TRIBAL ALERT!
NEW IRS PROCEDURE FOR TRIBAL MINORS’ TRUST FUNDS
Effective Immediately
January 27, 2002

Substantial Tax Savings for Tribal Minors’ Trust Funds

On January 6, 2003, the Internal Revenue Service (IRS) established a new kind of Minors’ Trust Fund, called the “IGRA Trust” – named after the Indian Gaming Regulatory Act (IGRA).

Under IRS Revenue Procedure 2003-14, tribes establishing IGRA Trust Funds with the net profits of gaming operations will be able to greatly increase the total funds available for each minor once he or she reaches adulthood.

Requirements for IGRA Trust Funds

Effective immediately, the Revenue Procedure establishes standardized criteria for the establishment of IGRA Trusts. For example, the Trust must include language indicating that:

• the tribe is both grantor and owner of the Trust

• the minors’ access to the Trust during childhood will be controlled

• the minors’ interest in the Trust cannot be garnished, or otherwise committed by the minor

In addition, there are requirements that the tribe must meet in establishing an inheritance order should a minor die during childhood, as well as other important requirements that must be tailored to each tribe’s individual circumstances.

Verifying Tax Status Made Easier

Before Revenue Procedure 2003-14 was issued, tribes seeking to verify the tax status of their Minors’ Trust Funds had to seek a Private Letter Ruling from the IRS. By establishing standard criteria, the Revenue Procedure makes this unnecessary. A tribe following the requirements of the Revenue Procedure will now have certainty about the tax results of its Minors’ Trust Fund.

For More Information

The Revenue Procedure can be accessed for free on-line at the IRS’ website http://www.irs.gov/govt/tribes/index.html (opens new window).

If you are a CILS client, please contact your CILS attorney. Or, if you are a former client, feel free to contact your nearest CILS office for more information about IGRA Trusts.

Comments Requested by the IRS

The IRS has requested comments regarding the new Revenue Procedure, even though it is effective immediately. The IRS indicated that these comments will be seriously reviewed, although any changes to the Revenue Procedure will take some time – most likely not occurring until next year. Interested tribes should review the Revenue Procedure provisions carefully and consider submitting comments reflecting any concerns they have. Comments are due April 28th, and may be sent mail to:

Internal Revenue Service
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044
Attn: CC:PA:T:CRU (CC:ITA:4)
Room 5529

or, by email to Notice.Comments@irscounsel.treas.gov

Disclaimer

This information is intended to assist you with your legal problem. Each area of the law is complex and changing. Your case may have special factors that could affect the applicability of this information. CILS does not guarantee that this information is sufficient to resolve your legal problem. If you have any questions, you should seek the advice and counsel of an attorney.

Back