1 5 2 T.C. No . 5

UNITED STATES TAX COURT

BLUE LAKE RANCHERIA ECONOM IC DEVELOPM ENT CORPORATION, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t MAINSTAY BUSINESS SOLUTIONS, Pet i t i o n er v . COM M ISSIONER OF

INTERNAL REVENUE, Res p o n den t

Do ck etNo s . 1 6 1 5 0 -1 7 L, 1 6 1 8 9 -1 7 L. Fi l edM arch 6 , 2 0 19
.

In th es e co ns o l i dat edcas es P1 i s a co rp o rat i o n o f a fed eral l y reco gn i zedIn d i an Tri b e wi th a ch art er i s s u edb y th e Dep art m en to f In t eri o r (DOI) u n der s ec. 1 7 o f t h e In d ian Reo rg an i zat i on Act(IRA s ec. 1 7 ). P2 i s a d i v i si o n o f P1 . R i n it i at edco l l ect i o n act i on s u n d er I.R.C. s ecs . 6 3 20 an d6 3 3 0 ag ai n s t P1 an d P2 fo r u np ai dem p l o ym en t t ax es g en erat edfro m P2 ’ s b u si n es s o p erat i o ns . P1 ’ s ch art er al l o ws i tt o creat e s ub d i v is i on s fo r t h e p u rp o s e o f l eg al l y s eg reg at i n g th e as s et s an d l i ab i li t ies o f d i s cret e b u si n es s en d eav o rs . R arg ues th atDOI d o es n o th av e au th o ri ty t o g ran t P1 thi s p o wer b ecau se t h e g ran ti s co n traryt o es t ab l i s h edSt at e co rp o rat e l aw p ri n ci p l es . P1 arg u es th atP2 i s a l eg al l y s ep arat e d i vi s i o n p erm i t t ed b y P1 ’ s IRA s ec. 1 7 ch art er an dR i s p recl u dedfro m co l l ect i n g P2 ’ s em p l o ym en t t ax l i ab i l it i es fro m P1 . As a s eco n d ary

i s su e, R arg u es- 2
-

th ati rres pect i v e o f t h e ch art er, P2 as s u m edP1 ’ s co rp o rat e i d en t i ty an dd i dn o ti n facto p erat e as a s ep arat e d i v i s i o n. Hel d : P1 ’ s ch art er p ro p erl y al l owedi tt o creat e co rp o rat e d i v i si o n s wh o s e as s et s an dl i ab i l i t i es were d i st i n ctfro m tho s e o f P1 fo r Fed eral t ax p u rp o s es . Hel d , fu rt h er, P2 act edas a l eg al l y d i s ti n ctd i v i s i o n o f P1 ; th erefo re, R i s p recl u d edfro m co l l ect i ng P2 ’ s em

pl o ym en tt ax l i ab i l i t i es fro m

P1
. Hel d , fu rt h er, P2 i s l i ab l e fo r em p l o ym en tt ax es i n acco rd an ce wi th the p art ies ’ co nces s i o n s an ds t i p ul at i o n s .

Ro b ertR. Rub i n , J on at h an EdwardSt ro u s e, an dM i ch ael E. Ch as e, fo r p et i t i o n ers . M arkAl ex an d er Eri cs o n an dM ark L. Hu l s e, fo r res p o n d en t
.
GOEKE, Ju d g e: Inthes e co n s o l i d at edco ll ect i o n du e p ro ces s (CDP) cas es , p et i t i o n ers s eekrev iew p u rs u an tt o s ect i o n 6 3 3 0 , as m ad e ap p l i cab l e b y s ect i o n 6 3 2 0 (c), o f res p o n den t ’ s d et erm i n at i o n s s etfo rt h i n h i s n o t i ces o f d et erm in at i o n . 1 Res po n d en ti n i t i at edthe co l l ect i o n act io n s wi th res pect t o u np ai dem p lo ym en t t ax es (i .e., Fed eral i n co m e t ax , So ci al Secu ri ty , an dM ed i care wi th ho l d i n g s) fo r

1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de as am en d ed , an dal l Ru l e referen ces are t o th e Tax Co u rt Ru l es o f Pract i ce an d Pro cedu re.- 3
-

s ev eral qu art erl y

t ax p eri o d s . Res p o n d en ts en t p et i ti o n ers Let t ers 3 17 2 , No t i ce o f Fed eral Tax Li en Fi l i n g an dYo u r Ri g h tt o a Heari n g u n d er IRC 6 3 20 , o n J u n e 1 9 , 2 0 1 2 , J u n e 2 0 , 2 0 13 , an dDecem b er 1 9 , 2 0 1 3 . OnJ u n e 3 0 , 2 0 1 7 , res p o n d en ts en t p et i t i o n ers th ree n o t i ces o f d et erm i n at i o n s u s t ai n i n g th e em p l o ym en tt ax
as s es s m en t s i n h i s n o t i ces o f Fed eral t ax l i en fi l i n gs . Res p o n d en tas s es s edu np ai d
em pl o y m en tt ax es as fo ll o ws : 2 Let t er 3 1 7 2 d at e Tax p eri o den ded A s s es s m en tb al an ce Ju n e 1 9 , 2 0 1 2 Ju n e 3 0 , 2 0 0 9 $ 2 6 4 ,9 0 6.2 7 Ju n e 1 9 , 2 0 1 2 Dec. 3 1 , 2 0 09 3 ,8 9 6 ,5 8 5 .8 4 Ju n e 1 9 , 2 0 1 2 Ju n e 3 0 , 2 0 1 0 2 3 7 ,8 61 .1 6 Ju n e 1 9 , 2 0 1 2 Sep t. 3 0, 2 0 1 0 4 3 1 ,5 04 .2 5 Ju n e 1 9 , 2 0 1 2 Dec. 3 1 , 2 0 10 3 9 7 ,9 46 .0 0 Ju n e 1 9 , 2 0 1 2 M ar. 3 1, 2 0 1 1 4 ,1 3 1 ,6 3 5 .1 9 Ju n e 2 0 , 2 0 1 3 Ju n e 3 0 , 2 0 1 1 1 ,0 8 5 ,0 7 4 .3 7 Dec. 1 9 , 2 01 3 Sep t. 3 0, 2 0 0 9 1 ,0 8 5 ,3 4 7 .2 1 To t al 1 1,5 3 0 ,8 6 0.2 9

2 Th es e as s es s m en t bal an ces refl ect th e am o un t s reco rd edb y res po n den to n h i s n o t i ces o f Fed eral t ax l i en fi l i n g s en tt o p et i t io n ers . Th e am o u n ts d o n o t i n cl u d e i n t eres t an dp en al ty accru al s , ab at em en t s , p aym en t s , an dth e l i k e, wh i ch o ccu rredaft er t h e Fed eral t ax l i en s were fi l edan dreco rd ed . Res p o nd en th as m ad e co n ces si o n s , an d t h e p art i es h av e s t i p u l at edth e cu rren to u t s t an d i ng b al an ces . Pet i t io n ers d o n otd i sp u t e t h e u n d erl y i n g em p l o ym en tt ax as s es s m en ts
.- 4
-

Fo l l owi n g co n ces si o ns an ds t i p u l at io n s b y th e p art i es , th e s o l e i s su e
rem ai n i n g fo r d eci s i o n i s wh et her p et i t i o n er Bl u e Lak e Ran ch eri a Eco n o m i c Dev el o pm en tCo rp . (BLREDCo ) i s l i ab l e fo r t he em p l o ym en t t ax l i ab il i ti es o f i t s
co rp o rat e d i vi si o n , p et i t i o n er M ai n s t ay Bu s in es s So lu t io n s (M BS). 3 W e h o l dth at i t is n o t
.

3 Pet i t i on ers i ni t i al l y

ch al l en g edth e co m

p u tat i o n o f fai lu re t o d ep o si t p en al t i es as s es sedu n d er s ec. 6 65 6 fo r s o m e o f t h e t ax ab l e qu art ers ati s s u e. Ho wev er, fo l l o wi n g co n ces s i o n s b y res p o nd en t th es e p en al t i es h av e b een res o l v ed i n the fo u rt h s ti p u l at io n o f fact s as fo ll o w s :

Tax p eri o den d ed Pen al ty s ec. 6 6 56 Ju n e 3 0 , 2 0 1 0 $1 5 3 ,7 28 .6 8 Sep t . 3 0 , 2 0 10 2 5 8,3 1 7 .2 0 Dec. 3 1 , 2 01 0 3 2 2,7 6 1 .2 7 M ar. 3 1, 2 01 1 4 5 0,7 6 2 .8 8 Th e fo u rt h s t i pu lat i o n o f fact s al s o p u rp o rt s t o res o lv e t h e p en al t i es fo r t he t ax p eri o den d edM arch 3 1 , 2 0 1 0 . Ho wev er, as th ere was n o n o t i ce o f Fed eral t ax l i enco n cern in g th atp eri o d , we h av e n o juri s d i ct i o n t o co n si d er i t
. M BS h as al s o fi leda cl ai m fo r i n teres tab at em en twh i ch i s p en di n g b efo re th e Co u rti n d o ck etNo . 6 51 0 -1 8 . Th e d eci s io n i n thi s cas e d o es n ott ak e i n t o acco u n t th ats ep arat e p en d i n g cl ai m .- 5
- FINDINGS OF FACT Th e p art i es h av e fi ledfo u r s t i p u lat i on s o f fact s wh i ch are i n co rp orat ed h erei n b y th i s referen ce. Th e p et i t i o n s i n th es e cas es were t i m el y fi l ed o n J u l y

3 1 , 2 0 1 7 . Atthatt i m e BLREDCO’ s p ri n ci pal p l ace o f b u si nes s was i n Cal i fo rn i a; M BS’ p ri n ci p al p lace o f b u s i n es s was al so i n Cal i fo rn ia b efo re i tceas ed
o p erat i o n s . Bl u e Lak e Ran ch eri a (Tri b e) i s an In d i an Tri b e fed eral l y reco g n izedb y

the U.S. Dep art m en to f t h e In teri o r (DOI). BLREDCo i s a fed eral l y ch art ered
co rp o rat i o n wh os e ch art er was i s s uedt o th e Tri be b y DOI. At al l rel ev an t t i m es M BS o p erat eda p ro fes s i o n al em p l o ym en to rg an i zat i o n th atp ro vi dedem p lo y ee l eas i ng an dt em

p o rarys t affi n g s erv ices . M BS h as i t s o wn Fed eral em p l o y er i d en t i fi cat i o n n u m

ber (FEIN), s ep arat e fro m th e o n e i s s u edt o BLREDCo . Th e
em pl o y m en tt ax es ati s s ue aro s e fro m M BS’ b u s i n es s o p erat i o n s . OnJ u ne 8 , 2 0 12 , res p o n d en tp rep aredFo rm s 6 6 8 (Y)(c), No t i ce o f Fed eral Tax Li en , fo r t he em

pl o ym en tt ax es fo r t he t ax p eri o d s en d edJ u n e 3 0 an d Decem b er 3 1 , 2 0 09 , J u n e 3 0 , Sep t em b er 3 0 , an dDecem

b er 3 1 , 2 0 10 , an dM arch 3 1 , 2 0 1 1 (fi rs tNFTLs ). Th e fi rs tNFTLs were reco rd edwi th t h e Co u n ty Reco rd ers o f Cl arkCo u n ty , Nev ad a, an dSacram en t o Co u n ty , Cal i fo rn ia, an dfi l ed wi th th e Cal i fo rn i a s ecret ary o f s t at e. Th e fi rs tNFTLs were reco rd edan dfi l edi n- 6
-

th e n am e o f “ M AINSTAY BUSINESS SOLUTIONS A DIVISION OF BLUE LAKE RANCHERIA ECONOM IC DEVELOPM ENT CORPORATION” an d

