-CITE-
26 USC Sec. 7871
01/02/01
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 80 - GENERAL RULES
Subchapter C - Provisions Affecting More Than One Subtitle
-HEAD-
Sec. 7871. Indian tribal governments treated as States for
certain purposes
-STATUTE-
(a) General rule
An Indian tribal government shall be treated
as a State -
(1) for purposes of determining whether
and in what amount any
contribution or transfer to or for the use of
such government (or
a political subdivision thereof) is deductible
under -
(A) section 170 (relating
to income tax deduction for
charitable, etc., contributions and
gifts),
(B) sections 2055 and
2106(a)(2) (relating to estate tax
deduction for transfers of public,
charitable, and religious
uses), or
(C) section 2522 (relating
to gift tax deduction for
charitable and similar gifts);
(2) subject to subsection (b), for
purposes of any exemption
from, credit or refund of, or payment with respect
to, an excise
tax imposed by -
(A) chapter 31 (relating
to tax on special fuels),
(B) chapter 32 (relating
to manufacturers excise taxes),
(C) subchapter B of chapter
33 (relating to communications
excise tax), or
(D) subchapter D of chapter
36 (relating to tax on use of
certain highway vehicles);
(3) for purposes of section 164 (relating
to deduction for
taxes);
(4) subject to subsection (c), for
purposes of section 103
(relating to State and local bonds);
(5) for purposes of section 511(a)(2)(B)
(relating to the
taxation of colleges and universities which are
agencies or
instrumentalities of governments or their political
subdivisions);
(6) for purposes of -
(A) section 105(e) (relating
to accident and health plans),
(B) section 403(b)(1)(A)(ii)
(relating to the taxation of
contributions of certain employers
for employee annuities), and
(C) section 454(b)(2)
(relating to discount obligations); and
(7) for purposes of -
(A) chapter 41 (relating
to tax on excess expenditures to
influence legislation), and
(B) subchapter A of chapter
42 (relating to private
foundations).
(b) Additional requirements for excise tax exemptions
Paragraph (2) of subsection (a) shall apply with
respect to any
transaction only if, in addition to any other requirement
of this
title applicable to similar transactions involving a State
or
political subdivision thereof, the transaction involves the
exercise of an essential governmental function of the Indian
tribal
government.
(c) Additional requirements for tax-exempt bonds
(1) In general
Subsection (a) of section 103 shall
apply to any obligation
(not described in paragraph (2)) issued by an
Indian tribal
government (or subdivision thereof) only if such
obligation is
part of an issue substantially all of the proceeds
of which are
to be used in the exercise of any essential governmental
function.
(2) No exemption for private activity bonds
Except as provided in paragraph (3),
subsection (a) of section
103 shall not apply to any private activity bond
(as defined in
section 141(a)) issued by an Indian tribal government
(or
subdivision thereof).
(3) Exception for certain private activity bonds
(A) In general
In the case of an obligation
to which this paragraph applies
-
(i) paragraph
(2) shall not apply,
(ii) such
obligation shall be treated for purposes of this
title as a qualified
small issue bond, and
(iii) section
146 shall not apply.
(B) Obligations to which paragraph
applies
This paragraph shall
apply to any obligation issued as part
of an issue if -
(i) 95 percent
or more of the net proceeds of the issue are
to be used for the acquisition,
construction, reconstruction,
or improvement of property
which is of a character subject to
the allowance for depreciation
and which is part of a
manufacturing facility
(as defined in section 144(a)(12)(C)),
(ii) such
issue is issued by an Indian tribal government or
a subdivision thereof,
(iii) 95
percent or more of the net proceeds of the issue
are to be used to finance
property which -
(I) is to be located on land which, throughout the 5-year
period ending
on the date of issuance of such issue, is
part of the
qualified Indian lands of the issuer, and
(II) is to be owned and operated by such issuer,
(iv) such
obligation would not be a private activity bond
without regard to subparagraph
(C),
(v) it is
reasonably expected (at the time of issuance of
the issue) that the employment
requirement of subparagraph
(D)(i) will be met with
respect to the facility to be
financed by the net proceeds
of the issue, and
(vi) no principal
user of such facility will be a person
(or group of persons)
described in section 144(a)(6)(B).
