Internal Revenue Service Actions on Tribal Tax Credits

By: Tina Garcia, Esq., Brant Kuehn, Esq., Julian Fortuna, Esq., Sabrina Strand, Esq., and L. Alexis Whitley, Esq.

Over the past three years, several individuals and their companies, known as “promoters,” have lured taxpayers into buying Native American Tax Credits (“NATCs”) with the promise of significant reductions in tax liability for purchasers. Promoters pitched these NATCs as valuable tax credits that could offset taxable income and claimed the credits were authorized by the Indian Self-Determination and Education Assistance Act (“the Act”). See 25 U.S.C. § 5301 et seq. The Act refers to specific grants that may be given to tribal governments out of funds appropriated by the U.S. Treasury Department but does not itself create NATCs or provide support for the use of NATCs. Critically, the Internal Revenue Service (“IRS”) has recently updated its Internal Revenue Manual (“IRM”) to provide IRS personnel guidance in handling taxpayer returns that claim the use of NATCs. As explained in more detail below, these IRM revisions make clear that the IRS will be rejecting the use of NATCs to reduce tax liability, referring to them as “Tribal Tax Credit Schemes” and noting that “[t]hese non-valid credits … should be disallowed.” Taxpayers who have been approached by promoters, as well as those who have already purchased or relied on NATCs, should be aware of the IRS’s policies and procedures related to these fraudulent credits, as summarized below.

Recently, the IRS and the Treasury Department have taken action in response to a Senate investigation of promoters selling NATCs a/k/a “sovereign tribal tax credits.” Promoters allege that investors can purchase these credits and obtain the same tax benefits that Native American tribes would allegedly be entitled to claim. However, as shown by statements from the IRS and Treasury Department, these so-called sovereign tribal tax credits do not exist. This article provides a timeline of recent actions regarding sovereign tribal tax credits and highlights how the IRS and Treasury Department view these fake credit schemes.

On December 4, 2024, then-President-elect Trump confirmed he would nominate Billy Long, a former Missouri congressman, as IRS Commissioner. Andrew Duehren, Trump Picks Ex-Congressman Who Hawked Tax Credits to Lead I.R.S., The New York Times (Dec. 4, 2024). Just two weeks later, Bloomberg Tax published an article in the Daily Tax Report reporting for the first time on the so-called sovereign tribal tax credits. Erin Schilling, Rich People Buy Tribal Tax Credits Treasury Says Don’t Exist, Daily Tax Report (Dec. 19, 2024). Bloomberg reviewed numerous documents, pitch materials, and emails from promoters to provide insight into these fake sovereign tribal tax credits sponsored by White River Energy Corp. (“White River”) and how promoters were selling them to investors. Then, on January 16, 2025, Bloomberg published another article reporting on the relationship between Billy Long and White River. Erin Schilling, Trump IRS Pick Has Ties to Group That Pushed Dubious Tax Credits, Daily Tax Report (Jan. 16, 2025).

White River entered the oil and gas industry in 2022 after previously being a cannabis venture, biotech company, and cigar broker. In November 2023, White River began offering sovereign tribal tax credit sales through a newly formed subsidiary. Per Securities and Exchange Commission (“SEC”) filings, White River alleged it had access to these credits through a joint venture with an unnamed partner. Nepsis Inc., Quartermaster Tax, and E3 Family Office have also promoted these sovereign tribal tax credits.

Sovereign tribal tax credits are not included anywhere in the Internal Revenue Code, nor have they been authorized by the Department of Treasury. Promoters of these tax credits allege they originated “in a law that solidified Native American tribal sovereignty and created a process in which the Department of Interior manages tribal assets in tribal trusts.” According to promoter emails, tribes could choose to receive tax credits rather than annual payments from the trusts due to an agreement between the Interior Department and Treasury Department. However, Treasury spokesperson Michael Martinez said no such agreement exists to permit those payments to be converted into tax credits. Schilling, Rich People Buy Tribal Tax Credits Treasury Says Don’t Exist.

White River officials declined to answer questions about the sovereign tribal tax credit scheme, and Chief Financial Officer Jay Puchir cited “confidential trade secrets” as the reason for remaining silent. Id. Puchir told Bloomberg Law he would answer questions if a nondisclosure agreement was signed, which Bloomberg Law would not do. Id. Additionally, Cherokee Nation Attorney General Chad Harsha stated he was “actively working in partnership with state and federal agencies to prevent further harm to the victims of this scheme, and to prevent damage to legitimate tribal government services and businesses.” Id. On the same day the Bloomberg article was released, Puchir held a call with investor representatives and stated that, beginning in February 2025, lobbyists were going to work with the IRS to have the sovereign tribal tax credits codified, and both he and White River’s Chief Executive Officer would be at the upcoming presidential inauguration to meet with officials about the credits. Letter from Ron Wyden, Ranking Member, Committee on Finance, and Catherine Cortez Masto, United States Senator, to Jay Puchir, White River Chairman and Chief Executive Officer, May 13, 2025.After these events, the Senate Finance Committee began investigating the validity of the sovereign tribal tax credits. In an email to the Senate Finance Committee dated March 21, 2025, the IRS confirmed to the Senate investigators “that these tax credits do not exist. Taxpayers who claim credits that don’t exist are subject to penalties and possible examination. Furthermore, promoters of these credits may be subject to civil or criminal penalties.” In an April 14, 2025, letter to the IRS, the Senate Finance Committee called on the IRS to initiate a criminal investigation of promoters of the sovereign tribal tax credits. Letter from Ron Wyden, Ranking Member, Committee on Finance, and Catherine Cortez Masto, United States Senator, to Melanie Krause, Acting IRS Commissioner, April 14, 2025 (citing email from IRS to Senate Committee on Finance, March 21, 2025).

