1 5 0 T.C. No . 6

UNITED STATES TAX COURT
ALICE PERKINS AND FREDRICK PERKINS, Pet i t i o n ers v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 8 2 15 -1 4
. Fi l edM arch 1 , 2 0 18
.

Ps cl ai m edth ati n co m e t h ey earn ed fro m

s el l i n g g rav el m i ned fro m Sen eca Nat i o n l an d was ex em p tfro m t ax u n der t h e Gen eral Al l o tm en tAct , th e Can an d ai g u a Treat y , an dth e Treat y o f 1 8 4 2 b ecau s e t he i n co m e was d eri v edfro m In d ian l an d . R ad

ju s t edPs ’ i n co m e t o i n cl ud e t he g rav el i n co m e. R al so d et erm i nedth at Ps were l i ab l e fo r ad d i t i o n s t o t ax an dp en al t i es u n d er I.R.C. s ect i o ns 6 6 5 1 (a)(1 ) an d6 66 2(a). Hel d : In co m e earn edfro m s el l in g g rav el m i n edfro m Sen eca Nat i on l an di s t ax ab l e i n co m e t h ati s n o t ex cl u dedb y ei t h er t reat y

o r b y th e Gen eral Al l o t m en tAct
. Hel d , fu rt her, Ps are l i ab l e fo r ad di t i o n s t o t ax u n d er I.R.C. s ect i o n 6 6 5 1 (a)(1 ). Hel d , fu rt her, Ps m ay

n o tb e l iab l e fo r p en al t i es u n d er I.R.C. s ect i o n 6 6 6 2(a).- 2
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Gary Den n i s Bo rek , fo r p et i t i o n ers . M arkAl ex an d er Eri cs o n , fo r res p on d en t
. OPINION
HOLM ES, J u d g e: Al i ce Perk i n s i s an en ro l l edm em b er o f t h e Sen eca Nat i on , wh i ch h as been an d rem ai n s th e l arg es tIn d ian n at i o n wi th i n t h e Iro qu o i s Co n fed eracyan dth e l arg es tp o p u l at i o n o f In d i an s i n wes t ern New Yo rk
. 1 Perk i n s
an d h er h u sb an dl iv e o n Sen eca p ro p ert y an dg o tp erm i s s i on fro m th e Nat i on ’ s g o v ern m en tt o m i n e an ds el l g rav el du ri ng 2 0 0 8 an d2 0 0 9 . Th ey arg u e th atth ei r i n co m e fro m

th es e s al es i s ex em

p tfro m fed eral t ax at io n u nd er t h e t erm s o f s ev eral t reat i es s i g n edwh en th e Un i t edSt at es were i n th ei r i n fan cy , wh i ch th e Perk i n s es
s ay p ro m i s e th atth e fed eral g o v ern m en two n ’ t t ax m em b ers o f t h e Sen eca Nat i o n

1 No m en cl ature i s frau gh ti n th i s fi el d . Th e Sen ecas refer t o them s el v es i n t h ei r o w n l an g u ag e as the O-n o n -d o wa-g ah . Th ei r g o v ern m en ts t ro n gl y p refers t o b e cal l eda n at i o n rat h er t h an a t ri b e, an dth e o ffi ci al n am e o f t he Nat i o n i n En g l i s h i s t he “ Sen eca Nat i on o f In d i an s .” See Sen eca Nat i o n o f In d i an s , h t tp s: // s n i .o rg (l as t v is i t edSep t . 1 2 , 2 0 1 7); Sen eca Nat i o n o f In d i an s FAQ, h t tp s : //s n i .o rg (l as t v i s i t edSep t . 1 2 , 2 0 1 7). Th e Nat i o n ’ s o wn web s i t e i s ag n o s t ic o n th e qu es t i o n o f referri n g t o Sen ecas as “ In d i an s ” o r “N at iv e Am eri can s .” See Sen eca Nat i o n o f In d i an s FAQ. M u ch o f t h e l i terat u re i n t h i s area refers t o “ In di an l aw” an d“ In d i an treat i es ” an d t h e l i k e, h o wev er; s o t o m ai n t ai n s o m e co n ti n u i t y wi t h th i s l eg al -h is to ri cal p as t , we wi l l u s e t h e t rad i ti o n al n o m en cl atu re, b u t we wi l l u s e “N at i on ” wh en we refer t o the Sen ecas ’ g o v ern m en tan dco l l ect i v e t erm fo r th em sel v es i n En g l i s h
.- 3
-

o n th i s k i n do f i nco m e. Bo t h p art i es are b efo re t he W es t ern Di st ri cto f New Yo rk i n an es s en t i al l y

i den t i cal refu n dcas e, an d t h e Perk i n s es recen t l y wo n the arg u m en tth ere, wi t h s t an d i ng th e Go v ern m en t’ s m ot i o n t o d i s m i s s. See Perk i n s v . Un i ted St at es , No . 1 6 -CV-4 9 5(LJ V ), 2 0 1 7 W L 3 3 2 6 8 1 8 (W .D.N.Y. Au g . 4 , 2 0 1 7 ). Th e Co m

m is s i o n er n ev ert h el es s arg u es th atwe h av e d eal twi th th i s i s s u e
m an y t i m es b efo re an dth ere’ s n o t ax ex em p t i o n t o b e fo u nd . He th i n k s th i s cas e i s ri p e fo r s u m

m ary ju d g m en t
. Back gro u n d Al i ce Perk i n s an dh er h us b an dFred ri ck l i v e o n th e Al l eg an y Terri t o ry o f th e Sen eca Nat i o n . In1 9 8 5 Al i ce b eg an a t ru ck i n g b u s i nes s cal l edA&F Tru ck i n g . Th e Perk i n s es ’ t ax retu rn s s u g g es tFred ri ck wo rk edfo r t h e co m

pan y as a t ru ck d ri v er. Th e reco rdd o es n ’ tt el l u s al l th e s erv i ces A&F Tru ck i n g p erfo rm ed , b u ti t d o es sh o w th atth e Perk i n ses were i n t eres t edi n m i n i n g g rav el o n t h e Nat io n ’ s l an d . Th is m ean tth ey

h adt o wi n p erm i s s i o n fro m the Nat i o n ’ s Co u n ci l . Al i ce
wo n thatp erm is s i o n fo r A&F Tru ck i n g i n 2 0 0 8 . No o n e d i s p u t es th ats h e m i n ed
an d s ol dth e g rav el i n b o t h 2 0 0 8 an d2 0 09 . InJ u n e 2 0 0 9 t h e Nat i on wi t hd rew t h e p erm i t , b u tth e b u s i n es s h ad pi l ed up en ou g h g rav el t o co n t i n u e t o s el l i t i n t o 2 0 1 0
.- 4
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Th e reco rdd o es n o t t el l u s h o w m u ch g rav el was du g up o r wh o b o u g h ti t , b u tthe Perk i n s es ’ t ax retu rn s s h o w th atth e b u s in es s h adal m os t$ 1 .5 m i ll i on i n g ro s s recei p t s fro m

2 0 0 8 an dn earl y

$ 1 .7 m i l l i on fro m

2 0 0 9
. Th e Perk i n s es d i d n ’ tfi l e t h ei r 2 0 0 8 an d 2 00 9 t ax retu rn s u n t i l Oct ob er 2 0 1 1 , wh i ch m ean s b o t h retu rn s were l at e. Th e Perk i ns es at t ach ed a “ det ai l s h eet ” t o each retu rn th ats ai dthe i n co m e fro m th e g rav el was fro m

“N at i v e Am eri can l an dn ots ub

jectt o fed eral i nco m e t ax es .” Ond i s cl o s ure s tat em en t s , th ey
ex p lai n ed : Th e t ax p ay er i s cl ai m i n g t h at t h e rev en ue fro m g rav el i n co m e earn ed fro m th e d ep l et i o n o f h i s l an d i s n o ts ub jectt o fed eral i n co m e t ax [.] Th e US Tax Co u rtco n cl u d ed t h ata fed eral i n co m e t ax ex em p t i o n was creat edb y

th e In d i an Gen eral Al l o t m en t Acto f 1 8 8 7 ch 1 1 9 fo r i n co m e t h atan i n d i vi du al In d i an al lo t t ee d eri ves d i rect l y fro m th e l an d h el d i n tru s tfo r h i m ci t in g Squ i re v . Cap o em an * * * [Sp el l i n g co rrect ed .] Th e Co m m i ss i o n er s o on s h o wedup t o d i s p ut e t h i s cl ai m . InAu gu s t 2 0 1 4 h e s en t t h e Perk i n s es a n o t i ce o f d efi ci en cy fo r th ei r 2 0 0 8 th ro u g h 2 0 1 0 t ax y ears . He s ai d t h atth e g rav el i n co m e was t ax ab l e an dth at h e wo u ldi m p o se p en al t i es u n der
s ect i on s 6 6 5 1 (a)(1 ) an d6 6 6 2 (a). 2

2 Al l s ect i o n referen ces are t o t h e In t ern al Rev en u e Co de i n effect fo r 2 0 0 8 an d 2 0 0 9 , an dal l Ru le referen ces are t o t h e Tax Co u rtRu l es o f Pract i ce an d Pro cedure u n l es s we s ay

o t h erwi s e.- 5
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Th e Perk i n s es res po n d edb y fi l in g a Tax Co u rtp et i t i o n fo r t h ei r 2 0 08 an d 2 0 0 9 t ax y ears . 3 Du ri n g d i s co v ery , th e Perk i n s es s en tan em ai l t o th e IRS s t at i n g t h atth ei r arg um en twas n o w b as edo n two treat i es --t h e Can an d ai g u a Treat y , No v . 1 1 , 1 7 9 4 , 7 St at . 4 4 , 4 an d t h e Treat y wi t h th e Sen eca, M ay 2 0 , 1 8 4 2 , 7 St at . 5 8 6 (1 8 4 2 Treat y ). Th e Co m m i s si o n er s aw h i s ch an ce an dm o v edfo r s u m m ary ju d g m en to n th e i s s u es o f wh et h er t h e g rav el i n co m e i s t ax ab l e an d wh et h er t h e Perk i n s es s h o u l dp ay

p en al ti es . Fo r t h ei r 2 0 1 0 t ax y ear t h e Perk i n s es p ai dth e al l eg edd efi ci en cy an dfi l eda refu nds u i ti n U.S. Di s t ri ctCo u rt
. See Perk i n s v . Un i t edSt at es , 1 1 9 A.F.T.R.2 d (RIA) 2 01 7 -5 9 5 (W .D.N.Y. 2 0 1 7 ). Aft er s o m e p ret ri al m an eu veri n g , th e Go v ern m en ti n th atcas e m ad e t h e s am e arg u m en tth atthe Co m m i s s i o n er m ak es h ere--t h at
n ei t h er t h e Can an d ai g ua Treat y n o r t h e 1 8 4 2 Treat y

ex em p t s t h e Perk i ns es ’ g rav el -s al es i n co m e fro m

fed eral t ax at i o n . Id . at2 0 1 7-5 9 6 . M ag is t rat e J u dg e Sco t t o f t h e W es t ern Di s t ri cto f New Yo rki s s u eda rep o rtan d reco m m en d at i o n th atth e

