribal 

government program and meets the 

requirements to qualify as an excludable 

Tribal general welfare benefit under 

section 139E and these proposed 

regulations, then such payment is not 

subject to the withholding requirements 

of section 3402(r). 

Section 139E does not address IGRA 

or the Federal tax treatment of per 

capita payments. Revenue Procedure 

2014–35, however, specifically provides 

that per capita payments are gross 

income under section 61, and are 

subject to the information reporting and 

withholding requirements of sections 

6041 and 3402(r). Thus, under the 

revenue procedure, per capita payments 

are not excludable from income under 

the administrative general welfare 

exclusion. 

The TTAC Report argues that a 

distribution with a general welfare 

purpose under IGRA should be 

presumed to be a Tribal general welfare 

benefit under section 139E and not be 

treated as a taxable per capita payment 

under IGRA. In addition, the TTAC 

Report provides that a Tribe’s RAP 

should be relied upon when 

determining whether a payment is a per 

capita payment or a general welfare 

payment under section 139E. Finally, 

the TTAC Report states that the IRS 

should not be allowed to challenge an 

approved RAP with respect to any 

perceived conflict with IGRA and 

section 139E. Rather, the TTAC Report 

argues, the IRS must engage in 

consultation with the Tribe to resolve 

the perceived conflict. Finally, the 

TTAC Report requests that any 

enforcement by the IRS contrary to the 

RAP be prospective only, and that 

Tribes be given time to amend their 

RAPs with the DOI. 

Some Tribal Comments argue that 

IGRA makes clear that not all equal 

distributions of gaming revenue are 

necessarily ‘‘per capita payments’’ to the 

extent that they are set aside for social 

welfare, medical assistance, education, 

housing, or similar purposes. Some 

Tribal Comments recommend that the 

proposed regulations focus on the 

purpose and methodology used to 

calculate the distributions, rather than 

the source of the funding or the value 

of the benefit. Finally, some Tribal 

Comments request that the IRS defer to 

a Tribe’s RAP and not recharacterize 

general welfare payments as per capita 

payments. 

The Treasury Department and the IRS 

are of the view that IGRA defines per 

capita payments and provides that those 

payments are includible in gross income 

for Federal income tax purposes. 

However, the Treasury Department and 

the IRS agree with the TTAC Report and 

the Tribal Comments noting that IGRA 

distinguishes between taxable per capita 

payments and other types of payments, 

such as general welfare payments. The 

Treasury Department and the IRS also 

are of the view that Indian Tribal 

governments are in the best position to 

determine whether net gaming revenues 

should be used to fund per capita 

payments or general welfare payments. 

The Treasury Department and the IRS 

do not agree with the TTAC Report that 

a distribution with a general welfare 

purpose under IGRA should be 

presumed to be a Tribal general welfare 

benefit under section 139E. Even if a 

payment is treated as having a general 

welfare purpose under IGRA, as 

designated in a RAP or otherwise, that 

purpose, by itself, is not sufficient to 

conclude that the payment is excludable 

from gross income under section 139E. 

Instead, the Indian Tribal government 

program must satisfy the requirements 

of section 139E (or other exclusion 

provision) for the payment to be 

excluded from the recipient’s gross 

income. 

Accordingly, proposed § 1.139E– 

1(c)(5)(ii) would provide that benefits 

under the Indian Tribal government 

program may be funded by net gaming 

revenues as permitted under IGRA. 

However, per capita payments, as 

defined under IGRA, are subject to 

Federal taxation under IGRA and are not 

excludable from gross income under 

section 139E or these proposed 

regulations. Proposed § 1.139E– 

1(c)(5)(ii) would further provide that, for 

purposes of section 139E and the 

proposed regulations, a payment is a per 

capita payment if it is identified by the 

Indian Tribal government as a per capita 

payment in a RAP that is approved by 

the DOI. This language is intended to 

mean that, if the Indian Tribal 

government has an approved RAP, the 

provisions of the RAP determine 

whether a payment is a per capita 

payment for purposes of Federal income 

taxation. In contrast, if the Indian Tribal 

government does not have a RAP, the 

determination of the Indian Tribal 

government that payments are not per 

capita payments is controlling for 

Federal income tax purposes. Whether 

or not the Indian Tribal government has 

a RAP, deference will be given to the 

Indian Tribal government’s 

determination of whether net gaming 

revenues are being used to make 

payments. The DOI is the Federal 

agency with sole authority to approve 


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the use of net gaming revenues by an 

Indian Tribal government, including 

whether per capita payments may be 

made under a RAP. 

In drafting these proposed 

regulations, the Treasury Department 

and the IRS have considered recent 

litigation addressing per capita 

payments made by one Tribe to its 

members. In United States v. Jim, 891 

F.3d 1242 (2018), the 11th Circuit 

affirmed the district court’s conclusion 

that section 139E did not apply to 

exclude per capita payments from a 

Tribal member’s gross income. The 

court held that per capita payments are 

taxable under IGRA, a specific statute 

addressing Tribal net gaming revenues. 

The court also held that section 139E, a 

more general statute, does not control or 

nullify IGRA. The Treasury Department 

and the IRS agree that section 139E does 

not control or nullify IGRA, and that per 

capita payments under IGRA cannot be 

excluded from gross income under 

section 139E. However, as noted in parts 

II.D and III.A.3 of this Explanation of 

Provisions, there is no prohibition in 

section 139E on Tribal general welfare 

benefits being paid from net gaming 

revenues, nor is there is a prohibition on 

Tribal general welfare benefits being 

paid in equal amounts to Tribal 

members. Thus, an Indian Tribal 

government may use net gaming 

revenues to provide benefits, whether or 

not uniform, to Tribal members. 

Further, those benefits may be excluded 

from gross income as Tribal general 

welfare benefits if (1) they are not 

designated, including under a RAP, as 

per capita payments by the Indian 

Tribal government, and (2) they 

otherwise meet the requirements in 

section 139E. For example, to be an 

excludable Tribal general welfare 

benefit, the benefit cannot be lavish or 

extravagant and must be provided under 

a program that is established by the 

Indian Tribal government and 

administered under specified 

guidelines. 

III. Tribal General Welfare Benefits 

Under section 139E(b), benefits 

provided under an Indian Tribal 

government program are Tribal general 

welfare benefits only if the benefits (1) 

are for the promotion of general welfare; 

(2) are available to any Tribal member 

who meets the guidelines; (3) are not 

lavish or extravagant; and (4) are not 

compensation for services. Proposed 

§ 1.139E–1(d) would describe each of 

these requirements. 

A. Benefits Must Be for the Promotion 

of General Welfare 

1. Deference to Tribes in Determining 

Promotion of General Welfare 

Section 139E(b)(2)(B) requires that a 

benefit provided under an Indian Tribal 

government program be for the 

promotion of general welfare but does 

not define ‘‘promotion of general 

welfare.’’ The TTAC Report 

recommends that promotion of general 

welfare should be presumed when the 

Indian Tribal government can 

substantiate that the benefit meets 

general welfare needs or purpose, and 

the method of distributing the benefit is 

expected to achieve program goals. 

Further, the TTAC Report states that an 

Indian Tribal government may 

substantiate that benefits meet general 

welfare needs or purposes by relying on 

data or studies corroborating the 

expenses. In addition, the TTAC Report 

recommends that an Indian Tribal 

government may show that the method 

of distribution is expected to achieve 

program goals by establishing Indian 

Tribal government-approved 

verification procedures such as direct 

pay arrangements, applications in 

which recipients agree to specified 

program requirements, or end-of-year 

certifications. Finally, the TTAC Report 

states that Indian Tribal governments 

must be afforded flexibility with regard 

to substantiating expenses that relate to 

Tribal cultural traditions, religious 

expenses, or historical need (such as 

benefits paid to elders to make up for 

historic economic deprivation and 

shorter life expectancy). 

Many Tribal Comments request that 

deference be given to Tribes and Indian 

Tribal governments on whether the 

types and amounts of benefits are for the 

promotion of general welfare. These 

Tribal Comments state that the Indian 

Tribal government is best suited to 

address the unique needs of its 

members, with many insisting that such 

discretion should be unfettered. The 

Tribal Comments noted that many 

programs may not reflect how the 

Treasury Department and the IRS would 

traditionally view general welfare, 

including benefits such as wellness 

centers, health coaches, and access to 

dieticians. 

Other Tribal Comments state that an 

official determination by the Indian 

Tribal government, such as a Tribal 

resolution or other formal action, should 

be sufficient to demonstrate that a 

benefit or program is for the promotion 

of general welfare. With respect to 

benefits provided, some Tribal 

Comments request that the regulations 

defer to Indian Tribal governments on 

determining whether benefits provided 

to Tribal members are considered ‘‘for 

the promotion of general welfare,’’ 

particularly when the Indian Tribal 

government relies on its own data or 

other empirical data (for example, 

private studies, or based on Federal or 

state statistics). Many Tribal Comments 

argue that the Treasury Department and 

the IRS should avoid listing specific 

criteria required for a benefit to satisfy 

the promotion of general welfare 

requirement. 

The Treasury Department and the IRS 

agree with the TTAC Report and the 

Tribal Comments that deference should 

be given to the Indian Tribal 

government in determining whether a 

benefit is for the promotion of the 

general welfare of its Tribal members or 

other eligible individuals. The Indian 

Tribal government is in the best position 

to determine which general welfare 

benefits are best suited to meet the 

needs of its Tribal members and other 

eligible individuals. As a result, these 

proposed regulations would not define 

the term ‘‘for the promotion of general 

welfare’’ or specifically provide 

requirements that a benefit must meet in 

order to satisfy section 139E(b)(2)(B). 

Instead, proposed § 1.139E–1(d)(2) 

would provide deference to the Indian 

Tribal government to determine, at the 

time the program is established, 

whether a benefit is for the promotion 

of general welfare of its Tribal members 

or other eligible individuals. Proposed 

§ 1.139E–1(d)(2) would provide further 

that an Indian Tribal Government has 

sole discretion to determine whether a 

benefit is for the promotion of general 

welfare and that the IRS will defer to the 

Indian Tribal Government’s 

determination that a benefit is for the 

promotion of general welfare. These 

proposed rules would be consistent 

with the specific language in section 

2(c) of the Act, which requires that 

deference be given to Indian Tribal 

governments for the programs 

administered and authorized by the 

Tribe to benefit the general welfare of 

the Tribal community. 

2. No Need Requirement 

The administrative general welfare 

exclusion requires that payments be for 

the promotion of general welfare, which 

the IRS has interpreted to require a 

showing of individual or family need, 

notably financial need. This 

interpretation generally applies 

regardless of whether the benefits are 

provided by a Federal, State, or local 

government or by an Indian Tribal 

government. However, Revenue 

Procedure 2014–35 provides that the 

individual need criterion of the 


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4See part II.E. of this Explanation of Provisions 

for a fuller discussion of IGRA and general welfare 

payments made from net gaming revenues. 

administrative general welfare exclusion 

is presumed to be met for certain 

benefits provided under an Indian 

Tribal government program. Section 

139E(b)(2)(B) requires that a benefit be 

for the promotion of general welfare but 

does not specifically define that term 

nor mention whether it incorporates a 

needs-based requirement. 

The TTAC Report and majority of the 

Tribal Comments contend that the 

proposed regulations should not 

incorporate a needs-based requirement 

for the promotion of general welfare 

requirement in section 139E(b). The 

Tribal Comments note that section 139E 

is silent on an individual need 

requirement. Also, the Tribal Comments 

point to the language in Revenue 

Procedure 2014–35, which conclusively 

presumed individual need was satisfied, 

as support for not including a 

requirement for the showing of 

individual need in section 139E. 

As noted in part III.A.1 of this 

Explanation of Provisions, proposed 

§ 1.139E–1(d)(2) would provide that an 

Indian Tribal Government has sole 

discretion to determine whether a 

benefit is for the promotion of general 

welfare and that the IRS will defer to the 

Indian Tribal Government’s 

determination that a benefit is for the 

promotion of general welfare. Consistent 

with this approach, Indian Tribal 

Governments thus would have sole 

discretion as to whether to consider 

individual need or not in designing a 

general welfare program. In addition, 

the Treasury Department and the IRS 

agree with the TTAC Report and the 

Tribal Comments that section 139E was 

intended by Congress to generally 

codify Revenue Procedure 2014–35, 

which conclusively presumed that 

individual need was satisfied if the 

program met certain requirements. This 

conclusion is also consistent with the 

legislative history of section 139E. See 

House Debate, at H7601 (Representative 

Devin Nunes stating ‘‘that the IRS will 

not interpret the statute as requiring 

individualized determinations of 

financial need where a tribal 

government has established a program 

consistent with the statute’’); see also 

Senate Colloquy, at S5686 (Senator Jerry 

Moran asking Senator Ron Wyden, and 

Senator Wyden agreeing, that the IRS 

will ‘‘in no event require an 

individualized determination of 

financial need’’ if a Tribal program 

meets the other requirements of section 

139E). 

Accordingly, proposed § 1.139E– 

1(d)(2) specifically states that Tribal 

general welfare benefits may be 

provided without regard to the financial 

or other need of Tribal program 

participants. However, Indian Tribal 

governments have broad discretion to 

establish and administer general welfare 

programs and may choose to limit a 

program or its benefits to Tribal program 

participants based on a showing of 

individual need. 

