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Indian Nations Update - May 2010

May 11, 2010

Deadline for Filing of Tax Returns for 501(c)(3) Corporations
A number of tribes have spun off 501(c)(3) corporations for housing development or community development in recent years. Prior to changes made in the tax law in 2006, small organizations with assets below a certain level were not required to file. In 2006, the law was changed to require all non-profits to file annual returns, including those which have nominal assets or contributions. Further, the law provides that IRS will revoke the tax-exempt status of an organization that fails to file a return for three consecutive years. Small organizations can often satisfy their filing requirements by sending in an e-postcard. The three year clock will run on May 15, 2010 for organizations that have not filed a return since the law was passed. The tax-exempt status of these organizations will be revoked if no return is filed by that date. For more information, contact Brian Pierson at 414.287.9456 or

USDA Funds Available For New Construction
USDA Rural Housing Service (RHS) has announced the availability of $18,902,349 for new construction. Under Section 515 of the 1949 Housing Act, RHS can make loans at a 1% rate of interest for the development of new, or rehabilitation of existing, low-income rental housing for families. Section 515 funds can be combined with low income housing tax credits and, as a result of changes made to the law in 2008, Section 515 loans do not decrease the tax credit equity (non-loan) financing or tax credit exchange financing. In addition, rental assistance may be available to assure the financial viability of projects that do not generate sufficient rental income from tenants to meet operating expenses. As part of its effort to promote sustainable building development, energy-efficiency and conservation, USDA Rural Development will award significant scoring points for projects that will consume no more energy than they produce. See 74 Fed. Reg. 19348, April 14, 2010. Applications are due June 14, 2010.

Godfrey & Kahn's Affordable Housing Team has extensive experience assisting tribal clients with Section 515 applications. For more information, contact Brian Pierson at 414.287.9456 or

Treasury Announces 2010 Round for New Markets Tax Credits
On April 7th, the U.S. Treasury Department announced the opening of the 2010 round of competition for tax credits under the New Markets Tax Credit (NMTC) Program. The purpose of the NMTC program is to encourage economic development and job creation in low-income communities by attracting investment capital from the private sector. The U.S. Treasury Department allocates a specified amount of tax credits annually to certified Community Development Entities (CDEs) based on a competitive application process. Investors provide equity to the CDEs in return for federal income tax benefits over a seven year period. The CDEs provide capital to qualifying businesses in low-income communities. Combining NMTCs with other financing can significantly reduce the total development cost of eligible projects.

NMTC funds may be used to finance new construction or rehabilitation of "any trade or business" including manufacturing, real estate development (i.e. development of property for commercial rental to third parties), retail, health care, government facilities, schools, daycare centers, etc. NMTC proceeds may not be used for farming, private or commercial golf courses, country clubs, massage parlors, hot tub facilities, suntan facilities, racetracks or other facilities used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises. Godfrey & Kahn has closed more than forty new markets tax credits transactions totaling over $300,000,000 in value. For more information, contact Brian Pierson at 414.287.9456 or

Supreme Court Agrees to Hear Tribal Trust Case
The U.S. Supreme Court granted certiorari April 20th in the case of Tohono O'Odham Nation v. United States, 2009 WL 650283 (Fed. Cir. 2009). The case relates to an issue common to many claims brought by tribes alleging mismanagement of trust assets by the federal government. The tribes have pursued a strategy of filing claims both in the Court of Federal Claims under the Indian Tucker Act, 28 U.S.C. § 1505, and in the federal district courts, seeking equitable relief in the district court action and money damages in the Court of Federal Claims. Federal law prohibits the Court of Federal Claims from taking jurisdiction over "any claim for or in respect to which the plaintiff or his assignee has pending in any other court any suit or process against the United States." The Court of Federal Claims had dismissed claims brought by the Tohono O'Odham Nation on the ground that, notwithstanding the different relief sought, the Nation's claims were essentially the same as those filed in the district courts. The Federal Circuit, however, reversed, holding that the Tribe was seeking different relief in the district court: "Nowhere in its prayer for relief in the Court of Federal Claims does the Nation seek specific performance, an injunction, or any other type of equitable relief."

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