3 Th e Co m

m i s si o ner i n i t i al l y

d i s p u t eda n u m

b er o f o th er i t em s i n th e n o t i ce o f d efi ci en cy , b utth e o n l y arg u m en tth e Perk i n ses m ad e i n th ei r p et i t i o n was th at t h e g rav el was n’ tt ax ab l e an dth ey s ho u l dn ’ th av e t o p ay p en al t i es . Th atm ean s t h atwe d eem

th e o th er i t em s i n th e n o t i ce o f d efi ci en cy co n ced ed b y

th e Perk i n s es u n d er Ru l e 3 4 (b )(4 ).

4 Th e Can an d ai g u a Treat y i s al s o kn o w n as th e Treat y o f t h e Si x Nat i o n s , wh i ch i s t h e n am e s o m e co urt s u s e. See, e.g ., Sy l v es ter v
. Co m m i s s i o n er, T.C. M em o. 1 9 9 9 -3 5 , 1 9 9 9 W L 4 97 7 3 , at* 2 n .3
.- 6
-

Di s t ri ctCo u rtd en y

th e Go v ern m en t ’ s m o t i o n t o d i s m i s s b as edo n th e Can an d ai g u a Treat y b u t g ran ti t s m o t i o n b as edo n th e 1 8 4 2 Treat y . Id . at2 0 1 7-6 0 0 t o 2 0 1 7
- 6 0 1 . Bo th p art i es o b

j ect ed , s ee Fed . R. Ci v . P. 7 2, an dDi s t ri ctJ u d ge Vi l ard o v ery
recen t l y ad o p t edJ u d g e Sco t t ’ s reco m m en d at io n ab o u tth e Can an d ai g u a Treat y b u t reject edh i s reco m

m en dat i o n ab o u tth e 1 84 2 Treat y , Perk in s, 2 0 17 W L 3 3 2 6 8 1 8 , at* 1 . He d en i edth e Go v ern m en t ’ s m o t i o n t o d i s m i s s . Id . at* 5
. Th i s p res en t s an u n u s u al o p p o rtu n i t y fo r t w o co u rt s t o an al y ze t h e s am e qu es ti o n ab o u tthe s am e t ax p ay ers atth e s am e t i m e. Di s cu ss i o n W e b eg i n wi t h s om e g en eral p ri n ci p les . W e m ay g ran t s umm ary

ju d g m en t wh en th ere’ s n o g en u i n e d i s p u t e o f m at eri al fact an d a d eci s i o n m ay b e ren d ered
as m at t er o f l aw. Ru l e 1 2 1 (b ); s ee, e.g ., Su n d s t ran d Co rp . v . Co m m i s s i o n er, 9 8 T.C. 5 1 8 , 5 2 0 (1 9 9 2 ), aff’ d , 1 7 F.3 d 9 6 5 (7 t h Ci r. 1 9 9 4 ). Th ere i s n o g en u i n e d i s p u t e o f m at eri al fact h ere, s o we m ay m ov e s t rai g h t t o th e l aw. Th e rel ev an tl aw b eg i n s wi t h a rem i n d er t h atAm eri can In d i an s h av e al l b een A m eri can ci t i zen s s i nce 1 9 2 4 . In d ian Ci t i zen s hi p Acto f 1 9 2 4 , ch . 2 33 , 4 3 St at . 2 5 3 . Fed eral t ax l aw ap p l i es t o ev ery Am eri can , i ncl u d in g In d ian s an dth ei r p ro p ert y i n t eres t s . Fed . Po w er Co m m ’ n v . Tu s caro ra In d i an Nat i o n , 3 6 2 U.S. 9 9, 1 1 6 -1 7 (1 9 6 0 ); Co m

m i s si o ner v . W al k er, 3 2 6 F.2 d2 6 1 , 2 6 3 (9 th Ci r. 1 96 4 ), aff’ g- 7
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i n p art , rev ’ g i n p art3 7 T.C. 9 6 2 (1 9 6 2 ). Th e Co d e t ax es “ ev ery i nd i v i du al ” o n

“ al l i n co m e fro m

wh at ev er s o u rce d eri v ed ,” s ee s ecs . 1 (a)-(c), 6 1 (a), u n l es s th e i n co m e i s s p eci fi cal l y

ex cl u d ed , s ee g en eral l y

ch
. 1 , s ub ch
. B, p
. III, It em s Sp eci fi cal ly Ex cl u d edFro m

Gro s s In co m e. In di an s are s ub ject t o th e t ax l aw ju s tl i k e
o t h er Am eri can s u nl es s th ere’ s a s p eci fi c ex cl u s io n i n a t reat y o r s tatu t e. Squ i re v . Cap oem an , 3 5 1 U.S. 1 , 6 (1 9 5 6); Sup eri n t en d en to f Fi v e Ci v i l i zedTri bes , fo r San dy Fo x , CreekNo . 1 2 6 3 v . Co m m i ss i o n er, 2 9 5 U.S. 4 1 8 , 4 21 (1 9 3 5 ). Hi s t ory d oes affect h o wwe co n s t ru e t ho s e ex cep t io n s. Th e n o rm al m ax im s --ci t edal m o s t ev ery

d ay o u r Co u rtrel eas es o pi n io n s --t h atd edu ct i o n s “ are a m at t er
o f l eg i sl at i v e g race,” s ee, e.g . , In d ep . Co o p . M i l kPro du cers As s ’ n v . Co m m i s s i o n er, 7 6 T.C. 1 0 0 1 , 1 0 1 4 (1 98 1 ), an dth at ex em p t i o n s fro m t ax are s t ri ct l y co n s t ru ed , s ee, e.g ., M cCam an tv . Co m m i s s i o n er, 3 2 T.C. 8 2 4, 8 3 4 (1 9 5 9), are d i s p laced a b i t wh en In d i an s are i n v o l v ed . W e co n s t ru e t reat i es an d s t atu t es i n fav o r o f In d i an s b ecau s e co u rt s h av e v i ewedIn d i an s as b ei n g i n a m o re v u l n erab l e p o s i t i o n i n rel at i o n t o th e Un it edSt at es g o v ern m en t . See Ch o at e v . Trap p , 2 24 U.S. 6 6 5 , 6 7 5 (1 9 1 2) (“ Th e co n s t ru ct i o n , i n s t ead o f b ei ng s t ri ct , i s l i b eral ; d oub t fu l ex p res s i o n s
* * * are t o b e res o l v edi n fav o r o f [t h e In d i an s] ”). “ Gen eral l y , treat ies are co n s t ru edm o re l i b eral l y t h an p ri v at e ag reem en t s an d t h e h i s t o ry , n eg ot i at i o n s, an d p ract i cal co n s t ru ct i o n ad o p t ed b y th e p art i es are al l rel ev an tt o treat y i n t erp ret a-- 8
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t i on . M o reo ver, In d i an treat i es ‘ are t o b e co n s t ru ed , s o far as p o ss i b l e, i n th e s en s e i n wh ich th e In d i an s u n d ers t o o dth em .’ ” Sen eca Nat i o n o f In d i an s v . New Yo rk , 3 8 2 F.3 d2 4 5, 2 5 9 (2 dCi r. 2 0 0 4 ) (q u o ti n g Ch o ct aw Nat io n o f In d i an s v . Un i t ed St at es , 3 1 8 U.S. 4 23 , 4 3 2 (1 9 4 3 )). St i ll , we can ’ tu s e t h i s can o n “ to creat e fav o rab l e ru l es ” fo r t hem . J o urd ai n v . Co m m i s s io ner, 6 7 1 T.C. 9 80 , 9 9 0 (1 9 79 ), aff’ d, 6 1 7 F.2 d5 0 7 (8 th Ci r. 1 9 8 0). W i t h th es e co n s t rai n t s i n m i n d, we tu rn t o th e p art i es ’ arg u m en ts
. W e s t artwi t h th e Perk i n ses ’ retu rn p o s i t io n . Onth ei r ret u rn s , the Perk i n s es rep o rt edth ei r i n co m e b u ti n an ex p l an at o ry at t ach m en td en i edi twas t ax ab l e u n d er t h e Gen eral Al lo t m en t Acto f 1 8 8 7 , ch . 1 1 9 , 2 4 St at
. 3 8 8 (co d ifi edas am en d edat 2 5 U.S.C. s ecs . 3 3 4 , 3 3 9 , 3 4 1, 3 4 2 , 3 4 8, 3 4 9 , 3 5 4 , 3 8 1 (2 0 1 2 )). 5 As th e Perk i n ses l at er reco g n i zed , h o wev er, t h e Gen eral Al l o t m en t Acts p eci fi cal l y ex em p t ed“ t he