“ BLUE LAKE RANCHERIA ECONOM IC DEVELOPM ENT CORPORATION DBA M A INSTAY BUSINESS SOLUTIONS.” On J u n e 1 9 , 2 0 1 2 , res p o n d en t
m ai l edLet ters 3 1 7 2 an dco p i es o f t h e p rep aredFo rm s 6 6 8 (Y)(c) t o M BS an d BLREDCo . Th e Let t ers 3 1 72 i n d i cat edth atth e fi rs t NFTLs were fi l edo n J u n e 1 9 , 2 0 1 2
. OnJ u ne 1 0 , 2 01 3 , res p o n d en tp rep aredFo rm s 6 6 8 (Y)(c) fo r t h e
em pl o y m en tt ax es fo r t h e t ax p eri o den d edJ u ne 3 0 , 2 01 1 (s eco ndNFTLs ). Th e
s eco n dNFTLs were reco rd edwi th t h e Co un ty Reco rd er o f Cl arkCo u n ty , Nev ad a,
an d fi l edwi th the Cal i fo rn i a s ecret ary o f s t at e. Th e s eco n d NFTLs were reco rd ed
an d fi l edi n th e n am e o f “ BLUE LAKE RANCHERIA ECONOM IC DEVELOPM ENT CORPORATION DBA M AINSTAY BUSINESS SOLUTIONS.” OnJ u n e 2 0 , 2 0 1 3 , res p o nd en tm ai l eda Let t er 3 1 7 2 an d co p i es o f th e p rep ared Fo rm s 6 6 8(Y)(c) t o BLREDCo
. Th e Let t er 3 1 7 2 i n d i cat edth atth e
s eco n dNFTLs were fi l ed o n J u n e 2 1 , 2 0 1 3
. Res p o n den th as n o ti s s u eda Let t er 3 1 7 2 o r fi l ed a n o t i ce o f Fed eral t ax l i en i n t h e n am e o f M BS fo r t h e em pl o ym en t t ax es fo r t h e t ax p eri o den d edJ u n e 3 0 , 2 0 1 1
.- 7
-

OnDecem

b er 9 , 2 0 13 , res p o n d en tp rep aredFo rm 6 6 8 (Y)(c) fo r th e
em pl o y m en tt ax es fo r t h e t ax p eri o den d edSep t em b er 3 0 , 2 0 0 9 (t h i rdNFTLs ). Th e t h i rdNFTLs were reco rd edwi th th e Co u n ty Reco rd er o f Cl arkCo u n ty , Nev ad a, an dfi l edwi th th e Cal i fo rn i a s ecret ary o f s t at e. Th e t h i rdNFTLs were
reco rd edan dfi l edi n th e n am e o f “ M AINSTAY BUSINESS SOLUTIONS A DIVISION OF BLUE LAKE RANCHERIA ECONOM IC DEVELOPM ENT CORPORATION” an d“ BLUE LAKE RANCHERIA ECONOM IC DEVELOPM ENT CORPORATION DBA M AINSTAY BUSINESS SOLUTIONS.” OnDecem b er 1 9 , 2 0 1 3 , res p o nd en t m ai l edLet t ers 3 1 72 an d
co p ies o f t he p rep aredFo rm s 6 6 8 (Y)(c) t o M BS an dBLREDCo . Th e Let t ers 3 1 7 2 i n d i cat edth atth e t h i rdNFTLs were fi l edo n Decem b er 1 9 , 2 0 1 3
. Th e fi rs t , s eco n d, an dth i rdNFTLs al l refl ect edth e FEIN o f M BS, n o tth at
o f BLREDCo
. OnJ u ly 2 5 , 2 0 12 , BLREDCo an dM BS each t i m el y fi l eda Fo rm 1 2 1 5 3 , Req ues t fo r a Co l l ect i o n Du e Pro ces s o r Equ i v al en tHeari n g , wi th res po n d en tfo r th e em p lo ym en tt ax es fo r t h e t ax p eri o d s l i s tedi n th e fi rs tNFTLs . OnJ u ly 1 8 , 2 0 1 3 , BLREDCo an dM BS each t i m el y fi l eda Fo rm

1 2 1 5 3 wi th res po n d en tfo r th e em p lo ym en tt ax es fo r t h e t ax p eri o dl i s t ed i n th e s eco n dNFTLs . OnJ an u ary 1 5 , 2 0 1 4 , BLREDCo an dM BS each t i m el y fi l ed a Fo rm 1 21 5 3 wi th res p on d en t- 8
-

fo r t h e em

p l o ym en tt ax es fo r t h e t ax p eri o dl i st edi n th e t h i rdNFTLs
. Th e Fo rm s 1 2 1 5 3 fi l edb y

M BS an dBLREDCo refl ect edd i fferen tFEINs ; th e FEIN u s edb y BLREDCo was n o t i t s o wn , b u to n e o f an o th er rel at eden ti ty . OnJ u ne 3 0 , 2 01 7 , res p o n d en ti s s u edth ree n o ti ces o f d et erm i n at i o n ad dres s edt o BLREDCo i n rel at i o n t o th e fi rs t , s eco n d , an dth i rdNFTLs . Th e
n o t i ces o f d et erm in at i o n i n cl u dedth e FEIN o f M BS. I. Creat i o n o f BLREDCo In J u n e 2 0 03 th e Tri b e s ub m i tt eda t ri b al res o l u t i o n an d p ro p o s edch art er o f i n co rp o rat io n t o DOI, requ es t in g ap pro v al o f a Fed eral ch art er o f i n co rp o rat i o n
u n d er t h e In d i an Reo rg an i zat i o n Acto f 1 9 3 4 (IRA), ch . 5 7 6 , s ec. 1 7 , 4 8 St at . at 9 8 8 (co d i fi edas am en dedat2 5 U.S.C. s ec. 5 1 2 4 (Sup p . V 2 0 1 7 ) (fo rm erl y
co d ifi edat2 5 U.S.C. s ec. 4 7 7 )) (IRA s ec. 1 7 ). OnDecem b er 2 9 , 2 0 0 4 , DOI ap p ro v edth e Tri b e’ s req u es tan di s s u eda ch art er u n der t h e au th o ri ty o f IRA s ec. 1 7 . OnJ an u ary

3 1 , 2 0 0 5 , th e Tri b e’ s b us i n es s co u n ci l p as s edRes ol u ti o n No . 0 5
- 0 7 rat i fy i n g th e ap p ro v edch art er, wh i ch h adth e effect o f b ri n g in g BLREDCo i n to
ex i s t en ce as a fed eral l y

ch art eredco rp o rat i o n (IRA s ec. 1 7 co rp o rat i o n ). In rel ev an t p art , BLREDCo ’ s IRA s ec. 1 7 ch art er s t at es : W HEREAS, th e Bu s in es s Co u n ci l h as fo u n dth atth e fo rm at i on o f t h e Bl u e Lak e Ran ch eri a Eco n o m i c Dev el op m en t Co rp o rat i o n p u rs u an t t o a § 1 7 Ch art er wi l l s erv e t h e b es ti n t eres t o f t h e Tri be, i t s m em b ers- 9
-

an di t s en terp ri s es an d wi l l p ro t ectthe p o l i ti cal i n teg ri ty , eco n om i c s ecu ri ty an dh eal th an d wel fare o f t he Tri be an di t s m em b ers b y , am o n g o ther t h i n gs * * * creat i n g a l eg al s tru ctu re wh i ch p ro v i d es fo r th e s eg reg at io n o f d i scret e Co rp orat i o n as s et s an d l i ab i l i t i es i n t o s ep arat e Co rp o rat e s ub d i v i s i o n s , wi th o utd i v es t i ng ei th er t he Co rp o rat i on o r the t ri b e o f t h e p ri v i leg es an di m m u ni t i es ari s i n g p u rs uan tt o thei r l eg al s t atu s u n d er fed eral an dTri b al Law * * *

* * * * * * * ARTI CLE VI I I . - Co rpo ra te Po w ers Sub ject t o ap p l i cab le fed eral l aw, th e Co rp o rat i o n i s au th o ri zedan d em p o w eredt o ex erci s e t h e fo l l o w i n g p o wers :
* * * * * * * E. To creat e s ub d i v i s i o n s o f t h e Co rp o rat i o n fo r t h e p u rp o se o f l eg al l y s eg reg at i n g th e as s et s an d l i ab i li t ies o f d i s cret e b u si n es s en d eav o rs o f th e Co rp o rat i o n reg ard l es s o f co m m o n d i rect o rs h i p ; p ro v i d ed , th ateach s u ch s ub d i v i s i o n s hal l h av e t h e ri g h t s an d p ri v il eg es g ran t edb y

an db e s ub

ject t o t h e l i m i tat i on s o f t h is Ch art er. II. Creat i o n o f M BS In 2 0 0 3 M BS was fo rm edas an en t erp ri s e o f th e Tri b e an do b t ai n ed a
s ep arat e FEIN. Du ri n g al l rel ev an tt i m es , M BS m ai n t ai n edi t s o wns ep arat e FEIN. OnDecem

b er 1 1, 2 00 6 , th e Tri b e’ s b u s i n es s co u nci l p as s edOrd i nan ce No . 0 6 -0 2 (co n v ers i o n o rd i n an ce), wh i ch creat eda n ew art i cl e i n t h e Tri b e’ s Tri b al Co d e
au th o ri zi n g b u s i n es s en t i t i es wh o l l y o wn edb y th e Tri b e t o co n v ertt o d i v i s i o n s o f BLREDCo th ro u g h a p l an o f co n v ers i o n . Inrel ev an tp art s t he co n v ers i on
o rd i n an ce read s :- 1 0 -

§ 2 .1 .3 .0 1 . Co nv ers i on o f a no ther bus i nes s enti ty i nto a di vi s i o n o f Bl ue La k e Ra ncheri a Eco no m i c Dev el opm ent Co rpo ra ti o n. An y b u s i n es s en t it y

wh o ll y o wn edb y

th e Tri b e * * * m ay

b e co n v ert edi nt o a d i v i si o n o f t h e Bl u e Lak e Ran ch eri a Eco n o m i c Dev el o p m en tCo rp o rat i o n * * * as au th o ri zedb y Art i cl e VIII, Sect i o n E o f t h e Fed eral Ch art er i s s u edo n Decem b er 2 9 , 2 0 0 4 fo r * * * [BLREDCo ] b y

th e Secret ary

o f t h e Un i t edSt at es Dep art m en to f In t eri o r p u rs u an tt o 2 5 U.S.C. § 4 7 7
.