For purposes of clause (iii), section
150(a)(5) shall apply.
(C) Private activity bond rules to
apply
An obligation to which
this paragraph applies (other than an
obligation described in paragraph
(1)) shall be treated for
purposes of this title as a private
activity bond.
(D) Employment requirements
(i) In general
The employment
requirements of this subparagraph are met
with respect to a facility
financed by the net proceeds of an
issue if, as of the close
of each calendar year in the
testing period, the aggregate
face amount of all outstanding
tax-exempt private activity
bonds issued to provide financing
for the establishment
which includes such facility is not
more than 20 times greater
than the aggregate wages (as
defined by section 3121(a))
paid during the preceding
calendar year to individuals
(who are enrolled members of the
Indian tribe of the issuer
or the spouse of any such member)
for services rendered
at such establishment.
(ii) Failure to meet
requirements
(I) In general
If,
as of the close of any calendar year in the testing
period, the
requirements of this subparagraph are not met
with respect
to an establishment, section 103 shall cease
to apply
to interest received or accrued (on all private
activity
bonds issued to provide financing for the
establishment)
after the close of such calendar year.
(II) Exception
Subclause (I) shall not apply if the requirements of this
subparagraph
would be met if the aggregate face amount of
all tax-exempt
private activity bonds issued to provide
financing
for the establishment and outstanding at the
close of
the 90th day after the close of the calender year
were substituted
in clause (i) for such bonds outstanding
at the close
of such calendar year.
(iii) Testing period
For purposes
of this subparagraph, the term ''testing
period'' means, with
respect to an issue, each calendar year
which begins more than
2 years after the date of issuance of
the issue (or, in the
case of a refunding obligation, the
date of issuance of the
original issue).
(E) Definitions
For purposes of this
paragraph -
(i) Qualified Indian
lands
The term
''qualified Indian lands'' means land which is
held in trust by the
United States for the benefit of an
Indian tribe.
(ii) Indian tribe
The term
''Indian tribe'' means any Indian tribe, band,
nation, or other organized
group or community which is
recognized as eligible
for the special programs and services
provided by the United
States to Indians because of their
status as Indians.
(iii) Net proceeds
The term
''net proceeds'' has the meaning given such term
by section 150(a)(3).
(d) Treatment of subdivisions of Indian tribal governments
as
political subdivisions
For the purposes specified in subsection (a),
a subdivision of an
Indian tribal government shall be treated as a political
subdivision of a State if (and only if) the Secretary determines
(after consultation with the Secretary of the Interior) that
such
subdivision has been delegated the right to exercise one
or more of
the substantial governmental functions of the Indian tribal
government.
(e) Essential governmental function
For purposes of this section, the term ''essential
governmental
function'' shall not include any function which is not customarily
performed by State and local governments with general taxing
powers.
-SOURCE-
(Added Pub. L. 97-473, title II, Sec. 202(a), Jan. 14, 1983,
96
Stat. 2608; amended Pub. L. 98-21, title I, Sec. 122(c)(6),
Apr.
20, 1983, 97 Stat. 87; Pub. L. 98-369, div. A, title
IV, Sec.
474(r)(41), title X, Sec. 1065(b), July 18, 1984, 98 Stat.
847,
1048; Pub. L. 99-514, title I, Sec. 112(b)(4), 123(b)(3),
title
XIII, Sec. 1301(j)(6), (7), title XVIII, Sec. 1878(i), 1899A(65),
Oct. 22, 1986, 100 Stat. 2109, 2113, 2658, 2905, 2962; Pub.
L.
100-203, title X, Sec. 10632(a), (b), Dec. 22, 1987, 101
Stat.