5 Th e Gen eral Al l o tm en tActd i v i d ed res erv at i o n s i n t o p arcel s an dh el dth e “ al l o t m en t s ” i n tru s tfo r i n d i v i du al In d i an s. Gen eral Al l o t m en t Acto f 1 8 8 7 , ch
. 1 1 9 , s ecs . 1 -5 , 2 4 St at
. at 3 8 8 -3 9 0 ; Un i t edSt at es v . An ders o n , 6 2 5 F.2 d9 1 0 , 9 1 2 (9 t h Ci r. 1 9 8 0 ). Aft er t h e s t atut o ry tru s tp eri o d en d ed , al l o tt ees g otth ei r l an d“ i n fee, d i s ch arg edo f s ai dtru s tan dfree o f al l ch arg e o r i n cu m b ran ce wh at s o ev er.” Gen eral Al l o t m en tActs ec. 5 , 2 4 St at . at3 8 9 ; s ee 2 5 U.S.C. s ec. 3 48 (2 0 1 2 ); Sq u i re v . Cap o em an , 3 5 1 U.S. 1 , 3 (1 95 6 ); St ev en s v . Co m m i s s i o n er, 4 5 2 F.2 d 7 4 1 , 7 4 5 (9 t h Ci r. 1 9 7 1 ), aff’ g i n p art , rev ’ g i n p art5 4 T.C. 3 5 1 (1 9 7 0 ) an d5 2 T.C. 3 3 0 (1 9 6 9 ). Al s o atth att i m e “ al l res t ri ct i o ns as t o s al e, i n cu m b ran ce, o r t ax at io n o f s ai dl an d* * * [were] rem o v ed
. ” 2 5 U.S.C. s ec. 3 49 (2 0 12 ). Co n g res s l i kel y as s u m edth e Actwo u l d b ri n g ab o u tth e en do f t h e res erv at i o n s y s t em , al t h o u g h t h e m o re d i rect g o al was t o p ro m o t e as s i m il at io n . Hag en v . Ut ah , 5 1 0 U.S. 3 9 9 , 4 2 4 -2 5 (1 9 9 4 ) (Bl ackm u n , J ., d i ss en t i n g ).- 9
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res erv at io n s o f the Sen eca Nat io n o f New Yo rkIn d i an s i n th e St at e o f New Yo rk .” See i d . s ec. 8 , 2 4 St at . at3 9 1 . Th atex em p t io n rem ai n s i n effect t o th i s d ay . See 2 5 U.S.C. s ec. 3 3 9
. 6 W e ag ree wi t h t h e Co m m i s s i on er--an dn o w ev en th e Perk i n s es --t h atth i s Actd o es n ’ tap p l y t o t h e Perk i n s es an dd o es n o t ex cu s e t h em fro m p ay i n g t ax o n t h e i n co m e t h ey earn eds el l in g g rav el
. Th e Perk i n s es real i zedth i s du ri n g th e au d i tan drai s eds o m e n ew arg u m en ts b as edo n th e Nat i on ’ s treat ies w i t h th e Fed eral Go vern m en t. Th e fi rs to f t h es e i s t h e Can an d ai g ua Treat y . Th e Perk i n s es fo cu s o u r at ten t io n o n th e p arto f t h e t reat y th ats ay s : [T] h e Un i t ed St at es wi l l n ev er cl ai m th e * * * [Sen eca Nat io n ’ s Treat y -d efi nedl an d s ] , n o r dis t u r b t h e Sen ek a Nat io n , n o r an y o f t h e Si x Nat i o n s , o r o f t h ei r In d i an fri en d s res i d i n g t h ereo n an du n it ed wi t h t hem , i n the f

r ee u s e a nd

en j o ymen t th er eo

f : b u t i ts h al l rem ai n t h ei rs , u n t i l th ey

ch o o s e t o s el l th e s am e t o th e p eo p le o f th e Un i t ed St at es , wh o h av e t h e ri g h tt o p u rch as e. Can an d ai g ua Treat y , art . III, 7 St at . at4 5 (em p has i s ad d ed ). Th e Perk i n ses arg u e t h atth e g u aran t y

n ot t o “ d i s tu rb * * * th e free u s e an den jo ym en t ” o f t he Sen eca Nat i o n ’ s l an d i n cl u des a t ax ex em p t i on fo r i nco m e d eri v edd i rect l y fro m th e l an d
.

6 Th e Sen eca Nat i o n v eh em en t l y o pp o s ed al l o t m en to f t ri b al l an ds . See Lau ren ce M . Haup t m an , “ Sen ecas an dSubd i v i d ers : Res i s t an ce t o Al l o t m en to f In d i an Lan d s i n New Yo rk , 1 8 75 -1 9 0 6 ”, 9 Pro l o gu e: Th e J o urn al o f t h e Nat i o n al Arch i v es 1 0 5 (1 9 7 7 ).- 1 0 -

Th e fi rs tqu es t i o n h ere i s wh et h er t hi s t reat y ev en p ro v i d es ri g ht s t o i n d i v i du al In d i an s, rat h er t h an t o th e Nat i o n as s u ch . Fo cu s o n th i s p as s ag e:

“ [T] h e Un i t edSt at es wi ll n ev er cl ai m th e * * * [Sen eca Nat i o n ’ s Treat y -d efi n ed l an d s ] , n o r d i s tu rb th e Sen ek a n at i on , n o r an y o f t h e Si x Nat i o n s , o r o f t h ei r In d i an fri en ds res i d i n g th ereo n an du n i t edwi t h th em , i n th e free u se an den jo ym en t t h ereo f.” Id
. Th e Di s t ri ctCo u rtreadth e p h ras e “ or o f t h ei r In d i an fri en d s res id i n g t h ereo n ” as creat i n g ri g h t s fo r th e Perk i n s es th em s el v es . Perk i n s , 2 0 1 7 W L 3 3 2 6 8 1 8 , at* 4 . W e m

u stres p ect fu ll y

d i s ag ree--t h e p h ras e i s p arto f a l i s t t h at i n cl u d es th e Nat i o n an d an y o f t h e o t h er n at io n s o f t h e Iro quo i s Co n fed eracy . W e d o n ’ tth i n kth atth e p h ras e “ o r o f t h ei r In d i anfri en d s res i d i n g t hereo n an du n i t ed wi t h th em ” can reas o n ab l y b e read as creat i n g p ers o n al ri g h ts --t h e cl as s o f “ In d i an fri en ds ” b ei n g l im i t edt o th o se “ fri en d s ” wh o h av e b eco m e “ u n i ted ” wi t h o n e o f t h e Iro qu o i s n at io n s . Th i s Co u rth as co n s i s t en t l y reject edth e arg u m en t t h atth e Can an d ai gu a Treat y creat es a t ax ex em pt i o n fo r i n d i vi du al m em b ers o f th e co ns t i tu en t n at i o n s
o f t h e Iro quo i s Co n fed eracy . See Sy l v es t er v . Co m m i s s io n er, T.C. M em o . 1 9 9 9
- 3 5 , 1 9 9 9 W L 4 9 7 7 3 , at* 2 -* 3 ; M aracl e v . Co m m i s si o n er, T.C. M em o . 1 99 1 -9 8 , 6 1 T.C.M . (CCH) 2 0 8 3 , 2 0 84 (1 9 9 1 ); Geo rg e v . Co m m i s s i o n er, T.C. M em o. 1 9 8 9
-- 1 1 -

4 0 1 , 5 7 T.C.M . (CCH) 1 1 6 8 , 1 1 6 8 -6 9 (1 9 8 9); Nep h ew v . Co m m i s s io n er, T.C. M em o. 1 9 8 9 -3 2 , 5 6 T.C.M
. (CCH) 1 1 2 2, 1 1 23 (1 9 89 ); s ee al s o Lazo re v . Co m m i s s i o n er, 1 1 F.3 d1 1 8 0 , 1 1 8 2 , 1 1 8 7 (3 dCi r. 1 9 9 3) (fi n d i ng th atth e Can an d ai g ua Treat y

d i dn otex em

p twag es earn edb y

m em b ers o f t h e M oh awk Nat i o n --an ot her p art y

t o the Can an dai g u a Treat y ), aff’ g i n rel ev an tp artT.C. M em o. 1 9 9 2 -4 0 4 , 1 9 92 W L 1 6 3 9 7 8
. By i t s ex p res s t erm s , th e t reat y p ro t ect s th e Sen eca Nat i o n ’ s l an d s fro m b ei n g “ d i s tu rb ed ”, wh i ch i s d i fferen tfro m creat i n g a t ax ex em

pt i o n . Th e res to f t h ats en t en ce--“ its h al l rem ai n t h ei rs , u n ti l th ey ch o os e t o s el l th e s am e t o t h e p eo pl e o f t he Un i tedSt at es , wh o h av e t h e ri g h tt o p u rch as e”--d o es n ’ tm ak e s en s e
as a t ax -ex em

p t i o n p ro v i s i o n , b u tm ak es p erfect s en s e as a res t ri ct i o n o n al i en at i o n
o f t h e Nat i on ’ s l an ds . Th e i n cl u s i o n o f “ In di an fri en d s res i d i n g th ereo n an du n i t ed wi t h th em ” m ean s th atth e Nat i o n g et s t o ch o o s e wh o i s a m em b er o f t he Nat i o n
an d p erh ap s ev en can b e s een as a p ro m i s e n ot t o u s e n o n -Sen eca In d i an s as p u t at i v e s el l ers o f Sen eca l an d
. Th e Co u rto f Fed eral Cl ai m s h as al s o an al y zedth i s p art i cu lar p ro vi si o n i n t h e Can an d ai g ua Treat y

an dh el dth atex ci s e t ax at i o n d o es n o tp rev en t“ free u s e
an d en jo y m en t ” b y In di an s . Co o k v . Un i tedSt at es , 3 2 Fed
. Cl . 1 7 0 , 1 7 4-7 5 (1 9 9 4). Th i s i s al s o h o w th e Sup rem e Co u rth as co n st ru eds i m i l ar l an g u ag e i n- 1 2 -

o t h er In d i an treat i es . See Sup eri n ten d en to f Fi v e Ci v i l i zedTri b es , 2 9 5 U.S. at4 2 1 (“No n -t ax ab i l i t y

an dres t ri ct i o n upo n al i en at io n are d i s t i n ctth i n g s ”). Th e Ei g h t h Ci rcu i th as l i kewi s e h el d t h atth e p ro m i se t hatl an d wo u l db e free o f “ m o l es t at i o n fro m th e Un it edSt at es ” m ean tfree fro m “ i n t erferen ce wi t h th e ri g h t s o f In di an s t o h u n tan do t h erwi s e en