* * * * * * * § 2 .1 .3 .0 4 . Ri g hts a nd l i a bi l i ti es . (a) Ex cep tas s etfo rt h i n s ub s ect i o n (c) b el o w, anen t i ty th at co n v ert s i n t o a d i vi s io n o f * * * [BLREDCo ] p u rs u an tt o th i s art i cl e i s fo r al l p u rp o s es th e s am e en t it y th atex i st edb efo re t h e co n v ers io n . (b ) Up o n a co n v ers i o n t ak i n g effect , al l o f th e fo l l o w i n g ap pl y : (1 ) Al l the ri g h t s an dp ro p ert y , wh et h er real , p ers o n al , o r m i x ed , o f t h e co n v ert i n g en t i ty are v es t ed i n th e co n v ert ed d i v i s i o n an ds h al l b e h el ds ep arat e an dap artfro m al l o th er ri g ht s an dp ro p ert y o f * * * [BLREDCo ]
.

(2 ) Al l d eb t s , l i ab i l i t i es , an do b l i g at i o n s o f t h e co n v ert i n g en t i ty

co nt in u e as d eb t s , l iab i l i t i es , an do b l i gat i o n s o f t h e d i v i si o n an d s h al l b e s ep arat e an dap artfro m th e d eb t s , l i ab i l it i es , an d o b l i gat i o n s o f * * * [BLREDCo ]
.

(3 ) Al l em

p l o y ees o f t h e co n v ert i n g en t i ty s h al l rem ai n th e em p l o y ees o f t h e * * * [BLREDCo ] d i v is i on . (4 ) Al l au th o ri zat i o n , i d en t i fi cat i o n n u m b ers , an d acco u n t s h el db y

th e co nv ert i n g en t i ty

s h al l rem ai n i n fu l l fo rce an d effect fo r t h e b en efi to f t h e n ew * * * [BLREDCo ] d iv is i o n t o the ex t en tau th o ri zed o r p erm i t t edb y l aw. (5 ) Al l ri g h t s o f cred i to rs an dl i en s up o n t h e p ro p ert y o f th e co nv ert in g en t i ty

s h al l b e p res erv edu n i m

p ai redan d rem ai n en fo rceab l e ag ai n s tth e d i v i s io n t o th e s am e ex t en tas ag ai n s tth e co n v ert i n g en t i ty

as i f t he co n v ers i o n h adn o to ccu rred
. (6 ) An y act i o n o r p ro ceed i n g p en d i n g b y o r ag ai n st th e co n v ert i n g en t i ty

m ay b e co n t i n u edag ai n s tth e d i v i s i o n as i f t h e co n v ers i o n h adn o t o ccu rred
.- 1 1 - (c) Ex cep tas ex p res s l y

s t at edab o v e, t h e d i v i s i o n wi l l o p erat e as a d i v is i o n o f * * * [BLREDCo ] i n acco rd an ce wi th th e * * * [BLREDCo ] Co rp o rat e Ch art er an dth e * * * [BLREDCo ] By l aws an dth e d i v i s i o n s hal l h av e t he s t atu s o f a fed eral l y ch art ered co rp orat i o n fo r al l p u rp o s es . Al s o o n Decem

ber 1 1 , 2 0 0 6 , th e Tri b e’ s b u s i n es s co u n ci l p as s edRes o l u t i o n No . 0 6 -2 9 (co n v ers i o n res o l u t i o n ), wh ich ad o p teda p l an fo r co n v ert i n g M BS, i n
acco rd an ce wi th the co n v ers io n o rd i n an ce, fro m an en terp ri s e o f t h e Tri be t o a d i v i s i on o f BLREDCo . Inco o rd i n at i o n wi th th e co n v ers i on res o l ut i o n , a cert ifi cat e o f co n v ers i o n was fi l edwi th th e Tri b al s ecret ary . M BS’ n am e was ch an gedfro m

“ M ai ns t ay

Bu s i nes s So l u t i o ns ” t o “ M ai n s tay Bu s i n es s So l u ti o n s , a d i v i s i on o f Bl u e Lak e Ran ch eri a Eco n o m i c Dev el o p m en tCo rp orat i o n . ” In rel ev an t p artth e co n v ers i o n res o l ut i on s t at es :

Up o n Co nv ers i on , M ai n s t ay Bu s in es s So lu t i o n s, a d i vi s i o n o f * * * [BLREDCo ] , s hal l o p erat e as a d i v is i o n o f * * * [BLREDCo ] u n d er t h e d i rect i o n an dco n tro l o f th e * * * [BLREDCo ] Bo ardo f Di rect o rs i n acco rd an ce wi th th e * * * [BLREDCo ] co rp o rat e ch art er an db y laws , s ub

jectt o § 2 .1
. 3 .0 4 o f t he Bl u e Lak e Ran ch eri a Tri b al Co d e. III. Op erat i on s o f BLREDCo an dM BS Atal l rel ev an tt im es , M BS was en g ag ed i n a n um b er o f em p l o y m en t
s t affi n g b u s i n es s act i v i t i es i n cl u d in g em p l o y ee l eas i n g, t em

p orarys t affi n g , p ayro l l
s erv i ces , an dHu m an Res ou rces ad m i n i s trat i o n o u t s o u rci n g . Nei th er BLREDCo- 1 2 -

n o r an y o f i t s o th er d i v i s i o n s were en g ag edi n s i m i l ar b us i n es s act i v i t ies du ri n g the t ax qu art ers ati s s u e. In 2 0 0 9 an d 2 0 1 0 M BS h adm o re t h an 2 0 ,0 0 0 em pl o y ees an d
m o re th an $ 10 0 m i l l i o n i n rev en u e an dex p en s es . M BS h ad i t s o wnb an kacco u nt s wi th Ban ko f Am eri ca, i n cl u d i n g an
o p erat i n g acco u n t an d a p ay ro l l acco u n t, an dan acco u n twi th Un i o n Ban k. M BS p ai di t s em

p l o y ees fro m

i ts Ban ko f Am eri ca p ayro l l acco u n t . M BS fi l edqu art erl y Fo rm s 9 4 1 , Em

p l oy er’ s Qu art erl y

Fed eral Tax Retu rn , fo r em p l o y m en t t ax qu art ers en d edJ u n e 3 0 , Sep tem b er 3 0 , an d Decem

b er 3 1 , 2 0 0 9 , M arch 3 1 , J u n e 3 0 , Sep t em

b er 3 0 , an d Decem

ber 3 1 , 2 0 1 0 , an d M arch 3 1 , 2 0 1 1 . M BS co m p l et ed a Fo rm 9 4 1 fo r t h e em

p lo ym en tt ax qu art er en d edJ u n e 3 0 , 2 0 1 1 , b u td i dn o tfi l e th e ret urn wi th res p o nd en t . M BS h adi t s o wn em pl oy ee b en efi tp l an s i n cl u d i n g a
s ect i on 4 0 1 (k ) ret i rem en tp l an , h eal th p lan , d en t al p l an , v is i on p l an , an dfl ex i b le b en efi t s p l an . M BS p ai dth e em p l oy er’ s p o rt io n s o f t h e co st s fo r th e h eal th , d en tal , an dv i s io n p l an s . M BS h ad i t s o wncu s t o m ers , i n cl u d i n g cert ai n d ep art m en t s o f t h e St at e o f Cal i fo rn i a, an du s edwri t t enco n tract s an dcl i en t s erv ice ag reem en t s wi th tho s e
cu s t o m ers . M BS was p ai d b y i t s cu s t o m ers ; BLREDCo d i dn o trecei v e p aym en t s fro m M BS cu s t o m ers . M BS l eas edequ i p m en tan d au t o m o b i l es i n i t s o wn n am e
an d m ad e l eas e p aym en t s o n th e s am e. M BS h adco m m erci al g en eral l i ab i l i ty- 1 3 -

i n s u ran ce, wo rk ers co m

p en s at i o n i n s u ran ce, an dp ro p ert y an d cas ual i n s uran ce al l i n i ts o wnn am e. Th e p rem i um s fo r t h es e p o l i ci es were al l p ai do u to f M BS’
o p erat i n g acco u n t. BLREDCo was an en t i ty

th atco l l ect edcas h an d as s et s fo r t h e Tri b e fo r t h e p u rp os e o f eco n om i c d ev el o pm en t . BLREDCo h adb an kacco u n t s an das s et s
s ep arat e fro m MBS’ . BLREDCo al s o ad m i ni s t ereda g en eral fu n dwi th
u n res tri ct edcas h fro m

cas i n o o p erat i o n s. Th e b oardo f BLREDCo recei v ed i n fo rm at i o n al upd at es o n th e o p erat i o n s o f M BS ati t s b o ardm eet i n g s b ut was n o t i n v o l v ed i n th e o p erat i o n s o f M BS. A. M BS Offi ce Sp ace M BS l eas edo ffi ce s p ace an dp ai dthe ren t an dp ers o n al p ro p ert y t ax es
as s o ci at ed wi th th es e l eas es . Inad d i t i o n , M BS o ccup i edp arto f an o ffi ce b u i l d i n g at6 0 5 Co o l i d g e Dri v e, Fo l s o m , Cal i fo rn i a (Co o li d g e p ro pert y ). Ti t l e t o th e Co o l id g e p ro p ert y

was t ak en i n th e n am e o f BLREDCo d .b .a. M BS as req u i redb y Rab ob an k , th e s ecu redl en der, i n o rd er t o cl o s e t h e l o an . Al th ou g h t it l e t o th e Co o l i dg e p ro p ert y was i n th e n am e o f BLREDCo , M BS m ad e t h e m on th l y m o rt g ag e p aym en t s o n th e b u i ld i n g an dp ai dm ai n t en an ce
an d rep ai r co s ts fo r th e p ro p ert y . M BS al s o co l l ect edren tfro m a l es s ee i n th e b u i l d i n g . Inad d i t i on , M BS p ai dth e p ro pert y t ax es , th e u ti l it y

b il l s , an d t h e- 1 4 -

l i ab i l i ty in s u ran ce as s o ci at edwi t h th e Co o l i d g e p ro p ert y . Th e l iab i l i ty i n su ran ce
n am edo n l y

M BS as i n s u red
. B. Fl ex ib le Fu n d in g Acco u n ts Recei vab l e Fi n an ci ng Ag reem en t OnM ay 1 5 , 2 0 0 9 , M BS an dFl ex i b l e Fu n d i n g , LLC (FF), en t eredi n t o an
acco u n t s recei vab l e fi n an ci n g ag reem en t (FF ag reem en t ) wh ereb y FF p ro v i d ed
acco u n t s recei vab l e fi n an ci n g t o M BS. Th e FF ag reem en t was s i l en tas t o th e rel at i o n s h i p b et ween BLREDCo an dM BS. M BS, b u tn otBLREDCo , g av e FF a Fo rm 8 8 2 1 , Tax In fo rm at i o n Au th o ri zat i o n , d at edJ u n e 3 , 2 0 0 9 . Un d er t h e FF ag reem en t , cert ai n MBS cu s to m ers m ad e p aym en t , v i a ch ecko r wi re t ran s fer, t o a jo i n t ban kacco u n to pen edb y M BS an dFF fo r t h e b en efi to f FF. FF p ro v i deda l i ne o f cred i t ag ai ns t wh i ch M BS co u l ddraw. OnM ay 2 6 , 2 0 1 0 , an am en d edfi n an ci ng ag reem en t(am en d edFF ag reem en t ) was en tered i n t o b et ween FF, BLREDCo , an dM BS, wh i ch th e ag reem en ti d en t i fi es as a d i v i s i o n o f BLREDCo . Inrel ev an tp art th e am en d edFF ag reem en ts t at es : “ Th i s ag reem en tam en d s an dres t at es i n i t s en t i ret y th at cert ai n Acco u n tRecei v ab l e Fi n an ci n g Ag reem en tb et ween M AINSTAY BUSINESS SOLUTIONS an dFLEXIBLE FUNDING d at edM ay 1 5 , 2 0 0 9 t o refl ectth atBl u e Lak e Ran ch eri a Eco n o m i c Dev el o p m en tCo rp o rat i o n was th e o ri g i n al co n tract i n g p art y .”- 1 5 -

