FEDERAL TAX INCENTIVES (subject to annual renewal by Congress)
Special Depreciation (IRC Section 168J)
Allows for shorter recovery periods for qualified property on Indian reservations:
|In the case of:||A recovery period of:|
|3 year property||2 Years|
|5 year property||3 Years|
|7 year property||4 Years|
|10 year property||6 Years|
|15 year property||9 Years|
|20 year property||12 Years|
|Non-residential real property (39 year property)||22 Years|
Indian Employment Tax Credit (IRC Section 45A)
The Indian employment credit provides businesses with an incentive to hire certain individuals who live on or near an Indian reservation. The tax credit is against your federal income and is 20% of qualified wages and benefits paid to qualified employees.
A qualified employee, for any tax period, is any employee who meets all of the following tests:
- The employee is an enrolled member of an Indian tribe or the spouse of an enrolled member of an Indian tribe.
- The employee performs substantially all of his or her services for the employer within an Indian reservation.
- While performing those services, the employee has his or her main home on or near the reservation.
STATE TAX INCENTIVES
Tax incentives for business development in the CTUIR’s Reservation Enterprise Zone (sunsets in 2018) :
Local Property Tax Abatement
For qualifying businesses:
- Standard exemption for three to five years, and
- Long-term rural facility incentive (up to 15 years) as applicable
Income Tax Credits
Special tax credits against state income tax liability that “level the playing field” on the reservation:
- Benefiting most any type of business operation that is new to the zone
- Claimed annually by business on state tax return using special form
- Equals 100% of all tribal taxes in the first year of operation and of all annual tribal property taxes thereafter
STATE & LOCAL PROPERTY TAXES
In July 2013, the U.S. Court of Appeals for the Ninth Circuit issued an opinion declaring that state and local governments don’t have the authority to tax permanent improvements built on Indian trust land. You can read the document here.
CTUIR PROPERTY TAXES
CTUIR has established a property tax on improvements and equipment equal to 2% of assessed value, with a $500,000 exemption. Any tribal taxes paid are eligible for an Oregon income tax credit on a dollar for dollar basis through 2018. All tax revenues are reinvested into improvements and maintenance at Coyote Business Park!