jo y th ei r l an d , no t

th e ‘r i gh t ’ t o b e f

ree f r o m f ed er a l t axa t i o n .” J o u rd ai n , 6 1 7 F.2 dat5 0 8 -0 9 (em p has i s ad d ed ) (d i s cu s s i ng th e Treat y
o f Green vi l l e, Au g . 3 , 1 7 9 5 , 7 St at . 4 9 ). An d we h av e o urs el v es h el dth at a t reat y
res erv i ng “ t h e ri g hto f t ak i n g fi s h , atal l u s u al an daccu s to m edg ro un d s an d
s t at i o n s ” d i d n ’ t creat e a t ax ex em p t i o n fo r i n co m e d eri v edb y u si ng th e ri g h t s g u aran teedb y

th e t reat y . Earl v . Co m

m i ss i on er, 7 8 T.C. 1 01 4 , 1 0 1 7 -1 8 (1 9 8 2 ) (q u o ti n g th e Treat y

o f M ed i ci n e Creek , Dec. 2 6 , 1 85 4 , 1 0 St at . 1 1 3 2 ). Bu tth e Perk i n s es arg u e t h ere’ s m o re u n d er t he s u rface i n t h i s cas e. Th ey p o i n to u tth atp rev i o us cas es th atan al y zedthe Can an d ai g u a Treat y aro s e fro m ch al l en g es b y

i n d i v i du al Iro qu o i s t o t h e t ax at i o n o f i n co m e fro m wa g es o r s i m i l ar t y p es o f i n co m e. Th ey

s ay t h atth ei r i n co m e was d i fferen tb ecau se i t was d eri v ed fro m th e Nat i o n ’ s l an d . Th e Di s t ri ctCo u rtag reed . See Perk i n s , 2 0 1 7 W L 3 3 2 6 8 1 8 , at* 3 . Th e Perk i n s es arg u e t h atth i s ch an g es ev ery t h i n g , an dthey ci t e
s ev eral cas es th ats p ecu l at edi n di ct a th atth e Can an d ai gu a Treat y “ mi gh t creat e an
ex em p t i o n fro m

t ax at i o n o n i n co m e d eri vedd i rect l y fro m th e l an d .” Lazo re, 1 1- 1 3 -

F.3 dat 1 18 5 (em

p h as i s ad d ed ) (d i scu s s in g Ho p t o w i t v . Co m m i s s io ner, 7 0 9 F.2 d 5 6 4 (9 th Ci r. 1 9 83 )); Sy l v es t er, 1 9 9 9 W L 4 9 7 7 3 , at* 2 -* 3 (n o t i n g “ t h atn o n e o f p et i t i o n er’ s i n co m e was d er i ved di r ect ly o r i n dir ect l

y f r o m th e u s e o

f In di an la n d

” i n ru l i n g th atthe i n co m e was n ’ tex em p tu n d er t he Can an dai g u a Treat y ) (em p h as i s ad d ed )). Nei th er co u rtex p l ai n edwh atp arto f t he t reat y o r cas el aw l edi tt o m ak e t h es e co m

m en ts
. W e can s o rto u t t h i s i s s u e b y g o i ng b ackt o Cap o em an . Th e Sup rem e Co u rt i n Cap o em an , 3 5 1 U.S. at8 -9 , h el dth atth e Gen eral Al l o t m en t Actcreat edan
ex em p t i o n fo r “ i n co m e d eri v edd i rect l y ” fro m l an d i f t he l an di s al l o t t edan ds t i l l h el di n tru st . Of co u rs e, t h e p art i es ag ree t h at t he Gen eral Al l o tm en tAct d o es n ’ t d i rect l y ap p l y t o th e Perk i n s es , b u tth e Perk i n ses s eem t o arg u e t h ere’ s a g en eral
ex em p t i o n --o r p erh ap s a p res u m p t i o n o f s o m e s o rt --fo r ex em p t i ng al l i n co m e d eri v edfro m In d i an l an d
. Bu tCap o em an d i dn o tcreat e a g en eral ex em pt i o n fo r al l i n co m e d eri v ed fro m l an d . Anap pl i cab l e ex em p t i o n fro m t ax at io n i n a t reat y o r s t atu t e i s s t i l l req u i red . Cap o em an , 3 5 1 U.S. at6 (“ In d i an s are ci t i zen s an d * * * i n o rd i n ary affai rs o f l i fe, n o tg o vern edb y treat i es * * * , th ey

are s ub jectt o the p aym en to f i n co m e t ax es as are o t h er ci t izen s . * * * [T] o b e v al i d , ex em p t i o n s t o t ax l aws
s h o u ldb e cl earl y ex p res s ed ”). Th e Ni n t h Ci rcu its t ret ch edCap o em ant o i n cl u d e- 1 4 -

i n co m e d eri v edd irect l y

fro m l an dth at h as b een a ll o t t ed u n der a n y o th er a ct wi th
s i m i l ar la n g u a g e t o th e Gen eral Al l o t m en tAct . St ev en s v . Co m m i s s i o ner, 4 5 2 F.2 d7 4 1 (9 t h Ci r. 1 9 7 1), aff’ g i n p art , rev ’ g i n p art 5 4 T.C. 3 5 1 (1 9 70 ) an d5 2 T.C. 3 3 0 (1 9 6 9 ). St i l l , th e “ Cap o em an ex em p ti o n ap pl i es o n l y t o i n co m e d eri v ed fro m
a l l o t ted l an d .” J o u rd ai n , 6 1 7 F.2 dat5 08 (em ph as i s ad d ed ). Th e ex em p t i o n was i n t en d edt o en s u re In di an s recei v ed“ u n en cu m b ered ” l an dwh en i twas rel eas ed fro m tru s tan d b ecam e t h e p ro p ert y o f t h e In d i anwh o recei v edth e al l o t m en t
. Wyn eco o p v . Co m

m i s si o ner, 7 6 T.C. 1 0 1 , 1 0 6 (1 9 8 1 ). Itwas n ot i nt en d edt o b en efi tIn d i an s “ s im

p l y b ecau se t h e i n co m e was d eri v edfro m l an d l o cat edo n an In d i an res erv at i o n .” Id
. An dco u rt s b efo re t h e Di s t ri ct Co u rt ’ s recen to p i n i o n h av e co n s i s t en tl y

h el dthati n co m e d eri v edfro m co m m on tri b al l an d --as o p p o s ed t o al l o tt edl an d --i s t ax ab l e. An d ers o n, 6 2 5 F.2 dat9 1 4 (i n co m e fro m cat t l e
ran ch i n g u n der a t ri b al l i cen s e was t ax ab l e); Fry , 5 5 7 F.2 dat 6 4 8 (i n co m e fro m l o g g i n g o n res erv at i o n l an dwas t ax ab l e); Wyneco o p , 7 6 T.C. at 1 0 7 (d i v i d en d s fro m s t o ckrecei v edi n ex ch an ge fo r m i n eral l eas es o f t ri b al l an d s were t ax ab l e);
s ee al so Ho l t , 3 6 4 F.2 dat4 1 -4 2 ; Earl , 7 8 T.C. at1 0 1 9 ; J o urd ai n , 7 1 T.C. at9 8 9 ; To n as k etv . Co m

m i s si o ner, T.C. M em o . 1 9 8 5-3 6 5 , 5 0 T.C.M . (CCH) 4 8 9 , 4 9 2 (1 9 8 5).- 1 5 -

Th e l an dh ere was n ’ tal l ot t edt o th e Perk i n s es . “ A ll ot t ed ” m ean s l an ds et
as i d e i n t ru s tfo r i n di v i du al In d i an s, i n co nt ras t t o l an dh el d b y th e Nat io n . See, e.g ., Cap o em an , 3 5 1 U.S. at3 . Th e Perk i n s es ad m it t edth atthe “ [g ] rav el at[i ] s s u e
was t ak en fro m

l an d t hatwas p arto f t h e co m m o n l an ds reco g n i zedb y fed eral t reat i es t o b e t h e t erri t ori es o f t h e Sen eca Nat i on .” Th ey al so ad m i t t edth atth e

“ g rav el ati s s u e was n o t t ak en fro m l an dth atwas al lo t t edt o p et i t i o n er-h u s b an d du ri n g 2 0 0 8 an d2 0 0 9.” Th e Perk i n s es wo u l dn ’ tad m i to r d en y wh et h er t he g rav el
was t ak en fro m

l an d al l o t t edt o Al i ce, b u ti f t h e g rav el was t ak enfro m co m m o n l an d , i tco u l dn ’ t h av e b een s p eci fi cal ly al l o t t edt o Al i ce. Th e Di s t ri ctCo u rtrefers t o Cap o em an b u td o es n o td i s cu s s i t s an al y s i s o f t h e d i s t i n ct i o n b et ween al l o t t edan dtri b al l an d s o r t h e t ax ab il it y o f i n co m e fro m each . W e t h erefo re m

us tag ai n res p ect fu l l y

d i s ag ree wi t h i t s h ol d i n g . W e h o l d i n s t eadth atth e Can an d ai g u a Treat y d o es n ’ t ex em

p tth e Perk i n s es fro m

p ay i n g t ax es o n th e g rav el i n co m e. Th e Perk i n s es al s o s ay we s h o u l du n d ers t an dth e Can an d ai g u a Treat y i n l i gh t o f h o w th e Sen eca Nat i o n u n d ers t o o d i t
. See J o n es v . M eeh an , 1 7 5 U.S. 1 , 1 1 (1 89 9 ). Ci ti n g Lazo re, 1 1 F.3 dat1 18 6 , th e Perk in s es arg u e th atth e Iro qu o i s
u n d ers t an d i n g o f t h e Can an d ai g u a Treat y was em b o di edi n t h e “ Two Ro w W am p u m ,” a b el tco n s i s t in g o f “ t wo p aral lel ro ws o f d arkco l o redb ead s o n a- 1 6 -

b ack gro un do f l i g h ter co l o red b ead s ” s i g ni fy in g “ t wo p eo p l es * * * co ex i s t i n g p eacefu l l y , n ei th er i m

p o s i n g t h ei r l aws o r rel i g i o n o n t h e o t h er.” 7 Li k e t h e co u rti n Lazo re, h o wev er, “ we are co n st rai n edfro m fi n d i n g an ex em p ti o n i n th e ab s en ce o f
s o m e t ex tu al s up p o rt .” Id . at1 1 8 7 . Th e Two Ro w W am p u m d o es n o t p ro v i d e t h i s req u i reds up p o rt
. 8 W e n o wtu rn t o t h e 1 8 4 2 Treat y . Th e Perk i n s es ci t e t h e fo l l o wi n g p o rt i o n
o f i t s t ex t : t o p ro tect s u ch o f t he l a nd s o f t h e Sen eca In d i an s , wi t h i n th e St at e o f New Yo rk , as m ay

fro m t i m e t o t i m e rem ai n i n th ei r p os s es si on f r o m

7 As th e Perk i n s es p o i nt o u t , th e Iro qu o i s u s edwam p um b el t s --b el t s m ad e fro m s t ri n g s o f s h el l s o r b ead s --t o m em o ri al ize ag reem en t s . See, e.g
. , Co l i n G. Cal l o way , “ Treat i es an d Treat y M ak i n g”, i n Th e Ox fo rdHan db o oko f Am eri can In d i an Hi s t o ry