3. Benefits May Be in Equal Amounts 

Section 139E does not address 

whether Tribal general welfare benefits 

may be provided to recipients in equal 

amounts. However, in considering the 

enactment of section 139E, 

Representative Nunes expressed an 

intent that section 139E apply to pro 

rata payments. In addressing the IRS’s 

frequent insistence that Tribal benefits 

be based on a stipulation based on 

individualized financial need, he stated, 

‘‘This stipulation prevents the general 

welfare exclusion from covering 

programs designed to provide 

substantially equal benefits to all 

qualifying members of a tribe or to 

provide benefits based on 

determinations of needs that are not 

financial in nature.’’ See House Debate, 

at H7601. Revenue Procedure 2014–35 

does not directly address this issue of 

whether general welfare benefits under 

its safe harbors could be provided 

equally to all eligible individuals, but 

states that per capita payments to Tribal 

members of Tribal gaming revenues that 

are subject to IGRA are gross income 

under section 61, are subject to the 

information reporting and withholding 

requirements of sections 6041 and 

3402(r), and are not excludable from 

gross income. 

The TTAC Report correctly notes that 

section 139E does not prohibit general 

welfare benefits from being distributed 

in uniform amounts. The Tribal 

Comments recommend that the 

Treasury Department and the IRS defer 

to Tribes in determining whether pro 

rata payments (that is, uniform 

payments to each recipient) are 

appropriate. In general, several Tribal 

Comments, when referring to net 

gaming revenues under IGRA, argue that 

IGRA does not treat all pro rata 

payments as taxable, but instead looks 

to the purpose and methodology used to 

calculate the payments.4 The Tribal 

Comments also request that the 

proposed regulations permit pro rata 

payments under an Indian Tribal 

government program, as several Tribal 

Comments emphasized that distributing 

benefits in equal amounts is often the 

most efficient method to provide 

benefits, such as for health and wellness 

and broadband internet access. 

The Treasury Department and the IRS 

agree with the TTAC Report and the 

Tribal Comments that section 139E does 

not prohibit an Indian Tribal 

government program from providing 

Tribal general welfare benefits to 

recipients in equal amounts. 

Accordingly, proposed § 1.139E–1(d)(2) 

would provide that Tribal general 

welfare benefits may be provided on a 

uniform or pro-rata basis to Tribal 

program participants. 

4. Specific Types of Benefits 

The TTAC Report and the Tribal 

Comments recommend clarification on 

whether payment of benefits for disaster 

relief and similar assistance qualify 

under section 139E. In addition, both 

the TTAC Report and many Tribal 

Comments request that an Indian Tribal 

government disaster declaration qualify 

to establish the existence of a disaster 

for purposes of identifying relief 

payments under section 139E. 

Section 139 generally provides an 

exclusion from gross income for 

qualified disaster relief payments. 

Qualified disaster relief payments 

generally include certain amounts paid 

to or for the benefit of an individual in 

connection with a qualified disaster, 

including a Federally declared disaster. 

Specifically, section 139(b)(4) includes 

as a qualified disaster relief payment an 

amount paid by a Federal, State, or local 

government, or agency or 

instrumentality thereof, in connection 

with a qualified disaster in order to 

promote the general welfare. Section 

139(b)(4) was enacted to codify the 

administrative general welfare exclusion 

for certain disaster relief payments, but 

does not supplant it. See Notice 2002– 

76 (2002–2 C.B. 917). Thus, benefits 

paid by Indian Tribal governments to 

individuals affected by a disaster may 

be excluded from the individuals’ gross 

income if the requirements of the 

administrative general welfare exclusion 

are met. Similarly, these disaster relief 

benefits may be excluded from gross 

income if they qualify as Tribal general 

welfare benefits under section 139E. 

The Treasury Department and the IRS 

recognize that Indian Tribal 

governments have broad discretion to 

provide benefits to individuals who are 

affected by a disaster or other 

emergency situation that does not meet 

the requirements of a qualified disaster 

under section 139. Thus, proposed 

§ 1.139E–1(d)(2) would include as a 

permissible general welfare purpose 

‘‘assistance for disasters or emergency 

situations.’’ The Indian Tribal 


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government need not make a specific 

Tribal disaster declaration. 

In addition, the TTAC Report requests 

that the proposed regulations 

specifically provide that wellness and 

health-related programs may be Tribal 

general welfare benefits. The TTAC 

Report acknowledges that section 139D 

applies to certain health care expenses 

but requests clarification that section 

139E operates independent of, and is 

not limited by, section 139D of the 

Code. In particular, the concern is that 

wellness and health-related programs 

may not fall within the section 139D 

exclusion. 

Section 139D generally provides an 

exclusion from gross income for any 

qualified Indian health care benefit. 

Qualified Indian health care benefits 

include medical care provided by an 

Indian Tribe or Tribal organization, or 

coverage under insurance or a plan 

provided by an Indian Tribe or Tribal 

organization for medical care. See 

section 139D(b)(2)-(4). For purposes of 

section 139D, ‘‘medical care’’ has the 

same meaning as when used in section 

213 of the Code. Amounts paid for 

benefits that are merely beneficial to the 

general health of an individual, such as 

certain wellness and health-related 

programs, as well as care by an 

unlicensed spouse or relative, are not 

amounts paid for medical care and thus 

are not excluded under section 139D. 

See section 213(d) and § 1.213– 

1(e)(1)(ii). 

The Treasury Department and the IRS 

agree that section 139E operates 

independently of, and is not limited by, 

section 139D. Thus, in accordance with 

the deference provided to Indian Tribal 

Governments in proposed § 1.139E– 

1(d)(2), an Indian Tribal Government 

may determine that wellness and 

health-related programs are for the 

promotion of general welfare under 

section 139E. 

B. Benefits Must Be Available to Any 

Tribal Program Participant 

Section 139E(b)(2) provides, in 

relevant part, that a benefit provided 

under the program must be available to 

any Tribal member who meets the 

specified guidelines of the program. 

Revenue Procedure 2014–35 requires 

that the benefit be available to any 

eligible individual who satisfies the 

program guidelines, subject to budgetary 

constraints. The TTAC Report and the 

Tribal Comments do not specifically 

address this requirement. 

The Treasury Department and the IRS 

have determined that this requirement 

should be interpreted in a manner 

similar to Revenue Procedure 2014–35. 

Thus, proposed § 1.139E–1(d)(3) would 

provide that a benefit under the Indian 

Tribal government program must be 

available to any Tribal program 

participant who meets the specified 

guidelines of the program, subject to 

budgetary constraints. 

C. Benefits Cannot Be Lavish or 

Extravagant 

Section 139E(b)(2) provides, in 

relevant part, that benefits provided 

under the program cannot be lavish or 

extravagant. Section 139E(c)(3) provides 

that the Secretary, in consultation with 

the TTAC, must establish guidelines for 

what constitutes lavish or extravagant 

benefits with respect to Indian Tribal 

government programs. The Treasury 

Department and the IRS have consulted 

with the TTAC during the drafting of 

these proposed regulations. In addition, 

the Treasury Department and the IRS 

will hold Tribal consultation before 

finalizing the proposed regulations. 

Like section 139E, Revenue Procedure 

2014–35 prohibits benefits that are 

lavish or extravagant. It does not define 

‘‘lavish or extravagant’’ but does provide 

that the benefits cannot be ‘‘lavish or 

extravagant under the facts and 

circumstances.’’ 

The TTAC Report recommends that 

the term ‘‘lavish or extravagant’’ be 

defined as a relative term that depends 

on the unique circumstances of the 

Tribe, and also depends on the type of 

benefit being provided (such as, onetime payment or monthly assistance). 

The TTAC Report sets forth a nonexclusive list of circumstances that 

should be considered when determining 

if a benefit is lavish or extravagant: an 

Indian Tribal government’s economic 

circumstances or factors, culture and 

cultural practices, history, geographic 

area, traditions, and resources. The 

TTAC Report recommends deference to 

Indian Tribal governments and proposes 

a rebuttable presumption that the 

benefit is not lavish or extravagant if the 

Indian Tribal government program 

meets general welfare needs or 

purposes, and the method of 

distribution is expected to achieve 

program goals. 

Several Tribal Comments recommend 

that the proposed regulations defer to 

the Tribes or their Indian Tribal 

governments for determining whether a 

benefit is lavish or extravagant. Most 

Tribal Comments provide that the term 

is relative and depends on the unique 

circumstances of each Tribe and the 

type of benefit provided. Some Tribal 

Comments recommend deference to an 

Indian Tribal government’s definition of 

lavish or extravagant as established by 

official actions, such as Tribal 

ordinances, resolutions, and policies. In 

addition, some Tribal Comments 

propose that a facts and circumstances 

standard, similar to Revenue Procedure 

2014–35, be applied to define lavish or 

extravagant. Under such a standard, a 

benefit would not be lavish or 

extravagant if based upon a particular 

Tribe’s political, socio-economic and 

cultural facts and circumstances as 

determined by that Tribe. Some Tribal 

Comments argue that the definition 

should be subject to the Tribal canon, as 

opposed to the traditional canons of 

statutory construction, and that any 

ambiguity be construed in favor of the 

Tribe. 

Some Tribal Comments describe what 

the proposed regulations should not do 

when defining lavish or extravagant. For 

example, some Tribal Comments urge 

that the proposed regulations should 

define lavish or extravagant in a way 

that targets egregious abuse but 

otherwise does not affect Indian Tribal 

government programs that are designed 

and administered in good faith. Other 

Tribal Comments suggest that the term 

lavish or extravagant not be defined by 

reference to dollar amounts, and 

specifically highlighted cost of living 

variations (for example, geographic 

differences). Some Tribal Comments 

emphasize that the proposed regulations 

should not use examples that may 

suggest limitations on the eligibility of 

program benefits. Specifically, these 

commenters suggest that it would be 

more helpful to include examples of 

benefits that are not considered lavish 

or extravagant. Finally, some Tribal 

Comments argue that the Treasury 

Department and the IRS should not refer 

to other Code provisions for guidance 

on interpreting the phrase ‘‘lavish or 

extravagant’’ under section 139E. 

The Treasury Department and the IRS 

generally agree with the TTAC Report 

and the Tribal Comments. Accordingly, 

proposed § 1.139E–1(d)(4) would 

provide a facts and circumstances test to 

determine whether a Tribal general 

welfare benefit is lavish or extravagant 

under section 139E. Under proposed 

§ 1.139E–1(d)(4), whether a benefit is 

lavish or extravagant would be based on 

the facts and circumstances at the time 

the benefit is provided. Relevant facts 

and circumstances would include a 

Tribe’s culture and cultural practices, 

history, geographic area, traditions, 

resources, and economic conditions or 

factors. A facts and circumstances test is 

consistent with Revenue Procedure 

2014–35, as well as the TTAC Report 

and the Tribal Comments suggesting 

that the Tribe’s unique circumstances 

should be considered when evaluating 

whether the Indian Tribal government 

determined a Tribal general welfare 


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5Section 139E(c)(5) provides an exception under 

which any items of cultural significance, 

reimbursement of costs, or cash honorarium for 

participation in cultural or ceremonial activities for 

the transmission of Tribal culture ‘‘shall not be 

treated as compensation for services.’’ This 

exception to the general prohibition on 

compensation for services is addressed in part IV 

of this Explanation of Provisions. 

benefit to be lavish or extravagant at the 

time the benefit is provided. However, 

proposed § 1.139E–1(d)(4) also would 

provide a presumption that a benefit is 

not lavish or extravagant if it is 

described in, and provided in 

accordance with, the written specified 

guidelines of the Indian Tribal 

government program. 

The TTAC Report and some Tribal 

Comments mention that the frequency 

of benefit (for example, lump sum or 

monthly payment) should be considered 

when evaluating whether a program’s 

benefit is lavish or extravagant. The 

Treasury Department and the IRS agree 

that the frequency of payment should be 

considered when determining whether a 

Tribal general welfare benefit is lavish 

or extravagant. Under a facts and 

circumstances test, an Indian Tribal 

government may establish a program 

that provides the types of benefits, 

including frequency of payment, that 

best meet the needs of its Tribal 

members. 

D. Benefits Cannot Be Compensation for 

Services 

Section 139E(b)(2)(D) provides that a 

Tribal general welfare benefit paid 

under an Indian Tribal government 

program cannot be compensation for 

services, with exceptions discussed in 

part IV of this Explanation of 

Provisions.5 Section 139E(b)(2)(D) does 

not provide a specific definition for the 

term compensation for services for 

purposes of section 139E. Revenue 

Procedure 2014–35 also provides that 

benefits under the safe harbors cannot 

be compensation for services but does 

not specifically define compensation for 

services. The prohibition on 

compensation for services is a longstanding core principle of the 

administrative general welfare 

exclusion. See Revenue Ruling 75–246 

(1975–1 C.B. 24). 

The TTAC Report acknowledges that 

section 139E prohibits compensation for 

services from being treated as Tribal 

general welfare benefits. The TTAC 

Report and the Tribal Comments do not 

recommend a specific definition of 

compensation for services, but the 

TTAC Report recommends that the 

proposed regulations confirm that (1) a 

benefit in connection with Tribal 

custom or tradition regarding 

community service is not compensation 

for services; (2) compensation for 

services does not include cultural or 

ceremonial gifts and payments, as 

determined by the Tribe; and (3) 

payments as part of training programs 

are not compensation for services. 

Similar to this third issue, one Tribal 

Comment argues that on-the-job 

training, apprenticeships, and other 

classes for job skills for which 

participants receive payment should not 

be treated as compensation for services. 

Finally, one Tribal Comment argues that 

the rule in section 139E(b)(2)(D) should 

be read narrowly to cover services that 

are traditionally provided under an 

employment or contracted-vendor 

relationship. 

