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The U.S. Department of Treasury and the IRS recently announced proposed changes to the 2014 Tribal General Welfare Exclusion Act — creating a crucial opportunity for Native American tribes across the country. These regulations promise to redefine how tribes can support their members through tax-free general welfare program payments.

The Treasury will hold tribal consultations on the proposed rule on November 18, 19 and 20 of this year, 2024, and . They are also accepting written comments received by December 17, 2024, which can be submitted at tribal.consult@treasury.gov.

Before these proposed changes take effect, tribal leaders must engage and plan to maximize the benefits for their nations. 

Key changes and their potential impact

While the 2014 act promoted tribal general welfare overall, defining general welfare became a challenge. What, exactly, constitutes “lavish or extravagant”?

The proposed amendment seeks to clarify these terms, deferring to tribes to define them within their unique cultures and circumstances. This clarity opens the door for tribes to expand existing programs and develop innovative new approaches to supporting tribal citizens. The impact could be transformative, enabling tribes to address long-standing issues of poverty and limited economic opportunities in culturally appropriate and tailored ways.

At the heart of these proposed regulations is a commitment to increased tribal autonomy. This flexibility is a game-changer, allowing tribes to adapt their programs to meet evolving needs without fear of running afoul of rigid federal definitions. As an added benefit, it also minimizes potential IRS scrutiny surrounding the terms.

Expanded opportunities for tribes

While the immediate benefits of these proposed regulations are significant, their true potential lies in the long-term transformation they could bring to tribal communities. It’s hard to overstate the potential for expanding economic support. With these proposed changes, tribes will have more leeway to design comprehensive welfare programs that address the unique challenges faced by their members. From housing assistance to educational support, the possibilities are vast.

Equally important is the opportunity to preserve and promote cultural practices. The proposed regulations recognize the integral role of culture in tribal well-being, potentially allowing for funding of language restoration programs, traditional arts and cultural activities as part of general welfare initiatives. This is an excellent step towards providing tribal communities with more holistic support.

By leveraging these new rules, tribes can also strengthen their sovereignty. The ability to design and implement expanded, self-directed welfare programs gives tribal governments more control, allowing them to address their communities’ needs in ways that align with their unique cultural values and economic realities.

Maximizing benefits and preparing for the future

Strategic planning is essential for tribal leaders to harness the full potential of these new regulations. A critical first step is to take advantage of the virtual consultation, written comment and public hearing opportunities. Participating in these forums is a chance to provide input and feedback on the proposed regulations — shaping the future of tribal economic opportunity.

A critical next step is to review revenue allocation plans. These plans, often centered around gaming revenues, have long been a cornerstone of tribal economic strategies. Now, with the expanded flexibility offered by the proposed regulations, tribes have an unprecedented opportunity to strike a balance between per capita payments and more comprehensive general welfare programs. This recalibration could lead to a more holistic approach to community support, addressing long-standing needs while still providing direct benefits to tribal members.

How Wipfli can help

The proposed updates to the Tribal General Welfare Exclusion Act are a significant step forward in recognizing tribal sovereignty and the unique needs of Native American communities. However, the true impact of these changes will depend on how effectively tribes engage with the process and implement new programs.

Through the consultation period and towards implementation, tribal leaders must stay informed, participate actively in the regulatory process and begin strategic planning for the future. By embracing this opportunity and taking decisive action, tribes can shape a future that honors their cultural heritage while meeting the evolving needs of their communities.

Wipfli can assist your tribe in your strategic planning process, helping you identify and pursue opportunities under the proposed updates. Contact us to learn more about how we can help.