This General Welfare Exception from income has become increasingly controversial as applied to tribal members and the IRS is being asked to weigh in.
In general, to be tax-free, payments must be made under a governmental program be for the promotion of general welfare ( i.e., based generally on individual, family or other needs) and not be compensation for services. Some 'general welfare' payments to individuals under social benefit programs are not taxed. PRO TIP:When researching where Indian casino money goes, it is important to remember that the money is subject to the same taxation laws as other forms of income.Additionally, Indian tribes are required to use casino revenue for tribal government services and economic development. But Some Payments to Native Americans are Exempt. One of the more complicated provisions of IGRA permits Native American tribes to make per capita distributions of revenue from gaming activities to tribe members. These per capita distributions are taxed.ĥ. Even exempt tribal income can be taxed when distributed to individual members of the tribe. citizens, and unlike their tribes, individuals are subject to federal income taxes. The tribe which has pushed the model the farthest is the Seminole Tribe of Florida. They can form corporations to conduct business and their income remains exempt.Ĥ. Tribes are exempt from federal income taxes even when conducting commercial activities.
Some types of tax-exempt organizations are taxed on some types of income.