5 3 9, 5 4 1 (Fred eri ckE. Ho x i e ed ., 2 0 16 ). Th e Two Ro w W am p u m i n i t i al l y co m

m em o rat ed a 1 7 t h -cen tu ry ag reem en tb et w een th e Iro qu o i s an dth e Du t ch . Lazo re v . Co m

m i s s i o n er, 1 1 F.3 d1 1 8 0 , 1 1 8 6 (3 d Ci r. 1 9 9 3 ), aff’ g i n p art T.C. M em o . 1 99 2 -4 0 4 . InLazo re, t h e co u rth eard t es t i m o n y ex p l ai n i n g th ati n th e Iro qu o i s ’ v i ew, t h e p ri n ci pl es o f t h e Two Ro w W am p u m “ were t h e b as i s fo r t reat i es wi t h Fran ce, Great Bri t ai n , an dth e Un i t edSt at es , i n cl u di n g t h e Treat y o f Can an d ai g ua.” Id
.

8 Al t h o u g h n ei t her t h e Perk i n s es n o r Lazo re d i s cu s s es i t , we n ot e t h at Geo rg e W as h in gt o n h ada s p eci fi c wam p u m b el tm ad e t o co m

m em o rat e t he Can an d ai g ua Treat y . See, e.g ., Ri ch ardW . Hi l l , Sr., “ L i n k i n g Arm s an d Bri g h t en i n g th e Ch ai n : Bu i l d i n g Rel at i o n s Th ro u g h Treat i es ”, i n Nat i o n t o Nat i o n : Treat i es Bet ween the Un i tedSt at es an dAm eri can In d i an Nat i o n s 3 7 , 5 6 (Su zan Sh o wn Harjo ed ., 2 0 1 4 ). Th atb el ts h o ws two fi g u res u n d er t h e ro o f o f a l o n g h o u s e l i n k i n g arm s wi t h t h i rt een fi g ures th at rep res en t t h e o ri g i n al St at es . Id
. Th i s wam p u m b el t , h o wev er, al s o d o es n o tg i v e u s t he t ex tu al s up p ortwe n eedt o fi nda t ax ex em

p t i o n .- 1 7 -

a l l taxes , an d as ses s m en tfo r ro ad s , h ig h way s , o r a n y o th er p ur p os e u n t i l s u ch l an d s s h al l b e s o l dan dco n v ey edb y t he s ai dIn d i an s , an d t h e p o s s es s i o n t h ereo f s h al l h av e b een rel i nq u i s h ed b y them
. 1 8 4 2 Treat y , art
. 9 , 7 St at . at5 90 (em p h as i s ad d ed ). 9 Th e Perk i n ses arg u e t h atth i s t reat y ex p l i ci t l y p ro v i d es a t ax ex em p ti o n fo r i nco m e d eri v edfro m t h e u s e o f t ri b al l an d . Th e Seco n dCi rcu i t h as h el dth atth e 1 84 2 Treat y “ cl earl y p ro h i b i t [s ] o n l y t h e t ax at i o n o f real p ro p ert y .” Un i t edSt at es v . Kai d , 2 4 1 F. Ap p ’ x 7 4 7 , 7 5 0 (2 d Ci r. 2 0 07 ) (ci t in g Sn y d er v . W et zl er, 6 0 3 N.Y.S.2 d9 1 0 , 9 1 2 (N.Y. Ap p. Di v . 1 9 9 3 ) (1 8 4 2 Treat y

“ cl earl y refers o nl y

t o t ax es l ev i edup o n real p ro p ert y o r l an d ”), aff’ d , 8 4 N.Y.2 d 9 4 1 (N.Y. 1 9 9 4 )). In the Perk i n s es ’ p aral l el Di s t ri ct Co u rtcas e, aft er q u es t i o n in g the p reced en t i al i m po rto f Kai d , 1 0 J u d g e Vi l ard o fo u n d i tal so l ack edp ers u as i v e v al u e b ecau s e Kai dd eal twi t h p ro du ct s u n rel at ed t o Sen eca l an dan d t h e p art ies i n Kai dwere n o t In di an s . Perk i n s , 2 0 1 7 W L 3 3 2 6 8 1 8 , at* 5 (“ [T] here i s n o reas o n t o b el i ev e t h atth e [Seco ndCi rcu i t ] ev en t h o u g h tab o u t t ax i n g t h e p ro du ct s o f t h e real p ro p ert y ”). In deed , the Di s t ri ctCo u rt

9 Th e 1 8 4 2 Treat y

ced edb ackt o the Sen eca Nat i o n l an di t h adp rev io u s l y s o l dt o th e Og d en Co m

p an y , i n cl u d i n g the Al l eg an y Terri t o ry . See 1 8 4 2 Treat y , art . 1 , 7 St at . at5 8 7 ; Haup t m an , s up ra, at1 0 7
.

1 0 Becau s e Kai di s a s u m

m ary o rd er p ub l i s h edi n th e Fed eral Ap p en d i x , J u d g e Vi l ard o rem ark ed t h at i t ’ s n otp reced en t i al i n t h e Seco n dCi rcu i t . Perk i n s , 2 0 1 7 W L 3 3 2 6 8 1 8, at* 4 (ci t i n g 2 dCi r. R. 3 2 .1 .1 (a) (ci t at io n o f s u m m ary o rd ers )). W e are n o n et h el es s p ers u ad edb y th e Seco ndCi rcu i t ’ s read i n g o f t h e 1 8 42 Treat y .- 1 8 -

qu es ti o n edwh eth er real p ro p ert y “ can ev en b e d i st i n g u i s h edfro m th e d i rt , g rav el , an d fo li ag e t h at co m

p ri s e i t.” Id . W e, o n th e o t h er h an d, are p ers u ad edb y th e Seco n dCi rcu i t’ s read i n g o f t h e 1 8 4 2 Treat y , an dwe d o n ’ tfi n d i td iffi cu l tt o d i s t i n gu i sh real p ro p ert y

fro m th e g rav el s ev ered fro m

i t . Bl ack ’ s Law Di ct i o n ary 1 4 1 2 (1 0 t h ed . 2 0 1 4) d efi n es real p ro p ert y as “ [l ] an dan d an yt h i n g g ro wi n g o n , at t ach edt o , o r erect edo n i t , ex cl u di n g an yt h i n g t h atm ay b e s ev ered wi t h o u ti n

ju ry t o the l an d .” Th e g rav el was n ’ tat t ach edt o th e l an d wh en i twas s o ld , s o th e Perk i n s es aren ’ t ex em

pt fro m t ax o n th e s al e o f t h e g rav el u n der t h e 1 8 4 2 Treat y . Cf. In re Bri g g s Av e. i n New Yo rk , 8 9 N.E. 8 1 4 , 8 1 6 (N.Y. 1 9 0 9) (a b u il d i n g th at i s s ev ered fro m

real p ro p ert y b eco m es p ers o n al p ro pert y ). Th atl eav es th e i s su e o f p en al t i es . Th e Co m m i s s io n er as s ert edtwo : a fai l u re-t o-t i m el y -fi l e p en al t y u n d er s ect io n 6 65 1 (a)(1 ) an dan accu racy -rel at ed p en al t y u n d er s ect i o n 6 6 6 2 (a). Sect io n 6 6 5 1 (a)(1 ) ad d s 5 % p er m o n th (up t o a m ax im u m o f 2 5 %) t o th e t ax al read y o wedfo r fai l u re t o fi le a ret u rn o n t i m e. Th e Co m m i ss i o n er h as p ro du ced t h e Perk i n s es ’ 2 0 08 an d 2 0 0 9 ret u rn s t o s h o w th atth ey were fi l edl at e, s o h e h as
m eth i s b u rd en o f p ro du ct i o n . See s ec. 7 4 9 1 (c). Th e Perk i n ses ’ 2 0 0 8 t ax retu rn
was due i n Oct o b er 2 0 0 9 an dth ei r 2 0 0 9 retu rn was du e i n Oct o b er 2 0 10 . Th ey d i d n ’ tfi l e ei t h er u n t i l Oct ob er 2 0 1 1 . Th e Perk i ns es al s o d i d n ’ t ad d res s p en al t i es- 1 9 -

i n thei r b ri ef, s o we d eem thi s i s s u e co nced edfo r t h atreas o n as wel l . See Ru l e 1 5 1 (e), Pet zo l dt v . Co m

m i s s i o n er, 9 2 T.C. 6 6 1 , 6 8 3 (1 9 8 9 ); Tu fftv . Co m m i s s i o n er, T.C. M em o . 2 0 0 9 -5 9
. Th e Co m m is s i o n er al s o d et erm i n edthatth e Perk i n s es are l i ab l e fo r
accu racy -rel at edp en al ti es u n d er s ect i o n 6 6 6 2(a). Sect io n 6 66 2 (a) p en al i zes a t ax p ay er o n th e p o rt i o n o f t h e u n d erp aym en to f t ax at tri b u t ab l e t o an y s ub s t an t i al
u n d ers t at em en to f i n co m e t ax . Sec. 6 6 6 2(a), (b )(2 ). Th e Co m m i s s i o n er al s o h as t h e b u rd en o f p ro du ct i o n h ere. Sec. 7 4 91 (c). An u n d ers t at em en ti s s ub s t an t i al i f i t
ex ceed s t h e g reat er o f $ 5 ,0 0 0 o r “ 1 0 p ercen to f th e t ax req u i redt o b e s h o wn o n th e ret u rn .” Sec. 6 6 62 (d )(1 )(A). Th e Perk i n s es ’ t ru e t ax l i ab i li t y fo r 2 0 0 8 i s ju s ts h y
o f $ 2 00 ,0 0 0 , b u tthey

