[Congressional Record Volume 143, Number 35 (Tuesday, March 18, 1997)]
[Extensions of Remarks]
[Pages E508-E509]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       INTRODUCTION OF H.R. 1095

                                 ______
                                 

                            HON. BILL ARCHER

                                of texas

                    in the house of representatives

                        Tuesday, March 18, 1997

  Mr. ARCHER.  Mr. Speaker, today I rise on behalf of the Honorable 
Charles B. Rangel and myself to introduce H.R. 1095, a bill that would 
correct a technical error originally contained in the Omnibus Budget 
Reconciliation Act of 1993. Specifically, the bill would correct the 
definition of the term ``Indian reservation'' under section 168(j)(6) 
of the Internal Revenue Code. This definition of the term ``Indian 
reservation'' applies for purposes of determining the geographic areas 
within which businesses are eligible for special accelerated 
deprecation (sec. 168(j)) and the so-called Indian employment tax 
credit (sec. 45A) enacted in 1993. As I explain in further detail 
below, the bill corrects the definition of Indian reservation for 
purposes of these special tax incentives so that, as Congress 
originally intended, the incentives are available only to businesses 
that operate on Indian reservations and similar lands that continue to 
be held in trust for Indian tribes and their members. It is my intent 
to incorporate the provisions of this bill into to a larger bill, which 
I plan to introduce later this session, containing technical 
corrections to other recently enacted tax legislation.
  Section 168(j)(6) of the Internal Revenue Code provides that the term 
``Indian reservation'' means a reservation as defined in either (a) 
section 3(d) of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)), 
or (b) section 4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C. 
1903(10)). The cross-reference to section 3(d) of the Indian Financing 
Act of 1974 includes not only officially designated Indian reservations 
and public domain Indian allotments, but also all ``former Indian 
reservations in Oklahoma'' and all land held by incorporated native 
groups, regional corporations, and village corporations under the 
provisions of the Alaska Native Claims Settlement Act. Thus, contrary 
to Congress' intent in enacting the special tax incentives for Indian 
lands in 1993, the reference to ``former Indian reservations in 
Oklahoma'' in the Indian Financing Act of 1974 results in most of the 
State of Oklahoma being eligible for the special tax incentives, even 
though parts of such ``former Indian reservations'' no longer have a 
significant nexus to any Indian tribe. For instance, it is my 
understanding that the entire city of Tulsa may be located within a 
former Indian reservation, such that any business operating in Tulsa 
qualifies for accelerated depreciation under present-law section 
168(j).Providing such a tax benefit to commercial activities with no 
nexus to a tribal community would frustrate Congress' intent to target 
special tax incentives to official reservations and similar lands that 
continue to be held in trust for Indians. Businesses located on 
official reservations and similar lands held in trust for Indians were 
provided special business tax incentives in order to counter the 
disadvantages historically associated with conducting commercial 
operations in such areas, which were expressly excluded from 
eligibility as empowerment zones or enterprise communities under the 
1993 act legislation (see Internal Revenue Code sec. 1393(a)(4)).
  The bill I am introducing today would modify the definition of Indian 
reservation under section 168(j)(6) of the Internal Revenue Code by 
deleting the reference to section 3(d) of the Indian Financing Act of 
1974. Consequently, the term ``Indian reservation'' would be defined 
under section 168(j)(6) solely by reference to section 4(10) of the 
Indian Child Welfare Act of 1978, which provides that the term 
``reservation'' means ``Indian country as defined in section 1151 of 
title 18 and any lands, not covered under [section 1151], title to 
which is either held by the United States in trust for the benefit of 
any Indian tribe or individual or held by an Indian tribe or individual 
subject to a restriction by the United States against alienation'' (25 
U.S.C. 1903(10)). Section 1151 of title 18, in turn, defines the term 
``Indian country'' as meaning ``(a) all land within the limits of any 
Indian reservation under the jurisdiction of the United States 
Government, notwithstanding the issuance of any patent, and, including 
rights-of-way running through the reservation, (b) all dependent Indian 
communities within the borders of the United States whether within the 
original or subsequently acquired territory thereof, and whether within 
or without the limits of a state, and (c) all Indian allotments, the 
Indian titles to which have not been extinguished, including rights-of-
way running through the same'' (18 U.S.C. 1151).

  Accordingly, amending section 168(j)(6) of the Internal Revenue Code 
to define the term ``Indian reservation'' solely by reference to the 
Indian Child Welfare Act of 1978 would carry out Congress' original 
intent in enacting the special Indian tax incentives in 1993 by 
eliminating from eligibility those areas in Oklahoma which formerly 
were reservations but no

[[Page E509]]

longer satisfy the definition of a ``reservation'' under the Indian 
Child Welfare Act of 1978. It is my understanding that, even after 
amending section 168(j)(6) in this manner, numerous areas within 
Oklahoma will remain eligible for the special tax incentives because, 
even though such areas are not officially designated reservations, such 
areas nonetheless qualify as Indian country under section 1151 of title 
18. Similarly, it is my understanding that lands held by native groups 
under the provisions of the Alaska Native Claims Settlement Act also 
would qualify as Indian country under section 1151 of title 18. Thus, 
if section 168(j)(6) were amended to define Indian reservation solely 
by reference to the Indian Child Welfare Act of 1978, lands held under 
the Alaska Native Claims Settlement Act would continue to be eligible 
for the special Indian tax incentives. In this regard, it is my intent 
that, if it is brought to the attention of the tax-writing committees 
that there are any Indian lands that technically do not fall within the 
definition of Indian reservation under the Indian Child Welfare Act of 
1978 but which could be made eligible for the special Indian tax 
incentives consistent with Congress' intent in 1993, then consideration 
will be given to further modifying the bill I am introducing today when 
it is incorporated into a larger technical corrections bill.
  The technical correction made by the bill would be effective as if it 
had been included in the Omnibus Budget Reconciliation Act of 1993, 
that is, the technical correction would apply to property placed in 
service and wages paid on or after January 1, 1994. As a general 
matter, I oppose retroactive changes to the Internal Revenue Code. 
However, technical corrections to fix drafting errors in previously 
enacted tax legislation traditionally refer back to the original 
effective date to prevent taxpayers from receiving an unintended 
windfall. This bill corrects such a drafting error.

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