IRS Extends Deadline for Comments on General Welfare Exclusion

On February 13, 2012, the Internal Revenue Service (IRS) issued IR-2012-19 (attached) which extends the deadline for submitting comments on the application of the general welfare exclusion to Indian tribal government programs that provide benefits to tribal members to March 14, 2012.

The general welfare exclusion is a federal tax doctrine under which payments made to individuals through governmental social benefit programs are excluded from an individual’s gross income and, therefore, not reported to the IRS or taxed. The doctrine has been applied to programs providing assistance for such things as food or shelter for the poor based on financial need, as well as for broader needs of the community itself, such as tax free grants for tribal members to promote employment and economic development on Indian reservations. Inconsistent application of the general welfare doctrine to tribal governmental programs has prompted tribes to request that the Treasury Department and IRS develop guidance that respects the sovereign right of tribes to determine what governmental programs are best suited to meet the needs of tribal members and the general welfare of the tribal community.

Previously, the deadline for submitting comments was February 13, 2012. The extended deadline is in response to tribal requests for additional time to weigh in on this important matter. For further information on the IRS’s request for comments on the application of the general welfare exclusion (Notice 2011-94) see our General Memorandum 11-151 (December 6, 2011).

Please contact us if you would like further information or assistance preparing comments.