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GAO was asked whether a city may impose city sales and property taxes upon an Alaskan native village corporation which is a nonprofit corporation supported by the Federal and State funds provided for by the Alaska Native Claims Settlement Act. Federal law characterizes the initial receipt of the Alaska Native Fund revenues as a nontaxable event, and it exempts certain classes of realty owned by village corporations from local property taxes for a period of 20 years. Under the Act, the city may not tax undeveloped or unleased property owned by the corporation until 1991. However, the city may tax leased or developed realty. Further, all rents, royalties, profits, and other revenues derived from such property interests are taxable. There is nothing in the Act which exempts the corporations from paying State or local sales taxes, nor are they exempt under the U.S. Constitution. The Alaska Native Fund revenues do not retain their identity as Federal funds after distribution. After distribution, they are essentially private funds, and the corporations cannot be deemed agencies of the Federal Government. Accordingly, Federal law does not prohibit the imposition by the city of a municipal sales tax upon purchases by the corporation, nor does it prohibit the imposition of a property tax upon those property interests conveyed to the corporation which are developed or leased to third parties.