Post by Okwes on Apr 1, 2007 22:12:47 GMT -5
Tribes seek clarity on bond-issue rules
PECHANGA RESERVATION - Tribes that want to issue tax-exempt bonds are
pushing legislation in Congress this year to make that practice easier,
a tribal consultant said Thursday.
The tribal governments want to be subject to the same Internal Revenue
Service rules as state and local governments, but they are under unique
restrictions that have made it difficult to issue the bonds without
getting ensnared in costly audits, said Tom Rodgers, a member of the
Blackfeet Tribe in Montana and a tribal consultant.
The problem lies in an IRS restriction that says tribal governments may
issue tax-exempt bonds only for activities that are an "essential
government function" -- not money-making ventures.
The restriction has been difficult for the IRS to enforce and for tribes
to comply with, according to a report released last year by the federal
Government Accountability Office.
The Cabazon Band of Mission Indians and the Morongo Band of Mission
Indians are under IRS audits because it questioned whether bonds they
issued qualified for tax-exempt status.
An IRS official declined Thursday to offer any information on the status
of those audits.
The Cabazon tribe declined to comment on the IRS audit or whether it
would support the bill Rodgers discussed. A Morongo public relations
consultant, Waltona Manion, said she was unsure of the status of the
audit, but that the tribe would support legislation to clarify the
Internal Revenue Code.
Other tribes across the country also have come under scrutiny for using
the financially beneficial bonds to fund new projects.
The IRS ordered one Florida tribe to refinance $258 million in
tax-exempt bonds because the agency said the tribe violated rules.
Rodgers and others talked about the issue Thursday at the Western Indian
Gaming Conference at the Pechanga Resort & Casino near Temecula.
The annual event staged by the California Nations Indian Gaming
Association ends today. Rodgers spoke at a panel discussion of upcoming
issues in Washington, D.C., that tribes should monitor.
The National Indian Gaming Association hopes to end the tax-law
confusion this year with a federal law that would clarify the
requirements for issuing tax-exempt bonds and see that tribes are
treated like other governments, Rodgers told the audience.
"We want to bring clarity so that financial institutions and tribal
governments can walk hand in hand," Rodgers said.
Sens. Gordon H. Smith, R-Ore., and Max Baucus, D-Mont., sponsored a bill
last year that would have changed the revenue code, but it stalled. They
plan to reintroduce legislation on the subject this year, Rodgers said.
Last year's bill, dubbed the Tribal Government Tax-Exempt Bond Parity
Act of 2006, would have amended the tax code to permit the issuance of
tax-exempt bonds by a tribal government if at least 95 percent of the
net proceeds were used to finance facilities on an Indian reservation or
if the proceeds would be used for an essential government function,
excluding gaming.
Governmental bonds generally lower municipalities' borrowing costs and
provide higher after-tax yields to investors, according to the
Government Accountability Office report.
Being able to issue the bonds is important for tribes that want to
diversify their economies but might not be able to so without the extra
dollars they save by issuing tax-exempt bonds, Rodgers said.
Anthony Miranda, chairman of the California Nations Indian Gaming
Association, said changing the law can help tribes save not only on the
taxes they won't pay, but also on the lower interest rates they can get.
PECHANGA RESERVATION - Tribes that want to issue tax-exempt bonds are
pushing legislation in Congress this year to make that practice easier,
a tribal consultant said Thursday.
The tribal governments want to be subject to the same Internal Revenue
Service rules as state and local governments, but they are under unique
restrictions that have made it difficult to issue the bonds without
getting ensnared in costly audits, said Tom Rodgers, a member of the
Blackfeet Tribe in Montana and a tribal consultant.
The problem lies in an IRS restriction that says tribal governments may
issue tax-exempt bonds only for activities that are an "essential
government function" -- not money-making ventures.
The restriction has been difficult for the IRS to enforce and for tribes
to comply with, according to a report released last year by the federal
Government Accountability Office.
The Cabazon Band of Mission Indians and the Morongo Band of Mission
Indians are under IRS audits because it questioned whether bonds they
issued qualified for tax-exempt status.
An IRS official declined Thursday to offer any information on the status
of those audits.
The Cabazon tribe declined to comment on the IRS audit or whether it
would support the bill Rodgers discussed. A Morongo public relations
consultant, Waltona Manion, said she was unsure of the status of the
audit, but that the tribe would support legislation to clarify the
Internal Revenue Code.
Other tribes across the country also have come under scrutiny for using
the financially beneficial bonds to fund new projects.
The IRS ordered one Florida tribe to refinance $258 million in
tax-exempt bonds because the agency said the tribe violated rules.
Rodgers and others talked about the issue Thursday at the Western Indian
Gaming Conference at the Pechanga Resort & Casino near Temecula.
The annual event staged by the California Nations Indian Gaming
Association ends today. Rodgers spoke at a panel discussion of upcoming
issues in Washington, D.C., that tribes should monitor.
The National Indian Gaming Association hopes to end the tax-law
confusion this year with a federal law that would clarify the
requirements for issuing tax-exempt bonds and see that tribes are
treated like other governments, Rodgers told the audience.
"We want to bring clarity so that financial institutions and tribal
governments can walk hand in hand," Rodgers said.
Sens. Gordon H. Smith, R-Ore., and Max Baucus, D-Mont., sponsored a bill
last year that would have changed the revenue code, but it stalled. They
plan to reintroduce legislation on the subject this year, Rodgers said.
Last year's bill, dubbed the Tribal Government Tax-Exempt Bond Parity
Act of 2006, would have amended the tax code to permit the issuance of
tax-exempt bonds by a tribal government if at least 95 percent of the
net proceeds were used to finance facilities on an Indian reservation or
if the proceeds would be used for an essential government function,
excluding gaming.
Governmental bonds generally lower municipalities' borrowing costs and
provide higher after-tax yields to investors, according to the
Government Accountability Office report.
Being able to issue the bonds is important for tribes that want to
diversify their economies but might not be able to so without the extra
dollars they save by issuing tax-exempt bonds, Rodgers said.
Anthony Miranda, chairman of the California Nations Indian Gaming
Association, said changing the law can help tribes save not only on the
taxes they won't pay, but also on the lower interest rates they can get.