The first two issues raised in the 

TTAC Report overlap with the rules in 

section 139E(c)(5), which provides that 

certain benefits provided for 

participation in cultural or ceremonial 

activities are not treated as 

compensation for services. These issues 

from the TTAC Report are addressed in 

part IV of this Explanation of 

Provisions. The third issue, relating to 

whether payments made to individuals 

in various types of training programs are 

compensation for services, is addressed 

under section 61 and current law 

relating to gross income generally. 

Section 61(a) generally provides that, 

except as otherwise provided in the 

Code, gross income means all income 

from whatever source derived, and this 

includes compensation for services, 

including fees, commissions, fringe 

benefits, and similar items, whether 

paid in money or property. Section 

1.61–2(a)(1) of the Income Tax 

Regulations provides additional 

examples of payments that are included 

in gross income because they are 

compensation for services, such as 

wages, salaries, and commissions paid 

salesmen. However, compensation for 

services also includes amounts that are 

not paid in an employment or 

contracted-vendor relationship. Thus, 

the proposed regulations do not adopt 

the Tribal Comment arguing that 

compensation for services should be 

read narrowly to cover only services 

that are traditionally provided under an 

employment or contracted-vendor 

relationship. 

In the context of training, 

apprenticeships, and other skills 

training programs, existing IRS guidance 

on the administrative general welfare 

exclusion provides assistance on how to 

distinguish whether a payment is a 

general welfare payment or is 

compensation for services. See Revenue 

Ruling 63–136 (1963–2 C.B. 19) 

(excluding from income the payments 

for on-the-job career training or 

retraining where such payments are 

‘‘intended to aid the recipients in their 

efforts to acquire new skills that would 

enable them to obtain better 

employment opportunities’’); Revenue 

Ruling 65–139 (1965–1 C.B. 31) (as 

clarified by Revenue Ruling 66–240 

(1966–2 C.B. 19)). In general, the 

determination as to whether payments 

under training programs are includible 

in a participant’s gross income rests on 

whether the activity for which the 

payments are received is in exchange for 

the performance of services 

(compensation for services) or is for 

participation in a training program that 

promotes the general welfare (general 

welfare payment). Revenue Ruling 75– 

246 (1975–1 C.B. 24). 

Because existing guidance addresses 

the long-standing distinction between 

compensation for services and general 

welfare payments, the Treasury 

Department and the IRS have 

determined that the proposed 

regulations should define compensation 

for services by reference to current law. 

Thus, proposed § 1.139E–1(d)(5) would 

define the term compensation for 

services by referring to the rules in 

section 61(a). These rules encompass all 

the regulations and other IRS guidance 

under section 61(a) that interpret the 

meaning of compensation for services. 

IV. Exception to Prohibition on 

Compensation for Services 

As noted in part III.D. of this 

Explanation of Provisions, section 

139E(b)(2)(D) generally provides that a 

Tribal general welfare benefit cannot be 

compensation for services. However, 

section 139E(c)(5) contains an exception 

to that general rule and provides that 

any items of cultural significance, 

reimbursement of costs, or cash 

honorarium for participation in cultural 

or ceremonial activities for the 

transmission of Tribal culture will not 

be treated as compensation for services. 

Accordingly, such items may, if the 

other requirements of section 139E are 

satisfied, be Tribal general welfare 

benefits that are excluded from gross 

income. 

Revenue Procedure 2014–35 contains 

a similar exception. Specifically, section 

5.03 of the revenue procedure provides 

that the safe harbors apply to ‘‘benefits 

provided under an Indian Tribal 

governmental program that are items of 

cultural significance that are not lavish 

or extravagant under the facts and 

circumstances, or nominal cash 

honoraria provided to religious or 

spiritual officials or leaders . . . to 

recognize their participation in cultural, 

religious, and social events.’’ 


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A. Participation in Cultural or 

Ceremonial Activities 

The exception in section 139E(c)(5) 

applies only if specific benefits are ‘‘for 

participation in cultural or ceremonial 

activities for the transmission of tribal 

culture.’’ Revenue Procedure 2014–35 

contains a similar exception, but that 

exception is limited to specific benefits 

‘‘provided to religious or spiritual 

officials or leaders (including but not 

limited to medicine men, medicine 

women, and shamans) to recognize their 

participation in cultural, religious, and 

social events (including but not limited 

to pow-wows [sic], rite of passage 

ceremonies, funerals, wakes, burials, 

other bereavement events, and honoring 

events).’’ As the TTAC Report points 

out, Revenue Procedure 2014–35 refers 

only to event participation by religious 

or spiritual leaders and does not 

describe larger Indian Tribal-wide 

cultural, ceremonial, and community 

service general welfare programs. The 

TTAC Report recommends that the 

proposed regulations provide that the 

IRS must defer to Tribal determinations 

on what it means to participate in 

cultural or ceremonial activities for the 

transmission of Tribal culture. Some 

Tribal Comments request that the 

exclusion apply to attendance at Tribal 

gatherings and participation in 

community service or tribal meetings. 

Some Tribal Comments provide 

examples of services that should not be 

considered compensation for services, 

such as blessings provided by Tribal 

members, preparation of traditional 

foods at events, support for sponsoring 

Tribal events, and the activities of 

traditional healers performed at or for 

official Tribal events like ceremonial or 

traditional gatherings. Finally, some 

Tribal Comments state that the proposed 

regulations should apply the section 

139E(c)(5) exception to services that are 

traditionally provided through 

employment or contracted-vendor 

arrangements. 

The Treasury Department and the IRS 

recognize that the language in section 

139E(c)(5) is broader than Revenue 

Procedure 2014–35 in that the section 

139E(c)(5) exception is not limited to 

religious or spiritual officials or leaders. 

The Treasury Department and the IRS 

also agree with the TTAC Report that 

Tribes are in the best position to 

determine what it means to participate 

in cultural or ceremonial activities for 

the transmission of Tribal culture. Thus, 

proposed § 1.139E–1(e) would provide 

that the Indian Tribal government 

determines what it means to participate 

in cultural or ceremonial activities for 

the transmission of Tribal culture and 

would include the list of examples from 

Revenue Procedure 2014–35 (powwows, 

rite of passage ceremonies, funerals, 

wakes, burials, other bereavement 

events, and honoring events). It would 

further provide that the IRS will defer 

to the Indian Tribal government’s 

determination of whether an activity is 

a cultural or ceremonial activity for the 

transmission of Tribal culture. 

The Treasury Department and the IRS 

do not agree with the Tribal Comments 

stating that the exception in section 

139E(c)(5) broadly applies to services 

that are traditionally provided under an 

employment or contracted-vendor 

relationship because section 139E is an 

exclusion from gross income for 

individuals and families, not 

businesses. For example, a corporation 

owned by a Tribal member that 

contracts with the Indian Tribal 

government to cater a Tribal ceremony 

is not within the section 139E(c)(5) 

exception. In this case, any payment 

received by the corporation from the 

Tribe to provide catered food at a Tribal 

ceremony is business income. However, 

a Tribal member that volunteers to make 

traditional foods for a Tribal ceremony 

and receives an item of cultural 

significance, cash honorarium, or 

reimbursement of costs is within the 

exception of section 139E(c)(5). 

B. Items of Cultural Significance 

Section 139E(c)(5) provides, in part, 

that ‘‘items of cultural significance’’ that 

are provided for participation in 

cultural or ceremonial activities for the 

transmission of Tribal culture are not 

treated as compensation for services. 

Revenue Procedure 2014–35 also 

contains an exception for items of 

cultural significance that are not lavish 

or extravagant under the facts and 

circumstances. The term ‘‘items of 

cultural significance’’ is not defined in 

section 139E or in Revenue Procedure 

2014–35. The TTAC Report and the 

Tribal Comments recommend that 

deference should be given to Indian 

Tribal governments and Tribes to 

determine what are items of cultural 

significance for their Tribe. One Tribal 

Comment provides a list of examples of 

items with cultural significance, 

including blankets, cash, food, regalia 

items, fabric, beads, drums, pelts, 

feathers, artwork, baskets, clothing, 

household items, tobacco, gift cards, 

animals, and vehicles. 

The Treasury Department and the IRS 

agree that Indian Tribal governments are 

in the best position to determine items 

of cultural significance. Thus, proposed 

§ 1.139E–1(e)(2) would provide that the 

Indian Tribal government determines 

items of cultural significance and that 

the IRS will defer to the Indian Tribal 

government’s determination. Unlike the 

similar rule in Revenue Procedure 

2014–35, the proposed regulations 

would not limit the items of cultural 

significance to those that are not lavish 

or extravagant. However, the prohibition 

on lavish or extravagant benefits in 

proposed § 1.139E–1(d)(4) would apply 

broadly to all Tribal general welfare 

benefits, including those that are 

provided under section 139E(c)(5) for 

participation in cultural or ceremonial 

activities. In addition, the Treasury 

Department and the IRS do not view 

cash, gift cards, or vehicles themselves 

as items with cultural significance, 

although such items may be used to 

reimburse costs for participation in 

cultural or ceremonial activities without 

being considered compensation for 

services. 

C. Cash Honorarium 

Section 139E(c)(5) provides, in part, 

that cash honoraria provided for 

participation in cultural or ceremonial 

activities for the transmission of Tribal 

culture is not treated as compensation 

for services. Revenue Procedure 2014– 

35 contains a similar exception, 

although it is limited to nominal cash 

honoraria. The term ‘‘cash honoraria’’ is 

not defined in section 139E or in 

Revenue Procedure 2014–35. The TTAC 

Report and the Tribal Comments request 

that the proposed regulations recognize 

Congress’s decision to eliminate the 

qualifier that honoraria be ‘‘nominal’’ 

and provide that a Tribe’s determination 

of the proper amount of the honorarium 

should be presumed to be reasonable 

and fair. 

The Treasury Department and the IRS 

agree with the TTAC Report and the 

Tribal Comments that section 139E is 

broader than Revenue Procedure 2014– 

35 by not limiting the exception to the 

compensation for services requirement 

to nominal cash honoraria. Thus, 

proposed § 1.139E–1(e) would not 

provide that the compensation for 

services exception in section 139E(c)(5) 

is limited to nominal cash honoraria. 

D. Reimbursement of Costs 

Section 139E(c)(5) provides, in part, 

that reimbursement of costs provided 

for participation in cultural or 

ceremonial activities for the 

transmission of Tribal culture is not 

treated as compensation for services. 

Revenue Procedure 2014–35 does not 

contain a similar exception. Section 

139E(c)(5) does not define the term 

‘‘reimbursement of costs.’’ However, the 

Treasury Department and the IRS expect 

that the usual usage of the term applies 

for purposes of section 139E. Thus, the 


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reimbursement of costs generally would 

include amounts paid by the Indian 

Tribal government to an individual to 

reimburse specific amounts paid by the 

individual to participate in the cultural 

or ceremonial activity. 

E. Members of Other Tribes 

As noted in part I.D. of this 

Explanation of Provisions, the proposed 

regulations generally would define the 

term Tribal member to mean a member 

of the Tribe that establishes or 

maintains the Indian Tribal government 

program. Some Tribal Comments 

highlight that some Tribes may provide 

benefits to individuals who are Tribal 

members of a different Tribe than the 

one establishing the general welfare 

program. For example, an Indian Tribal 

government may provide benefits to a 

cultural, spiritual, or ceremonial leader 

of another Tribe who teaches shared 

Tribal cultural practices or ceremonial 

functions. 

The Treasury Department and the IRS 

agree that, solely for purposes of the 

exception in section 139E(c)(5) relating 

to benefits provided for participation in 

ceremonial or cultural activities, the 

recipient may be a member of a Tribe 

that is different from the Tribe that 

establishes or maintains the program. 

Thus, proposed § 1.139E–1(b)(8)(ii) 

would provide that, solely for purposes 

of proposed § 1.139E–1(e), the definition 

of Tribal program participant may 

include a member of a Tribe that is 

different from the Tribe that establishes 

the Indian Tribal government program 

and provides the Tribal general welfare 

benefit. For example, if a cultural leader 

from one Tribe performs at another 

Tribe’s powwow, a cash honorarium 

given to the cultural leader is not 

compensation for services under section 

139E(c)(5). 

V. Issues Not Addressed in Proposed 

Regulations 

A. Interaction With Other Federal 

Programs 

The TTAC Report requests that the 

proposed regulations provide that 

individual need be presumed for all 

Tribal general welfare benefits that meet 

the requirements of section 139E. 

Moreover, the TTAC Report and many 

Tribal Comments request that the 

Treasury Department and the IRS 

coordinate with other Federal agencies, 

including the Social Security 

Administration, to ensure that Tribal 

general welfare benefits are not treated 

as income or a disqualifying resource for 

purposes of program eligibility, such as 

supplemental security income benefits 

under 42 U.S.C. 1381 et seq. 

The Treasury Department and the IRS 

have authority to interpret and provide 

rules under section 139E to determine 

whether a benefit is excludible from 

gross income for Federal income tax 

purposes. However, the issue of whether 

a Tribal general welfare benefit is taken 

into account for purposes of 

determining other Federal benefits is 

outside the authority of the Treasury 

Department and the IRS, and therefore 

beyond the scope of these proposed 

regulations. The Treasury Department 

and the IRS are willing to work with the 

TTAC and Tribes to confer with other 

Federal agencies and provide advice on 

how the Federal tax law applies to 

Tribal general welfare benefits. 

