05 Special sourcing rules

A. Allocation or apportionment required. When a tribal member earns or derives income, including income from pass-through entities or sole proprietorships, from sources both on tribal land and elsewhere, an allocation or apportionment of the income must be made to determine the amount of income sourced to tribal land. The following provisions set forth the rules for the determination of a tribal member’s income sourced to tribal land. For the purpose of this section, the term “income” includes, in the alternative, the term “loss.” A tribal member may, with the return for the taxable year, request an alternative method of allocation or apportionment of income with a full explanation of the method. The proposed method is subject to review and modification by the Assessor. Allocation or apportionment of income from the rendering of purely personal services by employees, salespersons, athletes, and entertainers is addressed below. B. Employees generally. When a tribal member employee establishes the exact amount of compensation received for services performed on tribal land, that amount is the amount of income sourced to tribal land. When a tribal member is unable to establish such exact determination of amounts earned on, or derived from, tribal land, the compensation must be apportioned to tribal land. The apportionment is calculated by multiplying the gross compensation wherever earned by a fraction, the numerator of which is the number of days spent working on tribal land and the denominator of which is the total working days. 18-125 Chapter 825 Page 15 The result is the amount of the tribal member’s compensation sourced to tribal land. Holidays, sick days, vacations, and paid or unpaid leave are included in both the numerator and the denominator. When a working day is spent working partly on tribal land and partly elsewhere, it is treated as one-half of a day spent working on tribal land. For purposes of this subsection, salaries and wages earned while teleworking or working remotely on tribal land, whether for the convenience of the tribal member employee or the employer, are items of income derived from sources on tribal land. Conversely, salaries and wages earned while teleworking or working remotely off tribal land, whether for the convenience of the tribal member employee or the employer, are not items of income derived from sources on tribal land. C. Salespersons. Tribal land income of a tribal member who is a salesperson or whose compensation is based in whole or in part upon commissions is computed as follows: The gross income earned by the tribal member from sales everywhere is multiplied by a fraction, the numerator of which is the amount of sales made by the tribal member on tribal land and the denominator of which is the amount of sales made by the tribal member everywhere. For the purposes of this calculation, the "amount of sales" is determined under the same method by which the amount of sales is determined for purposes of calculating the tribal member’s commissions. Sales are sourced to the location where the tribal member performs the activities in obtaining the order, not to the location of the formal acceptance of the contract. D. Professional Athletes. 1. Exhibition and regular season games. A tribal member who is a professional athlete must include in the income sourced to tribal land the entire amount of compensation received for games played on tribal land. In the case of a tribal member athlete not paid specifically for the game played on tribal land, the following apportionment formula must be used: The income earned on tribal land is the total compensation earned during the taxable year, including incentive payments, bonuses, and extras, but excluding signing bonuses and league playoff money. Total compensation is multiplied by a fraction, the numerator of which is the number of exhibition and regular season games the tribal member played (or was available to play for the tribal member’s team, as, for example, with substitutes) on tribal land during the taxable year, and the denominator of which is the total number of exhibition and regular season games that the tribal member was obligated to play under contract or otherwise during the taxable year, including games in which the tribal member was excused from playing because of injury or illness. 2. Playoff games. For playoff games played on tribal land, the amount of league playoff money earned by the tribal member for playing or being available to play in such games is determined by the following formula: League playoff money earned on tribal land is the total league playoff compensation earned during the taxable year multiplied by a fraction, the numerator of which is the number of playoff games the tribal member played or was available to play on tribal land during the taxable year, 18-125 Chapter 825 Page 16 and the denominator of which is the total number of playoff games which the tribal member’s team played during the taxable year, including playoff games in which the tribal member was excused from playing because of injury or illness. 3. Signing bonuses. Any amount received by a tribal member as a signing bonus is excluded from the income subject to apportionment. E. Entertainers. Tribal land income of a tribal member who is an entertainer is the entire amount received by the tribal member for performances, engagements, or events that occurred on tribal land. In the case of a tribal member who is not paid specifically for a performance on tribal land, the following apportionment formula must be used: The income earned on tribal land is the tribal member’s total annual compensation multiplied by a fraction, the numerator of which is the number of performances the tribal member performed (or was available to perform, as, for example, with understudies) on tribal land, and the denominator of which is the total number of performances which the tribal member was obligated to perform under contract or otherwise during the taxable year.