Tribal General Welfare Exclusion Act of 2014

Floor Speech

Mr. WYDEN. Mr. President, I rise as chairman of the Senate Finance Committee to strongly support the Senate's passage of an important tax bill, H.R. 3043, the Tribal General Welfare Exclusion Act of 2014. This bill will improve the application of the Federal income tax in Indian Country and in doing so will reflect appropriate respect for the sovereignty of tribal governments.

By way of background, the Federal Tax Code treats most payments that individuals receive, and the value of some services they receive, as taxable income. There is an exclusion, though, for payments and services received under programs conducted by State and local governments. It's called the general welfare exclusion, and it covers things like housing assistance, emergency medical care, and education assistance. These are traditionally treated as nontaxable.

Unfortunately, the IRS has had difficulty applying the general welfare exclusion when it comes to benefits provided by tribal governments to tribal members. In order to determine which benefits were excluded from taxation, the IRS began conducting aggressive audits, leaving the tax treatment of many tribe-provided benefits in doubt. As Delores Pigsley, chairman of the Confederated Tribes of Siletz Indians Tribal Council, put it in a letter to me, ``for several years, the IRS has sought to tax tribal government programs and services.'' This, in turn, has undermined tribal sovereignty and hindered economic and social development.

I am pleased to report that there has been some significant progress. In July, the IRS issued regulations clarifying the application of the exclusion, and the regulations were a good step in the right direction, clearing up some questions and reflecting an improved dialogue between the IRS and tribes. However, a regulation is not a congressional statute; we need to lock these improvements into statutory law, as well as expand on them such as by establishing a Tribal Advisory Committee to help the Treasury Department and the IRS understand about how best to address tax issues affecting Indian Country.

The bill we are considering today would accomplish these goals. It codifies and expands IRS regulations, draws clear lines, and gives greater respect to tribal institutions and programs.

I would like to acknowledge the principal sponsors of the Senate version of the bill, Senators Moran and Heitkamp, for their leadership. I also would like to thank Senators Stabenow, Thune, and other members of the Finance Committee, who have urged the committee to move forward on this issue.

Tribal governments have a long history of providing critical benefits to tribal members, and these programs are fundamental to the sovereignty and cultural integrity of tribes. Tribes, and not the IRS, are in the best position to determine the needs of their members and provide for the general welfare of their tribal citizens and communities. I know this bill has the support of tribes in my home State of Oregon and will benefit tribes and tribal members across the Nation. I urge all Senators to support the bill.

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