By JONAH LOSSIAH
One Feather Reporter
On March 1, the Eastern Band of Cherokee Indians (EBCI) rolled out a voluntary alternative for Per Capita distributions and a full substitution of the Per Capita Loan program known as the GenWell program. Following is a breakdown of what the program is, how it can affect members of the EBCI, and how one can go about signing up.
What is GenWell?
The primary difference with the GenWell program is that the distributions will be tax-free. The functions of the program will primarily mirror those of the current per capita program. EBCI tribal members have the option of receiving checks semi-annually or they can additional receive monthly payments.
This new program is possible through the Tribal General Welfare Exclusion (TGWE) Act of 2014. This act added Section 139E to the United States Internal Revenue Code. This addition to code states that ‘Indian welfare benefit’ can be exempted from annual gross income for an individual, as long as stipulations are met. The requirements under Section 139E are:
- The program is administered under specific guidelines and does not discriminate in favor of members of the governing body of the tribe.
- The benefits provided under the program are:
- Available to any tribal member who meets the guidelines.
- For the promotion of general welfare.
- Not lavish and extravagant.
- Not compensation for services.
The TGWE Act was an expansion of IRS Safe Harbor, or Revenue Procedure 2014-35. The goal of this was to provide ‘safe harbors under which certain benefits provided under Indian tribal government programs may be excluded from income under the general welfare exclusion.’ Programs can fall under this if they are focused on housing, education, elder, disabled, and cultural & religious purposes.
The EBCI is not the first tribe to offer payments through the TGWE Act. The EBCI Department of Treasury has offered information and answers to FAQs on the GenWell program. The following is from those releases.
‘Although the specifics of the programs differ from tribe to tribe, approximately 14 other federally-recognized tribes have developed their own programs for making general welfare distributions to their members on a tax-free basis.’
The Indian Gaming Regulatory Act (IGRA) requires that the EBCI’s allocation laws comply with IGRA. Because of this, Per Capita will be maintained in its current form as an option for tribal members. EBCI Treasury said that this structure is subject to change.
‘The Tribe has determined that the general welfare needs of its members exceed the amount of the current distribution and therefore can be distributed as General Welfare Exclusion benefits. It is possible, however, that at some time in the future the amount available for distribution to members will exceed their needs. At that point, a portion of the distribution would be made as taxable per capita payments. It is also possible that changes in federal law will require changes to the GenWell Program. Rather than amending the Tribe’s revenue allocation laws again (which is a slow process that requires approval of the federal government), the Tribe is building flexibility into the documents, so it is prepared for whatever the future brings.’
How does this work for EBCI tribal members?
The GenWell program is fully voluntary, and any EBCI tribal member interested will need to sign up. Members can easily maintain receiving their semi-annual Per Capita distributions from the EBCI. Nothing will change for those that choose this route, no action is required, and the payments will continue to be subject to taxation.
Tribal members that do sign up will get the same amount as those receiving Per Capita, but their distributions would be exempt from taxes. This could be a significant difference in the final worth of the payment. In December of 2022, Per Capita distributions were $9,042 before tax. After voluntary withholding tax, however, that number was $7,686. The aim for GenWell is for that $1,356 to stay with enrolled members.
Distributions for GenWell are more versatile than Per Capita distributions. It will be replacing the Per Capita Loan program and can function in a similar way. Members can choose to receive payments semi-annually, getting one in both June and December. They can also sign up for monthly distributions, which will reduce the semi-annual payment by the amount that they choose to receive monthly. This opens the door to five potential options. Members of the GenWell Program can receive $800, $500, $300, $200, or $0 monthly. As mentioned, the remaining money will then be provided in June or December, respectively.
There are also three options for where to receive the payment. Like Per Cap, members can receive the payments via mailed check or direct deposit to their personal bank account. There will also be an option to have the money deposited to a third-party Tribal Member Benefits Program (TMBP).
‘The platform will act as a deposit account allowing members direct access via a TMBP Debit Card and to establish recurring provider payments. Members electing this option will have access to their account online, via telephone, text message, and mobile application.’
EBCI Treasury has stated that direct deposit is the ‘preferred method’ of distribution.
Currently, GenWell is available to EBCI tribal members 18 years-of-age or older. It will not yet affect the Minor’s Trust Fund, which is still subject to Federal taxation. However, the Tribe is actively working on making the Minor’s Trust Fund non-taxable under the TGWE Act as well.
Because GenWell payments will be exempt from taxes, they will not be included in a 1099 from the Tribe. EBCI Treasury said that these payments are ‘generally’ free from state taxation as well. North Carolina, for example, follows federal tax law and should not collect taxes from GenWell payments, according to EBCI Treasury.
A record of expenses also will not be required, at least for the time being.
‘The GenWell Program does not require receipts at this time. The Tribe also believes that it would be reasonable for members not to retain receipts for audit purposes because the general welfare needs of the members exceeds the amount of the General Welfare Exclusion benefits received by the members. However, it is possible that the Internal Revenue Service will issue guidance in the future requiring receipts to be kept or members to otherwise substantiate their general welfare expenses. The Tribe will modify the Program as necessary to respond to future IRS guidance.’
If an enrolled member is subject to garnishments for Child Support, Court Fines, or Debts to Tribe & Entities, those will still apply to GenWell distributions until paid in full.
‘Garnishments and voluntary assignment of enrolled member benefits as described in Cherokee Code Section 16C-5 shall carry forward to the EBCI GenWell Program reducing the benefit payments or making the enrolled member ineligible for payments, depending on the amount of garnishment or voluntary assignment, in accordance with the plan design of the EBCI GenWell Program and provisions of Cherokee Code Section 16C-5.’
How can I sign up?
Members can sign up online at ebci.com/genwell in just a few minutes.
The form will ask for various pieces of personal information. These include:
- Full legal name
- EBCI Enrollment number
- Last four digits of social security number
- Date of Birth
- Mailing Address
- Phone number
- Email (optional)
The rest of the application requires acknowledging specific aspects of the program, as well as choosing which forms you wish to receive payments.
According to EBCI Treasury, there is no requirement to demonstrate ‘individual need’ to sign up for the program.
It is important to know that enrolled members can only sign up or making changes to their GenWell information during ‘open enrollment’ periods. There are two periods throughout the year. One is during the month of March, the other during September.
If a tribal member wishes to sign up for monthly distributions, the soonest payment could come in April of this year. In order to receive this payment, enrolled members must sign up by March 17. If someone only wishes to sign up for semi-annual distributions, they have until March 31.
Further information or assistance on the GenWell program is available. Potential enrollees can call (828) 359-6000 for help with application. The email address genwell@ebci-nsn.gov is also open.
