Bibeau v. Comm'r of Internal Revenue
| Docket Number | 11483-20L |
| Decision Date | 24 May 2023 |
| Parties | FRANK WARREN BIBEAU, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
Frank Warren Bibeau, pro se.
Lisa R. Jones and Beth A. Nunnink, for respondent.
Frank Bibeau is an enrolled member of the Chippewa tribe who lives and practices law on the Leech Lake Reservation in Minnesota. In a treaty with the United States, the Chippewa kept the right to "hunt, fish, and gather the wild rice" on their traditional lands. Bibeau says this is really the right to "food, clothing and shelter and travel, whereby the new canoe is the automobile." He argues that this means that income from his law practice is tax exempt.
The Commissioner in reply urges us instead to follow binding Eighth Circuit and Supreme Court precedent.
Bibeau and his wife filed joint returns for their 2016 and 2017 tax years. For both years, Bibeau reported income from his law practice and a sizable net operating loss carryforward that was enough to shield his income from income tax. But his self-employment income still led to a [*2] total self-employment tax liability for both years of $6,000. He has never paid this tax debt.
In January 2019, the Commissioner sent him a letter asking him to pay. Bibeau timely requested a collection due process (CDP) hearing.[1]During the hearing, his only argument was that the income he earned in 2016 and in 2017 was exempt from self-employment tax under treaties between the Chippewa and the United States. The Commissioner disagreed and sent him a notice of determination sustaining the IRS's decision to levy on his property to collect the tax.[2]Bibeau timely petitioned our Court, and challenges only his liability.[3] The parties submitted the case for decision on stipulated facts.
Like all Americans, Indians[4] are subject to federal tax laws unless there is a specific law or treaty that provides otherwise. Squire v. Capoeman, 351 U.S. 1, 6 (1956). The canons that require us to strictly construe exemptions from income tax, however, are in tension with those that govern the interpretation of treaties between Indian tribes and the United States. While exemptions from income taxation are to be strictly construed, see, e.g., McCamant v Commissioner, 32 T.C. 824, 834 (1959), Indian treaties "are to be construed, so far as possible, in the [*3] sense in which the Indians understood them," Choctaw Nation of Indians v. United States, 318 U.S. 423, 432 (1943). This means that "[t]he construction, instead of being strict, is liberal; doubtful expressions, instead of being resolved in favor of the United States, are to be resolved in favor of [the Indians]." Choate v. Trapp, 224 U.S. 665 675 (1912).
This canon telling us to construe Indian treaties favorably to Indians does not, however, "create favorable rules." Jourdain v. Commissioner, 71 T.C. 980, 990 (1979). And in the case of exemptions from taxation, the Supreme Court has held that "to be valid, exemptions to tax laws should be clearly expressed." Capoeman, 351 U.S. at 6 (emphasis added).
Bibeau had two arguments for how the treaties between the United States and the Chippewa express an exception from taxation for his self-employment income. He first argues that the 1837 Treaty with the Chippewa, July 29, 1837, art. 5, 7 Stat. 536, 537, protects his right to make a "modest living."[5] The actual language of this 1837 Treaty doesn't use this phrase, but only states that the Chippewa will be guaranteed "[t]he privilege of hunting, fishing, and gathering the wild rice, upon the lands, the rivers and the lakes included in the territory ceded."
Bibeau points us to United States v. Brown, 777 F.3d 1025, 1031 (8th Cir. 2015), an Eighth Circuit case where that court held that the 1837 Treaty "indicate[s] that the Indians believed they were reserving unrestricted rights to hunt, fish, and gather throughout a large territory." In deciding whether the right to fish included the right to sell fish, the court looked to history and concluded that the "Chippewa Indians' exercise of their usufructuary rights included selling what they hunted, fished, or gathered in order to make a modest living." Id. (emphasis added). Bibeau says that his law practice is analogous to hunting, fishing, and gathering wild rice in that it also enables him to make a "modest living."[6] He asserts that the right to make a "modest [*4] living" is what the 1837 Treaty means by its preservation of the Indians' rights to "hunting, fishing, and gathering the wild rice." Continuing the analogy, Bibeau argues that the right to "hunt, fish, and gather the wild rice" really means the right to "food, clothing and shelter and travel, whereby the new canoe is the automobile."
We are not persuaded.
The right to hunt, fish, and gather may be the means to a "modest living," but the Treaty does not clearly express an intent that it means a modest, tax-free living. Brown made no holding about whether Chippewa would owe tax on the sale of the fish they caught, much less a broad holding that includes an exemption from tax of any Chippewa earning a "modest income" from any other source. It held only that the Chippewa were not criminally liable for violating federal law because of their right to fish retained under the 1837 Treaty. Brown, 777 F.3d at 1032. There is no discussion in the opinion about whether the right to sell fish under the 1837 Treaty created an exemption from tax on the sale.
We ourselves have held that "we are constrained from finding [a tax] exemption in the absence of some textual support." Perkins v. Commissioner, 150 T.C. 119, 128-29 (2018) (quoting Lazore v. Commissioner, 11 F.3d 1180, 1187 (3d Cir. 1993), aff'g in part, rev'g in part T.C. Memo. 1992-404), aff'd, 970 F.3d 145 (2d Cir. 2020). Practicing law or conducting research does not yield income derived from "hunting, fishing, or gathering the wild rice." There is nothing in the language of the 1837 Treaty to expand the activities that it protects beyond those it explicitly lists.[7] Interpreting the 1837 Treaty to imply exemption from tax on income from activities not even mentioned in the treaty would undoubtably generate a new rule. This is something we cannot do. Jourdain, 71 T.C. at 990. [*5] Bibeau has a second argument as a fallback. He argues that he is exempt from federal taxation because there is no treaty in which the Chippewa granted the United States any right to tax members of the tribe or their income from any activity. Bibeau contends, quoting United States v. Winans, 198 U.S. 371, 381 (1905), that treaties between the United States and Indians are "not a grant of rights to the Indians, but a grant of rights from them-a reservation of those not granted."
When it comes to exemptions from tax, however, the Supreme Court has stated "that Indians are citizens and that in ordinary affairs of life, not governed by treaties or remedial legislation, [Indians] are subject to the payment of income taxes as are other citizens." Capoeman, 351 U.S. at 6. This means that the absence of tax terms from a treaty does not imply the Indians reserved their right to be free of taxation- instead, it means that an exemption from taxation does not exist. In other words, "tax exemptions are not granted, by implication, to Indians." Jourdain, 71 T.C. at 990.
Bibeau acknowledges that Capoeman is precedent, but he flags for us what he considers to be a mistake in the Supreme Court's reasoning, that is, its failure to consider the 1924 Indian Citizenship Act in its legal analysis. The Indian Citizenship Act stated that by granting Indians citizenship, the Act "shall not in any manner impair or otherwise affect the right of any Indian to tribal or other property." Indian Citizenship Act of 1924, ch. 233, 43 Stat. 253, 253. Bibeau argues that this is evidence that Congress intended to preserve not only the rights that were explicitly granted by treaties, but also those that were implicitly reserved-including the right to be free of taxation.
Here Bibeau crashes into clear Eighth Circuit caselaw. That court has squarely held that the Indian...
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