B. Grants to Indian-Owned Enterprises 

The TTAC Report requests that the 

proposed regulations provide that grants 

to establish or expand Indian-owned 

enterprises are excludible from gross 

income under section 139E. The TTAC 

Report cites Revenue Ruling 77–77 

(1977–1 C.B. 11), for the proposition 

that non-reimbursable grants made 

under the Indian Financing Act of 1974 

to Indians to expand profit-making 

Indian-owned economic enterprises on 

or near reservations are excludable from 

gross income under the administrative 

general welfare exclusion. The TTAC 

Report also requests that the guidance 

clarify that ‘‘expanding’’ a business 

includes assistance to help a business 

remain in operation or recover from 

losses, and also to allow the Tribe to be 

able to determine what it means to be 

an Indian-owned enterprise. One Tribal 

Comment also requests that grants for 

establishing and assisting Indian-owned 

enterprises should be excluded from 

gross income. 

The administrative general welfare 

exclusion generally does not apply to 

payments made to businesses, including 

sole proprietors. Instead, the exclusion 

is intended to address benefits that 

promote the general welfare of families 

and individuals. See also Revenue 

Procedure 2014–35, which applies only 

to individuals and not to businesses. 

Section 139E also applies only to 

individuals and not to businesses. Thus, 

these proposed regulations do not 

address grants to Indian-owned 

enterprises. However, these proposed 

regulations do not affect the validity of 

Revenue Ruling 77–77, which provides 

a limited exception to the rule that the 

administrative general welfare doctrine 

does not apply to businesses. Under that 

revenue ruling, a grant made by an 

Indian Tribal government to a Tribal 

member to expand an Indian-owned 

business on or near a reservation is 

excluded from the Tribal member’s 

gross income under the administrative 

general welfare exclusion. 

C. Trust Arrangements and Deferred 

Benefits 

The TTAC Report states that an 

Indian Tribal government program may 

distribute general welfare benefits from 

trust arrangements, including payments 

that are set aside for the health, 

education, and welfare of trust 

beneficiaries under IGRA. The TTAC 

Report recommends that the proposed 

regulations provide that the 

determination of whether a payment is 

a general welfare benefit is made at the 

time the trust distributes the payment to 

the beneficiary from the trust. Some 

Tribal Comments asked that the 

proposed regulations expressly 

recognize that health, education, and 

welfare payments under a minor’s trust 

can be structured in a way to qualify 

payments for exclusion under section 

139E. 

The TTAC Report requests that the 

proposed regulations provide that an 

Indian Tribal government program may 

permit Tribal members and other 

recipients to defer and accumulate 

benefits for future payment. The TTAC 

Report suggests that if the amount is not 

lavish or extravagant at the time the 

beneficiary defers receipt of the 

payment, then section 139E is satisfied 

at the time the Indian Tribal government 

distributes the funds to the beneficiary. 

The TTAC Report also recommends that 

section 139E not be limited by 

constructive receipt and economic 

benefit restrictions on the deferral of 

taxable income or benefits. Many Tribal 

Comments support the TTAC Report on 

the issue of deferred benefits, and 

request that the proposed regulations 

provide examples of deferred benefits. 

Section 139E does not specifically 

address trust arrangements or deferred 

benefits. Section 139E addresses 

whether a benefit that is generally 

includible in gross income under 

section 61 may be excluded from gross 

income under section 139E. It does not 

address the taxable year in which a 

benefit may be includible in gross 

income, in particular if a benefit is put 

into a trust or its receipt is deferred 

through some other arrangement. Most 

individuals use the cash receipts and 

disbursements method of accounting, 

which incorporates numerous rules 

addressing when amounts must be 

included in gross income. Those rules 

generally apply in determining when a 

benefit must be included in the gross 

income and include the concepts of 

constructive receipt and economic 

benefit. In addition, there is existing 

authority addressing trusts under IGRA 


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that is not affected by these proposed 

regulations. See Revenue Procedure 

2011–56 (2011–49 I.R.B. 834), which 

provides a safe harbor under which the 

IRS treats a Tribe as the grantor and 

owner of a trust for the receipt of Tribal 

gaming revenues under IGRA for the 

benefit of minors and certain other 

individuals. However, as described in 

the Comments and Public Hearing 

section of this preamble, the Treasury 

Department and the IRS request 

comments on whether additional 

guidance is needed under section 139E 

or other Code sections to address the tax 

treatment of deferred benefits or benefits 

paid from trust arrangements and, if so, 

what specific fact patterns should be 

addressed. 

D. Advance Rulings 

Some Tribal Comments propose that 

the Treasury Department and the IRS 

allow Tribes to request advance rulings 

at the option of the Tribe to address the 

tax status of general welfare programs. 

These comments request, however, that 

any procedure involving advance 

rulings requests must be implemented 

with narrow parameters to avoid 

becoming a de facto audit of Tribal 

programs. In addition, these Tribal 

Comments suggest that these advance 

rulings be binding on states and other 

Federal agencies. The Treasury 

Department and the IRS appreciate that 

Indian Tribal governments have been 

awaiting guidance under section 139E 

and have concerns about how the IRS 

may view existing general welfare 

programs. The IRS has a general process 

in place for entities and individuals to 

request a letter ruling on the tax 

treatment of a particular transaction or 

program, but that process generally does 

not apply if the request presents an 

issue that cannot be readily resolved 

before a regulation or any other 

published guidance is issued. See 

Revenue Procedure 2024–1 (2024–1 

I.R.B. 1). If an Indian Tribal government 

or a Tribal member receives a letter 

ruling from the IRS, the ruling generally 

is binding on the IRS. However, a letter 

ruling would address only Federal tax 

law and would not be binding in any 

way on any other Federal agency or any 

state agency. 

As discussed in part VIII of this 

Explanation of Provisions, section 4(a) 

of the Act requires the IRS to suspend 

all audits or examinations to the extent 

the audit or examination relates to the 

exclusion from gross income of benefits 

under the general welfare exclusion. 

After soliciting public comments and 

holding Tribal consultation on these 

proposed regulations, the Treasury 

Department and the IRS intend to issue 

final regulations that provide clear and 

helpful guidance on Tribal general 

welfare benefits. Further, in accordance 

with section 3(b)(2) of the Act, the 

Secretary of the Treasury, in 

consultation with the TTAC, will 

establish certain training and education, 

which specifically includes the 

provision of training and technical 

assistance to Tribal financial officers 

about implementation of section 139E. 

The Treasury Department and the IRS 

will continue to work with the TTAC 

and Tribes throughout this rulemaking 

process to ensure that the final rules are 

comprehensive and provide as much 

clarity and certainty as possible within 

the parameters of the section 139E. 

VI. Safe Harbors and Examples 

The Tribal Comments were not 

uniform on whether it would be helpful 

for the proposed regulations to provide 

examples of benefits that qualify as 

Tribal general welfare benefits. Some 

Tribal Comments recommend examples 

to help Indian Tribal governments 

identify what types of benefits would be 

considered for promotion of general 

welfare. In contrast, some Tribal 

Comments express concern that a list of 

examples of permissible benefits would 

over time be viewed as an exhaustive 

list of permissible benefits. 

The TTAC Report requests that Indian 

Tribal governments be given the ability 

to rely on programs that meet the safe 

harbor requirements of Revenue 

Procedure 2014–35. Some Tribal 

Comments argue that the safe harbors in 

Revenue Procedure 2014–35 were 

arbitrarily limiting and state that the 

proposed regulations should refrain 

from using safe harbors to avoid 

establishing similar limitations under 

section 139E. However, many other 

Tribal Comments recommend 

incorporating the safe harbors from 

Revenue Procedure 2014–35 into the 

proposed regulations or expanding the 

safe harbors to include payments from 

net gaming revenue, payments under 

section 139E(c)(5), and programs 

developed pursuant to official 

determinations by Indian Tribal 

governments. The Tribal Comments also 

request that the proposed regulations 

expressly state that a safe harbor is not 

intended to limit the types of general 

welfare programs otherwise permitted 

under section 139E. 

Revenue Procedure 2014–35 contains 

numerous safe harbors under which the 

IRS will conclusively presume that the 

individual need requirement of the 

administrative general welfare exclusion 

is met. As a revenue procedure, this 

guidance represents an official 

statement of a procedure by the IRS that 

affects the rights or duties of taxpayers 

under Federal tax law, rather than an 

official statement of IRS position on a 

substantive tax issue like the 

administrative general welfare 

exclusion. See § 601.601 of the 

Statement of Procedural Rules (25 CFR 

part 601). Thus, the safe harbors in 

Revenue Procedure 2014–35 do not 

represent examples of the application of 

the administrative general welfare 

exclusion, but instead are fact patterns 

for which the IRS is required to presume 

that the need requirement of the 

administrative general welfare exclusion 

is met. Accordingly, taxpayers may rely 

upon the safe harbors in Revenue 

Procedure 2014–35, but the revenue 

procedure does not have the force and 

effect of Treasury regulations. 

The enactment of section 139E 

provides authority for the Treasury 

Department and the IRS to issue 

regulations to interpret section 139E. 

Regulations are the most authoritative 

form of published guidance and 

generally include substantive rules 

interpreting the statute. Treasury 

regulations often include examples in 

the regulatory text to illustrate specific 

provisions of the regulation. These 

examples describe how the regulatory 

rule applies to a set of facts, but 

examples cannot be the source of the 

rule itself. 

The proposed regulations would 

provide examples of benefits that are for 

the promotion of general welfare under 

section 139E(b)(2)(B). The Treasury 

Department and the IRS agree that the 

examples in these proposed regulations 

are illustrations of benefits that are for 

the promotion of general welfare and are 

not intended to represent an exhaustive 

list of qualifying benefits. The examples 

in the proposed regulations also would 

incorporate the safe harbors in Revenue 

Procedure 2014–35. Section 139E was 

intended generally to codify Revenue 

Procedure 2014–35, and these proposed 

regulations are intended to be no less 

favorable than Revenue Procedure 

2014–35, consistent with the intent of 

Congress reflected in the House Debate 

and Senate Colloquy in enacting the 

Act. Therefore, the general welfare 

programs described as safe harbors in 

Revenue Procedure 2014–35 would also 

be programs that satisfy the promotion 

of general welfare requirement under 

section 139E(b)(2)(B). Thus, these 

proposed regulations would include the 

list of programs described in section 

5.02(2) of Revenue Procedure 2014–35 

as a non-exhaustive list of the types of 

programs that would satisfy the general 

welfare requirement in section 139E and 

these proposed regulations. As 

described in the Comments and Public 


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Hearing section of this preamble, the 

Treasury Department and the IRS 

request comments on whether 

additional examples are necessary. 

VII. Proposed Obsolescence of Revenue 

Procedure 2014–35 

Revenue Procedure 2014–35 generally 

provides principles for applying the 

administrative general welfare exclusion 

and provides safe harbors under which 

the IRS conclusively presumes that the 

individual need requirement of the 

administrative general welfare exclusion 

is met for benefits provided under 

Indian Tribal government programs that 

are described under section 5.02 or 5.03 

of the revenue procedure. In Notice 

2015–34, the Treasury Department and 

the IRS announced that section 139E 

codified (but does not supplant) the 

administrative general welfare exclusion 

for certain benefits provided under 

Indian Tribal government programs, and 

that ‘‘Revenue Procedure 2014–35 may 

be broader than section 139E in some 

instances.’’ 

Many Tribal Comments argue that the 

safe harbors in Revenue Procedure 

2014–35 were superseded by section 

139E. Some Tribal Comments express 

the preference that Revenue Procedure 

2014–35 be expanded to explicitly 

incorporate the concept of deference to 

the Tribe. 

The Treasury Department and the IRS 

are of the view that the proposed 

regulations, if finalized, generally would 

provide rules that are at least as 

favorable as the safe harbors provided 

under Revenue Procedure 2014–35 and 

therefore, that Indian Tribal 

governments may have no further need 

to rely on Revenue Procedure 2014–35. 

In addition, the Treasury Department 

and the IRS expect that Indian Tribal 

governments would benefit by having a 

single set of rules that apply specifically 

to their general welfare benefit 

programs, rather than having to analyze 

their programs under both Revenue 

Procedure 2014–35 and the section 139E 

final regulations. Thus, the Treasury 

Department and the IRS propose to 

obsolete and supersede Revenue 

Procedure 2014–35 after the final 

regulations are applicable. As described 

in the Comments and Public Hearing 

section of this preamble, the Treasury 

Department and the IRS request 

comments on this issue. 

VIII. Audit Suspension and IRS Training 

Section 4 of the Act directs the 

Secretary of the Treasury to suspend all 

audits and examinations of Indian 

Tribal governments and members of 

Tribes (or any spouse or dependent of 

such a member) to the extent such an 

audit or examination relates to the 

exclusion of a payment or benefit from 

an Indian Tribal government under the 

general welfare exclusion, until the 

education and training prescribed by 

section 3(b)(2) of the Act is completed. 

Section 3(b)(2) of the Act directs the 

Secretary of the Treasury, in 

consultation with the TTAC, to establish 

and require (A) training and education 

for internal revenue field agents who 

administer and enforce internal revenue 

laws with respect to Tribes on Federal 

Indian law and the Federal 

Government’s unique legal treaty and 

trust relationship with Indian Tribal 

governments, and (B) training of such 

internal revenue field agents, and 

provision of training and technical 

assistance to Tribal financial officers, 

about implementation of the Act and the 

amendments made thereby. 

The TTAC Report requests that the 

proposed regulations refer to the audit 

suspension provided in section 4 of the 

Act. Specifically, the TTAC Report 

requests that the proposed regulations 

provide that all audits and examinations 

of Indian Tribal governments, Tribal 

members, and qualified nonmembers (as 

defined in Revenue Procedure 2014–35) 

to the extent that an audit or 

examination relates to the reporting or 

exclusion of a Tribal general welfare 

benefit are suspended until a specified 

time related to prospective enforcement 

of the final regulations. The TTAC 

Report further requests that enforcement 

of the final regulations be delayed for 

one year after the training and guidance 

required by section 3(b)(2) of the Act is 

completed (the compliance date), and 

that when examinations commence, 

they relate only to the periods beginning 

on or after the one-year period 

beginning on or after the compliance 

date. The TTAC Report further states 

that guidance under section 139E must 

be applied prospectively and that Tribes 

and Tribal citizens who have developed 

and administered programs in good 

faith will not be audited retroactively 

once the audit suspension is lifted. 

