IRC 7871 and PL 638

Foundation/Native Nonprofit IRC781 & PL638

 

Public Law (PL) 638 and Internal Revenue Code (IRC) 7871 are two very important but either unknown or misunderstood tools that can expand the fundraising capacity of Indigenous governments, program departments, courts and colleges.

In 1982 Congress passed the Indian Tribal Governmental Tax Status Act giving Nations/Tribes the same tax related advantages as states. The IRS then developed IRC 7871 as part of the implementation of this law.

IRC 7871 – Provides Indigenous Nations/Tribes with the same tax advantage as state governments when they receive grants from foundations, charities or individual donors.

PL 638 – American Indian Self Determination and Education Assistance Act established a clear definition of “Indian organizations” — recognized by federal & state governments.

 

Tribal Government:

  • 7871 provides Indigenous Nations/Tribes with the same tax advantage by state governments when they receive grants from foundations, charities or individual donors.
  • Indian Tribal Governmental Tax Status Act of 1982 passed to Nations/Tribes the same advantage as states.

 

Foundations:

  • Clarifies the status of contributions they make to Indigenous governments or their subdivision and program entities.

 

Native Nonprofits:

  • Removes the requirement to become a 501 (c)(3) tax exempt organization.
  • Must be Nation/Tribal chartered, sanctioned or controlled entity.

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