Technical and Miscellaneous Revenue Act of 1988 (P.L. 100-647)
Technical and Miscellaneous Revenue Act of 1988 (P.L. 100-647)
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H.R. 2792, Reported in the House
100th Congress 2d Session
Rept. 100-312, Part 2
HOUSE OF REPRESENTATIVES
TAX TREATMENT OF INDIAN FISHING RIGHTS INCOME
JUNE 15, 1988.--Committed to the Committee ofthe Whole House on the State ofthe Union and ordered to be printed
Mr. ROSTENKOWSKI, from the Committee on Ways and Means,submitted the following
REPORT
[To accompany H.R. 2792 which on June 25, 1987, was referred jointly to the Committee on Ways and Means and the Committee on Interior and Insular Affairs]
The Committee on Ways and Means, to whom was referred the bill (H.R. 2792) to clarify Indian treaties, Executive orders, and Acts of Congress with respect to Indian fishing rights, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu thereof the following:
SECTION 1. FEDERAL TAX TREATMENT OF INCOME DERIVED BY INDIANS FROM EXERCISE OF FISHING RIGHTS SECURED BY TREATY, ETC.
(a) GENERAL RULES.--Subchapter C of chapter 80 of the Internal Revenue Code of 1986 (relating to provisions affecting more than 1 subtitle) is amended by adding at the end thereof the following new section:
"SEC. 7873. INCOME DERIVED BY INDIANS FROM EXERCISE OF FISHING RIGHTS.
"(a) IN GENERAL.--
"(1) INCOME AND SELF-EMPLOYMENT TAXES.--No tax shall be imposed by subtitle title A on income derived--
"(A) by a member of an Indian tribe directly or through a qualified Indian entity, or
"(B) by a qualified Indian entity, from a fishing rights-related activity of such tribe.
"(2) EMPLOYMENT TAXES.--No tax shall be imposed by subtitle C on remuneration paid for services performed in a fishing rights-related activity of an Indian tribe by a member of such tribe for another member of such tribe or for a qualified Indian entity.
"(b) DEFINITIONS.--For purposes of this section--
"(1) FISHING RIGHTS-RELATED ACTIVITY.--The term 'fishing rights-related activity' means, with respect to an Indian tribe, any activity directly related to harvesting, processing, or transporting fish harvested in the exercise of a recognized fishing right of such tribe or to selling such fish but only if substantially all of such harvesting was performed by members of such tribe.
"(2) RECOGNIZED FISHING RIGHTS.--The term 'recognized fishing rights' means, with respect to an Indian tribe, fishing rights secured as of March 17, 1988, by a treaty between such tribe and the United States or by an Executive order or an Act of Congress.
"(3) QUALIFIED INDIAN ENTITY.--
"(A) IN GENERAL.--The term 'qualified Indian entity' means, with respect to an Indian tribe, any entity if--
"(i) such entity is engaged in a fishing rights-related activity of such tribe,
"(ii) all of the equity interests in the entity are owned by qualified Indian tribes, members of such tribes, or their spouses,
"(iii) in the case of an entity which engages to any extent in any substantial processing or transporting of fish, 90 percent or more of the annual gross receipts of the entity is derived from fishing rights-related activities of 1 or more qualified Indian tribes each of which owns at least 10 percent of the equity interests in the entity, and
"(iv) substantially all of the management functions of the entity are performed by members of qualified Indian tribes.
For purposes of clause (iii), equity interests owned by a member (or the spouse of a member) of a qualified Indian tribe shall be treated as owned by the tribe.
"(B) QUALIFIED INDIAN TRIBE.--For purposes of subparagraph (A), an Indian tribe is a qualified Indian tribe with respect to an entity if such entity is engaged in a fishing rights-related activity of such tribe.
"(1) DISTRIBUTIONS FROM QUALIFIED INDIAN ENTITY.--For purposes of this section, any distribution with respect to an equity interest in a qualified Indian entity of an Indian tribe to a member of such tribe shall be treated as derived by such member from a fishing rights-related activity of such tribe to the extent such distribution is attributable to income derived by such entity from a fishing rights-related activity of such tribe.