Al th ou g h the am en d edFF ag reem en ti ncl u d es BLREDCo as a p art y an d
was o st en s i b l y

m ad e t o cl ari fy

th atBLREDCo was a p art y t o th e o ri gi n al ag reem en t , the t erm s o f th e am en d edFF ag reem en ti m p os e o b li g at i o n s an d p ro v id e b en efi ts t o FF an d M BS; th ey are co m pl et el y s i l en tas t o BLREDCo
. Th e p ream

bl e t o th e am en d edFF ag reem en ts t at es : FLEXIBLE FUNDING h ereb y ag rees t o p ro v i d e M AINSTAY s erv ices as m o re fu ll y

s etfo rt h an ds p eci fi edi n th i s Ag reem en t. Su ch s erv ices s h al l i n cl u de: (1 ) es t ab li s hi n g an d m ai n tai n i n g fo r M AINSTAY’ s b en efi tan “ o p en en d ” cred i tp ro g ram * * * u si n g as co l l at eral th e as s i g n m en tb y M AINSTAY t o FLEXIBLE FUNDING o f al l o f t he ACCOUNTS RECEIVABLE res u lt i ng fro m p l acem en to f t em p o raryem

p l o y ees * * *
. In ad d it i o n , th e am en d edFF ag reem en t , as i trel at es t o co l l at eral , p ro v i d es : 1 2 . M AINSTAY h ereb y ag rees th atal l o f i t s o b l i g at i o n s u n d er th i s Ag reem en t are h ereb y

s ecu redb y

th e as s i g n m en tt o FLEXIBLE FUNDING o f t h e fo l l o wi n g p ro p ert y (h erei n aft er t h e “ Co l l at eral ”): a. Al l acco u nt s recei v ab le, ri g h t s t o recei v e p aym en tfo r s erv i ces ren d eredwh eth er b y co n tract o r o therwi s e, ri g h ts t o l i qu i d at edd am ag es , cl ai m s fo r u n l i qui d at ed d eb t s (t h e “ A cco u n ts ”) n o w ex i s t i ng o r h ereaft er creat ed ari s i n g fro m

an y b u s i n es s o f M AINSTAY * * * ; an d b
. Al l p ro ceed s fro m

s u ch Acco u n t s * * * , an d; c. Al l b o o k s an dreco rd s rel at i n g t o an y o f th e ab o v e * * * i n th e p o s ses s i o n o r co nt ro l o f M AINSTAY * * *
. 1 3 . M AINSTAY ag rees t o ex ecu t e, up o n d em an db y FLEXIBLE FUNDING, an y

an dal l Fi n an ci n g St at em en t s * * * u sefu l o r n eces s ary t o p erfect FLEXIBLE FUNDING’ s s ecu ri ty i n teres t* * *
. M AINSTAY h ereb y

i rrev o cab l y

ap p o i nt s FLEXIBLE FUNDING i t s ag en tfo r t h e p u rp o s es o f ex ecu t in g an dfi li n g an y fi n an ci n g s t at em en t- 1 6 -

o r s i m i l ar d ocu m en twh i ch m ay b e n eces s ary

t o p erfect an dco n t i n u e p erfect eds u ch s ecu ri ty

i n t eres tu n der t h e Un i fo rm Co m m erci al Co d e. Th e am en d edFF ag reem en ti s s i l en tas t o p erfect i n g an y i n t eres tag ai n s t BLREDCo ; h owev er, at tach edt o the ag reem en ti s a d o cu m en ten t i t l ed

“ ATTACHM ENT PAGE TO FORM UCC-1 ” wh i ch l i s t s BLREDCo as th e

“ En t i ty ’ s Nam e”. On Ap ri l 2 , Ap ri l 2 2 , M ay 7 , an d J u n e 1 1 , 2 0 1 0 , FF fi l edUCC-1 Fi n an ci n g St at em en t s wh i ch n am edBLREDCo as th e d eb t o r an d M BS as an ad d it i o n al d eb to r. Each fi n an ci n g s t at em en tco v eredthe co l l at eral d es cri b edi n th e
am en d edFF ag reem en t . Al tho u g h BLREDCo was l i s t edas th e d eb t o r o n t h e fi nan ci n g s t at em en t s , th ere i s n o ev i d en ce i n th e reco rdth atBLREDCo h adan y
acco u n t s o r o th er as s et s th atwere co v eredb y th e co l l at eral as d es cri b ed
. Fo l l owi n g th e am en d edFF ag reem en t , M BS, n otBLREDCo , co n t i n u edt o
m ak e p aym en t s t o FF. In ad d i t i o n , as a co n d i t i o n o f co n t i n u i n g th e ag reem en t , BLREDCo ’ s b o ardo f d i rect o rs g ran t eda l im i t edwai v er o f s ov erei g n i m m u n i t y i n fav o r o f FF, wh i ch was en fo rceab l e o n l y ag ai ns tth e as s et s o f M BS. BLREDCo ’ s IRA s ec. 1 7 ch art er d el eg at edt o i t s b o ardo f d i rect o rs the au th o ri ty t o wai v e
s o v erei g n i m

m u n i ty fo r t h e d i v i s i o n s o f BLREDCo , i n cl u d i n g M BS.- 1 7 -

C. M BS Ceas es Op erat i o n s Eco n o m i c co n d it i o n s i n th e l at e 2 0 0 0 ’ s an dearl y 2 0 1 0’ s m ad e i td i ffi cu l tfo r M BS t o m eeti t s u n em

p l o y m en ti n s u ran ce o b l ig at io n s wi th t h e St at e o f Cal i fo rn i a. M BS fai l edt o m ak e s ev eral p aym en t s o n i ts Cal i fo rn i a u n em pl o ym en ti n su ran ce l i ab i l i ty . M BS al so fai l edt o m ak e ap p ro p ri at e p aym en ts t o res p on d en tfo r i t s
em pl o y m en tt ax l i ab i l it i es th ro u g h o utth e p eri o d s ati s su e i n th es e cas es . As a res u l t o f o u t st an d in g u n em p l o ym en t i n s uran ce l iab i l i t i es , the Cal i fo rn i a Em p l o ym en t Dev el o pm en tDep art m en t(EDD) l ev i ed o n t h e b an kacco u n t s an d
acco u n t s recei vab l e o f M BS, m ak i ng i ti m p os s i b l e fo r M BS t o p ay

i t s ex p en s es , i n cl u d i n g p ayro l l
. M BS was fo rced t o ceas e o p erat i o n s th e s am e d ay the l ev i es
were s erv ed . InAu g u s t2 0 11 EDD rel eas ed th e l ev i es p u rs u an tt o a co u rto rd er. EDD d i dn o tl ev y

o n th e b an k acco u n t s o f BLREDCo . M BS h as few t o n o as s et s
rem ai n i n g fo l l o w i n g i t s ces s at i o n o f o p erat i o ns . No M BS as s et s were t ran sferred t o the Tri b e o r BLREDCo du ri n g al l rel ev an tt im es , i n cl u d i n g aft er M BS ceas ed
o p erat i o n s . IV. IRA Sec. 1 7 Ch art ers Gen eral l y To es t ab l is h an IRA s ec. 1 7 co rp o rat i o n , an In d i an Tri b e m u sts ub m itt o th e Secret ary o f DOI a res ol u t i o n ad o p t edb y i t s tri b al co u n ci l req u es t i n g t h e i s s u an ce
o f a ch art er. Th e Secret ary h as d el eg at edh is p o wer t o i s s u e co rp o rat e ch art ers t o- 1 8 -

th e Bu reau o f In d i an Affai rs (BIA) reg i o n al o ffi ces . As p arto f t h e ap p ro val p ro ces s , each IRA s ec. 1 7 ch art er m u s tb e rev i ewedb y BIA fo r co n s i s t en cy wi th Fed eral l aw an d s ub s equ en tl y ap p ro v edb y

th e BIA Reg i o n al Di rect o r an d b y th e As s is t an tSecret ary --In d i an Affai rs . Fo ll o wi n g ap p ro v al b y DOI, th e t ri b al co u n ci l
m u stp as s an o th er res o l u t i o n rat i fy i n g th e ch art er. Up o n p as s ag e o f t h e rat i fy i n g
res o l ut i o n, th e co rp o rat i on i s o ffi ci al l y creat ed
. On ce i s s u ed , an IRA s ec. 1 7 ch art er can n ot b e rev o k edo r s urren dered ex cep tb y an acto f Co n gres s . IRA s ec. 1 7 d es cri b es th e p o w ers th atcan b e g ran t edt o an IRA s ec. 1 7
co rp o rat i o n i n i t s ch art er, an dan IRA s ec. 1 7 co rp o rat i o n i s au th o ri zedt o ex erci s e
o n l y the p o wers s p eci fi ed i n i t s ch art er. DOI h as i s s u edn u m ero u s IRA s ec. 1 7 ch art ers to Fed eral In d i an Tri b es . Si nce M ay 1 2 , 1 9 9 8, Fed eral ch art ers h av e b een i s su edt o creat e atl eas t 2 8 tri bal l y o wn edco rp o rat i o n s u n der IRA s ec. 1 7 , i n cl u d i n g th e o n e i s s u edt o th e Bl u e Lak e Ran ch eri a Tri be wh i ch es t ab l i sh ed BLREDCo . Each o f t h es e 2 8 ch art ers co n t ai n edt erm s s ub s t an t i al l y s i m i l ar t o th o s e fo u n di n BLREDCo ’ s IRA s ec. 1 7 ch art er al l o wi n g fo r th e creat i on o f
co rp o rat e d i vi si o n s fo r the p urp o se o f l eg al l y s eg reg at i n g as s et s an dl i ab i l i t i es . OPINION W e are a co u rto f l i m i t edjuri s d i ct i o n, an das s u ch we m u s td et erm i n e wh et h er t h e cas e b efo re u s i s o n e t h atCo n g res s h as au th o ri zedu s t o co n si d er.- 1 9 -

