Tribe explores pathway to tax-free casino distributions

BY HOLY KAYS STAFF WRITER

Starting in March, members of the Eastern Band of Cherokee Indians may have the chance to sign up for a program that will let them receive casino distributions without reporting them as income on federal taxes.

Because tribal code refers to the twiceyearly distributions as “per capita,” they’re automatically taxable, Secretary of Finance Cory Blankenship told Tribal Council during a Sept. 20 work session.

However, the Tribal General Welfare Exclusion Act of 2014 excludes “any Indian general welfare benefit” from the calculation of gross income as long as several requirements are satisfied. The benefits must be for the promotion of general welfare, not be lavish and extravagant or compensation for services, and available to any tribal members who meets the guidelines. Programs must be administered under specific guidelines and may not discriminate in favor of members of the tribe’s governing body.

Like per capita, the new program, to be called GenWell, would provide tribal members with direct payments. The stated purpose of the payments would be for health and wellness-related expenditures —housing, education, transportation and medical costs, for example.

Combined with an ordinance change eliminating the term “per capita” from tribal law, this would bring the program into compliance with the Tribal General Welfare Exclusion Act. Tribal members would no longer have to pay federal taxes on their casino distributions or even report them on Tax Day.

“The idea is that we would adopt the general language as part of ordinance and Council by resolution would adopt the plan design,” Blankenship said. “Any amendments that are needed in the future to the plan design can only be done by resolution of the council.”

Blankenship aims to offer an annual open enrollment period, with the first one running throughout March 2023. During this period, tribal members could apply to leave the per capita program and enroll in the GenWell program instead. They would also have a choice as to how often to receive distributions. Participants could be paid twice per year when distributions are released or receive $800 per month, with any additional distributions over that amount paid in June and December each year.

The tribal government wants to run the two programs — per capita and GenWell — side by side for a while to familiarize tribal members with the idea. Eventually, Blankenship said, the tribe could eliminate per capita and distribute casino proceeds solely through GenWell.

“If we get the majority of tribal members moved over to the GenWell program, there may be a point in time in the future when we say, ‘Let’s make this change for everyone,’” Blankenship said. “But for now we’ll run these programs side-by-side.”

The program still requires action from Council, which has yet to formally consider the ordinance change and program design.

wasn’t in the General Assembly when the bill was passed, but echoed Corbin by saying that wasn’t the intent of the bill. Rep Mark Pless (R-Haywood) wasn’t in the General Assembly either, but agreed with Corbin, Turner and Clampitt.

“The intent, it had nothing to do with anything except COVID and obviously this wasn’t COVID,” said Pless. “They’re using this to cover up a lot of things but that was not the intent the legislature told me they had when this was put into place.”

Nancy Lindell, Public and Media Relations Manager for HCA’s North Carolina Division, did say that “Our hearts go out to the Smathers family. We also believe the care we provided was appropriate and we will defend ourselves through the legal process.”

What Lindell didn’t do was answer why the c-section allegedly took five hours from the time it was first ordered, and if HCA planned to use the COVID immunity law as a defense.

“As a trial lawyer, we hope for the best and plan for the worst,” Zaytoun said, “so I would assume that they will use it, and we’ll deal with it.”

In the suit, plaintiffs put forth a number of reasons why the immunity provision should not apply to the Smathers suit.

First, Stone was born on March 21, 2020, but the bill was enacted on May 4 of that year and applies retroactively. Smathers alleges that the retroactive application removes a vested right and violates the due process and equal protection clauses of the U.S. and North Carolina constitutions.

Moreover, the suit claims that the care provided to Stone wasn’t impacted by COVID; that Mission Hospital was not treating a single COVID patient when Ashley was admitted; that Mission did not treat any COVID patients in the labor and delivery ward during Ashley’s delivery; that Mission never informed Smathers that the care they would provide had been impacted by COVID; that Mission did not experience staffing shortages due to COVID during Ashely’s delivery; and, that the actions of HCA constituted gross negligence and reckless misconduct.

A trial date has not yet been set.

News Editor Kyle Perrotti contributed to this report. A PROVEN LEADER

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