i n i t i al l y d i d n ’ trep o rtan y

t ax ab le i n co m e. Fo r 2 0 0 9 t h ei r
co rrect t ax l i ab i l i t y i s ju s t o v er $ 2 0 0 ,0 0 0 b u t , as fo r 2 0 0 8 , th ey o ri g in al l y

d i d n ’ t rep o rtan y

t ax ab l e i n co m e. Th es e u n d ers t at em en t s are o f co urs e g reat er th an 1 0 %
o f t h e t ax th e Perk i ns es s h o ul dh av e rep o rt ed , wh i ch i s g reat er t h an $ 5,0 0 0
. Th i s wo u l do rd i nari l y

b e en ou g h fo r u s t o h o l dth at t h e Co m m i s si on er h as
m eth i s b u rd en o f p ro du ct i o n o n th e s ect i o n 6 6 6 2 p en al t y . Th e Seco n d Ci rcu i t , h o wev er, recen t l y

h el di n Ch ai v . Co m

m is s i o n er, 8 51 F.3 d 1 9 0 , 2 2 1 (2 dCi r. 2 0 1 7 ), aff’ g i n p art , rev ’ g i n p artT.C. M em o. 2 0 1 5 -4 2 , th ats ect i o n 6 7 5 1 (b )(1 )

“ req u i res wri t t en ap p ro v al o f t he i n i t i al p en al t y d et erm i n at i o n n o l at er t han th e- 2 0 -

d at e t h e IRS i s s ues th e n o t i ce o f d efi ci en cy * * * as sert i n g s u ch p en al t y .” Ital s o h el dth at“ co m

p l i an ce wi t h § 6 7 5 1 (b ) i s p arto f t h e Co m m i ss i o n er’ s b u rd en o f p ro duct i o n an dp ro of i n a d efi ci en cy cas e i n wh i ch a p en al t y

i s as s ert ed .” Id . Th e Co m m i s s i o n er h as n o t m etev en h i s b u rd eno f p ro du ct i o n o n t h e s ect i o n 6 6 6 2 p en al t y h ere, an ds o we can n o tfi n d t h ath e h as es t ab l i s hedh is en t i t lem en tt o ju d g m en tas a m at t er o f l aw o n t h i s p en al t y , ev en t h o u gh th e Perk in s es d i d n’ t
m ak e an y arg u m en t s ab o ut t h e p en al t y i n th ei r b ri ef. 1 1
An ap p ro p ri at e o rd er wi ll b e i s s u ed
. Rev i ewedb y

the Co u rt
. VASQUEZ, M ORRISON, BUCH, an d NEGA, J J ., ag ree wi t h th is o p i n i o n o f t h e Co u rt
.

1 1 Th e Perk i n s es al s o fi l eda m o t io n fo r l eav e t o fi l e s up p l em en tal m at eri al s, wh i ch we wi l l g ran t . W e co n s id ered th e s up pl em en t al m at eri al i n th i s Op in i o n .- 2 1 -

LAUBER an dPUGH, J J ., co n cu rri n g i n p artan dco ncu rri n g i n th e res u l t : W e ag ree wi t h the o p i n i o n o f t h e Co u rtthatth e Can an d ai g ua Treat y , No v . 1 1 , 1 7 9 4 , 7 St at
. 4 4 , d o es no tex em p t fro m Fed eral i nco m e t ax th e rev en ues o f p et i

t i on ers ’ g rav el m i ni n g b u s i nes s. Th e o pi n io n o f t h e Co u rtreach es th e s am e
co n cl u s i o n wi th res pect t o th e Treat y wi t h th e Sen eca, M ay 1 0 , 1 8 42 (1 8 4 2 Treat y ), 7 St at . 5 8 6 , reas o n i n g th ati tex em p ts fro m t ax o n l y “ t h e l an d s o f t h e Sen eca” an dth atth e g rav el p et i t i o n ers m i n edi s d i s t i n ctfro m th o se l an d s . Bu t as J u d g e Fo l ey

co n v in ci n g l y

s h o ws i n h i s d i s s en t in g o p i n i o n , th ere are u n res o l v ed fact ual an dl eg al i s s u es as t o wh et h er g rav el m i n edfro m In d ian l an di s p arto f In d i an l an d . Al t h o u g h s umm ary ju d g m en to n t hatth eo ry

i s i n ap p ro p ri at e fo r t h at
reas on , we wo u lds u s t ai n s u m m ary ju d g m en tfo r res p o n d en t o n two al t ern at i v e g ro u nd s : fi rs t , th at t h e 1 8 4 2 Treat y , l i k e t h e Can an d ai g u a t reat y , d i dn o tco n fer ri gh t s o n i n d i v i du al m em b ers o f t he Sen eca Nat io n, an d s eco nd , th atth e 1 8 4 2 Treat y ad d res ses ex em

pt i o n o n l y

fro m St at e, n otFed eral , t ax es . Th e o p i n i o n o f t h e Co u rtco rrect l y n o t es th atwe s h o u l di n t erp retth e 1 8 4 2 Treat y as th e Sen eca u nd ers t o o di t. Do in g s o req u i res u n d ers tan d i n g th e h i s t o ri cal b ack gro un do f t h e 1 8 4 2 Treat y an dan al y zi n g th e l an g u ag e t h e p art i es em p l o y ed
. See Ch o ct aw Nat i o n o f In d i an s v . Un it edSt at es , 3 1 8 U.S. 4 2 3 , 4 3 2 (1 9 4 3 ). Th e 1 8 4 2 Treat y

h ada v ery

n arro w p u rp o s e, n am el y , t o res o l v e d is ag reem en t s th ath ad- 2 2 -

ari s enu n d er a t reat y

th e Un i tedSt at es h ads i g n edwi t h th e Sen eca fo u r y ears p rev i o u s l y . See Treat y

atBu ffal o Creeko f 1 8 3 8 , 7 St at
. 5 5 0 (1 8 3 8 Treat y ). W h en t h e t ex to f t h e 1 8 4 2 Treat y i s readag ai n s tth i s h is to ri cal b ack g ro u n d , i ti s cl ear t h at t h e 1 8 42 Treat y

co nferred ri g h ts o n th e Sen eca Nat i o n , n o ti t s co ns t i tu en tm em b ers , an dth ati tco vers o n ly t ax es i m p o s edb y th e St at e o f New Yo rk
. Th e l an do n wh i ch p et i t i o n ers co n du ct edthei r g rav el m in i n g b u s in es s i s wi t h i n th e Sen eca res erv at i on . Befo re 1 83 8 , th e Sen eca l i vedo n fo u r d i s t i n ctres erv at i o ns i n up st at e New Yo rk : th e Bu ffal o Creek , Cat t arau g u s , Al l eg an y , an d To n newan d a res erv at i o n s . In1 8 3 8 th e Sen eca s o l d al l fo ur res erv at i o n s t o a p ai r
o f p ri v at e b u si n es s m en , Th om as Og d en an dJ o s ep h Fel l o ws , fo r $ 2 0 2 ,0 0 0 . Inth e 1 8 3 8 Treat y , ex ecu tedco n cu rren t l y wi t h t h e d eedo f s al e, 1 i twas ag reed t hatth e Sen eca wo u l dm o v e wes to f t h e M i s s i s s i p p i Ri v er b y Ap ri l 4 , 1 8 45 , b u tth atth ey
co u ldrem ai n o n th e Al l eg an y an d Cat t arau g us res erv at i on s u n t i l th atd at e. 1 8 3 8 Treat y , art s . 2 , 3 , 1 0 , 7 St at
. 5 5 0 , 5 5 1 -5 53
. In 1 8 4 0 th e New Yo rk

Leg i s l atu re i m

po s eda h i g h way t ax , an di n 1 8 4 1 i t i m p o s eda ro adt ax , o n t h e l an d(t h en o w n edb y Og d en an dFel l o ws ) t h ath adco n s t itu t edth e Al l eg an y

an d Cat t arau g u s res erv at i o n s . Acto f M ay 9 , 1 8 4 0 , 6 3 ds es s .,

1 Th e 1 8 38 treat y

was s i g n edo n J an u ary

1 5 , 1 83 8 , b u twas n otp ro cl ai m ed u n t i l Ap ri l 4 , 1 8 40
.- 2 3 -

ch . 2 5 4 , s ecs . 1 an d2 ; Acto f M ay 4 , 1 8 4 1 , 6 4 t h s es s ., ch . 1 6 6 , s ecs . 1 , 3 . If ei t h er t ax wen t u np ai d , th e St at e co u l di m p os e l i en s an ds ei ze l an d o n wh i ch th e Sen eca were t h en res i d i n g an do n wh i ch they h adth e ri g h tt o res i d e u nt i l 1 8 4 5 . Th e t ax es
an d t h e en fo rcem en t m ech an i s m were co n t ro v ers i al , res u l t i n g i n a l aws u i tth at
ev en tu al l y

fo u n d i t s way

t o the U.S. Suprem e Co u rt . See In re New Yo rkIn d i an s , 7 2 U.S. (5 W al l .) 7 6 1, 7 63 -7 64 , 7 7 1 -7 7 2 (1 8 6 6 ). Nu m ero u s d i sag reem en t s o n th i s an do t h er p oi n t s aro s e co ncern i n g th e p ro p er i n t erp ret at i o n o f t h e 1 8 3 8 Treat y . Th e 1 8 4 2 Treat y , wh ich es s en t ial l y rep l aced t h e 1 8 38 Treat y , was i nt en d edt o “ s et t l e, co m p ro m i s e, an d fi n al l y

t erm in at e” t h es e

“ d i vers qu es t i o n s an dd i fferen ces .” 1 8 4 2 Treat y , 7 St at . at 5 8 7 (fi ft h “ wh ereas ” cl au s e). Un d er t h e 1 8 4 2 Treat y , Og d en an d Fel l ows ret ai n edo wn ers hi p o f t h e l an dth atfo rm erl y

co n st i tut edth e Bu ffal o Creekan d To n n ewan d a res erv at i o n s . Th e Sen eca were res t o redt o o wn ers h i p o f t h e Al leg an y an d Cat t arau gu s res erv at i on s , b u tth e Treat y

v es t edi n Og den an dFel lo ws th e ri g h t t o p u rch as e t h e l an d
co m p ri s i n g th o s e t wo res erv at i o n s wh en th e Sen eca m o vedwes t . Id . art . 1 . An d i n l ieu o f t h e p u rch as e p ri ce s t i p u lat edi n t he 1 8 38 Treat y , the 1 8 4 2 Treat y p ro v i d edth atth e Sen eca wo u l du l t i m at el y b e p ai d , fo r rel eas e o f th e Bu ffal o Creek
an d To n n ewan d a res erv at i o n s , “ a ju s tco n s i d erat i o n s u m ” t o b e d et erm i n at edb y a p an el o f arb i t rat ors . Id
. art s . 3 an d4 , 7 St at . at5 8 8
.- 2 4 -