Many Tribal Comments agree with the 

TTAC Report. 

The Treasury Department and the IRS 

acknowledge that section 4 of the Act 

provides a temporary suspension of 

audits and examinations of Indian 

Tribal governments and Tribal members 

(or any spouse or dependent of such 

member) to the extent that the audit or 

examination relates to the exclusion of 

a payment or benefit from an Indian 

Tribal government under the general 

welfare exclusion. The Treasury 

Department and the IRS expect that the 

audit suspension described in section 4 

of the Act will continue until all the 

requirements of section 3(b)(2) of the 

Act are satisfied. In particular, the 

Treasury Department and the IRS 

contemplate that the education and 

training described in section 3(b)(2) of 

the Act, which requires training to the 

Internal revenue field agents and to 

Tribal financial officers about 

implementation of section 139E, cannot 

and will not take place until final 

regulations are issued under section 

139E. Thus, once final regulations under 

section 139E are issued, the Treasury 

Department and the IRS, in consultation 

with the TTAC, will conduct the 

required education and training under 

section 3(b)(2) of the Act. Only after that 

education and training is complete will 

the audit suspension be lifted. These 

proposed regulations do not address the 

education and training that will be 

required to be complete before the audit 

suspension is lifted, but the Treasury 

Department and the IRS will consult 

with the TTAC on the requirements of 

section 3(b)(2) of the Act before the 

commencement of the required 

education and training and will provide 

further guidance after that consultation. 

IX. Information Reporting 

If section 139E applies to exclude the 

value of a benefit from the Tribal 

program participant’s gross income, 

then there is no requirement to file with 

the IRS or furnish to the Tribal program 

participant an information return on 

Form 1099–MISC, Miscellaneous 

Information, for that benefit. Indian 

Tribal governments should not include 

the amount of any benefit that qualifies 

for exclusion under section 139E on a 

Form 1099–MISC that is filed with the 

IRS and furnished to the Tribal program 

participant. Including such amounts on 

a Form 1099–MISC when such amounts 

are not required to be reported on the 

Tribal program participant’s individual 

tax return could result in IRS 

compliance activity, such as inquiries 

from the IRS automated underreporting 

(AUR) program. 

X. Tribal Consultation 

Some Tribal Comments request that 

the Treasury Department and the IRS 

engage in consultation with Tribes 

throughout the development and 

implementation of the regulations, and 

any additional guidance. In addition, 

several of these Tribal Comments 

request additional consultation before 

the proposed regulations are published 

in the Federal Register. 

The Treasury Department and the IRS 

agree with the Tribal Comments and 

expect that consultation will continue 

throughout the rulemaking process that 

will culminate with the publication of 


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final regulations in the Federal Register. 

As noted in the Background section of 

this preamble, the Treasury Department 

and the IRS held consultation on the 

Act and the TTAC Report on December 

14, 15, and 16, 2022, and also received 

comments pursuant to that consultation. 

These proposed regulations reflect the 

input from the TTAC Report and the 

comments received through 

consultation. The Treasury Department 

and the IRS also plan to hold 

consultation after these proposed 

regulations are issued and will consider 

comments from that consultation when 

drafting final regulations. This 

consultation is in addition to the 

standard notice and comment process 

for proposed regulations, which will 

include the opportunity to participate in 

a public hearing and to provide 

comments through https://

www.regulations.gov. Comments 

received during these processes will be 

considered and addressed in the final 

regulations. Finally, the Treasury 

Department and the IRS expect to 

continue discussions with the GWE 

Subcommittee and the TTAC on all 

aspects of section 139E. 

Proposed Applicability Date 

These regulations are proposed to 

apply to taxable years of Tribal Program 

Participants that begin on or after the 

date of publication of the final 

regulations in the Federal Register. 

Comments and Public Hearing 

Before these proposed amendments to 

the regulations are adopted as final 

regulations, consideration will be given 

to any comments that are submitted 

timely to the IRS as prescribed in the 

preamble under the ADDRESSES section. 

The Treasury Department and the IRS 

request comments on all aspects of the 

proposed regulations. In addition, the 

Treasury Department and the IRS 

request comments on the following 

specific issues: 

(1) Should additional examples be 

included in the final regulations, and if 

so, what specific fact patterns or rules 

should be addressed by the additional 

examples? 

(2) Should Revenue Procedure 2014– 

35 be obsoleted when the final 

regulations become applicable? If not, 

why is there a continuing need for it 

after the publication of final 

regulations? 

(3) Do Indian Tribal governments 

anticipate needing any transition relief 

to adjust existing general welfare 

programs to satisfy these proposed 

regulations before they are finalized? If 

yes, please explain the nature of the 

transition relief needed and provide 

recommendations as to what relief 

would be helpful to Indian Tribal 

governments. 

(4) Is additional guidance needed 

under section 139E or other Code 

sections to address the tax treatment of 

deferred benefits or benefits paid from 

trust arrangements, and, if so, what 

specific fact patterns should be 

addressed? 

Any comments submitted will be 

made available at https://

www.regulations.gov or upon request. 

Once submitted to the Federal 

eRulemaking Portal, comments cannot 

be edited or withdrawn. 

A public hearing will be held on 

January 13, 2025, beginning at 10 a.m. 

ET, in the Auditorium at the Internal 

Revenue Building, 1111 Constitution 

Avenue NW, Washington, DC. Due to 

building security procedures, visitors 

must enter at the Constitution Avenue 

entrance. In addition, all visitors must 

present photo identification to enter the 

building. Because of access restrictions, 

visitors will not be admitted beyond the 

immediate entrance area more than 30 

minutes before the hearing starts. 

Pursuant to Announcement 2023–16, 

2023–20 I.R.B. 854 (May 15, 2023), the 

public hearing is scheduled to be 

conducted in person, but the IRS will 

provide a telephonic option for 

individuals who wish to attend or 

testify at the hearing by telephone. 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

must submit an outline of the topics to 

be discussed as well as the time to be 

devoted to each topic by December 16, 

2024. A period of ten minutes will be 

allocated to each person for making 

comments. After the deadline for 

receiving outlines has passed, the IRS 

will prepare an agenda containing the 

schedule of speakers. Copies of the 

agenda will be made available free of 

charge at the hearing. If no outlines of 

the topics to be discussed at the hearing 

are received by December 16, 2024, the 

public hearing will be cancelled. If the 

public hearing is cancelled, a notice of 

cancellation of the public hearing will 

be published in the Federal Register. 

Individuals who want to testify in 

person at the public hearing must send 

an email to publichearings@irs.gov to 

have your name added to the building 

access list. The subject line of the email 

must contain the regulation number 

REG–106851–21 and the language 

TESTIFY In Person. For example, the 

subject line may say: ‘‘Request to 

TESTIFY In Person at Hearing for REG– 

106851–21.’’ 

Individuals who want to testify by 

telephone at the public hearing must 

send an email to publichearings@irs.gov 

to receive the telephone number and 

access code for the hearing. The subject 

line of the email must contain the 

regulation number REG–106851–21 and 

the language TESTIFY Telephonically. 

For example, the subject line may say: 

‘‘Request to TESTIFY Telephonically at 

Hearing for REG–106851–21.’’ 

Individuals who want to attend the 

public hearing in person without 

testifying must also send an email to 

publichearings@irs.gov to have your 

name added to the building access list. 

The subject line of the email must 

contain the regulation number (REG– 

106851–21) and the language ATTEND 

In Person. For example, the subject line 

may say: ‘‘Request to ATTEND Hearing 

In Person for REG–106851–21.’’ 

Requests to attend the public hearing 

must be received by 5 p.m. ET on 

January 9, 2025. 

Individuals who want to attend the 

public hearing telephonically without 

testifying must send an email to 

publichearings@irs.gov to receive the 

telephone number and access code for 

the hearing. The subject line of the 

email must contain the regulation 

number (REG–106851–21) and the 

language ATTEND Hearing 

Telephonically. For example, the 

subject line may say: ‘‘Request to 

ATTEND Hearing Telephonically for 

REG–106851–21.’’ Requests to attend 

the public hearing must be received by 

5 p.m. ET on January 9, 2025. 

The hearing will be made accessible 

to people with disabilities. To request 

special assistance during the hearing, 

contact the Publications and 

Regulations Branch of the Office of 

Associate Chief Counsel (Procedure and 

Administration) by sending an email to 

publichearings@irs.gov (preferred) or by 

telephone at (202) 317–6901 (not a tollfree number) at least January 8, 2025. 

Special Analyses 

I. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

Executive Order 13175 (Consultation 

and Coordination With Indian Tribal 

Governments) prohibits an agency from 

publishing any rule that has Tribal 

implications if the rule either imposes 

substantial, direct compliance costs on 

Indian Tribal governments and is not 

required by statute, or preempts Tribal 

law, unless the agency meets the 

consultation and funding requirements 

of section 5 of the Executive order. 

These proposed regulations have a 

substantial direct effect on one or more 

Federally-recognized Indian Tribes and 

do impose substantial direct compliance 


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costs on Indian Tribal governments 

within the meaning of the Executive 

order. As a result, the Treasury 

Department intends to comply with 

section 5(b)(2)(A)–(B) of Executive 

Order 13175. In compliance with 

section 5(b)(2)(A) of Executive Order 

13175 and in response to Tribal leader 

requests for proposed regulations, the 

Treasury Department and the IRS held 

consultations with Tribal leaders on 

December 14, 15, and 16, 2022, 

requesting assistance in addressing 

questions related to the Act and the 

TTAC Report, which informed the 

development of these proposed 

regulations. The Treasury Department 

and the IRS also intend to conduct 

Tribal consultation on these proposed 

regulations. 

II. Regulatory Planning and Review 

Pursuant to the Memorandum of 

Agreement, Review of Treasury 

Regulations under Executive Order 

12866 (June 9, 2023), tax regulatory 

actions issued by the IRS are not subject 

to the requirements of section 6(b) of 

Executive Order 12866, as amended. 

Therefore, a regulatory impact 

assessment is not required. 

III. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520) generally 

requires that a Federal agency obtain the 

approval of the Office of Management 

and Budget (OMB) before collecting 

information from the public, whether 

such collection of information is 

mandatory, voluntary, or required to 

obtain or retain a benefit. An agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless the 

collection of information displays a 

valid control number. 

These proposed regulations would 

include third-party disclosures and 

recordkeeping requirements that are 

required to substantiate that the value of 

a Tribal General Welfare Benefit is 

excluded from a recipient’s gross 

income. These collections of 

information would generally be used by 

the IRS for tax compliance purposes and 

by taxpayers to facilitate proper 

substantiation of the gross income 

exclusion. The likely respondents to 

these collections are Indian Tribal 

governments and individuals. 

The recordkeeping requirements in 

proposed § 1.139E–1(c)(3) would 

provide that Indian Tribal government 

programs must be administered under 

specified guidelines and would provide 

general requirements on the content of 

those guidelines. Under proposed 

§ 1.139E–1(c)(3), the specified 

guidelines would need to, at a 

minimum, describe the program, the 

benefits provided, the eligibility 

requirements of the program, and the 

process for receiving benefits. Written 

specified guidelines would not be 

required. However, Indian Tribal 

governments may keep records of 

affidavits or declarations of how the 

program operates. These proposed 

regulations would not prescribe the 

specific method of keeping these 

records. Indian Tribal governments 

should keep these records in the manner 

they deem appropriate in order to 

substantiate that the program qualifies 

as an Indian Tribal government program 

under section 139E and these proposed 

regulations, and to assist Tribal program 

participants with determining that a 

Tribal general welfare benefit may be 

excluded from gross income under 

section 139E and these proposed 

regulations. Additionally, Indian Tribal 

governments should keep records they 

deem appropriate to substantiate that 

the Tribal general welfare benefits are 

distributed without discriminating in 

favor of the governing body of the Tribe, 

as described in proposed § 1.139E– 

1(c)(4), are not lavish or extravagant, as 

described in proposed § 1.139E–1(d)(4), 

and are not compensation for services, 

as described in proposed § 1.139E– 

1(d)(5). This information will generally 

be used by the IRS for tax compliance 

purposes to ensure that Indian Tribal 

governments are distributing Tribal 

general welfare benefits in accordance 

with proposed § 1.139E–1. 

The recordkeeping requirements in 

proposed § 1.139E–1(d)(4) would 

provide that whether a benefit is lavish 

or extravagant is based on the facts and 

circumstances at the time the benefit is 

provided. Proposed § 1.139E–1(d)(4) 

would provide that a benefit will be 

presumed not to be lavish or extravagant 

if the Indian Tribal government 

establishes the program in writing and 

provides the benefit in accordance with 

the program’s written specified 

guidelines. This presumption in 

proposed § 1.139E–1(d)(4) for a benefit 

provided in accordance with the 

program’s written specified guidelines 

would be an optional rule and an Indian 

Tribal government may choose not to 

apply such rule. This information will 

generally be used by the IRS for tax 

compliance purposes to ensure that 

Indian Tribal governments are 

distributing Tribal general welfare 

benefits in accordance with proposed 

§ 1.139E–1(d)(4). 

