In mid-April, CIRI received notice from the Internal Revenue Service that, effective June 1, 2005, the agency would reverse its decades-old policy exempting ANCSA corporation shares and dividends from tax levies. This change in policy, unless altered by Congress or the courts, would mean that the IRS could seize a CIRI shareholder's stock or dividends to secure payment of back taxes owed by the shareholder. CIRI, together with other regional corporations, has expressed its opposition to the IRS move and is studying options for challenging the move legislatively or through the courts. Until the IRS position is reversed, CIRI shareholders owing back taxes face the risk of IRS levy on their shares and dividends.

When Congress enacted ANCSA in 1971, it included a provision that exempted individual shareholders' stock and stock rights, including dividend payments, for most common forms of attachment or seizures by creditors for an initial period of 20 years. That exemption period was subsequently extended by amendments to ANCSA. Without admitting that it was legally bound by the restrictions, the IRS has, for more than 34 years, honored them and has refrained from serving levies to attach to individual shareholders' dividend payments. In an abrupt change of policy, the agency has announced it will now enforce federal tax levies on ANCSA dividends.

CIRI President and CEO Margie Brown believes that the IRS position is inconsistent with the purposes of ANCSA and should be reversed.

"We certainly feel that CIRI shareholders need to be responsible for their tax payments, but we also believe that those provisions of the ANCSA designed to protect shareholders against loss of their stock and benefits were intended to apply to all creditors, including the IRS," said Brown.

IRS levies are generally placed upon taxpayer property only after the agency has notified the taxpayer of taxes owed and attempted to obtain payment. In the event such efforts are unsuccessful, the IRS may serve a Notice of Levy on the corporation. Should CIRI receive any Notices of Levy, we will contact the shareholder immediately to advise that a levy has been received and that the company will respond to the levy in accordance with applicable law.