Art i cl e 9 o f the 1 84 2 Treat y i s th e p ro v i s i o n t hatco n cern s u s h ere. Wh en qu o t i n g th i s p ro v i s i o n , s ee o p. Ct . p . 1 7 , th e o pi n i on o f t h e Co u rto m i t s th e fi rs t1 8
wo rd s , wh i ch are q u i t e s i gn i fi can ti n o ur v i ew. Art i cl e 9 i n i t s en ti ret y read s as fo l l o w s : Th e p art i es t o t h i s co m p actm u tu al l y ag ree t o s o l i ci tth e i n fl u en ce o f t he Go v ern m en t o f t h e Un i t edSt at es t o p ro tect s uch o f t h e l an d s o f t h e Sen eca In d i an s , wi t h i n the St at e o f New Yo rk , as m ay

fro m t i m e t o t i m e rem ai n i n th ei r p o s s es s io n fro m al l t ax es , an das s es s m en ts fo r ro ad s , h i gh way s , o r an y o t h er p u rp o s e u n t i l s u ch l an d s s h al l b e s o l dan d co n v ey ed b y t h e s ai dIn d i an s , an dth e p o s s es s i o n thereo f s hal l h av e b een rel i n qu i s h edb y

th em . [Id
. , 7 St at . at 5 9 0 .] Wh en th i s l an gu ag e i s readag ai n s tth e h i s t o ri cal co nt ex t , i t s eem s cl ear t hat t h e 1 8 42 Treat y , l ik e t he Can an d ai g u a t reat y , d idn o t creat e a t ax ex em p ti o n fo r i n d i v i du al m em

b ers o f t h e Sen eca Nat io n . See In re New Yo rkIn d ian s , 7 2 U.S. at 7 7 1 -7 7 2 . Rat h er, t he p art i es ag reed thatth e rem ai n i n g t ri b al l an d s --i
. e., t h e l an d s
co m p ri s i n g th e Al l eg an y

an d Cat t arau g u s res erv at i o n s --wo u l db e p ro t ect edo n l y as l o n g as th o s e l an d s rem ai n edi n t h e Sen eca’ s p o s ses s i o n . Th ere i s n o d i s p u t e t h at t h e Perk i n s es m i n edan ds o ldth e g rav el t o g en erat e i n co m e fo r t h em s el v es , n o tfo r t h e Sen eca Nat i o n . Th e 1 8 4 2 Treat y , th en , h as n o ap p l i cat i o n t o thi s cas e. It al s o s eem s cl ear t h atth e “ t ax es ” t o wh i ch th e 1 8 4 2 Treat y refers are t ax es i m p o s edb y th e St at e o f New Yo rk . As the o p i n i o n o f t h e Co u rt co rrect l y n o t es ,- 2 5 -

art i cl e 9 h as al way s b een i n t erp ret edt o refer “ o n ly t o t ax es l ev i edupo n real p ro p ert y o r l an d .” See o p . Ct . p . 1 8 (qu o ti n g Sn y d er v . W et zl er, 6 0 3 N.Y.S.2 d 9 1 0 , 9 1 2 (N.Y. Ap p . Di v . 1 9 9 3 ), aff’ d, 8 4 N.Y.2 d 9 4 1 (1 9 94 )). In 1 8 4 2 there was
n o Fed eral t ax o n real p ro p ert y o r l an d . In d eed , n o Fed eral t ax o n l an dh adex i s t ed du ri n g th e p rev i o u s 2 6 y ears . 2 Gi v en th e ex t rem el y

n arro w fo cu s o f t h e 1 8 4 2 Treat y --t o s et tl e d i sp u t es th at h ad ari s en ab o u ti nt erp ret at i o n o f t h e 1 8 3 8 Treat y --i t s eem s h ig h ly u n l i k el y th at t h e p art i es i n ten d edart i cl e 9 t o co n fer i m m u n i t y fro m a Fed eral t ax th atd i dn o t t h en ex i s tan dh adn o tex i s tedfo r a g en erat i o n . In deed , art i cl e 9 i s l i m i t edt o th e l an d s o f t h e Sen eca In d i an s “ w i t h i n th e St at e o f New Yo rk .” Al l p art i es t o th e 1 8 4 2 Treat y

ex p ect edth atth e Sen eca wo ul dev en tu al l y m o v e wes to f th e M i s s i s s i pp i Ri v er. If t h e Sen eca h adb een co n cern ed ab o u t t h e p o s si bl e fu tu re ap p earan ce o f a Fed eral p ro pert y t ax , th ey p res u m ab l y

wo u ldn o t h av e ag reed t o l i m i tth e Fed eral ex em

p t i on t o p ro p ert y

wi t h i n New Yo rk
.

2 Th e Fi ft h Co n g res s en act edth e fi rs t d i rectt ax o n l an di n t h e fi x edam o u n t o f $ 2 m i l l i o n . Acto f J u l y 9 , 1 7 9 8, 1 St at . 5 9 7 . Th e J effers on ad m i n i s t rat io n d ecl i n edt o ren ew t h e t ax (an dal s o rep eal edco n tem po ran eo us l y

en act edex ci s e t ax es ). See Act o f Ap r. 6 , 1 8 0 2 , 2 St at . 1 4 8
. Oth er Fed eral t ax es o n l an d, g en eral l y i m p o s edi n a fi x edam o u n to n a o n e-t i m e b as i s , were en act edi n 1 8 1 3 , 1 8 1 5 , an d 1 8 1 6 , b u tth en d is ap p eared u n t i l th e Ci v i l W ar. Acto f Au g . 2 , 1 81 3 , 3 St at . 5 3 ; Acto f J an . 9 , 1 8 1 5 , 3 St at . 1 64 ; Acto f M ar. 5 , 1 8 1 6 , 3 St at2 5 5 . See g en eral l y Veazi e Ban kv . Fen n o, 7 5 U.S. (8 W al l .) 5 33 , 5 42 -5 4 3 (1 8 6 9 ).- 2 6 -

Th e t y pe o f t ax es t o wh i ch art i cl e 9 refers i s al s o i n st ru ct iv e. Itrefers t o

“ as ses sm en t s fo r ro ad s , h ig hway s , o r an y o t h er p u rp os e” l ev i edo n l an dth at“ m ay fro m t i m e t o t i m e rem ai n i n * * * [t h e Sen eca Nat i o n ’ s ] p o s s es s i o n * * * u n t i l s u ch l an d s s h al l b e s o l dan dco n v ey edb y th e s ai dIn d i an s .” Un der t h e 1 8 4 2 Treat y , th e l an dth atwas t o rem ai n i n t h e Sen eca’ s p o ss es s i o n co n si s t edo f t h e Al l eg an y an d Cat t arau g u s res erv at i o n s, wh i ch were t h e t arg eto f t h e o b j ect i on ab l e h i g h way

t ax
an d ro adt ax --i .e., “ as s es s m en t s fo r ro ad s * * * [o r] h i g h way s ”--t h at t h e New Yo rk Leg is l ature h aden act edi n 1 8 4 0 an d1 8 4 1
. Gi v en thi s h i s t o ri cal co n t ex t , art i cl e 9
s eem s cl earl y

d es i g n edt o p ro t ectth e Al l eg an y an dCat tarau gu s res erv at i o n s fro m New Yo rk t ax es u n ti l th e Sen eca s o l dthe l an dan dm o v edwes t
. Perh ap s m os ti ns t ru ct i ve are t h e i n t ro du ct ory wo rd s o f art icl e 9 , wh ereb y

“ [t ] h e p art i es * * * m

u tu al l y ag ree t o s o l i ci tthe i nfl u en ce o f t h e Go vern m en to f th e Un i ted St at es t o p ro t ect * * * the l an d s o f t h e Sen eca In d i an s ” fro m t ax at i o n . Th i s
wo u l db e an ex t rem el y

o d d --we wo u l dg u es s u np reced en t ed --way t o ex p res s an
ex em p t i o n fro m

Fed eral t ax at i o n . To s t art wi t h , a s o v erei gn Go v ern m en t can n o t