Naft el v . Co m

m i s si o ner, 8 5 T.C. 5 2 7 , 5 2 9 (1 9 8 5 ). Th es e co n s o li d at edcas es i n v o l v e s ep arat e p et i t i o n ers , an dwe m us td eci d e o ur ju ri s d ict i o n o v er each . W e h av e juri sd i ct i o n t o d eci d e a CDP cas e wh ere t h ere i s a wri t t en n o t i ce em b od y i n g a d et erm i n at i o n b y

th e Co m m i s s i o n er i n reg ardt o th e fi l i n g o f n o t i ces o f Fed eral t ax l i enan dth e t ax p ay er t i m el y fi l es a p et it i o n wi th th i s Co u rt . Secs . 6 3 2 0 (c), 6 3 3 0 (d ); Lu ns fo rdv . Co m m is s i o n er, 1 1 7 T.C. 1 5 9 , 1 6 4 (2 0 0 1 ). In th es e cas es , res p o n d en t i s s uedthree n o ti ces o f d et erm i n at i o n i n rel at i on t o th e n o ti ces o f Fed eral t ax l i en , an d p et i ti o ners t i m el y fi l edp et i t i o ns fo r t h is Co u rt ’ s rev i ew. A n o t i ce o f d et erm i n at io n i s g en eral l y v al idi f i ts p eci fi es th e t ax ab l e p eri o d s ati s s ue, as wel l as th e l i ab i l i ti es an dco l l ect i o n act i o n t o wh i ch i t rel at es
o r, atth e v ery

l eas t , p ro v i d es s u ffi ci en ti n fo rm at i o n s o t h atthe t ax p ay er can n o t
reas on ab l y

b e d ecei v edas t o th es e i t em s . Dees v . Co m m is s i o n er, 1 4 8 T.C. 1 (2 0 1 7); LG Ken dri ck , LLC v . Co m m i s s i o n er, 1 4 6 T.C. 1 7 , 2 8-2 9 (2 0 1 6 ), aff’ d , 6 8 4 F. Ap p ’ x 7 4 4 (1 0 th Ci r. 2 0 1 7 ). W e h av e h el d th ata fl aw i n a ju ri s d i ct i o n al
n o t i ce i s n otfat al i f t h e n o t i ce an d an y at t ach m en t s are s u ffi ci en tt o ap p ri se t h e t ax p ay er o f t h e Co m

m i s si o ner’ s d et erm i n at i o n an d th e t ax p ay er was n o tp reju d i ced
o r m is l edb y th e fl aw. LG Ken dri ck , LLC v
. Co m m i s s io n er, 1 4 6 T.C. at2 9 ; J o h n C. Ho m & As s o cs ., In c. v . Co m

m i s s i o n er, 1 4 0 T.C. 2 1 0 , 2 1 3 (2 0 1 3 ) (“ M i s t ak es i n
a n o t i ce wi l l n oti n val i d at e i ti f t h ere i s n o p reju d i ce t o th e t ax pay er.”).- 2 0 -

In Fi rs tRo ck

Bap t i s t Ch u rch Ch i l dDev . Ct r. v . Co m m i s s i on er, 1 4 8 T.C. 3 8 0 , 3 8 7 (2 0 1 7), we d i s m i s s edFi rs tRo ckBap ti s t Ch u rch (Ch u rch ) b ecau s e i th ad
n o tb een i s s u eda v al i dn o t ice o f d et erm i n at i o n . W e d et erm i n edwe h ad juri s d i ct i o n o v er Fi rs tRo ckBap t i s tCh u rch Ch i l dDev el o p m en tCen t er (Cen t er), h o wev er, b ecau s e t he Cen t er was th e s ubjecto f t h e IRS co l l ect i o n act i o n , th e Fed eral t ax l i en aro s e ag ai n s ti t, an dthe n ot i ce o f d et erm in at i o n was s en tt o th e Cen ter at i t s co rrect ad dres s, b o re t h e Cen t er’ s t ax p ay er ID n u m b er, an ds h o wedi t rel at ed t o the Cen t er’ s quart erl y t ax p eri od s ati s s u e. Id . at3 8 6 -3 8 7 . W e d i s m i s s edth e Ch urch i n thatcas e b ecau s e, al th ou g h th e n ot i ce h adb een
erro neo u s l y

ad dres s edt o i t , th e Ch u rch was n otthe s ubjecto f an y IRS co l l ect i o n act i on , i t h adn o o u t s t an di n g t ax l i ab i l i ti es , an dn o Fed eral t ax l i en h adb een fi l ed ag ai n s ti t . Id . at3 8 7 . Acco rd i ng l y , we h el d t h atn o v al i dn o t i ce o f d et erm i n at i o n
was i s s u edb y

th e IRS t o th e Ch u rch . Id . at3 8 7 -3 8 8
. In th es e cas es , res p o nd en ti s s u eda s i n g l e s eto f t h ree n o t ices o f d et erm i n at i o n rel at i n g t o th e n o t i ces o f Fed eral t ax l i en h e h adp rev i o us l y i s s u edt o p et i t i o n ers . Th os e n o t i ces o f d et erm i n at i o n were ad dres s edt o BLREDCo ; h o wev er, t h ey

i n cl u d edth e u n i qu e FEIN o f M BS. In ad d i ti o n , th e n ot i ces m ad e cl ear wh i ch t ax p eri o d s an dwh i ch l i ab i l it i es an dco ll ect i o n act i o n s th ey rel at edt o . Pet i t io n ers were cl earl y n o td ecei v edas t o th e i t em s co v ered b y th e n o t i ce o f- 2 1 -

d efi ci en cy , an d each p et it i o n er t i m el y fi l eda p et it i o n wi th th is Co u rt . See Dees v . Co m m i s s i o n er, 1 4 8 T.C. at9 (fi n d i n g th atth e t ax p ay er “ w as n o t m i s ledb y th e
am bi g uo u s n ot i ce o f d efi ci en cy , as ev i den cedb y th e co n ten to f h i s t i m el y fi l ed p et i t i o n ”). 4 Al th o u gh s ep arat e n o ti ces o f d et erm i n at io n were n o ti s s u edt o M BS
an d BLREDCo , Fed eral t ax l i en s were fi l ed ag ai ns tb ot h en t i t i es , b o th were s en t Let t ers 3 17 2 i n d i cat i n g th e t ax l i en fi l i n g s , b ot h p art i ci p at ed i n th e CDP Ap p eal s p ro ces s wi th res p o n d en t , an d th ere i s a d i s p u t e as t o wh et h er t h e t ax l i ab i li t i es can b e co ll ect ed fro m

BLREDCo . Co ns equ en t l y , we fi n d th i s s i tuat i o n d i s t i n gu i s h ab l e fro m th ati n Fi rs t Ro ck

Bap t i s tCh urch Ch il dDev . Ct r. an d d et erm i n e o u r juri s d i ct i o n i s ap p ro p ri at e as t o M BS an dBLREDCo
. Th e p art i es s t i p u l at e t h atp et i t i o n ers h adn o o p po rtu ni ty b efo re t he CDP h eari n g t o d i s p u t e t h e u n d erl y i n g t ax l i ab i l i t i es ati s s u e i n th es e cas es . Our juri s d i ct i o n al l o ws u s t o rev i ew ag en cy act i o n em

b o d i edi n a “ d et erm i n at i o n ”. Secs . 6 32 0 (c), 6 3 3 0 (d )(1 ). Wh ere a t ax p ay er h ad n o p ri o r o p p o rtu ni ty t o d i s p u t e th e t ax l iab i l i ty

at i s s u e, i t m ay

rai s e i tfo r t h e fi rs t t i m e i n i t s h eari n g . Secs
. 6 3 2 0 (c), 6 3 3 0(c)(2 )(B). Pet i ti on ers rai s ed , i n th ei r h eari n g, a d i sp u te as t o wh o i s

4 A n o t i ce o f d et erm i n at i on u n d er s ecs . 6 3 20 an d6 3 30 i s th e juri s di ct i o n al equ iv al en to f a n o t i ce o f d efi ci en cy ; th erefo re, o u r cas el aw o n v al idn o t ices o f d efi ci en cy

i n fo rm s o ur an al y s i s. See LG Ken dri ck , LLC v . Co m m i ss i o n er, 1 4 6 T.C. 1 7 , 2 9 -3 0 (2 01 6 ), aff’ d , 6 8 4 F. Ap p ’ x 7 4 4 (1 0 th Ci r. 2 01 7 ); Offi ler v
. Co m m i s s i o n er, 1 1 4 T.C. 4 9 2 , 4 9 8 (2 0 0 0).- 2 2 -

l i ab l e fo r t he u n d erl y i n g t ax l i ab i l i t i es . Th ere rem ai n s a g en u in e cas e o r
co n tro v ers y

b et w een th e p art i es as t o wh o i s l iab l e fo r t h e t ax es o wed ; an d b ecau s e th e u n derl y i n g t ax l i ab i l i t i es are p ro p erl y ati s s u e, we wi ll rev i ew res p o nd en t ’ s d et erm i n at i o n s as t o th o se l i ab i l i t i es d e n o vo . See Seg o v . Co m m i s s i o n er, 1 1 4 T.C. 6 0 4 , 6 1 0 (2 0 0 0 ). 5 Wh i l e t h e p art ies h av e s ti p u l at edth e p ro p er am o un t s o f l i ab i li t ies o wed , th ey l eav e fo r u s t o d eci d e wh o t h e res po n s i b l e t ax pay er i s i n th es e cas es . Thu s , we m u s trev iew t he ap pro p ri at en es s o f res p o nd en t ’ s co l l ect io n act i o n ag ai n s teach p et i t i o n er. M BS h as co n ced edth atres p o n d en tm ay co l l ect fro m

i tthe u np ai d
em pl o y m en tt ax es ; we m

u s td eci d e wh et h er res p o n d en tcan al s o p u rs u e co l l ect i o n act i on ag ai n s tBLREDCo i n th es e u ni que cas es . A few g ui d i n g p ri n ci p l es can h el p t o s itu at e t hi s d i s p ut e. As an i ni t i al
m at t er, cl as s i fi cat i o n o f o rg an izat i o n s fo r Fed eral t ax p u rp o s es i s d et erm i n edb y

5 Al th o ug h n ei th er p art y

rai s edth e i s s u e, we m

u s t b ri efl y

co n s id er o u r juri s d i ct i o n o v er M BS fo r t h e t ax p eri o dl is t edi n th e s eco n d NFTLs . Res p o n d en t ack n owl ed ges th ath e n ev er fi l eda Fed eral t ax l i en fo r t h e p eri o den d ed J un e 3 0 , 2 0 1 1 , i n th e n am e o f M BS; h o wev er, o u r ju ri sd i ct i o n turn s n o to n th e fi l i n g o f a Fed eral t ax l i en , b u t on th e i s s uan ce o f a n o t i ce o f d et erm i n at i on . Fi rs tRo ck Bap ti s tCh u rch Ch i ldDev . Ct r. v . Co m m i ss i o ner, 1 48 T.C. 3 8 0 , 3 8 8 (2 0 1 7 ) (reject i ng th at“ wi th drawal o f th e NFTL b y i t s el f m o o t s th e en t ire cas e * * *
. Sect i o n 6 3 3 0(d )(1 ) g ran t s u s juri s d i ct i o n t o rev i ew ag en cy act i o n th ati s em

b o d i ed i n a ‘ d et erm i n at i o n’ ”). Res p o nd en th as i s s u eda n o ti ce o f d et erm i n at i o n co n cern in g th e t ax p eri o d en dedJ u ne 3 0 , 2 0 1 1 , an d co n s equ en t l y th at t ax p eri o di s p ro p erl y b efo re u s. See s ecs . 6 3 2 0 (c), 6 3 3 0 (d )(1 ).- 2 3 -

