IRS written determination 201445002

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 201445002
Release Date: 11/7/2014
Index Number: 7871.00-00, 103.02-01
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:FIP:5
PLR-102800-14
Date:
July 24, 2014
LEGEND
Tribe =------------------------------------------------
Authority =--------------------------------------------------------------
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Council =--------------------------------------------------
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Constitution and Bylaws = ---------------------------------------------------------------
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Authority Code= --------------------------------------------------------
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Board of Trustees=-------------------------------------------------------
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BIA Letters= ------------------------------------------------------
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PLR-102800-14
2
Dear ------------------:
This letter is in response to your request for a ruling that Authority may be treated as a
political subdivision of a State within the meaning of §7871(d) of the Internal Revenue
Code.
FACTS AND REPRESENTATIONS
Tribe is listed in the most recent list of tribal entities recognized as Indian tribes by the
Department of the Interior, Bureau of Indian Affairs (“BIA”), published in the Federal
Register on October 1, 2010 (75 FR 190). Tribe’s Constitution and Bylaws describe the
Council as the supreme governing body of Tribe composed of all members of Tribe 18
years of age or older. The Constitution and Bylaws also create a Business Committee
(“Business Committee”) consisting of a chairman (“Chairman”), a vice chairman, a
secretary, and three additional committeemen that is responsible for the day-to-day
operation of Tribe’s government and for such additional duties as may be delegated or
assigned to it by the Council. Council appoints the Chairman.
In 2008, Council created Authority to be managed by its Board of Trustees and ratified
Authority Code as Authority’s governing document. Chairman appoints the Board
members. Authority Code may be amended at any time by either Council or Business
Committee. Authority’s existence is perpetual and, in the event of its dissolution, all
assets must be distributed to Tribe. Authority Code describes Authority as an agency
and instrumentality of Tribe having the purposes, powers, and duties as provided by law
of Tribe. Authority has not been described in a revenue procedure as a political
subdivision of a State.
Authority Code states, in part, that the purposes of Authority are: (1) promoting
economic development of Tribe; (2) attracting outside funding in support of economic
development of Tribe; (3) expanding Tribe’s resource base and economic development
potential through investment in land, financial instruments, and enterprises; (4)
establishing, owning, and operating business enterprises within the jurisdiction of Tribe;
and (5) providing revenues for Tribe to address other matters of public health, safety,
and welfare.
Authority Code delegates to Authority the power of eminent domain over private
property within the reservation for the furtherance of public purpose projects involving
revenue-producing utility projects. Revenue-producing utility projects are limited to the
following types of projects: (a) electric power projects; (b) sewer lines and treatment
plants; (c) utility easements of any kind; (d) road easements; and (e) projects for the
transpiration, delivery, treatment or furnishing of water for domestic purposes or for
power, including but not limited to the construction of lakes. Authority may exercise the
power of eminent domain without seeking approval by Tribe and the Authority Code

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does not impose approval or any other procedural limitation on the manner or timing of
Authority’s exercise of eminent domain.
Authority requested and received BIA Letters providing, in part, that: (1) Tribe is
recognized by the Department of the Interior as an Indian tribe; (2) Authority Code gives
Authority substantial, uniquely governmental powers; (3) Council delegated the power of
eminent domain to Authority; (4) Authority performs a uniquely governmental function
through the exercise of the power of eminent domain; (5) Authority functions as an
integral part of Tribe within the meaning of §7871(d); and (6) Authority is a political
subdivision of Tribe for purposes of §7871(d).
LAW
Section 7871(a) provides that an Indian tribal government shall be treated as a State for
certain specified tax purposes, including, subject to subsection (c), for purposes of
§ 103 (relating to state and local bonds).
Section 7871(d) provides that for the purposes specified in subsection (a), a subdivision
of an Indian tribal government shall betreated as a political subdivision of a State if (and
only if) the Secretary determines (after consultation with the Secretary of the Interior)
that such subdivision has been delegated the right to exercise one or more of the
substantial governmental functions of the Indian tribal government.
Rev. Proc. 84-37, 1984-1C.B. 513, provides, in part, that three generally accepted
sovereign powers of states are the power to tax, the power of eminent domain and the
police power. A subdivision of an Indian tribal government that has been delegated one
of the generally accepted sovereign powers may qualify as a political subdivision of a
State for purposes of § 7871(d) of the Code.
Section 305.7871-1(e) provides, in part, that designation of a subdivision of an Indian
tribal government as a political subdivision of a State will be by revenue procedure. If a
subdivision of an Indian tribal government is not currently designated by the applicable
revenue procedure as a political subdivision of a State, and such subdivision believes
that it qualifies for such designation, the subdivision may apply for a ruling from the
Internal Revenue Service.
Rev. Proc. 2014-1, section 7.01(7) provides that to facilitate prompt action on a letter
ruling request for recognition ofIndian tribal government status or status as a political
subdivision of an Indian tribal government, the taxpayer must submit with the letter
ruling request a letter from the Department of the Interior, Bureau of Indian Affairs,
verifying that the tribe is recognized by BIA as an Indian tribe and that the tribal
government exercises government functions or that the political subdivision of the
Indian tribal government has been delegated substantial governmental functions.

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ANALYSIS
Authority Code sets forth the purposes of Authority, which are clearly public in nature
and intended to benefit Tribe and Tribal members. Tribe controls Authority through
control over the Authority Code. Council may amend the Authority Code at any time
and may, in its sole discretion, abolish Authority or cause a Board member to be
removed for any reason. Based on this control and the public purposes of Authority, we
conclude that Authority is a subdivision of Tribe.
Authority has been delegated the power of eminent domain limited only by the
requirement that it be used by Authority for public purpose utility projects. The use of
this power by Authority requires no approval and is not limited by other procedures that
would distinguish it from the inherent eminent domain power possessed by Tribe itself.
Based upon the foregoing, we conclude that Authority is a subdivision of Tribe that has
been delegated one of the substantial governmental functions of the Indian tribal
government) and therefore may be treated as political subdivision of a State for
purposes of purposes of § 7871(a).
CONCLUSION
Based solely on the documents provided to us and the factual representations made by
Authority, we conclude that Authority is a subdivision of Tribe that may be treated as a
political subdivision of a State for purposes of § 7871(a).
Except as expressly provided herein, no opinion is expressed or implied about the tax
consequences of any transaction or item discussed in this letter.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

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The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the request for rulings, it is subject to verification on examination.
Sincerely,
Associate Chief Counsel (Financial
Institutions and Products)
/S/
By: ____________________
Timothy L. Jones
Senior Counsel
Branch 5