“ i n fl u en ce” i t s el f. If t he Un it edSt at es h adi n t en dedt o co n fer i m m u n i t y fro m Fed eral t ax at i o n i n art i cl e 9 , i two u l d p res u m ab l y ju s t h av e s ai ds o . An di f t h e Sen eca h adb arg ai n edfo r i m m u n i t y fro m Fed eral t ax at i o n , th ey

p res u m ab l y

wo u l d- 2 7 -

h av e d em an d ed an ex p l i ci ts t at em en tt o th ateffect , wh i ch the Un i t edSt at es (h adi t i n t en d edt o g ran t s u ch an ex em p t i o n ) co u l deas i l y

h av e s up p li ed
. Th e n atu ral i n terp ret at io n o f t h es e i n t ro du ct ory wo rd s i s th atth e Un i t ed St at es wo u l dex erci s e i t s i n fl u en ce t o p rev en t New Yo rkfro m t ax i n g t h e Sen eca’ s l an d , as th e New Yo rk Leg i s l atu re h ads o ug h tt o d o i n 1 8 40 an d 1 8 41 . Th e St at e
o f New Yo rkwas n o ta p art y t o th e 1 8 4 2 Treat y , an dp ri n ci p l es o f s o v erei g n i m m u ni t y wo ul dh av e p rev en t edth e Un it edSt at es fro m at t em p t i n g t o i n t erfere wi th
an o t h erwi s e-co n s t i tu t i o n al New Yo rkt ax . 3 Th e b es tthe Un i t ed St at es co ul dd o
was t o p l ed g e t o u s e i ts i n fl u en ce t o d i s s u ad e New Yo rk fro m t ax i n g Sen eca res erv at i o n l an dwh i le t h e Sen eca co n t i n u edt o o ccup y i t . Th i s cam

p ai g n ap p aren t l y
s u cceed ed : In 1 8 57 New Yo rk ab o li s h edth e 1 8 4 0 h ig hway t ax an d t he 1 8 4 1 ro ad t ax . See In re New Yo rkIn d i an s , 7 2 U.S. at 7 7 1
. Fo r t h es e reas on s , we co n cl u d e t h atart i cl e 9 o f t h e 1 8 42 Treat y d oes n o t
co n fer i m m u n i t y fro m Fed eral t ax at i o n an d d o es n o tev en ad d res s th ats ub ject
. Li k e t h e res to f t h e 1 8 42 Treat y , art icl e 9 was i n t en d edt o ad d res s o n e o f t h e “ d i

v ers qu es t i o n s an dd i fferen ces ” th at h adari sen i n th e wak e o f t h e 1 8 3 8 Treat y --

3 See Do bb i n s v . Co m

m ’ rs o f Eri e Ct y . , 4 1 U.S. (1 6 Pet .) 4 3 5 , 4 4 7 (1 8 4 2 ) (St at e t ax i n g p o wer “ i s a s acred ri g h t , es s en t i al t o t h e ex i s t en ce o f g ov ern m en t --an i n ci d en to f s o v erei g n t y ”); M ’ Cu l l o ch v . M ary l an d , 1 7 U.S. (4 Wheat .) 3 1 6 , 4 3 6
- 4 3 7 (1 81 9 ) (d i s t i n g u is h in g St at e t ax es as s es sedo n a Fed eral i n s t ru m en t al i ty ’ s l an d fro m St at e t ax es i m

p os edo n i t s co n s t i tu t i o nal l y au t h o ri zed o p erat i o n s ).- 2 8 -

n am el y , New Yo rk ’ s at t em p tt o i m p o s e ro adan d h i g h w ay

t ax es o n th e l an dco m p ri s i n g th e Al l eg an y an dCat t arau g u s res erv at i o ns , o wn ers h i p o f wh i ch th e 1 8 4 2 Treat y rev es t edi n the Sen eca. In art icl e 9 th e Un i tedSt at es ag reed t o u s e i t s i n fl uen ce t o p rev en tNew Yo rkfro m t ax i ng th e l an d wi t h i n th o s e t wo res erv at i o n s s o l o n g as th e Sen eca co n t i n u ed t o o ccup y t h atl an d . Th at art i cl e acco rd i n g l y h as n o ap p li cat io n t o Fed eral t ax at i o n . Un l i ke t h e o p in io n o f th e Co u rt , we wo u ldn o t reach th e i s s u e o f wh et h er g rav el co n s t i tu t es real p ro p ert y . In s t ead , we wo ul dg ran t s u m m ary ju dg m en tfo r
res p o n d en t b ecau s e art i cl e 9 o f t h e 1 8 4 2 Treat y co n ferred ri g ht s o n the Sen eca Nat i o n , n o t i t s co n s ti tu en t m em b ers , an db ecau s e i m

m u n i ty fro m Fed eral t ax at i on
was n otam o n g th e ri gh t s co n ferred
. M ARVEL, GALE, THORNTON, GOEKE, GUSTAFSON, PARIS, KERRIGAN, an dASHFORD, J J ., ag ree wi t h th i s o p i n i o n co n cu rri n g i n p artan d co n cu rri n g i n th e res u l t
.- 2 9 -

FOLEY, J ., d i s s en t in g : Th e Treat y wi t h t h e Sen eca, M ay

2 0 , 1 8 4 2 , 7 St at
. 5 8 6 (1 84 2 Treat y ) s t at es th atth e Un i t edSt at es wi l l “p ro tect s u ch o f t h e l an d s o f t h e Sen eca In d i an s , wi t h i n th e St at e o f New Yo rk , as m ay fro m t i m e t o t im e
rem ai n i n th ei r p o s s es si o n fro m al l t ax es ”. 1 8 4 2 Treat y , art . 9 , 7 St at . at5 9 0 (em p h as i s ad ded ). Wh en d et erm in i n g wh et h er s u m m ary ju d g m en t i s ap p ro p ri at e,
we m u s tv i ew al l fact s i n t h e l i g h tm o s t fav o rab l e t o t h e Perk i n s es (i .e., th e
n o n m o v i n g p art y ). See Su nd s t ran dCo rp . v . Co m m i s si o n er, 9 8 T.C. 5 1 8 , 5 2 0 (1 9 9 2), aff’ d , 1 7 F.3 d 9 6 5 (7 t h Ci r. 1 9 9 4 ). Inad d i t i o n , “ t reat i es s ho u ldb e
co n st ru edl i b eral l y

i n fav o r o f t h e In d i an s , wi t h am b i gu o u s p ro v i s i o ns i n terp ret ed t o thei r b en efi t ”. Co un t y o f On ei d a v . On ei d a In d i an Nat i o n o f N.Y., 4 7 0 U.S. 2 2 6 , 2 4 7 (1 9 8 5) (i n tern al ci t at i o n s o m i t t ed ). Th e o p i n i on o f t h e Co u rt , h o wev er,
co n st ru es th e t reat y

n arro wl y rat h er t h an l i b eral l y

an d ci t es Un i tedSt at es v . Kai d, 2 4 1 F. Ap p ’ x 7 4 7 , 7 5 0 (2 d Ci r. 2 0 0 7 ), an i rrel ev an t n on p reced en t i al s u m m ary
o rd er, an dBl ack ’ s Law Di ct i o n ary as i t s o n l y

au t h o ri t i es . Th e o p i n i o n o f t h e Co u rtco n cl u d es thatg rav el m i n edfro m In d i an l an di s
n o tp arto f In d ian l an d , reas o ni n g t h at“ [t ] h e g rav el was n ’ t at tach edt o th e l an d wh en i twas s o l d, s o th e Perk i n s es aren ’ t ex em p tfro m t ax o n t h e s al e o f t h e g rav el
u n d er t h e 1 8 4 2 Treat y . ” See o p . Ct . p . 1 8
. M o re co n v in ci n gl y , th e Un i t edSt at es Di s t ri ctCo u rtfo r t h e W es t ern Di s t ri cto f New Yo rks t at edth at- 3 0 -

[g ] i v en th e l i b eral p ri n ci p l es o f t reat y co n s tru ct i on th atap pl y

h ere, t h ere i s n o reas o n t o b el i ev e t h ato n e ru l e wo ul d ap p l y t o t ax i n g t h e d i rt , g rav el , an d fo l i ag e t h at m ak e up th e p ro p ert y an dan o t h er t o th e p ro p ert y i t s el f--i f “ t h e p ro p ert y ” can ev en b e d i s t i n gu i s h edfro m th e d i rt , g rav el , an d fo l i ag e t h at co m p ri se i t
. Perk i n s v . Un i t ed St at es , No . 1 6 -CV-4 95 (LJ V), 2 0 17 W L 3 3 26 8 18 , at* 5 (W
. D.N.Y. Au g . 4 , 2 0 1 7 ). Th e o p i n i o n o f t h e Co u rt ’ s co n cl u si o n , s ee o p . Ct . p . 1 8 , th ati ti s n o t“ d i ffi cu l tt o d i s t i n g ui s h real p ro pert y fro m th e g rav el s ev ered fro m i t ” i g n ores th e co m

pl ex i t ies rel at i n g t o m i n eral ri gh t s an d p ro p ert y l aw. See W at t
v . W . Nu cl ear, In c., 4 6 2 U.S. 3 6 , 5 5 (1 9 8 3 ) (h o l d i n g th at i n th e co n t ex to f t h e St o ck -Rai s i n g Ho m es t eadActo f 1 9 1 6 (SRHA) (s i n ce rep eal ed ), “ val u ab le
m i n eral s ” i n cl u d e g rav el ); Ty o n ekNat i ve Co rp . v . Co o k In l et Reg i o n, In c., 8 5 3 F.2 d7 2 7 , 7 2 9 (9 t h Ci r. 1 9 8 8 ) (an al y zi n g th e s ub s u rface an d s u rface o w n ers h i p ri gh t s o f s an dan d g rav el ); Res
. Co n s erv at i o n Grp ., LLC v . Un i t edSt at es , 9 6 Fed
. Cl . 4 5 7 , 4 6 5 (2 0 1 1) (h ol d i n g t h e Nav y co rrect l y d et erm i n edth atem b ed d edg rav el
an d s an dwere real p ro p ert y p urs u an tt o 4 1 C.F.R. s ec. 1 0 2 -7 1
. 2 0 ); cf. Bed Ro c Lt d ., LLC v . Un i t edSt at es , 5 4 1 U.S. 1 76 , 1 8 5 -1 86 (2 0 0 4 ) (d ecl i n i n g t o ex t en dW
. Nu cl ear, In c., 4 6 2 U.S. at3 6 , an d h o l d i n g th ats an dan dg rav el were n o t
co n si d ered “ v al u ab le m i n eral s ” p u rs u an tt o th e Pi t t m an Un d erg ro u n dW at er Acto f 1 9 1 9 ). Si m

p ly p u t , the o p i n i o n o f t h e Co u rtfai l s t o ad d res s th e req u is it e l eg al an d fact ual i s s u es . Thu s , the g ran t o f s u m m ary ju d g m en ti s n o t ap p ro p ri at e.