The third-party disclosure 

requirement may apply to Indian Tribal 

governments that choose to provide 

notification to Tribal program 

participants that an Indian Tribal 

government program exists for which 

Tribal program participants may apply 

for benefits. These proposed regulations 

would not prescribe a specific method 

that Indian Tribal governments must use 

to announce the existence of a program. 

An Indian Tribal government may 

announce Indian Tribal government 

programs in any manner it deems 

appropriate. 

These proposed regulations would not 

impose any additional recordkeeping 

requirements on Tribal program 

participants. However, Tribal program 

participants are required to maintain 

records under section 6001 sufficient to 

show that the value of a Tribal general 

welfare benefit received from an Indian 

Tribal government program is 

excludible from gross income. These 

records are required for the IRS to 

validate that taxpayers have met the 

regulatory requirements for a Tribal 

general welfare benefit, and that 

taxpayers are entitled to exclude the 

value of the benefit from gross income. 

The burden associated with maintaining 

tax records is already approved under 

OMB number 1545–0074 that is used for 

Form 1040, Individual Tax Return. 

These proposed regulations would not 

create or change the general 

recordkeeping requirement under 

section 6001. 

There is limited data to calculate the 

burden estimates for these proposed 

regulations. The Treasury Department 

and the IRS estimate the burden based 

on the list of 574 Federally-recognized 

Tribes published by the Department of 

Interior, and estimate an upper bound of 

2,296 Indian Tribal governments, 

including their agencies or 

instrumentalities. The estimate is based 

on an upper bound assumption that 

Indian Tribal government programs are 

set up by each Indian Tribal government 

of a Federally-recognized Tribe and by 

3 separate agencies or instrumentalities 

of each such Indian Tribal government. 

A summary of the Paperwork Reduction 

Act burden estimates for the collections 

are as follows: 

Indian Tribal governments (thirdparty disclosure and recordkeeping 

burden for Tribal entities): 

Estimated Number of Respondents: 

2,296. 

Estimated Time per Response: 2 

hours. 

Estimated Frequency of Response: 

Once or on occasion. 

Estimated Total Burden Hours: 4,592 

hours. 

The collections of information 

contained in this notice of proposed 

rulemaking has been submitted to the 

Office of Management and Budget for 


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76008 Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Proposed Rules 

review in accordance with the 

Paperwork Reduction Act. Commenters 

are strongly encouraged to submit 

public comments electronically. Written 

comments and recommendations for the 

proposed information collection should 

be sent to www.reginfo.gov/public/do/ 

PRAMain, with copies to the Internal 

Revenue Service. Find this particular 

information collection by selecting 

‘‘Currently under Review—Open for 

Public Comments’’ then by using the 

search function. Submit electronic 

submissions for the proposed 

information collection to the IRS via 

email at pra.comments@irs.gov (indicate 

REG–106851–21 on the subject line). 

Comments on the collection of 

information should be received by 

December 16, 2024. Comments are 

specifically requested concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the IRS, 

including whether the information will 

have practical utility; the accuracy of 

the estimated burden associated with 

the proposed collection of information; 

how the quality, utility, and clarity of 

the information to be collected may be 

enhanced; how the burden of complying 

with the proposed collection of 

information may be minimized, 

including through the application of 

automated collection techniques or 

other forms of information technology; 

and estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. The Paperwork Reduction 

Act of 1995 (44 U.S.C. 3501–3520) 

(PRA) generally requires that a Federal 

agency obtain the approval of OMB 

before collecting information from the 

public, whether such collection of 

information is mandatory, voluntary, or 

required to obtain or retain a benefit. An 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless the 

collection of information displays a 

valid control number. 

IV. Regulatory Flexibility Act 

The Secretary of the Treasury hereby 

certifies that the proposed regulations 

would not have a significant economic 

impact on a substantial number of small 

entities pursuant to the Regulatory 

Flexibility Act (5 U.S.C. chapter 6). 

These proposed regulations would affect 

Indian Tribal governments that establish 

and administer Tribal general welfare 

programs and that distribute Tribal 

general welfare benefits to certain 

individuals. The Treasury Department 

and the IRS have no reliable data to 

determine whether Tribal general 

welfare programs may be established 

and administered through small entities, 

such as not-for-profit entities. Although 

data is not readily available about the 

number of small entities that would 

potentially be affected by these 

proposed regulations, it is possible that 

a substantial number of small entities 

may be affected. However, any impact 

on those entities would not be 

economically significant and therefore a 

regulatory flexibility analysis under the 

Regulatory Flexibility Act is not 

required. 

The impact of these proposed 

regulations can be described in the 

following categories. First, proposed 

§ 1.139E–1(c) would provide guidance 

on what criteria a program must meet in 

order to be an ‘‘Indian Tribal 

Government Program.’’ Specifically, 

proposed § 1.139E–1(c) would provide 

that the program must be established by 

the Indian Tribal government; 

administered under specified 

guidelines; and not discriminate in 

favor of members of the governing body 

of the Tribe. Even assuming that these 

provisions would affect a substantial 

number of small entities, they would 

not have a significant economic impact. 

Section 139E(b) imposes the burden of 

what is needed to create an Indian 

Tribal government program. These 

proposed regulations would provide 

deference to Indian Tribal governments 

on the types of general welfare programs 

established, and generally defer to 

Indian Tribal governments on the form 

of the program’s specified guidelines 

and the specific records they should 

maintain. As such, it is expected that 

the proposed regulations would have a 

minimal economic impact on Indian 

Tribal governments. 

Second, proposed § 1.139E–1(d) 

would provide guidance on whether a 

benefit is a ‘‘Tribal General Welfare 

Benefit’’ that is excluded from an 

individual’s gross income. Specifically, 

proposed § 1.139E–1(d) would require 

that the benefit be provided pursuant to 

an Indian Tribal government program; 

be for the promotion of general welfare; 

be available to any eligible Tribal 

program participant; not be lavish or 

extravagant; and, except as provided in 

section 139E(c)(5), not be for 

compensation for services. Proposed 

§ 1.139E–1(d) would provide deference 

to Indian Tribal governments on the 

types of benefits that promote the 

general welfare, the individuals who are 

eligible for benefits, and whether 

benefits are provided in exchange for 

participation in certain cultural or 

ceremonial activities under section 

139E(c)(5) and these proposed 

regulations. It would also provide that a 

benefit is presumed to not be lavish or 

extravagant if it is described in, and 

provided in accordance with, the 

written specified guidelines of an Indian 

Tribal government program. As such, it 

is expected that the proposed 

regulations would have a minimal 

economic impact on Indian Tribal 

governments. 

Third, proposed § 1.139E–1(e) would 

permit an Indian Tribal government 

program to provide to Tribal program 

participant benefits that are items of 

cultural significance, reimbursement of 

costs, or cash honoraria for their 

participation in certain cultural or 

ceremonial activities. Indian Tribal 

governments have broad discretion to 

determine whether or not these benefits 

are provided. Even assuming that this 

provision affects a substantial number of 

small entities, it would not have a 

significant economic impact because 

benefits that are items of cultural 

significance, reimbursement of costs, 

and cash honoraria are only a few types 

of the benefits that are permitted to be 

provided under section 139E and 

proposed § 1.139E–1. An Indian Tribal 

government is not required to provide 

these types of benefits. 

For the reasons stated, a regulatory 

flexibility analysis under the Regulatory 

Flexibility Act is not required. The 

Treasury Department and the IRS invite 

comments on the impact of the 

proposed regulations on small entities. 

Pursuant to section 7805(f), this 

notice of proposed rulemaking has been 

submitted to the Chief Counsel for the 

Office of Advocacy of the Small 

Business Administration for comment 

on its impact on small business. 

V. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits and take certain other 

actions before issuing a final rule that 

includes any Federal mandate that may 

result in expenditures in any one year 

by a State, local, or Indian Tribal 

government, in the aggregate, or by the 

private sector, of $100 million (updated 

annually for inflation). These proposed 

regulations do not include any Federal 

mandate that may result in expenditures 

by State, local, or Indian Tribal 

governments, or by the private sector in 

excess of that threshold. 

VI. Executive Order 13132: Federalism 

Executive Order 13132 (Federalism) 

prohibits an agency from publishing any 

rule that has federalism implications if 

the rule either imposes substantial, 

direct compliance costs on State and 

local governments, and is not required 

by statute, or preempts State law, unless 


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the agency meets the consultation and 

funding requirements of section 6 of the 

Executive Order. These proposed 

regulations do not have federalism 

implications and do not impose 

substantial direct compliance costs on 

State and local governments or preempt 

State law within the meaning of the 

Executive order. 

Statement of Availability of IRS 

Documents 

Guidance cited in this preamble is 

published in the Internal Revenue 

Bulletin and is available from the 

Superintendent of Documents, U.S. 

Government Publishing Office, 

Washington, DC 20402, or by visiting 

the IRS website at https://www.irs.gov. 

Drafting Information 

The principal authors of these 

proposed regulations are Lisa MojiriAzad, Jonathan Dunlap, and Dominic 

DiMattia, Office of Associate Chief 

Counsel (Income Tax & Accounting). 

However, other personnel from the 

Treasury Department and the IRS 

participated in their development. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, the Treasury Department 

and the IRS propose to amend 26 CFR 

part 1 as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 is amended by adding an entry 

for §§ 1.139E–1 and 1.139E–2 in 

numerical order to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

* * * * * 

Sections 1.139E–1 and 1.139E–2 also 

issued under 26 U.S.C. 139E. 

* * * * * 

■ Par. 2. Sections 1.139E–0 through 

1.139E–2 are added to read as follows: 

* * * * * 

Sec. 

1.139E–0 Table of contents. 

1.139E–1 Tribal general welfare benefits. 

1.139E–2 [Reserved] 

* * * * * 

§ 1.139E–0 Table of contents. 

This section lists the major captions 

for §§ 1.139E–1 and 1.139E–2. 

§ 1.139E–1 Tribal general welfare benefits. 

(a) Overview. 

(b) Definitions. 

(1) Act. 

(2) Benefit. 

(3) Code. 

(4) Indian Tribal Government. 

(5) Indian Tribal Government Program. 

(6) Tribal General Welfare Benefit. 

(7) Tribe. 

(8) Tribal Program Participant. 

(9) Tribal Member. 

(10) Dependent. 

(c) Indian Tribal Government Program. 

(1) In general. 

(2) Program must be established. 

(3) Program must be administered under 

specific guidelines. 

(4) Program cannot discriminate in favor of 

members of the governing body of the Tribe. 

(5) No limitation on source of funds. 

(d) Tribal General Welfare Benefits. 

(1) In general. 

(2) Benefits must be for the promotion of 

general welfare. 

(3) Benefits must be available. 

(4) Benefits cannot be lavish or 

extravagant. 

(5) Benefits cannot be compensation for 

services. 

(e) Cultural or ceremonial activities. 

(1) In general. 

(2) Application 

(3) Examples. 

(f) Audit suspension. 

(g) Applicability date. 

§ 1.139E–2 [Reserved] 

§ 1.139E–1 Tribal general welfare benefits. 

(a) Overview. Under section 139E of 

the Code and this section, the gross 

income of a Tribal Program Participant 

for the taxable year does not include the 

value of any Tribal General Welfare 

Benefit provided by an Indian Tribal 

Government Program during the year to 

or on behalf of the Tribal Program 

Participant. Paragraph (b) of this section 

provides definitions that apply for 

purposes of this section. Paragraph (c) of 

this section provides the requirements 

that any program must satisfy to qualify 

as an Indian Tribal Government 

Program for purposes of this section. 

Paragraph (d) of this section provides 

the requirements that any benefit 

provided to or on behalf of a Tribal 

Program Participant must satisfy to 

qualify as a Tribal General Welfare 

Benefit for purposes of this section. 

Paragraph (e) of this section provides 

special rules related to cultural or 

ceremonial activities solely for purposes 

of this section. Paragraph (f) of this 

section describes the audit suspension 

provisions in section 4(a) of the Act. 

Paragraph (g) of this section provides 

the date of applicability of this section. 

(b) Definitions. The following 

definitions apply for purposes of this 

section— 

(1) Act. The term Act means the Tribal 

General Welfare Exclusion Act of 2014, 

Public Law 113–168, 128 Stat. 1883 

(2014). 

(2) Benefit. The term benefit means 

any money, property, services, or other 

item of value provided to or on behalf 

of an individual. 

(3) Code. The term Code means the 

Internal Revenue Code. 

(4) Indian Tribal Government. The 

term Indian Tribal Government means 

an Indian Tribal Government as defined 

by section 7701(a)(40) of the Code and 

includes any agencies or 

instrumentalities of such an Indian 

Tribal Government. 

(5) Indian Tribal Government 

Program. The term Indian Tribal 

Government Program means a program 

that satisfies the requirements of 

paragraph (c) of this section. 

(6) Tribal General Welfare Benefit. 

The term Tribal General Welfare Benefit 

means any benefit provided to or on 

behalf of a Tribal Program Participant 

that satisfies the requirements of 

paragraph (d) of this section for 

exclusion from gross income as an 

‘‘Indian general welfare benefit’’ under 

section 139E of the Code. 

(7) Tribe. The term Tribe means any 

Indian Tribe, band, nation, pueblo, or 

other organized group or community, 

including any Alaska Native village as 

defined in 43 U.S.C. 1602(c), that is 

recognized as eligible for the special 

programs and services provided by the 

United States to Indians because of their 

status as Indians. 