1330-455; Pub. L. 103-66, title XIII, Sec. 13222(d), Aug.
10, 1993,
107 Stat. 481.)
-MISC1-
AMENDMENTS
1993 - Subsec. (a)(6)(B) to (D). Pub. L. 103-66
redesignated
former subpars. (C) and (D) as (B) and (C), respectively,
and
struck out former subpar. (B) which read as follows: ''section
162(e) (relating to appearances, etc., with respect to
legislation),''.
1987 - Subsec. (c)(2). Pub. L. 100-203, Sec.
10632(b)(2),
substituted ''Except as provided in paragraph (3), subsection
(a)''
for ''Subsection (a)''.
Subsec. (c)(3). Pub. L. 100-203, Sec. 10632(b)(1),
added par.
(3).
Subsec. (e). Pub. L. 100-203, Sec. 10632(a),
added subsec. (e).
1986 - Subsec. (a)(4). Pub. L. 99-514, Sec. 1301(j)(6),
substituted ''(relating to State and local bonds)'' for ''(relating
to interest on certain governmental obligations)''.
Subsec. (a)(6). Pub. L. 99-514, Sec. 123(b)(3),
redesignated
subpars. (C) to (E), as previously redesignated by section
112(b)(4) of Pub. L. 99-514, as (B) to (D), respectively,
and
struck out previously redesignated subpar. (B), which read
as
follows: ''section 117(b)(2)(A) (relating to scholarships
and
fellowship grants),''.
Pub. L. 99-514, Sec. 112(b)(4), redesignated
subpars. (B) to (F)
as (A) to (E), respectively, and struck out former subpar.
(A)
which read as follows: ''section 24(c)(4) (defining State
for
purposes of credit for contribution to candidates for public
offices),''.
Pub. L. 99-514, Sec. 1878(i), made technical
amendment to
directory language of Pub. L. 98-369, Sec. 1065(b). See 1984
Amendment note below.
Subsec. (a)(6)(D). Pub. L. 99-514, Sec. 1899A(65),
substituted
''; and'' for period at end.
Subsec. (c)(2). Pub. L. 99-514, Sec. 1301(j)(7),
amended par. (2)
generally. Prior to amendment, par. (2) read as follows:
''Subsection (a) of section 103 shall not apply to any of
the
following issued by an Indian tribal government (or subdivision
thereof):
''(A) An industrial development bond
(as defined in section
103(b)(2)).
''(B) An obligation described in
section 103(l)(1)(A) (relating
to scholarship bonds).
''(C) A mortgage subsidy bond (as
defined in paragraph (1) of
section 103A(b) without regard to paragraph (2)
thereof).''
1984 - Subsec. (a)(6)(A). Pub. L. 98-369, Sec.
474(r)(41),
substituted ''section 24(c)(4)'' for ''section 41(c)(4)''.
Subsec. (a)(6)(B) to (F). Pub. L. 98-369, Sec.
1065(b), as
amended by Pub. L. 99-514, Sec. 1878(i), added subpars. (B),
(D),
and (F), and redesignated former subpars. (B) and (C) as
(C) and
(E), respectively.
1983 - Subsec. (a)(6). Pub. L. 98-21 redesignated
subpars. (B) to
(D) as (A) to (C), respectively, and struck out former subpar.
(A),
which referred to section 37(e)(9)(A) (relating to certain
public
retirement systems).
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to amounts
paid or
incurred after Dec. 31, 1993, see section 13222(e) of Pub.
L.
103-66 set out as a note under section 162 of this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Section 10632(c) of Pub. L. 100-203 provided
that: ''The
amendments made by this section (amending this section) shall
apply
to obligations issued after October 13, 1987.''
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 112(b)(4) of Pub. L. 99-514
applicable to
taxable years beginning after Dec. 31, 1986, see section
151(a) of
Pub. L. 99-514, set out as a note under section 1 of this
title.
