Exempt Income of Native Americans
(1)ORS 316.777 (Income derived from sources within federally recognized Indian country exempt from tax) exempts from Oregon taxation certain income earned by an enrolled member of a federally recognized Indian tribe. To qualify under these provisions, at the time the income is earned the tribal member must reside in “Indian country” in Oregon, and the income must be derived from sources within Indian country in Oregon. A tribal member who resides outside of Indian country can not exclude income from Oregon tax under the provisions of ORS 316.777 (Income derived from sources within federally recognized Indian country exempt from tax). The person is subject to the statutes and rules governing Oregon residents and nonresidents and is taxed accordingly.
(2)Definitions: For purposes of this rule:
(a)“Current reservation boundaries” means the boundaries in existence at the time of the transaction.
(b)“Indian country” means any federally recognized Indian reservation in Oregon or other land in Oregon that has been set aside for the residence of tribal Indians under federal protection, and includes:
(A)Any land within the current reservation boundaries of a federally recognized reservation regardless of ownership.
(B)Tribal- or member-owned land outside current reservation boundaries if held in trust for the benefit of the tribe or its members.
(C)Land that the federal government allotted to a tribal member that since the time of the allotment has been continuously either:
(i)Held in trust by the federal government for the benefit of an individual tribal member(s), i.e. a trust allotment; or
(ii)Owned by a tribal member(s) with continuing federal restrictions against sale of the land, i.e., a restricted allotment.
(3)Income derived from sources within Indian country includes:
(a)Wages earned for work performed in Indian country;
(b)Income from a business or real estate located in Indian country;
(c)Distributions, including earnings, from retirement plans, if the contributions to the plan were derived from or connected with services performed in Indian country;
(d)Unemployment compensation, if the benefits are received as a result of work performed in Indian country;
(e)Interest, dividends, capital gain from the sale of stock, and other income from intangibles regardless of the location of the bank accounts or other intangible assets.
(4)To be exempted from Oregon personal income tax withholding, a tribal member whose wages are exempt from Oregon tax must furnish the member’s employer with an extract from the tribal rolls as proof of enrolled status. Any employer of a qualified exempt tribal member who has documentary proof under this rule must keep this proof as part of the employer’s payroll records.
(5)The following examples illustrate the provisions of this rule:
Rule 150-316-0595 — Exempt Income of Native Americans,