[Congressional Record Volume 155, Number 42 (Tuesday, March 10, 2009)]
[Extensions of Remarks]
[Page E621]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          REGARDING H.R. 1381

                                 ______
                                 

                             HON. DON YOUNG

                               of alaska

                    in the house of representatives

                        Tuesday, March 10, 2009

  Mr. YOUNG of Alaska. Madam Speaker, recently, I introduced H.R. 1381, 
which would make permanent the provisions of Section 646 of the 
Internal Revenue Code. Currently, these provisions are slated to expire 
on December 31, 2010.
  In 1971 Congress passed, and President Nixon approved, landmark 
legislation known as the Alaska Native Claims Settlement Act (ANCSA). 
This legislation settled the aboriginal land claims of Native Alaskans 
in exchange for land selection rights and cash. The law was, and is, a 
bold and organic national experiment in Native land claims settlement. 
However, it has needed revision and refinement many times since 1971. I 
am proud to have worked with my Colleagues over the past several years 
to accomplish these improvements.
  In 1988, Congress enacted legislation to authorize Alaska Native 
corporations to establish ``settlement trusts.'' Their purpose was to 
provide benefits to Alaska Natives and permit a legal structure that 
would protect and preserve, for current and future Alaska Native 
generations, much of the value of the land claims settlement. The 
original ANCSA required Native groups to form Alaska state law 
corporations to receive, administer, and distribute the ANSCA 
settlement, and the 1988 legislation was recognition that the corporate 
form had not always been well-suited to this task. In part, this was 
due to the federal tax problems that attend the corporate form, 
although ironically in the years after 1988, it became apparent that 
the federal tax rules relative to trusts present their own complexities 
and problems that discouraged the use of settlement trusts.
  Congress enacted Section 646 of the Tax Code to address these 
problems. Section 646 provides for an elective regime for Alaska Native 
settlement trusts that (i) provides for a trust level tax at various 
rates ranging up to 10% in lieu of beneficiary level taxes; (ii) allows 
contributions to be made to these trusts on a tax favored basis; and 
(iii) streamlines administrative reporting for these trusts. When 
adopted, this elective treatment initially provided significant 
incentives to the use of settlement trusts to further the ANCSA 
settlement, and Alaska Native corporations utilized this provision to 
provide benefits through Alaska Native settlement trusts.
  As I mentioned earlier, Section 646 is scheduled to sunset on 
December 31, 2010, despite the positive effects it has had for the 
Alaska Native community. The principal aim of settlement trusts is to 
provide funds to the Alaska Native beneficiaries. These beneficiaries 
are among the most economically disadvantaged persons in our country. 
Section 646 has worked well to provide an incentive for the use of 
settlement trusts, and must be continued.
  However, the looming expiration of Section 646 has had a chilling 
effect in recent years upon the establishment of new Alaska Native 
settlement trusts. Alaska Native corporations have no desire to 
exchange the corporate tax problems they already face for the tax 
problems accompanying the trust form that they will face if Section 646 
is allowed to sunset. In October 2008, the Alaska Federation of Natives 
formally endorsed the permanent extension of Section 646, and in 
December 2008 the Joint Committee on Taxation scored the permanent 
extension of Section 646 as costing approximately $33 million.
  I introduced H.R. 1381, because a permanent extension of Section 646 
will immediately remove the disincentive for Alaska Native corporations 
to use settlement trusts to provide benefits to their Alaska Native 
shareholders otherwise presented by the sunset of Section 646.

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