Amendment by section 123(b)(3) of Pub. L. 99-514
applicable to
taxable years beginning after Dec. 31, 1986, but only in
the case
of scholarships and fellowships granted after Aug. 16, 1986,
see
section 151(d) of Pub. L. 99-514, set out as a note under
section 1
of this title.
Amendment by section 1301(j)(6), (7) of Pub.
L. 99-514 applicable
to bonds issued after Aug. 15, 1986, except as otherwise
provided,
see sections 1311 to 1318 of Pub. L. 99-514, set out as an
Effective Date; Transitional Rules note under section 141
of this
title.
Amendment by section 1878(i) of Pub. L. 99-514
effective, except
as otherwise provided, as if included in the provisions of
the Tax
Reform Act of 1984, Pub. L. 98-369, div. A, to which
such
amendment relates, see section 1881 of Pub. L. 99-514, set
out as a
note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(r)(41) of Pub. L. 98-369
applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks
from
such years, see section 475(a) of Pub. L. 98-369, set out
as a note
under section 21 of this title.
Section 1065(c) of Pub. L. 98-369 provided that:
''The amendment
made by subsection (b) (amending this section) shall apply
to
taxable years beginning after December 31, 1984.''
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 98-21 applicable to taxable
years beginning
after Dec. 31, 1983, except that if an individual's annuity
starting date was deferred under section 105(d)(6) of this
title as
in effect on the day before Apr. 20, 1983, such deferral
shall end
on the first day of such individual's first taxable year
beginning
after Dec. 31, 1983, see section 122(d) of Pub. L. 98-21,
set out
as a note under section 22 of this title.
EFFECTIVE DATE
Section 204 of title II of Pub. L. 97-473, as
amended by Pub. L.
98-369, div. A, title X, Sec. 1065(a), July 18, 1984,
98 Stat.
1048; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095,
provided that: ''The amendments made by this title (enacting
this
section, amending sections 41, 103, 164, 170, 2055, 2106,
2522,
4227, 4484, 6420, 6421, 6424, 6427, and 7701 of this title,
and
enacting provisions set out as a note under section 1 of
this
title) -
''(1) insofar as they relate to chapter
1 of the Internal
Revenue Code of 1986 (formerly I.R.C. 1954) (26
U.S.C. 1 et seq.)
(other than section 103 thereof), shall apply
to taxable years
beginning after December 31, 1982,
''(2) insofar as they relate to section
103 of such Code, shall
apply to obligations issued after December 31,
1982,
''(3) insofar as they relate to chapter
11 of such Code (26
U.S.C. 2001 et seq.), shall apply to estates
of decedents dying
after December 31, 1982,
''(4) insofar as they relate to chapter
12 of such Code (26
U.S.C. 2501 et seq.), shall apply to gifts made
after December
31, 1982, and
''(5) insofar as they relate to taxes
imposed by subtitle D of
such Code (26 U.S.C. 4041 et seq.), shall take
effect on January
1, 1983.''
SHORT TITLE
For short title of title II of Pub. L. 97-473
as the ''Indian
Tribal Governmental Tax Status Act of 1982'', see Short Title
of
1983 Amendments note set out under section 1 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514
IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For nonapplication of amendment by section 123(b)(3)
of Pub. L.
99-514 to the extent application of such amendment would
be
contrary to any treaty obligation of the United States in
effect on
Oct. 22, 1986, see section 1012(aa)(3), (4) of Pub. L. 100-647,
set
out as a note under section 861 of this title.
PLAN
AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments
made by subtitle
A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177)
or title
XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment
to
any plan, such plan amendment shall not be required to be
made
before the first plan year beginning on or after Jan. 1,
1989, see
section 1140 of Pub. L. 99-514, as amended, set out as a
note under
section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 164, 170, 401, 2055, 2106, 2522, 4227, 4484, 6420, 6421, 6427, 7701 of this title; title 25 section 566.