Fed eral t ax l aw. See s ec. 3 0 1.7 7 0 1 -1 (a)(1 ), Pro ced . & Ad m i n . Reg s. Wh et h er an
o rg an i zat i o n i s an en t i ty s ep arat e fro m i t s o wn ers fo r Fed eral t ax p u rp o s es i s a
m at t er o f Fed eral t ax l aw an dd o es n o t d ep en do n wh et h er t h e o rg an i zat i o n i s
reco g n izedas an en t i ty

u n d er l o cal l aw. Id
. Rel ev an tt o thi s cas e, IRA s ec. 1 7
co rp o rat i o ns are n o t reco g n izedas s ep arat e en ti t ies fo r Fed eral t ax p u rp o s es . Id
. s ub p ara. (3 ). Ho wev er, t h i s i s a d i s p u t e o v er em p l o ym en tt ax es an d , g en eral l y , ev en di s reg ard eden ti t ies are t reat edas co rp o rat i o ns fo r t he p u rp o s e o f
em pl o y m en tt ax es . Id . s ec. 3 0 1 .7 7 0 1 -2 (c)(2 )(i v ). Ino th er l eg al co n t ex t s a d i v i s i on o f a co rp o rat e en t i ty i s n o tl eg al ly s ep arat e fro m

th e co rp o rat i o n . See, e.g ., Brei t m an v . M ay

Co . Cal ., 3 7 F.3 d5 62 , 5 64 (9 th Ci r. 1 9 9 4 ) (fo r d i v ers i ty o f juri s d i ct i o n p u rp o s es , 2 8 U.S.C. s ec. 1 3 3 2, “ th e d is t in ct i o n b et w een an i n co rp o rat eds ub s i d i ary an dan u n i n co rp o rat edd i v is i on i s i m p o rt an t* * * . ‘ A d i v i s i on o f a co rp o rat i o n d o es n o tp o s s es s the fo rm al s ep arat en es s * * * an dth u s i s
n o tan in d ep en d en t en t i ty ’ ” (q uo t i n g Sch wart z v . El ec. Dat a Sy s . , In c., 9 1 3 F.2 d 2 7 9 , 2 8 4 (6 th Ci r. 1 9 9 0 ))); St o tt er & Co . v . Am s t ar Co rp . (In re Su g ar In du s . An t it ru s tLi t i g .), 5 7 9 F.2 d1 3 , 1 8 (3 d Ci r. 1 9 7 8 ) (h o l d i n g th atfo r p u rp os es o f 1 5 U.S.C. s ec. 1 5 , “ [a] d i vi si o n o f a co rp o rat i o n i s n o ta s ep arat e en t i ty b u ti s th e
co rp o rat i o n i t s el f”). Th ere m u s tb e s om et h i ng u n i qu e t o thi s s i tu at i o n fo r u s t o d i v ertfro m

th atcu s t o m ary

u nd ers t an d i ng . Acco rd i n g l y , t o reach o ur h o l d in g we- 2 4 -

m u stex am i n e t h e creat i o n o f BLREDCo an dth e au tho ri ty u n der wh i ch i ts eek s t o b e co ns i d eredan en t i ty

s ep arat e an dap artfro m M BS. I. IRA Sec. 1 7 Th e p art i es ag ree t h atDOI i s s u edth e Tri b e an IRA s ec. 1 7 ch art er
es t ab l i s h in g BLREDCo an d t h atBLREDCo ’ s ch art er co n t ai n s l an g u ag e t hat p u rp ort ed l y

al l o ws i t“ [t ] o creat e s ub d i v is i o n s o f t h e Co rp o rat io n fo r t h e p u rp o s e
o f l eg al l y s eg reg at i n g t h e as s et s an dl iab i l it i es o f d is cret e b u s i n es s en deav o rs o f th e Co rp o rat i o n reg ard l es s o f co m m on d i rect o rs hi p ”. Pet it i on ers co n t en dth atth e ch art er’ s t ex t , ap p ro v edb y DOI, i s co n tro l li n g an d p recl u d es an y res p on s ib i l i ty o f BLREDCo fo r t h e l i ab i l i t ies o f M BS, i n cl u d i ng i t s em p l o ym en tt ax l i ab i l i t i es . Res po n d en t , h o w ev er, co u n t ers th at th e ch art er ex ceed s th e s co p e o f IRA s ec. 1 7
an d can n o tg ran t a co rp o rat i o n s u ch a p o wer; therefo re, ev en tho u g h th e BLREDCo ch art er p u rp ort s t o al l o w i t t o creat e d i v i s io n s wi th l eg al l y s eg reg at ed
as s et s an dl i ab i l it i es , i t m ay n o tp ro p erl y

d o s o . 6 Th i s i s an i ss u e o f fi rs ti m p res s i o n fo r t h e Co u rt . Inth e o n ly p ri o r cas e wh ere we h av e co n si d eredIRA s ec. 1 7 we h el d , am o ng o th er t h i n g s, th ata St at e6 BLREDCo ’ s IRA s ec. 1 7 ch art er g ran tedi t th e p o wer t o creat e s ubd i v i s i on s t o l eg al l y s eg reg at e t h e as s et s an dl i ab i l i t i es o f i t s d i s cret e b u s i n es s en d eav o rs ; h o wev er, t h e co nv ers i on o rd i n an ce refers t o t h e co n v ert in g en t it y as a d i v is i o n . W e fi n dth es e t erm s i n t erch an g eab l e, b utfo r t h e s ak e o f cl ari ty we at t em p t t o refer t o M BS as a d iv i s i o n th ro u gh o u tth i s rep o rt
.- 2 5 -

ch art eredco rp o rat i o n o f an In d i an Tri b e i s s ub jectt o Fed eral i n co m e t ax ev en th o u g h an IRA s ec. 1 7 co rp o rat i o n i s n o t. Un ib an d , In c. v . Co m m i s s i o n er, 1 4 0 T.C. 2 3 0 , 2 6 4 (2 0 1 3 ). Al th o ug h th atcas e d o es n otad dres s th e i ss u es we are
co n si d eri n g t o day , we n ot e t hati n Un i b an dwe o bs erv edth atDOI’ s i s s u an ce o f ch art ers w as wi th in i t s d i s cret i o n as affo rd ed b y IRA s ec. 1 7 ; an In d i an Tri b e h as th e o p ti o n o n l y

t o ad o pto r v et o an i s s u edch art er as thatch art er co n fers o n l y th e p o wers DOI i s wi l l i n g fo r t h e t ri b al co rp o rat i o n t o p o s s es s . Id . at 2 61 -2 6 2
. A. St atu t o ry

In t erp ret at i o n Th i s d i s pu t e i s p ri m ari l y

o n e o f s t atu t o ry

i n t erp ret at io n . As we ty

pi cal l y d o wh en l o o k i n g at s uch i ss u es , we m u s tfi rs tex am i n e t h e t ex to f t h e s t atu te. Th e Sup rem e Co u rth as s ai d t h at“ in an y cas e o f s t atut o ry

co n st ru ct i o n , o u r an al y s i s b eg in s wi th the l an g u ag e o f t h e s t atu t e * * * . An d wh ere t h e s tatu t o ry l an gu ag e p ro v id es a cl ear an swer, i t en d s t h ere as wel l .” Harri s Tr. & Sav . Ban k v . Sal o m o n Sm it h Barn ey , In c., 5 3 0 U.S. 2 3 8 , 2 5 4 (2 0 00 ) (qu o t i n g Hu g h es Ai rcraft Co . v . J aco b s o n, 5 2 5 U.S. 4 3 2 , 4 3 8 (1 9 9 9 )); Un i t edSt at es v . M o. Pac. R. Co ., 2 7 8 U.S. 2 6 9 , 2 7 8 (1 9 2 9) (“ [W ] h ere t h e l an g u ag e o f an en act m en ti s cl ear, an dco n s tru ct i o n
acco rd i n g t o i t s t erm s d oes n o tl eadt o ab s u rdo r i m pract icab l e co n s equen ces , th e
wo rd s em p l o y edare t o b e t ak en as th e fi n al ex p res s i on o f t h e m ean in g i n t en d ed .”). M o reo v er, wh ere t h e s t atu t e i s cl ear o n i ts face, u n equi v o cal ev id en ce o f- 2 6 -

l eg i s lat i v e p u rp o s e i s req u i redb efo re we can co ns tru e t h e s t atu te t o o v erri d e t h e p l ai n m ean i n g . Hal p ern v . Co m m i s s i o n er, 9 6 T.C. 8 9 5 , 8 9 9 (1 99 1 ). Un i qu e t o th i s cas e, we are al s o m i n dfu l th atth e Sup rem e Co u rth as
cau t i on edth at “ th e s t an d ard pri n ci p l es o f s t atut o ry co n s tru ct i o n d o n o th av e t h ei r
u s u al fo rce i n cas es i n v o l vi n g In d i anl aw.” M o n t an a v . Bl ack feet Tri b e o f In d i an s , 4 7 1 U.S. 7 5 9 , 7 6 6 (1 9 8 5 ). Rat h er, “ s t atu tes are t o b e co n s tru edl i b eral l y i n fav o r
o f t h e In d i an s, wi th am

b i g u o us p ro v i s i o n s i nt erp ret ed t o t h ei r b en efi t ”. Id . Th i s p ri n ci p l e o f s t atut o ry

co ns tru ct i o n m

u s tg ui d e o u r an al y si s o f IRA s ec. 1 7. In 1 9 3 4 Co n g res s en act edIRA, i ncl u d i n g IRA s ec. 1 7 , i n o rd er “ [t ] o
co n serv e an dd ev el op In d i an l an d s an dres o u rces ; t o ex ten dt o In d i an s th e ri g h t t o fo rm b u si n es s an do th er o rg an i zat io n s ; t o es t ab li sh a cred i t s y s tem fo r In d i an s ; t o g ran tcert ai n ri g ht s o f h o m e ru l e t o In d i an s ; t o p ro v i d e fo r v o cat io n al edu cat i o n fo r In d i an s ; an dfo r o th er p u rp o s es .” IRA, 4 8 St at . at9 8 4 . Ex cep t fo r m i n or
am en d m en t s n otrel ev an th ere, s ee Acto f M ay 2 4 , 1 9 9 0, Pub
. L. No . 1 0 1 -3 0 1 , s ec. 3 (c), 1 0 4 St at . at2 0 7 , th e t ex to f IRA s ec. 1 7 h as rem ai n edl arg el y u n ch an g edan d i n i ts en ti ret y

read s : Th e Secret ary o f t h e In t eri o r m ay , up o n p et i t i o n b y an y tri b e, i s s u e a ch art er o f i n co rp o rat i o n t o s u ch tri b e: Pro v id ed , Th ats u ch ch art er s h al l n o tb eco m e o p erat i v e u n t il rat i fi ed b y th e g o v ern i n g b o dy

o f s u ch tri b e. Su ch ch art er m ay co nv ey t o th e i nco rp o rat edtri b e t h e p o wer t o p urch as e, t ak e b y g i ft , o r b equ es t , o r o th erwi se, o wn , h o l d ,- 2 7 -

