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Federal Indian Country Tax Incentives Expire

September 5, 2012

Amidst partisan gridlock in the Beltway over national tax policy, Congress has allowed several tax incentives designed to attract private development and jobs to Indian Country, to expire. Others will expire unless Congress acts. Indeed, amidst much election-year debate about the American small business sector and middle class, Indian Country’s private sector and hope for a robust middle class has been forgotten by Congress.

– The accelerated depreciation program, which allows manufacturers with facilities in Indian Country to use shorter recovery periods when calculating depreciation deductions for production equipment, has been unavailable since January 1, 2012. Legislation has been introduced that would reauthorize the provision until 2014. S. 3521, 112th Cong. § 211 (2012); H.R. 6240, 112th Cong. § 201 (2012).

— The Indian Employment Tax Credit, which provides businesses with an incentive to hire individuals who are enrolled members of an Indian tribe (or the spouse of an enrolled member) and who live on or near an Indian reservation, expired on December 31, 2011. Legislation has been introduced that would retroactively extend the program to December 31, 2013. S. 3521, 112th Cong. § 204 (2012).

— The Low-Income Housing Tax Credit Program, through which tax credits are available for low-income housing projects on homes that that were constructed, rehabilitated or acquired since 1986, including those in Indian Country, are currently available to until only September 30, 2011. Legislation has been introduced to extend the credits to January 1, 2014. S. 3521, 112th Cong. § 203 (2012).

— The Work Opportunity Tax Credit, a federal tax credit incentive for private-sector businesses that hire individuals from twelve target groups who have consistently faced significant barriers to employment, including certain Indians, expired in 2011. Legislation has been introduced that would extend the WOTC to December 31, 2013. S. 3521, 112th Cong. § 209 (2012).

Indian Country must urge that these tax incentives be extended so that tribal governments can continue to attract private capital and create new jobs for tribal members and neighboring communities. Between now and November any calls to Capitol Hill will likely fall on deaf ears. But come after the election, tribal constituents should call their Delegation to urge that Indian Country’s tax and job needs not be forgotten.

Gabriel “Gabe” Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Gabe assists tribal governments and businesses in all matters of tribal economic development and diversification, including entity formation and related tax strategy. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.

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