As a result of these fraudulent and fake sovereign tribal tax credits schemes, the IRS began revising the IRM. The IRM is the operational guidebook for the IRS, detailing the agency’s internal procedures, policies, and guidelines for day-to-day operations and administration. It is intended to provide IRS employees with comprehensive instructions on handling tax returns, audits, collections, and other aspects of tax administration. In essence the IRM is a “how-to guide” for IRS employees.

The IRM is continuously updated through a formal revision process managed by the IRS. Each section has designated subject matter experts and program owners who are responsible for keeping their portions current with changes in tax law, court decisions, new regulations, and operational improvements. Updates can range from minor procedural clarifications to major overhauls following significant tax legislation. The manual is organized into numbered parts and chapters, making it easier to locate specific guidance, and revisions are systematically reviewed and approved before implementation. While primarily an internal document for IRS personnel, the IRM is publicly available and is frequently referenced by tax professionals, attorneys, and researchers who need to understand how the IRS interprets and applies tax law in practice.

On June 27, 2025, eleven days after IRS Commissioner Long was sworn into office, the IRS revised IRM 3.11.15.5.9 to add procedures for IRS personnel reviewing the “Tribal Credits Scheme.” This procedural addition is part of a Servicewide Electronic Research Program (“SERP”) Alert. The alert expressed clear IRS policy denying the validity of the credits:

There is currently a potential scheme that was identified with Tribal Credits being claimed. These credits are not allowed, regardless of the amount claimed or the type of documentation provided…These non-valid credits are being claimed as ‘Other Credits’ with Code ‘ZZ’ and should be disallowed.

On July 2, 2025, the IRS added a procedural alert to the IRM which affected the following subsections: 3.11.15.5.7(5), 3.11.15.17(3), and 3.11.15.38(2). All of these alerts added a paragraph about “Tribal Credit Schemes” and told IRS personnel to refer back to the revised IRM 3.11.15.5.9. Later, on July 23, 2025, the IRS again made a procedural update to the IRM affecting subsections 3.11.15.5.7(5), 3.11.15.5.9(3)(4), and 3.11.15.38(2). These alerts made corrections to line numbers and updated procedural requirements for the IRS when dealing with tribal tax credits.

On August 7, 2025, another procedural update to the IRM was made, this time to subsections 3.11.15.5.7(5), 3.11.15.5.9, 3.11.15.24.6(4), and 3.11.15.38(2). Again, these updates centered around the tribal tax credit scheme and added procedures to follow when such credits are at issue. An August 8, 2025, IRM update added new procedures and made corrections to existing procedures regarding tribal tax credits for the following subsections: 3.12.15.2.16(1), 3.12.15.2.16(2), 3.12.15.2.16(3), 3.12.15.2.16.1(1), (2), 3.12.15.10.7(3), and 3.12.15.20.26(4)(d).

The IRM has referred to the NATCs in different ways, none suggesting validity. In the June 27, 2025, update, the IRM referred to the credits as “Highly Questionable Tax Credits,” but the July 23, 2025, update retitled the section to “Tribal Tax Credit Scheme.” In the August 8, 2025, update, the term “highly questionable” reappeared in the IRM. Notably, that update occurred the same day Long was ousted.

Recently, the Senate introduced the Tribal Tax and Investment Reform Act of 2025. This proposed legislation aims to provide tax parity for Native American tribes and boost their economic development. The proposed legislation repeals the “essential government function” test limiting Native American tribes’ abilities to issue governmental bonds, amends the Internal Revenue Code to treat tribal government pensions and employee benefit plans similarly to state government plans and updates the expired Indian Employment Tax Credit, among other matters. While this legislation addresses important economic issues faced by Native American tribes, the bill does not propose to codify the NATCs that have been pushed by promoters.

Although promoters continue to push these fake sovereign tribal tax credits to investors looking to lower their tax liability, taxpayers should beware. There is no legal authority for these credits, and the IRS and Treasury Department have both stated these credits do not exist. While the degree of Long’s involvement in the scheme remains to be seen, the IRS actions to date show the agency’s new focus on providing procedures and combatting the promotion of these fraudulent tax credits.

Greenspoon Marder’s Tribal Tax Group remains at the forefront of navigating this complex litigation and is fully prepared to assist individuals impacted by the Tribal Tax Credits scheme. If you or your clients have been affected, contact our team for guidance and support.