m an ag e, o p erat e, an dd i s p o se o f p ro p ert y o f ev ery d es cri p t i on , real an dp ers o n al , i n cl ud i n g th e p o wer t o p urch as e res tri ct edIn d ian l an d s an dt o i s s u e i n ex ch an ge t h erefo r i n t eres t s i n co rp o rat e p ro pert y , an d s u ch fu rt her p o wers as m ay b e i n ci d en t al t o th e co ndu ct o f co rp o rat e b u s i n es s , n o ti nco n s i s t en twi th l aw; b u tn o au th o ri ty s h al l b e g ran ted t o s el l , m ort g ag e, o r l eas e fo r a p eri o dex ceed i n g twen ty -fi v e y ears an y tru s to r res tri ct edl an d s i n cl u d edi n th e l i m i t s o f th e res erv at io n . An y ch art er s o i ss u eds h al l n o tb e rev ok ed o r s u rren dered ex cep tb y Acto f Co n gres s . Res p o n d en ts ubm i t s th atIRA s ec. 1 7 co rp orat i o n s can n o t h av e t h e p o wer t o creat e l eg al l y

d i s t in ctd i vi s io n s wh o s e l i ab i l i t i es are u n co l l ect i b l e fro m th e
co rp o rat i o n--a p o wer, res p o n d en targ u es , o th er co rp o rat io n s d o n o t h av e. Pet i t io n ers co u n t er t h atth e wo rd i ng i s b ro adan db y i t s ex pres s t erm s d o es n o t p rev en t IRA s ec. 1 7 co rp o rat i o n s fro m h o l d i n g th i s p o wer. Fo r t h e reas o n s th at fo l l o w , we are u np ers u ad edb y res p on d en t’ s read in g o f IRA s ec. 1 7
. B. Ap p li cat i o n o f St at e Law Cen tral t o res p o nd en t ’ s arg u m en ti s h is b el i ef t h atSt at e l aw s h o u l d g u i d e
o u r i n t erp ret at i o n o f IRA s ec. 1 7 . Res p o nd en t en co u rag es u s t o co n s i d er t hatIRA
s ec. 1 7 al l o ws tri b al co rp o rat i o n s t o b e v es t edwi th p o wers “ i n ci d en t al t o th e
co n du ct o f co rp o rat e b u s i n es s , n o ti n co ns i s ten t wi th l aw”, wh ich res po n den t
m ai n t ai n s m

u s tb e l i m i t edt o St at e l aw co rp o rat e p o w ers . BLREDCo i s a t ri b al co rp o rat i o n creat edb y a Fed eral ch art er, i s s u edb y a Fed eral ag en cy

u n d er IRA s ec. 1 7 --a Fed eral l aw--i n v o l v edi n a d i s p u t e o v er- 2 8 -

Fed eral t ax es . W e fai l t o s ee wh y res p o n d en tb el i ev es St at e l aw s h o u l d ap pl y . It i s a co m m o n p ri n ci p le o f s t atu t o ry i n t erp ret at i o n th at wh ere Co n g res s h as s h o wni t kn o ws h ow t o ex p res s a l im i tat i o n , we wi l l n otas s u m e i th as d o n e s o thro u g h
s i len ce, ab sen ta cl ear ex p res s i o n o f i n ten t . See M i s s . ex rel
. Ho o dv . AU Op tro n i cs Co rp ., 5 7 1 U.S. 1 6 1 , 1 6 9 (2 0 1 4) (i n t erp ret i n g the Cl as s Act i o n Fai rn es s Acto f 2 0 0 5, the Co u rtreas on edth at“ [h ] adCo ng res s i n ten d ed ” a s t atu t o ry
n u m ero s i ty

req u i rem en t t o m ean n am ed o r u nn am edp art i es “ i t eas i l y co u l dh av e draft edl an g uag e t o th at effect . In d eed , wh en Co n gres s wan t ed a n u m ero s i ty req u i rem en ti n CAFA t o b e s at i s fi edb y co u nt i n g u n n am edp art i es i n i n t eres ti n ad d it i o n t o n am edp l ai n t i ffs , i tex p l i ci t l y s ai ds o ”); s ee al s o M eg h ri g v . KFC W es t ern , In c., 5 16 U.S. 4 7 9 , 4 85 (1 9 9 6 ) (“ Co n g res s * * * d em on s trat ed i n CERCLA t h ati tkn ew h o w t o p ro v i d e fo r t he reco veryo f cl ean up co s t s , an d* * * th e l an g u ag e u s edt o d efi n e t h e rem ed i es u n d er RCRA d o es n o tp ro vi d e t h at
rem ed y .”). HadCo n g res s i n t en d edfo r IRA s ec. 1 7 t o b e l i m i t edb y St at e l aw, i t kn ew h o wt o d o s o ex pl ici t l y . Infact , i td i d s o i n o ther s ect i o n s o f IRA. Fo r
ex am p l e, IRA s ec. 4 , 4 8 St at
. at9 8 5 (am en d edb y th e In d i an Lan dPro bat e Refo rm Tech n i cal Co rrect i on s Acto f 2 0 0 5 , Pub . L. No . 1 0 9-1 5 7 , s ec. 8 (b ), 1 1 9 St at . at 2 9 5 2 ) (co d i fi edas am en d edat 2 5 U.S.C. 5 1 0 7 (Supp . V 2 01 7 )) (em ph as i s ad d ed ), p ro v id edth atres tri ct edIn d ian l an d s “ s h al l d es cen do r b e d ev i s ed , i n acco rd an ce- 2 9 -

wi th th e t h enex i s ti n g l aws o f t h e St at e, o r Fed eral l aws wh ere ap p l i cab l e, i n wh i ch
s ai dl an d s are l o cat ed ”. In IRA s ec. 1 7 , Co n g res s ch os e n o t t o ex p l i ci t l y cal l fo r th e ap p l i cat i o n o f St at e l aw t o i n co rp o rat ed tri b es . Th erefo re, ab s en t a cl ear
s h o wi n g t o th e co nt raryi n th e l eg i s l at i v e h i st o ry , we wi l l n o t as su m e Co n g res s i n t en d eda t ri b al co rp o rat i o n ch art eredu nd er IRA s ec. 1 7 t o b e l i m i t edb y St at e l aw. 7 Res p o n d en t ’ s read i n g h as an o th er p ro b l em . Th e Co n s t i tu t i o n p ro vi d es th at

“ th e Laws o f t h e Un i t edSt at es * * * s h al l b e t he s up rem e Law o f t he Lan d ”. U.S. Co n s t . art . VI, cl . 2 . Th erefo re, we wi l l n o tas s u m e th atCo n g res s ch o se t o
s ub o rd i n at e i t s au th o ri ty

t o St at e l aw, ab s en ta cl ear s h o w i n g o f co n g res s i o n al

7 Hi s t o ry s u rro un d i n g th e en act m en to f IRA fu rt h er i l l u s trat es co ng res s i o n al awaren es s i n ap p ly i n g St at e l aw. Un i tedSt at es v . Ri v ers i d e Bayv i ew Ho m es , In c., 4 7 4 U.S. 1 2 1 , 1 3 6 -1 37 (1 9 8 5); Un it edSt at es v . Un i v ers al C.I.T. Cred i t Co rp ., 3 4 4 U.S. 2 1 8 , 2 2 2 (1 9 5 2 ) (“ [R] eg ardfo r t h e s p eci fi c h i s t o ry o f th e l eg i s lat i v e p ro ces s th atcu l m i n at ed i n th e Actn o w b efo re u s affo rd s m o re s o l i d g ro un dfo r g i vi n g i t ap p ro p ri at e m ean i n g .”). A p ri or Sen at e v ers i o n o f IRA al lo wedres tri ct edl an dt o “ d es cen do r b e d ev i s ed , i n acco rd an ce wi th ex i s t i n g l aw”. S. 3 6 4 5 , 7 3 d Co n g ., s ec. 4 (2 dSes s . 1 9 3 4 ). Co n tras tth atwi th a p ri o r Ho u s e v ers i on , wh i ch p ro v i d ed th atres tri ct edl an d“ m ay

d es cen do r b e d ev is edi n acco rd an ce wi th th e th en ex i s t in g l aws o f t he St at e i n wh i ch s ai dl an d s are l o cat ed ”. H.R. Rep t . No . 7 3
- 1 8 0 4 , at 2 (1 9 3 4 ) (acco m pan y in g H.R. 7 9 02 ). As fi n al l y en act ed , th e Ho u s e v ers i on was ad o p t edwi th an ad d i t i o n al cav eatth at“ Fed eral l aws wh ere ap p li cab l e” al s o ap p l y . H.R. Rep t . No . 7 3 -2 0 4 9 , at2 , 7 (1 93 4 ) (acco m p an y i n g S. 3 6 4 5 ); 7 8 Co n g . Rec. 1 2 1 6 2 -1 2 1 6 3 (1 93 4 ) (s t at em en tb y th e h o u s e co nferees ex p lai n i n g th ats ect i o n 4 o f t he co n feren ce v ers i o n “ i s s ect i o n 4 o f t h e Ho us e b i l l ” wi th s o m e am en dm en t s ).- 3 0 -

i n t en t . M o reo ver, ev en i n th e ab s en ce o f ex p res s l eg i s lat i ve p reem p t i o n , we m ay i n fer t h atCo n g res s i nt en d edt o fo recl os e t h e ap p l i cat i o n o f St at e l aw wh ere an

“ Acto f Co n gres s * * * t o u ch [es ] a fi el di n wh i ch the fed eral i n teres ti s s o d o m i n an tth atth e fed eral s y s t em wi l l b e as s um ed t o p recl u d e en fo rcem en to f s t at e l aws o n th e s am e s ub

ject
. ” Ri ce v . San t a Fe El ev at o r Co rp . , 3 3 1 U.S. 2 1 8 , 2 3 0 (1 9 4 7). Sai dan o th er way , “ Co n g res s i m p l ici t l y m ay i n d i cat e an i n t en t t o o ccup y a g i v en fi el dt o the ex cl u s i o n o f s t at e l aw.” Sch nei d ewi n dv . ANR Pi p el i ne Co ., 4 8 5 U.S. 2 9 3 , 3 0 0 (1 9 8 8 ). W e reco g ni ze t h atthe Co n s t i tu t i o n co n fers au th o ri ty o n Co ng res s t o reg u l at e In d ian affai rs , s ee U.S. Co n s t . art . I, s ec. 8 , cl . 3 (“ Co n gres s s h al l h av e p o wer * * * To reg u l at e Co m m erce * * * wi th t h e In d i an Tri b es [.] ”), an d t h i s
au th o ri ty h as b een d es cri b edb y

th e Sup rem e Co u rtas “p l en ary ” an d“ ex cl u s i v e”, So u th Dak o t a v . Yan k t o n Si o u x Tri b e, 5 2 2 U.S. 3 2 9 , 3 4 3 (1 9 98 ) (“ Co n g res s p o s s es s es p l en ary

p o wer o v er In d i an affai rs [.] ”); Co u n ty o f On ei da, N.Y. v
. On ei d a In d i an Nat i o n, 4 7 0 U.S. 2 2 6 , 2 3 4 (1 9 85 ) (“ W i th t h e ad o p t i o n o f t h e Co n s t i tu t i o n , In d i an rel at i o n s b ecam e t h e ex cl u s iv e p ro v in ce o f fed eral l aw.”); s ee al s o Am . Van t ag e Co s . v . Tab l e M t . Ran ch eri a, 2 9 2 F.3 d1 0 91 , 1 09 6 (9 th Ci r. 2 0 0 2 ) (“ Becau s e ‘ Co n g res s p o s s es s es p l en ary p ower o v er In d i an affai rs ,’ * * * In d i an tri b es fal l u n d er n earl y ex cl u s i v e fed eral , rat h er t h ans t at e, co nt ro l .”).- 3 1 -