(8) Tribal Program Participant—(i) In 

general. The term Tribal Program 

Participant means a Tribal Member, 

spouse of a Tribal Member within the 

meaning of § 301.7701–18 of this 

chapter, spouse of a Tribal Member 

under applicable Tribal law, dependent 

of a Tribal Member, or other individual 

who has been determined by the Indian 

Tribal Government to be eligible for a 

Tribal General Welfare Benefit because 

such individual is, with respect to a 

Tribal Member, an ancestor, descendant, 

former spouse, widow or widower, or 

legally recognized domestic partner or 

former domestic partner. 

(ii) Special rule for ceremonial or 

cultural activities. Solely for purposes of 

paragraph (e) of this section, the term 

Tribal Program Participant may include 

a member or citizen of a Tribe that is 

different from the Tribe that establishes 

or maintains the Indian Tribal 

Government Program that provides the 

Tribal General Welfare Benefit. 

(9) Tribal Member. The term Tribal 

Member means an individual who is a 

member or citizen of the Tribe that 

establishes or maintains the Indian 

Tribal Government Program because the 

individual meets the requirements 

established by applicable Tribal law for 

enrollment in the Tribe, and: 

(i) Is listed on the Tribal rolls of the 

Tribe if such rolls are kept; 


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(ii) Is recognized as a member by the 

Tribe if Tribal rolls are not kept; or 

(iii) Is an Indian child as defined in 

25 U.S.C. 1903. 

(10) Dependent. The term dependent 

means an individual who— 

(i) Is a qualifying child, as defined in 

section 152 of the Code, of a Tribal 

Member for the taxable year; 

(ii) Is a qualifying relative, as defined 

in section 152, of a Tribal Member for 

the taxable year; 

(iii) Is a qualifying child or qualifying 

relative of a Tribal Member described in 

paragraph (b)(10)(i) or (ii) of this section 

for the taxable year of the Tribal 

Member beginning in a calendar year 

without regard to whether the Tribal 

Member was a qualifying child or 

qualifying relative, each as defined in 

section 152, of another taxpayer for a 

taxable year of the other taxpayer 

beginning in that calendar year; 

(iv) Is a qualifying child or qualifying 

relative of a Tribal Member described in 

paragraph (b)(10)(i) or (ii) of this section 

for the taxable year of the Tribal 

Member beginning in a calendar year 

without regard to whether the 

individual filed a joint return with the 

individual’s spouse (as defined in 

section 6013 of the Code) for the taxable 

year beginning in that calendar year; or 

(v) Is a qualifying relative of a Tribal 

Member described in paragraph 

(b)(10)(ii) of this section for the taxable 

year of the Tribal Member beginning in 

a calendar year without regard to the 

individual’s gross income for the 

calendar year in which the individual’s 

taxable year begins. 

(c) Indian Tribal Government 

Program—(1) In general. A program is 

an Indian Tribal Government Program 

only if the program: 

(i) Is established by the Indian Tribal 

Government, as described in paragraph 

(c)(2) of this section; 

(ii) Is administered under specified 

guidelines, as described in paragraph 

(c)(3) of this section; and 

(iii) Does not discriminate in favor of 

members of the governing body of the 

Tribe, as described in paragraph (c)(4) of 

this section. 

(2) Program must be established—(i) 

In general. A program must be 

established by an Indian Tribal 

Government. A program established by 

Tribal custom or government practice, 

or by formal action of the Indian Tribal 

Government, is a program established 

by the Indian Tribal Government. 

Formal action means authorization of 

the program pursuant to applicable 

Tribal law. The formal action must be in 

writing to the extent such writing is 

required under applicable Tribal law. 

For example, written documentation 

that evidences the formal action of the 

Indian Tribal Government to establish 

the program is required if such written 

documentation is required under 

applicable Tribal law. Similarly, no 

written documentation of the formal 

action of the Indian Tribal Government 

to establish the program is required if, 

under applicable Tribal law, no written 

documentation of such action is 

required. As an additional example, a 

program may be established by a voice 

vote if such voice vote would otherwise 

constitute formal action of the Indian 

Tribal Government under applicable 

Tribal law. To the extent permitted 

under applicable Tribal law, an Indian 

Tribal Government may delegate the 

authority for establishing a program to 

a designated individual or entity of the 

Indian Tribal Government. 

(ii) Examples. The requirements of 

paragraph (c)(2) of this section are 

illustrated by the following examples: 

(A) Example 1. A, a Tribe, operates 

under the direction of its Indian Tribal 

Government (the Council). According to 

the laws of A, all expenditures of A 

must be approved by a majority of the 

Council at the Council’s annual meeting 

or by written unanimous consent if the 

action is taken without a meeting. 

During the annual meeting of A’s 

Council, a majority of the Council vote 

to approve establishing a program. A’s 

Council has established the program 

under paragraph (c)(2)(i) of this section. 

(B) Example 2. Same facts as in 

paragraph (c)(2)(ii)(A) of this section 

(Example 1), except that, based on a 

recommendation from the Tribal 

Education office, A’s Council 

determines to provide funding for a 

scholarship program to pay 100% of 

education related expenses for any 

Tribal Member who graduates from high 

school or receives a GED during the 

calendar year. Because the next Council 

meeting is scheduled in December 2024, 

and to avoid potential impact on eligible 

students, in February 2024, Council 

adopts by unanimous written consent 

the following education program: 

(1) Approving $X of funding for the 

2024 year for the scholarship program; 

and 

(2) Authorizing the director of the 

Tribal Education office to use the 

approved funds for the scholarship 

program. A’s Council has established 

the education program under paragraph 

(c)(2)(i) of this section. 

(C) Example 3. Same facts as in 

paragraph (c)(2)(ii)(B) of this section 

(Example 2) except that A’s Council 

approves $X of annual funding to be 

provided for the education program, and 

delegates to the Tribal Education office 

authority to establish a scholarship 

program. A’s Council has established 

the education program under paragraph 

(c)(2)(i) of this section. 

(3) Program must be administered 

under specified guidelines. A program 

must be administered under specified 

guidelines. The specified guidelines 

must include, at a minimum, a 

description of the program to provide 

Tribal General Welfare Benefits, the 

benefits provided by the program 

(including how benefits are 

determined), the eligibility requirements 

for the program, and the process for 

receiving benefits under the program. A 

program is administered under specified 

guidelines if the program is operated in 

accordance with such guidelines. Indian 

Tribal Governments may choose to, but 

are not required to, set forth the 

specified guidelines of the program in 

writing. 

(4) Program cannot discriminate in 

favor of members of the governing body 

of the Tribe—(i) In general. Except in 

the case of a program described in 

paragraph (c)(4)(ii) of this section, a 

program cannot discriminate in favor of 

members of the governing body of the 

Tribe. For the purposes of this 

paragraph (c)(4), a governing body 

means the legislative body of the Tribe, 

such as the Tribal Council, or the 

representative equivalent of the 

legislative body of the Tribe. 

(ii) General council Tribes. A program 

is treated as being in compliance with 

this paragraph (c)(4) if the governing 

body of a Tribe consists of the entire 

adult membership of the Tribe. 

(iii) Facts and circumstances test. 

Except in the case of a program 

described in paragraph (c)(4)(ii) of this 

section, a program fails to satisfy the 

requirements of this paragraph (c)(4) if 

based on all the facts and circumstances 

the program either by its terms or in its 

administration discriminates in favor of 

members of the governing body of the 

Tribe. Accordingly, a program 

discriminates in favor of the members of 

the governing body of the Tribe if the 

program by its terms is available only to 

members of the governing body. 

Additionally, the administration of a 

program discriminates in favor of 

members of the governing body of the 

Tribe if, based on the facts and 

circumstances, the benefits provided 

during the year disproportionately favor 

members of the governing body. Thus, 

for example, a program established to 

provide benefits solely to the children of 

members of the governing body of the 

Tribe (unless the Tribe is a general 

council Tribe) and thus defrays costs 

otherwise borne by members of the 

governing body fails to satisfy the 

requirements of this paragraph (c)(4). 


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(5) No limitation on source of funds— 

(i) In general. Benefits under the Indian 

Tribal Government Program may be 

funded by any source of revenue or 

funds. For example, an Indian Tribal 

Government may use funds derived 

from levies, taxes, and service fees; 

settlements; revenues from triballyowned businesses, including casino 

revenues; funds from Federal, State, or 

local governments; and funds from other 

sources, including grants and loans, to 

provide benefits under an Indian Tribal 

Government Program. 

(ii) Benefits funded by net gaming 

revenues. Benefits under the Indian 

Tribal Government Program may be 

funded by net gaming revenues as 

permitted under the Indian Gaming 

Regulatory Act, 25 U.S.C. 2701–2721 

(IGRA). However, per capita payments, 

as defined under IGRA, are subject to 

Federal taxation under IGRA and are not 

excludable from gross income under 

section 139E or this section. For 

purposes of section 139E and this 

section, a payment is a per capita 

payment if it is identified by the Indian 

Tribal Government as a per capita 

payment in a Revenue Allocation Plan 

that is approved by the Department of 

the Interior. See 25 U.S.C. 2710(b)(3) 

and 25 CFR 290.11. 

(d) Tribal General Welfare Benefits— 

(1) In general. A benefit does not qualify 

as a Tribal General Welfare Benefit 

unless the benefit is: 

(i) Provided pursuant to an Indian 

Tribal Government Program, as 

described in paragraph (c) of this 

section; 

(ii) Provided for the promotion of 

general welfare, as described in 

paragraph (d)(2) of this section; 

(iii) Available to any eligible Tribal 

Program Participant, as described in 

paragraph (d)(3) of this section; 

(iv) Not lavish or extravagant, as 

described in paragraph (d)(4) of this 

section; and 

(v) Not compensation for services, as 

described in paragraph (d)(5) of this 

section. 

(2) Benefits must be for the promotion 

of general welfare—(i) In general. Tribal 

General Welfare Benefits must be for the 

promotion of general welfare. For 

purposes of section 139E and this 

paragraph (d)(2), the Indian Tribal 

Government determines that a benefit is 

for the promotion of general welfare at 

the time it establishes the Tribal General 

Welfare Program meeting the 

requirements of paragraph (c) of this 

section. An Indian Tribal Government 

has sole discretion to determine 

whether a benefit is for the promotion 

of general welfare and the Internal 

Revenue Service will defer to the Indian 

Tribal Government’s determination that 

a benefit is for the promotion of general 

welfare. Benefits may be provided 

without regard to the financial or other 

need of Tribal Program Participants and 

may be provided on a uniform or prorata basis to Tribal Program Participants. 

Thus, for example, an Indian Tribal 

Government determines whether 

benefits are for the promotion of general 

welfare under programs such as cultural 

programs, housing assistance programs, 

programs to provide education benefits, 

programs for training or retraining to 

acquire new skills or to obtain better 

employment opportunities, programs to 

provide assistance for disasters or 

emergency situations, funeral or burial 

assistance programs, legal aid programs, 

wellness and health-related programs, 

or any programs that provide benefits to 

specific categories of individuals, such 

as elderly individuals or minors. 

(ii) Examples. The requirements of 

paragraph (d)(2)(i) of this section are 

illustrated by the following examples. 

For the examples in this paragraph 

(d)(2)(ii), assume the Indian Tribal 

Government has determined that the 

benefits provided are for the promotion 

of general welfare. 

(A) Example 1: Housing programs. 

Indian Tribal Government A 

administers a program, B, pursuant to 

which the following benefits are 

provided in connection with A’s Tribal 

Members’ principal residences and 

ancillary structures which are not used 

in any trade or business: payments for 

Tribal Members to use to make mortgage 

payments, down payments, and rent 

payments (including but not limited to 

security deposits); payments for Tribal 

Members to enhance habitability of 

housing, such as by remedying water, 

sewage, sanitation service, safety 

(including but not limited to mold 

remediation), and heating or cooling 

issues; payments for Tribal Members to 

provide for basic housing repairs or 

rehabilitation (including but not limited 

to roof repair and replacement); and 

payments to Tribal Members to pay 

utility bills and charges (including but 

not limited to water, electricity, gas, and 

basic communications services such as 

phone, internet, and cable). The 

payments made by A under B are for the 

promotion of general welfare as 

described in paragraph (d)(2)(i) of this 

section. 

(B) Example 2: Educational programs. 

Indian Tribal Government C administers 

a program, D, pursuant to which the 

following benefits are provided: 

provision to students (including but not 

limited to post-secondary students) of 

transportation to and from school, 

tutors, and supplies (including but not 

limited to clothing, backpacks, laptop 

computers, musical instruments, and 

sports equipment) for use in school 

activities and extracurricular activities; 

tuition payments for students (including 

but not limited to allowances for room 

and board on or off campus for the 

student, spouse, domestic partner, and 

dependents) to attend preschool, school, 

college or university, online school, 

educational seminars, vocational 

education, technical education, adult 

education, continuing education, or 

alternative education; provision of care 

of children away from their homes to 

help their parents or other relatives 

responsible for their care to be gainfully 

employed or to pursue education; and 

provision of job counseling and 

programs for which the primary 

objective is job placement or training, 

including but not limited to allowances 

for expenses for interviewing or training 

away from home (including but not 

limited to travel, auto expenses, lodging, 

and food), tutoring, and appropriate 

clothing for a job interview or training 

(including but not limited to an 

interview suite or a uniform required 

during a period of training). The 

payments made by C under D are for the 

promotion of general welfare as 

described in paragraph (d)(2)(i) of this 

section. 

(C) Example 3: Elder and disabled 

programs. Indian Tribal Government E 

administers a program, F, pursuant to 

which the following benefits are 

provided to Tribal Members who have 

attained age 55 or are mentally or 

physically disabled (as defined under 

applicable law, including but not 

limited to an Indian Tribal 

Government’s disability laws): meals 

through home-delivered meals programs 

or at a community center or similar 

facility; home care such as assistance 

with preparing meals or doing chores, or 

day care outside the home; local 

transportation assistance; and 

improvements to adapt housing to 

special needs (including but not limited 

to grab bars and ramps). The payments 

made by E under F are for the 

promotion of general welfare as 

described in paragraph (d)(2)(i) of this 

section. 

