American Indian Tribes Alarmed by IRS Tax Audits

Ogalala Sioux Tribe Chief John Yellowbird Steele says the Internal Revenue Service is failing to recognize Native American sovereignty by trying to tax government-funded benefits the tribes provide their members.

Steele and other tribal officials are among witnesses testifying before a Senate panel Thursday on the possibility that the IRS may try to collect taxes on government-funded benefits given to tribal members and per capita trust payments.

Steele says the IRS has been auditing several tribes and asking for documents on aid such as housing assistance, school clothes and burial assistance.

An IRS official says in prepared testimony that to be excluded from taxes, benefits and payments must be made under a government program, promote the general welfare and not represent compensation for services.