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‘Tribal Business Structure Handbook’

The “Tribal Business Structure Handbook” is an important new guide to business ventures in Indian country, where tribal, federal and state laws intersect. The handbook is jointly authored by Karen J. Atkinson and Kathleen M. Nilles and published by the Native American Finance Officers Association.

Separate chapters of the handbook provide detailed information about the major forms of business available to Indian tribes, including tribal government entities, tribal corporations, state-law entities and joint-venture entities. An introduction provides an overview of the entire field.

A chart at the conclusion of the chapters presents different business structures in an easy-to-follow summary of the chapter discussions. For example, the chart allows quick comparison of a tribal unincorporated entity and a corporate entity chartered under Section 17 of the Indian Reorganization Act. It shows the law governing the formation of each entity, the impact on sovereign immunity, legal liability issues, federal tax treatment and financing issues.

This combination of detailed chapter discussions and the comparison chart make the handbook a useful and easy to use resource. It is well written, well researched and well organized. One senses immediately that the authors know what they are writing about.

Atkinson, Mandan, Hidatsa and Tsimshian, has served since 2005 as executive director of the Native American Contractors Association in Washington, D.C. As president of Tribal Strategies, Inc., Atkinson works with tribes in energy planning and development and focuses on creating public/private partnerships to increase tribal economic opportunities. She holds an undergraduate degree from Stanford University and a law degree from the University of New Mexico.

Nilles is a partner with Holland & Knight, LLP (resident in its Washington, D.C. office), and a member of the firm’s Indian law practice group. Nilles has more than 20 years experience advising tribal governments on tax and corporate issues. She is a member of the board of directors of the National Intertribal Tax Alliance. She holds an undergraduate degree from Santa Clara University and a law degree from the University of Virginia.

She has assisted in structuring numerous types of tribal business entities and secured Internal Revenue Service rulings and determinations to confirm their tax treatment. When asked whether she sees any long-term threats to tribal sovereignty from the IRS, Nilles said, “The IRS in its recent audits of tribal governments appears to have difficulty recognizing tribes as governments when they depart from the conventional mold of state and local governments. For example, the IRS is currently auditing a number of tribal governments that provide health benefits to their members – suggesting that such benefits go beyond what state and local governments provide to their citizens. Likewise, the IRS bond audits appeared to have similar built-in biases. At the same time, I would give the IRS credit for its consistent recognition that tribal business entities share the same tax status as the tribe.”

Regarding the role of outside investors in tribal business projects, Nilles added, “In my experience, investors and lenders generally recognize the immunity of the tribal governments with which they are dealing. However, to protect their economic interests, they frequently request a waiver of sovereign immunity that is targeted to allow them to enforce their contractual rights and economic interests. Such requests do not undermine sovereign immunity if they are based on mutual respect and understanding.”

The handbook repeatedly emphasizes the importance of protecting tribal sovereignty while engaging in expanded business opportunities. “Tribes as governmental entities are not subject to suit unless they clearly waive immunity or Congress has waived their immunity. This raises questions regarding the ability of lenders, investors and business partners to enforce agreements and to protect their investment. Each entity has different sovereign immunity implications that must be considered.”

The other side of preserving tribal control and sovereignty is insulating business decisions from tribal governmental decisions and tribal politics. The handbook is clear and helpful on this issue. It refers to separation of tribal electoral politics from day-to-day management of business enterprises as a “critical factor” for success. It states that, “Tribal governments should have a role in strategic decision making. However, tribal governments should not make the day-to-day business decisions of tribal enterprises.”

The handbook provides two appendices to reinforce its guidance. The first, on tribal sovereignty, summarizes recent judicial decisions about the main factors that determine whether a tribal enterprise or entity shares the parent tribe’s sovereign immunity. The second appendix focuses on corporate liability issues, listing key steps that will enhance the independence of a corporate entity and strengthen its protection of limited liability.

The “Tribal Business Structure Handbook” is a valuable new tool in tribal business development. It is a combination of readable analysis and coherent guidance based on documented research.