Tax Payments and Filings
Per Capita Trusts have many different tax issues that can cause significant problems for the Tribe and for your children if these issues are neglected. In general, per capita trust funds are not taxed until distributed from the trust – much like a retirement plan. The IRS knows per capita is taxable income and aggressively monitors the tax procedures, withholdings and payments of these per capita trusts. Further, there are many tax forms required to be filed with the IRS and also issued to tribal members.
First, the trusts need to file tax returns, even if taxes are not owed. We file a master tax return on the IRS Form 1041 for the trust each year.
Also, IRS Form 1099’s need to be issued each year to every tribal member that receives trust distributions and/or has tax withholdings made. This sometimes requires collecting Form W-9’s and having accurate tribal membership data.
Another tax process that requires careful attention is required tax withholdings. When the distribution amounts reach certain levels, tax withholdings are required under specific IRS tables for Native American per capita payments and such withholdings must be paid to the IRS in a specific way and time. Our customized process determines when such tax withholdings are required and then also the calculation of the amount, timely payment to the IRS through the EFTPS system and reporting the amounts on the Form 1099’s and jointly on a Form 945 each year.
Providence First has been working with Native American tribes regarding the tax issues of per capita trusts since these trusts began to be formed. We will consult tribal leaders on the many tax issues and help make necessary decisions and establish sound policies.
Also, we spend a lot of time educating the individual tribal members regarding the tax implications and forms. Our database is specifically built around the tax regulations of Native American tax regulations and rules to ensure proper tax procedures. Further, with our legal and tax background, we stay up-to-date on the leading tax issues and solutions regarding Native American per capita trusts.