(D) Example 4: Transportation 

programs. Indian Tribal Government G 

administers a program, H, pursuant to 

which the following benefits are 

provided: payment of transportation 

costs such as rental cars, substantiated 

mileage, and fares for bus, taxi, and 

public transportation between an Indian 

reservation (as defined in section 

168(j)), service area (as defined in 25 

CFR 20.100), or service unit area 

(meaning an area designated for 


ddrumheller on DSK120RN23PROD with PROPOSALS1
76012 Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Proposed Rules 

purposes of administration of Indian 

Health Service programs under 42 CFR 

136.21(1)) and facilities that provide 

essential services to the public (such as 

medical facilities and grocery stores). 

The payments made by G under H are 

for the promotion of general welfare as 

described in paragraph (d)(2)(i) of this 

section. 

(E) Example 5: Medical programs. 

Indian Tribal Government J administers 

a program, K, pursuant to which the 

following benefits are provided: 

payments for the cost of transportation, 

temporary meals, and lodging of a Tribal 

Program Participant while the 

individual is receiving medical care 

away from home, or to pay the cost of 

nonprescription drugs (including but 

not limited to traditional Tribal 

medicines). The payments made by J 

under K are for the promotion of general 

welfare as described in paragraph 

(d)(2)(i) of this section. 

(F) Example 6: Emergency programs. 

Indian Tribal Government L administers 

a program, M, pursuant to which the 

following benefits are provided: 

assistance to individuals in exigent 

circumstances (including but not 

limited to victims of abuse), including 

but not limited to the costs of food, 

clothing, shelter, transportation, auto 

repair bills, and similar expenses; 

payment of costs for temporary 

relocation and shelter for individuals 

involuntarily displaced from their 

homes (including but not limited to 

situations in which a home is destroyed 

by a fire or natural disaster); and 

assistance for transportation 

emergencies (for example, when 

stranded away from home) in the form 

of transportation costs, a hotel room, 

and meals. The payments made by L 

under M are for the promotion of 

general welfare as described in 

paragraph (d)(2)(i) of this section. 

(G) Example 7: Cultural and religious 

programs. Indian Tribal Government N 

administers a program, P, pursuant to 

which the following benefits are 

provided: payment of expenses 

(including but not limited to admission 

fees, transportation, food, and lodging) 

to attend or participate in a Tribe’s 

cultural, social, religious, or community 

activities, such as powwows, 

ceremonies, and traditional dances; 

payment of expenses (including but not 

limited to admission fees, 

transportation, food, and lodging) to 

visit sites that are culturally or 

historically significant for the Tribe, 

including but not limited to other 

Indian reservations (as defined in 

section 168(j)); payment of the costs of 

receiving instruction about a Tribe’s 

culture, history, and traditions 

(including but not limited to traditional 

language, music, and dances); payment 

of funeral and burial expenses and 

expenses of hosting or attending wakes, 

funerals, burials, other bereavement 

events, and subsequent honoring events; 

and payment of transportation costs and 

admission fees to attend educational, 

social, or cultural programs offered or 

supported by the Tribe or another Tribe. 

The payments made by N under P are 

for the promotion of general welfare as 

described in paragraph (d)(2)(i) of this 

section. 

(3) Benefits must be available. The 

benefits provided under an Indian 

Tribal Government Program must be 

available to any Tribal Program 

Participant who meets the specified 

guidelines of the program required 

under paragraph (c)(3) of this section, 

subject to budgetary constraints. 

However, the Indian Tribal Government 

has discretion to determine the category 

of individuals who are Tribal Program 

Participants under the Indian Tribal 

Government Program, provided that 

such determination is consistent with 

the specified guidelines described in 

paragraph (c)(3) of this section and 

subject to the prohibition on 

discrimination under paragraph (c)(4) of 

this section. Thus, for example, an 

Indian Tribal Government is permitted 

to limit eligibility for an Indian Tribal 

Government Program to dependents of 

Tribal Members who have attained a 

specified age, or, as another example, to 

a Tribal Member’s household. 

(4) Benefits cannot be lavish or 

extravagant. The benefit provided by an 

Indian Tribal Government Program 

cannot be lavish or extravagant. 

Whether a benefit is lavish or 

extravagant for purposes of this section 

is based on the facts and circumstances 

at the time the benefit is provided. 

Relevant facts and circumstances 

include a Tribe’s culture and cultural 

practices, history, geographic area, 

traditions, resources, and economic 

conditions or factors. A benefit will be 

presumed to not be lavish or extravagant 

if it is described in, and provided in 

accordance with, the written specified 

guidelines of an Indian Tribal 

Government Program. 

(5) Benefits cannot be compensation 

for services. Except as provided in 

paragraph (e) of this section, a Tribal 

General Welfare Benefit does not 

include benefits that are provided as 

compensation for services to any 

person. Under section 61(a) of the Code, 

compensation for services includes fees, 

commissions, fringe benefits, and 

similar items, whether paid in money or 

property. 

(e) Cultural or ceremonial activities— 

(1) In general. For purposes of section 

139E and paragraph (d)(5) of this 

section, a benefit is not compensation 

for services if: 

(i) The benefit is provided to a Tribal 

Program Participant for their 

participation in cultural or ceremonial 

activities for the transmission of Tribal 

culture as determined by the Indian 

Tribal Government (including, but not 

limited to, powwows, rite of passage 

ceremonies, funerals, wakes, burials, 

other bereavement events, and honoring 

events); and 

(ii) The benefit consists of an item of 

cultural significance as determined by 

the Indian Tribal Government, the 

reimbursement of costs, or a cash 

honorarium. 

(2) Application. Except as otherwise 

provided in this paragraph (e)(2), an 

Indian Tribal Government has sole 

discretion to determine whether an item 

is an item of cultural significance and 

whether an activity is a cultural or 

ceremonial activity, and the Internal 

Revenue Service will defer to these 

determinations by the Indian Tribal 

Government. However, cash, gift cards, 

or vehicles are generally not items of 

cultural significance. 

(3) Examples. The application of this 

paragraph (e) is illustrated by the 

following examples: 

(i) Example 1: Benefits for cultural or 

ceremonial activities not compensation 

for services. Tribe B regularly holds a 

gathering during the fall season to 

celebrate its cultural traditions. During 

the gathering, Tribal Members of B, as 

well as Tribal members of other Tribes 

from around the region, are invited to 

participate. The Indian Tribal 

Government of B (ITG–B) allocates 

funds for the gathering, some of which 

are used for the following payments: 

(A) Tribal Member of B. Individual 1, 

a Tribal Member of B, provides 

traditional blessings on the first and 

final days of the gathering. ITG–B gives 

Individual 1 a cash honorarium in 

recognition of providing the blessings. 

The cash honorarium that Individual 1 

receives from ITG–B is not 

compensation for services under this 

paragraph (e). 

(B) Tribal Member of different Tribe. 

Individual 2, a Tribal Member of Tribe 

C, participates as a drummer for a 

ceremonial dance on the second day of 

the gathering. ITG–B gives Individual 2 

a piece of culturally significant jewelry. 

Under paragraph (a)(7)(ii) of this 

section, Individual 2 is a Tribal Program 

Participant solely for purposes of this 

paragraph (e). The jewelry that 

Individual 2 receives from ITG–B is not 


ddrumheller on DSK120RN23PROD with PROPOSALS1
Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Proposed Rules 76013 

1See MDEQ Missoula Submission Receipt— 

01.30.24 in docket. 

2See Montana January 30, 2024, submittal, p. 98. 

compensation for services under this 

paragraph (e). 

(ii) Example 2: Benefits for cultural or 

ceremonial activities not compensation 

for services. Tribe C operates a language 

preservation center in which Individual 

3, a Tribal Member of C, who speaks the 

traditional language that is common to 

C and other regional Tribes, volunteers 

to come in every Saturday to discuss 

and teach the traditional language of C 

to other Tribal Members of C. The 

Indian Tribal Government of C (ITG–C), 

reimburses Individual 3 for travel 

expenses and teaching supplies used in 

Individual 3’s language lessons. The 

reimbursement of costs that Individual 

3 receives from ITG–C is not 

compensation for services under this 

paragraph (e). 

(f) Audit suspension. After [date of 

publication of the final regulations in 

the Federal Register], the Department of 

the Treasury and the Internal Revenue 

Service (IRS) will, in consultation with 

the Treasury Tribal Advisory 

Committee, establish and require the 

education and training prescribed in 

section 3(b)(2) of the Act. The temporary 

suspension of audits and examinations 

described in section 4(a) of the Act will 

not be lifted until the education and 

training prescribed by section 3(b)(2) of 

the Act is completed. 

(g) Applicability date. This section 

applies to taxable years of Tribal 

Program Participants that begin on or 

after [date of publication of the final 

regulations in the Federal Register]. 

§ 1.139E–2 [Reserved] 

Douglas W. O’Donnell, 

Deputy Commissioner. 

[FR Doc. 2024–20826 Filed 9–13–24; 8:45 am] 

BILLING CODE 4830–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R08–OAR–2023–0472; FRL–12252– 

01–R8] 

Air Plan Approval; Montana; Missoula, 

Montana, Air Rule Revisions 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is proposing to approve a 

State Implementation Plan (SIP) 

revision submitted by the State of 

Montana on January 30, 2024, that 

incorporates revisions to the Missoula, 

Montana City-County Air Pollution 

Control (MCCAPC) program rules into 

the Montana SIP. The EPA is taking this 

action pursuant to the Clean Air Act 

(CAA). 

DATES: Written comments must be 

received on or before October 17, 2024. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–R08– 

OAR–2023–0472, to the Federal 

Rulemaking Portal: https://

www.regulations.gov. Follow the online 

instructions for submitting comments. 

Once submitted, comments cannot be 

edited or removed from https://

www.regulations.gov. The EPA may 

publish any comment received to its 

public docket. Do not submit 

electronically any information you 

consider to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Multimedia submissions (audio, video, 

etc.) must be accompanied by a written 

comment. The written comment is 

considered the official comment and 

should include discussion of all points 

you wish to make. The EPA will 

generally not consider comments or 

comment contents located outside of the 

primary submission (i.e., on the web, 

cloud, or other file sharing system). For 

additional submission methods, the full 

EPA public comment policy, 

information about CBI or multimedia 

submissions, and general guidance on 

making effective comments, please visit 

https://www2.epa.gov/dockets/ 

commenting-epa-dockets. 

Docket: All documents in the docket 

are listed in the https://

www.regulations.gov index. Although 

listed in the index, some information is 

not publicly available, e.g., CBI or other 

information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

will be publicly available only in hard 

copy. Publicly available docket 

materials are available electronically in 

https://www.regulations.gov. For this 

action we do not plan to offer hard copy 

review of the docket. Please email or 

call the person listed in the FOR FURTHER

INFORMATION CONTACT section if you 

need to make alternative arrangements 

for access to the docket. 

FOR FURTHER INFORMATION CONTACT: 

Joseph Stein, Air and Radiation 

Division, EPA, Region 8, Mailcode 

8ARD–IO, 1595 Wynkoop Street, 

Denver, Colorado 80202–1129, 

telephone number: (303) 312–7078, 

email address: stein.joseph@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document wherever 

‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean 

the EPA. 

I. Background 

On January 30, 2024, the State of 

Montana submitted proposed revisions 

to the MCCAPC rules for incorporation 

into the Montana SIP.1 The MCCAPC 

rules address open burning, industrial 

and household combustors, and other 

activities that generate particulate 

matter emissions. The submittal was 

signed by the governor and went 

through a 30-day public comment 

period starting on Thursday, September 

7, 2023, and ending on Monday, 

October 9, 2023.2 Montana received no 

requests for public hearing and all 

comments received were in favor of the 

revised MCCACP rules and their 

incorporation into the Montana SIP. In 

this action, we are proposing to approve 

certain revisions and to take no action 

on certain revisions, as described in 

greater detail below. 

The EPA has reviewed the revisions 

to Chapters 1 through 9, and Chapters 

13 and 14 of the MCCAPC rules. The 

bulk of the changes are administrative 

in nature, including formatting and 

grammatical corrections, conforming 

edits to create consistency across the 

MCCAPC, deletions of extraneous or 

repetitive content, removal of outdated 

references to a retired outdoor burn 

hotline, and similar edits. Additionally, 

there are several revisions that are 

substantive in nature, including new 

definitions for outdoor burning air 

pollution control technologies, 

provisions for the use of such control 

technologies, new limits on outdoor 

recreational fires, and the extension of 

wood stove rules to new areas around 

Missoula, among others. The EPA has 

determined that both the administrative 

and substantive revisions are consistent 

with the requirements of the CAA. 

These substantive revisions either have 

no effect on, or further restrict, 

particulate matter emissions. 

The EPA will not be acting on the 

rules submitted for revision in MCCAPC 

Chapter 10: Fuels rules 10.102(1), 

10.105(1), 10.109(1), 10.110, 10.111, 

10.111(2). The EPA is proposing to act 

on the revisions in Chapter 10 in a 

separate action. 

II. Proposed Action 

In this action, the EPA is proposing to 

approve the revisions to the MCCACP 

rules submitted by the State of Montana 

on January 30, 2024, listed below in 

table 1, Chapters 1 through 9 and 

Chapters 13 and 14. 

In the table below, the key is as 

follows: 


ddrumheller on DSK120RN23PROD with PROPOSALS1