(1) There is a unique Federal legal and political 
relationship between the United States and Indian 
tribes. 
(2) Indian tribes have the responsibility and au-
thority to provide governmental programs and serv-
ices to tribal citizens, develop tribal economies, and 
build community infrastructure to ensure that In-
dian reservation lands serve as livable, permanent 
homes. 
(3) The United States Constitution, U.S. Fed-
eral Court decisions, Executive orders, and numer-
ous other Federal laws and regulations recognize 
that Indian tribes are governments, retaining the in-
herent authority to tax and operate as other govern-
ments, including (inter alia) financing projects with 
government bonds and maintaining eligibility for 
general tax exemptions via their government status. 
(4) Codifying tax parity with respect to tribal 
governments is consistent with Federal treaties rec-
ognizing the sovereignty of tribal governments. 
(5) That Indian tribes face historic disadvan-
tages in accessing the underlying capital to build the 
necessary infrastructure for job creation, and that 
certain statutory restrictions on tribal governance 
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further inhibit tribes’ ability to develop strong gov-
ernance and economies. 
(6) Indian tribes are sometimes excluded from 
the Internal Revenue Code of 1986 in key provisions 
which results in unfair tax treatment for tribal citi-
zens or unequal enforcement authority for tribal en-
forcement agencies. 
(7) Congress is vested with the authority to 
regulate commerce with Indian tribes, and hereby 
exercises that authority in a manner which furthers 
tribal self-governance, and in doing so, further af-
firms the United States government-to-government 
relationship with Indian tribes. 
SEC. 3. TREATMENT OF INDIAN TRIBES AS STATES WITH 
RESPECT TO BOND ISSUANCE. 
(a) IN GENERAL.—Subsection (c) of section 7871 of 
the Internal Revenue Code of 1986 (relating to Indian 
tribal governments treated as States for certain purposes) 
is amended to read as follows: 
‘‘(c) SPECIAL RULES FOR TAX-EXEMPT BONDS.—In 
applying section 146 to bonds issued by Indian tribal gov-
ernments (or subdivisions thereof) the Secretary of the 
Treasury shall annually— 
‘‘(1) establish a national bond volume cap based 
on the greater of— 
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‘‘(A) the State population formula ap-
proach in section 146(d)(1)(A) (using national 
tribal population estimates supplied annually by 
the Department of the Interior in consultation 
with the Census Bureau), and 
‘‘(B) the minimum State ceiling amount in 
section 146(d)(1)(B) (as adjusted in accordance 
with the cost of living provision in section 
146(d)(2)), and 
‘‘(2) allocate such national bond volume cap 
among all Indian tribal governments seeking such an 
allocation in a particular year under regulations pre-
scribed by the Secretary.’’. 
(b) REPEAL OF ESSENTIAL GOVERNMENTAL FUNC-
TION REQUIREMENTS.—Section 7871 of such Code is fur-
ther amended by striking subsections (b) and (e). 
(c) EFFECTIVE DATE.— 
(1) SUBSECTION (a).—The amendment made 
by subsection (a) shall apply to obligations issued in 
calendar years beginning after the date of the enact-
ment of this Act. 
(2) SUBSECTION (b).—The repeals made by 
subsection (b) shall apply to transactions after, and 
obligations issued in calendar years beginning after, 
the date of the enactment of this Act. 
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SEC. 4. TREATMENT OF PENSION AND EMPLOYEE BENEFIT 
PLANS MAINTAINED BY TRIBAL GOVERN-
MENTS. 
(a) AMENDMENTS
TO
THE INTERNAL REVENUE 
CODE OF 1986.— 
(1) QUALIFIED PUBLIC SAFETY EMPLOYEE.— 
Section 72(t)(10)(B) of the Internal Revenue Code 
of 1986 (defining qualified public safety employee) is 
amended by— 
(A) striking ‘‘or political subdivision of a 
State’’ and inserting ‘‘, political subdivision of 
a State, or Indian tribe’’; and 
(B) striking ‘‘such State or political sub-
division’’ and inserting ‘‘such State, political 
subdivision, or tribe’’. 
(2) GOVERNMENTAL PLAN.—The last sentence 
of section 414(d) of such Code (defining govern-
mental plan) is amended to read as follows: ‘‘The 
term ‘governmental plan’ includes a plan established 
or maintained for its employees by an Indian tribal 
government (as defined in section 7701(a)(40)), a 
subdivision of an Indian tribal government (deter-
mined in accordance with section 7871(d)), an agen-
cy, instrumentality, or subdivision of an Indian trib-
al government, or an entity established under Fed-
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eral, State, or tribal law which is wholly owned or 
controlled by any of the foregoing.’’. 
(3) DOMESTIC
RELATIONS
ORDER.—Section 
414(p)(1)(B)(ii) of such Code (defining domestic re-
lations order) is amended by inserting ‘‘or tribal’’ 
after ‘‘State’’. 
(4) EXEMPT GOVERNMENTAL DEFERRED COM-
PENSATION PLAN.—Section 3121(v)(3) of such Code 
(defining governmental deferred compensation plan) 
is amended by inserting ‘‘by an Indian tribal govern-
ment or subdivision thereof,’’ after ‘‘political subdivi-
sion thereof,’’. 
(5) GRANDFATHER
OF
CERTAIN
DEFERRED 
COMPENSATION PLANS.—Section 457 of the Internal 
Revenue Code is amended by adding at the end the 
following new subsection: 
‘‘(h) CERTAIN TRIBAL GOVERNMENT PLANS GRAND-
FATHERED.—Plans established before the date of enact-
ment of this subsection and maintained by an Indian tribal 
government (as defined in section 7701(a)(40)), a subdivi-
sion of an Indian tribal government (determined in accord-
ance with section 7871(d)), an agency, instrumentality, or 
subdivision of an Indian tribal government, or an entity 
established under Federal, State, or tribal law which is 
wholly owned or controlled by any of the foregoing, in com-
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