"(2) DE MINIMIS UNRELATED AMOUNTS MAY BE EXCLUDED.--If, but for this paragraph, all but a de minimis amount--
"(A) derived by a qualified Indian tribal entity, or by an individual through such an entity, is entitled to the benefits of paragraph (1) of subsection (a), or
"(B) paid to an individual for services is entitled to the benefits of paragraph (2) of subsection (a),
then the entire amount shall be entitled to the benefits of such paragraph.
"(3) RELATIONSHIP OF SECTION TO TREATIES, ETC.--Provisions securing any fishing right for any Indian tribe in any treaty, law, or executive order shall not be construed to provide an exemption from any tax imposed by this title."
(b) CLERICAL AMENDMENT.--The table of sections for such subchapter C is amended by adding at the end thereof the following new item:
"Sec. 7873. Income Derived By Indians from Exercise of Fishing Rights."
SEC. 2. STATE TAX TREATMENT OF INCOME DERIVED BY INDIANS FROM EXERCISE OF FISHING RIGHTS SECURED BY TREATY, ETC.
Section 2079 of the Revised Statutes (25 U.S.C. 71) is amended by adding at the end thereof the following new sentence:
"Such treaties, and any Executive orders and Acts of Congress under which the rights of any Indian tribe to fish are secured, shall be construed to prohibit (in addition to any other prohibition) the imposition under any law of a State or political subdivision thereof of any tax on any income derived from the exercise of rights to fish secured by such treaty, Executive order, or Act of Congress if section 7873 of the Internal Revenue Code of 1986 does not permit a like Federal tax to be imposed on such income."
SEC. 3. CONFORMING AMENDMENTS RELATING TO COVERAGE UNDER OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE PROGRAM.
(a) EXCLUSION FROM WAGES OF INCOME DERIVED BY INDIANS FROM EXERCISE OF FISHING RIGHTS.--Section 209 of the Social Security Act (42 U.S.C. 409) is amended--
(1) in subsection (r), by striking "or" at the end;
(2) in subsection (s), by striking the period and inserting "; or"; and
(3) by inserting after subsection (s) the following new subsection:
"(t) Remuneration consisting of income excluded from taxation under section 7873 of the Internal Revenue Code of 1986 (relating to income derived by Indians from exercise of fishing rights)."
(b) EXCLUSION FROM NET EARNINGS FROM SELF-EMPLOYMENT OF INCOME DERIVED BY INDIANS FROM EXERCISE OF FISHING RIGHTS.--Section 211(a) of such Act (42 U.S.C. 411(a)) is amended--
(1) in paragraph (12), by striking "and" at the end;
(2) in paragraph (13), by striking the period and inserting "; and"; and
(3) by inserting after paragraph (13) the following new paragraph:
"(14) There shall be excluded income excluded from taxation under section 7873 of the Internal Revenue Code of 1986 (relating to income derived by Indians from exercise of fishing rights)."
(c) CROSS-REFERENCES IN SECA AND FICA TO APPLICABLE INDIAN FISHING RIGHTS PROVISIONS.--
(1) SECA.--Subsection (a) of section 1402 of the Internal Revenue Code of 1986 (relating to net earnings from self-employment) is amended by striking "and" at the end of paragraph (13), by striking the period at the end of paragraph (14) and inserting "; and", and by inserting after paragraph (14) the following new paragraph:
"(15) in the case of a member of an Indian tribe, the special rules of section 7873 (relating to income derived by Indians from exercise of Fishing rights) shall apply."
(2) FICA.--Subsection (a) of section 3121 of such Code (relating to wages) is amended by striking "or" at the end of paragraph (19), by striking the period at the end of paragraph (20) and inserting "; or", and by inserting after paragraph (20) the following new paragraph:
"(21) in the case of a member of an Indian tribe, any remuneration on which no tax is imposed by this chapter by reason of section 7873 (relating to income derived by Indians from exercise of fishing rights)."
The amendments made by this Act shall apply to all periods beginning before, on, or after the date of the enactment of this Act.
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