Treasury Issues New Rules on Tribal General Welfare Programs and Corporate Entities

WASHINGTON — The U.S. Department of the Treasury on Tuesday announced the publication of new regulations clarifying the General Welfare Exclusion Act of 2014 and the treatment of tribally chartered corporate entities, during a public meeting of the Treasury Tribal Advisory Committee (TTAC).

Picture: NAFOA

The rules are intended to provide clearer guidance on how tribal general welfare programs are treated for federal tax purposes, while emphasizing deference to tribal governments in determining the needs of their citizens.

Under the regulations, tribes retain broad discretion to define what constitutes general welfare and cultural significance. Treasury officials said the rules formally recognize that tribal governments are best positioned to determine the needs of their members and communities.

The regulations expand the definition of individuals eligible to receive benefits under tribal general welfare programs. In addition to enrolled tribal members, eligible individuals may include spouses, dependents, ancestors, descendants, caregivers, widows or widowers, legally recognized domestic partners, former spouses, and others designated by tribal governments.

The rules also remove limitations on funding sources for general welfare benefits. Tribal programs may be funded from any revenue source, including net gaming revenue, and tribes may classify distributions as general welfare rather than per capita payments. Revenue allocation plans may be amended accordingly.

Treasury clarified that uniform payments are permitted and that general welfare benefits are not required to be based on financial need. Tribes may also provide general welfare benefits through grantor trusts and may modify existing Indian Gaming Regulatory Act (IGRA) trusts to do so.

The regulations further recognize certain economic development programs as qualifying for general welfare exclusion, including programs that support individuals in starting, expanding, or operating businesses.

Alaska Native regional and village corporations may elect to apply these rules on an interim basis until regulations specifically addressing Alaska Native corporations are issued.

Treasury also announced that the current suspension of audits related to tribal general welfare programs will remain in place until Internal Revenue Service field agents complete required training on the General Welfare Exclusion. The IRS will consult with TTAC and tribal governments to develop the training, which will include instruction on applying appropriate deference to tribal determinations of general welfare and cultural benefits.

The rules include a limitation barring benefits considered “lavish and extravagant,” though Treasury acknowledged that the term is not specifically defined in the final regulations. Officials said the framework is intentionally designed to give substantial weight to tribal decision-making, with further guidance to be addressed during IRS training.

Treasury officials said the regulations are intended to provide long-term certainty for tribes administering general welfare programs while reinforcing federal recognition of tribal sovereignty.