The long awaited Cobell Trust Settlement became final on November 24, 2012, following action by the U. S. Supreme Court and expiration of the appeal period. See the full press release from the Department of Interior.
You may recall that we disseminated information about trust settlements in September 2011. Based on an analysis of policies regarding the treatment of trust settlement proceeds, per capita payments based on proceeds from settlements of Indian Tribal Trust cases are exempt from federal income tax. Please see the notice from the Internal Revenue Service, titled “Per Capita Payments from Proceeds of Settlements of Indian Tribal Trust Cases.” This notice also includes a list of tribes that have entered into settlement agreements in the tribal trust cases.
The Cobell settlement agreement does not specifically address child support payments. However, tribes may want to consider whether these per capita payments may be used to pay child support arrearages or current support. As a reminder, the tribal child support regulation gives tribes the option to determine if per capita payments are included in the definition of income. The regulation at 45 CFR 309.05 defines income as “any periodic form of payment due to an individual regardless of source, except that a Tribe may expressly decide to exclude per capita, trust, or Individual Indian Money (IIM) payments.”
The October/November issue of the Child Support Report highlighted a tribe’s response to a similar settlement case and distribution of per capita payments. The tribe communicated with noncustodial parents to encourage them to discuss debt management of their case(s) and make voluntary payments to reduce or eliminate child support debt.
Tribes may also want to consider working within the community to promote financial education and other asset-building strategies. Providing financial education is often a welcomed and needed service for noncustodial parents with child support orders – providing these parents with tools to budget, plan, and pay their child support on a regular basis. Promoting asset building for children, custodial, and noncustodial parents is an important step to help families improve their financial standing and support education and career development. The ACF Administration for Native Americans recently started a demonstration partnership with the ACF Office of Community Services, called the Native American Asset-Building Initiative, and you may be able to find some helpful resources on financial education and asset building though this initiative.
You can access additional information about the settlement and working within communities to protect tribal members from fraudulent practices at: www.ncai.org/protectnativemoney.
I hope this information is helpful to you as you work to support the families in your communities.
Office of Child Support Enforcement
cc: ACF/OCSE Regional Program Managers
Last Reviewed: May 30, 2019 Archived: June 9, 2020