Friday, December 14, 2012

IRS Rules Various Tribal Payments To Shamans Are Not Taxable Income

Last week, the Internal Revenue Service released a proposal for a Revenue Procedure to provide guidance on certain payments by tribal governments to tribe members. Application of the General Welfare Exclusion to Indian Tribal Government Programs That Provide Benefits to Tribal Members (Notice 2012-75) spells out certain payments that need not be included in the individual's gross income for federal income tax purposes.  Among excluded items are:
benefits provided under an Indian tribal governmental program that are items of cultural significance (not lavish or extravagant) or nominal cash honoraria provided to medicine men or women, shamans, or similar religious or spiritual officials to recognize their participation in cultural, religious, and social events (for example, pow-wows, rite of passage ceremonies, or funerals, wakes, burials, or other bereavement events).
Also excluded are reimbursements to tribal members for them to attend traditional ceremonies or learn about a Tribe's culture, history and traditions.  Also, payments a tribe makes to an Indian medicine man to use traditional practices to treat a tribal member's disease are not included as income by the tribal member receiving the treatment. AP reports on the IRS release.