Piliero Mazza & Pargament, PLLC   Vol. 5, Issue 2  February 2003

Addressing Tribal and Alaska Native Corporation
Legal and Business Issues

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  A R T I C L E S

EMPLOYMENT - Employment Law Issues Pertaining to Military Reservists and National Guard Members

GAMING - New Tax Safe Harbor from Certain IGRA Trust Payments

BUSINESS - Increased Use of E-Mail Highlights Need for Retention Policies




Employment Law Issues Pertaining to Military Reservists and National Guard Members     

The current military mobilization has prompted many employers to inquire regarding their obligations and rights to reservists and National Guard members. Because Congress has revised the statutes governing veterans’ re-employment rights since the early 1990s, we offer the following general information regarding the law governing these issues.

The law governing the issue is the Uniformed Services Employment and Re-Employment Rights Act (USERRA), 38 U.S.C. sec. 4301 et seq., which generally protects any employee who must be absent from civilian employment because of active duty military service. As with many laws, a question is raised as to the law’s application to tribes and their businesses.

The definition of “employee” under USERRA, sec. (3), broadly applies to “any person employed by an employer.”  Additionally, the definition of an “employer,” sec. (4)(A), is equally as expansive. Neither definition specifically exempts Indian tribes, as is the case in Title VII of the Civil Rights Act of 1964. As a rule, statutes that do not expressly state whether they apply to tribes are referred to as statutes of “general applicability.” Normally, a statute applying to “any person” will include Indian tribes and their property interests. However, various courts have carved out exceptions to this general rule.



New Tax Safe Harbor from Certain IGRA Trust Payments

On January 6, 2003, the Internal Revenue Service (IRS) issued Revenue Procedure 2003-14, promulgating new rules regarding trusts established under the Indian Gaming Regulatory Act (IGRA). The IGRA regulates gaming activity on Indian lands and allows net revenues from gaming to be paid to individual members of the tribe under certain circumstances. Specifically, Congress requires the tribe to protect the interests of minors and other legally incompetent tribal members by ensuring that only payments necessary for the member’s health, education or welfare will be made to such members. Essentially, the tribe holds these payments in trust for the minor or legally incompetent tribal member until the funds are needed or until the member reaches legal age or competency. Until issuance of this Revenue Procedure, the tax implications of these "IGRA trusts" were unclear.

Indian tribes enjoy a unique tax status in this country. The IRS has recognized the political sovereignty of Indian tribes and does not generally assert tax liability against tribes with respect to tribal income earned from activities on reservations. See IRS Revenue Ruling 81-295, 1981-2 C.B. 15 (citing Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973)). Individual tribal members, however, are subject to tax under the Internal Revenue Code. Further, the IGRA provides that per capita payments of gaming revenues paid to tribal members are subject to federal tax, as well.



Increased Use of E-Mail Highlights Need for Retention Policies

Electronic mail, or e-mail, has fast become a preferred method of communication between businesses around the world. However, with the proliferation of e-mail use comes an increased risk. Although e-mails are often considered to be "documents," most companies do not have an e-mail retention policy. Firms can reduce the risks associated with communication by e-mail by implementing an e-mail retention policy.

The reasons for creating and implementing an e-mail retention policy are similar to those for having a policy for paper documents. In general, document retention policies are needed to:

• Reduce the volume of documents in storage;

• Meet legal requirements for record keeping (e.g., tax and accounting records); and

• limit exposure in litigation (documents containing damaging admissions by company personnel may be subject to discovery).

While the need for an e-mail retention policy is clear, there is considerable debate over what categories of e-mails to retain, how to identify e-mails once retention categories are established, and how to store them.



As the 108th Congress convenes, the two committees with primary jurisdiction over Native American issues, the House Resources Committee and the Senate Indian Affairs Committee, welcome several new members.

The House Resources Committee, led by a new chairman, Representative Richard W. Pombo, (California) maintains the same proportional party membership split it had in the 107th Congress. New Republicans to the committee include Rick Renzi (Arizona), Tom Cole (Oklahoma), Steve Pearce (New Mexico) Rob Bishop (Utah) and Devin Nunes (California ). Democrats experienced no change in membership or leadership, with Representative Nick Rahall (West Virginia) remaining the committee’s ranking member.



The National Indian Gaming Commission (NIGC) published the annual fee rates for 2003 in the January 22, 2003 issue of the Federal Register. Tribes with gaming interests under NICG’s jurisdiction must report and submit fees to NICG based on the following percentages of revenue. For tier 1 gaming, the rate is 0.00%; for tier 2, the rate is 0.059% (.00059). For tribes with self-regulating certification under 25 CFR part 518, the rate for class two revenues is 0.0295% (.000295), which is one-half of the annual fee rate. Reports and fees are due to the Commission by March 31, 2003.




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