Interpretation of P.L. 97-377

In response to a request from the Internal Revenue Service (IRS), GAO gave its interpretation of a section of legislation pertaining to the implementation and enforcement of IRS rulings against North Dakota tax exempt organizations which have been administering games of chance. GAO does not generally offer opinions on the constitutionality of enacted legislation. However, from its analysis of the legislation, GAO found that IRS may assess a tax on certain income of exempt organizations in North Dakota, although it may not enforce the tax with funds appropriated by the current continuing resolution. Furthermore, exempting only the State of North Dakota from the application of this tax would raise serious constitutional questions.