“ [T] ri bal s o v erei g n ty

i s d ep en den to n , an d s ub ord i n at e t o , o nl y th e Fed eral Go v ern m en t , n o tth e St at es .” W as h i n g t o n v . Co n fed erat ed Tri b es o f Co l vi l l e In d i an Res erv at i o n, 4 4 7 U.S. 1 3 4 , 1 5 4 (1 9 8 0 ). Th us , Co ng res s h as ev i d en cedan i n t en tt o d o m i nat e t h e fi el do f In d i an l aw s o t h ati t g en eral l y p reem p t s St at e l aw o n th e s ub ject . Ab s en tcl ear i n t en tt o t h e co n trary , we wi l l n ot as s u m e Co n g res s i n t en d edt o l es s en i t s p reem p t i o n i n th i s fi el d b y

al l owi n g St at e l aw t o co n tro l wh atp o wers m ay

b e h el db y

an IRA s ec. 1 7 co rp orat i o n . W e fi n dn o cl ear i n t en ti n th e t ex to f IRA s ec. 1 7 th attri b al co rp orat e p o wers s ho u l d b e l i m i t ed b y St at e l aw. Res po n d en tp o i n t s u s t o th e p hras e “ n o t i n co n s i s t en twi th l aw” as ev i d en ce t h atSt at e l aw ap p l i es . Ho wev er, cl earl y , i n the l i gh t o f t h e p ri n ci pl es o u t l i nedab o v e, t h atp h ras e d o es n ots u g g es tth e ap p l i cat i o n
o f St at e l aw. Li kewi s e, we fi n dn o cl ear i nt en ti n th e l eg i sl at iv e h i s t o ry o f IRA
s ec. 1 7 s ug g es ti n g i ti s t o b e l i m i t edb y St at e l aw p ri n ci p les
. Th ro u g h o u tth e v o l u m i no u s l eg i s l at i v e h i s t ory rel at i ng t o th e en act m en to f IRA an d , s p eci fi cal l y , IRA s ec. 1 7 , res p on d en th as i d en t i fi ed o n ly two s t at em en t s fro m a s i n g l e m em

ber o f Co n g res s t o s up p o rth i s read i ng . Is o l at eds t at em en t s o f a
s i ng l e m em

b er o f Co n g res s , es p eci al l y o n e ab s en t fro m

th e rel ev an tco m

m i t t ees
an d l ack in g a l ead ers h i p ro l e i n t h e b i l l ’ s p as s ag e, are “ n o t i m p res s i v e l eg i s l at i v e h i s t o ry ”. Zu

b er v . Al l en , 3 96 U.S. 1 6 8 , 1 8 7 (1 96 9 ); s ee al s o Garci a v . Un i t ed- 3 2 -

St at es , 4 6 9 U.S. 7 0, 7 6 (1 9 8 4 ) (“ W e h av e es ch ewedrel i an ce o n the p as s i n g
co m m en t s o f o n e M em

b er * * * an dcas u al s t at em en t s fro m the fl o o r d eb at es .”). Ev en s o , we are n o ts u re t hes e s t at em en t s p ro v i d e as m u ch s upp o rt as res p on d en t
wo u l dh av e u s co ncl u d e. Du ri n g d eb at e o n th e Ho u s e v ers io n o f IRA, b efo re t h e co n feren ce
co m m i t t ee rep ort , Rep res en t at i v e Has t i n g s --wh o d idn o ts i t o n th e rel ev an tHo u s e
co m m i t t ee an dwh o h ad n o l ead ers h i p ro l e rel at edt o th e b i l l --d i s cu s s ed fo ur
s ect i on s o f t h e b i l l , th ree o f wh i ch were n ev er en act ed . See 7 8 Co n g . Rec. 1 1 7 3 9 (1 9 3 4); s ee al so St at em en tb y Ho u se co n ferees , 7 8 Co n g . Rec. 1 2 1 6 3-1 2 16 4 (1 9 3 4) (ex p l ai n i n g wh i ch p ro v i s i o n s were ad o p t edi n th e co n feren ce rep o rtan d
n o t i n g th e ex cl u s i o n o f th ree s ect i on s d i scu s s edb y Rep . Has t i n g s ). See g en eral l y H.R. Rep t . No . 7 3 -2 0 4 9 (1 9 3 4 ) (co n feren ce rep ortt o acco m p an y S. 3 6 4 5 ). Inh i s fl oo r s peech , h e s t at ed h i s s up p o rtfo r au th o ri zi n g th e fo rm at i on o f In d i an ch art eredco rp o rat i o n s t o p ro m o t e th e eco n o m ic wel fare o f t h e In d ian Tri b e, s o l o n g as “ i ti s m ad e cl ear t h at th ey are g o v ern edb y

th e St at e an dFed eral l aws ”. 7 8 Co n g . Rec. 1 1 73 9 (1 9 34 ). He al s o ex p res s eds o m e d i s co m fo rtwi th th e s el fg o v ern m en tfeat ures o f cert ai n s ect i o n s i n th e Ho u s e b i l l . Inp art icu l ar, h e n o t ed :

“ I t h i n kev ery

tri b e, wh erev er l o cat ed , s h o ul d b e * * * s ubjectt o St at e an d Fed eral l aws an d co u rt s .” Id . Cl earl y , th es e cas u al s t at em en ts are n o th i n g m o re t han- 3 3 -

p as s i n g co m

m en t s o n Rep res en t at i v e Has t i n g s ’ p referen ce t h atIn d i an Tri b es as a wh o l e o u g h tt o b e g o v ern edb y St at e l aw i n ad di t i o n t o Fed eral l aw. Reg ard l es s o f h i s v i ews o n th e m at ter, t h e real i t y i s th atth ey are n o t. Th i s i s ev i den ti n h i s
co m m en t s o n th e s ub

ject ; i f In d i an Tri b es were al read y s ub jectt o St at e l aw, h e
wo u l dh av e n o n eedt o ex p res s h i s v i ews th atth ey “ s ho u ldb e” s ub

jectt o th e s am e. Rep res en t at i v e Has t i ng s ’ p ers o n al v i ews are n o t rel ev an tt o i nt erp ret i n g th e s t atu t e ati ss u e h ere, an d we g i v e n o wei g h to r co n s i d erat i o n t o h is s tat em en t s co n cern i n g
s ect i on s o f t h e b i l l th atwere n ev er en act ed . Sh an n on v . Un i tedSt at es , 5 1 2 U.S. 5 7 3 , 5 8 3 -5 8 4 (1 9 94 ) (“ To g i v e effect t o th is s ni p p eto f l eg i s l at i ve h i s t o ry , we
wo u l dh av e t o ab an d on al to g et h er t h e t ex to f t h e s t atu t e as a g u i d e i n the i n t erp ret at iv e p ro ces s. * * * ‘ [C] o u rt s h av e n o au th o ri ty t o en fo rce [a] p ri n ci p l [e] g l ean ed so l el y

fro m l eg i s lat i v e h i s t o ry

th ath as n o s t atu t o ry

referen ce p o i n t .’ ” (qu o ti n g In t ’ l Bh d . o f El ec. W o rk ers , Lo cal Un i o n No . 4 7 4 v . NLRB, 8 14 F.2 d 6 9 7 , 7 1 2 (1 9 8 7)). W e wo u l dex p ecta cl ear s t at em en to f co n g res s io n al i n t en t b efo re as s u m i n g a d es i re t o d is rup t th e wel l -s et tl edn ot i o n o f fed eral i s m an dth e p ri nci p l es o f p reem pt i o n an dFed eral l aw s up rem acy . Fi nd i n g n o cl ear s t at em en tt o th ateffect i n the t ex to r th e l eg i s l at i v e h i s t o ry , we are p ers u ad edth atCo n g res s d i d n o ti n t en d- 3 4 -

IRA s ec. 1 7 co rp o rat i o n s t o b e l i m i t edb y St at e l aw. 8 Res p o n d en t h as n o t arg u ed th atth e p o wer DOI h as co n ferred o n th e Tri b e t o creat e l eg al l y s ep arat e
s ub d iv i s i o n s i s i n co n si s t en t wi th Fed eral l aw, an dwe can fi n d n o reas on wh y i t
wo u l db e. C. Po wers In ci d en tal t o th e Co ndu ct o f Co rp o rat e Bu s in es s Hav i n g d et erm i nedthatSt at e l aw d o es n o tres tri ctth e p o wers o f t ri b al
co rp o rat i o ns ch art eredu n d er IRA s ec. 1 7 , we m u s t tu rn t o res po n d en t ’ s o th er arg u m en t . Res p o n den tu rg es u s t o fi n d thatth e p o wer t o creat e l eg al l y d i s ti n ct
co rp o rat e d i vi si o n s i s n o tan o rd i n ary co rp o rat e p o wer--i .e., i ti s n o to n e p o s s es s ed b y co rp o rat i o n s o rg an i zedu nd er St at e l aw (St at e co rp o rat i on s ). Th u s , h e arg u es , i t i s o u t s i de t h e s co p e o f IRA s ec. 1 7 fo r DOI t o g ran t a ch art er co n t ai n i n g s u ch a p o wer. W e m

us tat t em p t t o d i scern wh eth er t h e p o wer t o creat e l eg al l y s ep arat e
co rp o rat e d i vi si o n s i s o n e wi th i n th e p l ai n m ean in g o f IRA s ec. 1 7 . Wh ere t h e
s t atu te i s cl ear, we m

u sti n t erp retth e l aw as wri t t en an dare n o tfree t o rep l ace t h e

8 Ou r h o ld i n g i s al s o co n si s t en twi th DOI reg ul at i o n s. In 2 0 0 4 wh en th e Tri b e’ s ch art er was ap pro ved , DOI reg u l at i o n s i m p o s edn o res tri ct io n s o n th e t y p e o f co rp o rat e p owers th atco u ldb e g ran t edt o IRA s ec. 1 7 co rp o rat i on s . See g en eral l y 2 5 C.F.R. p t s . 8 1 , 8 2 (2 0 0 4 ). Pt s . 8 1 an d 8 2 were co m b i n edi n t o p t . 8 1 an d p t
. 8 2 was rem o v edi n 2 0 1 5 . Fi n al Ru l e, 8 0 Fed
. Reg . 6 3 0 9 4 (Oct . 1 9 , 2 0 1 5 ). Ad d i t i o n al l y , cu rren t reg u l at i o ns o n l y i n s tru ctth e BIA t o rev i ew p ro p o s edIRA s ec. 1 7 ch art ers fo r v i o l at i o ns o f Fed eral l aw. 2 5 C.F.R. 8 1 .4 5 (c)(3 ) (2 0 1 8).- 3 5 -

t ex twi th “ u n en act ed l eg i sl at i v e i n ten t .” INS v . Card o za-Fo n s eca, 4 8 0 U.S. 4 2 1 , 4 5 3 (1 98 7 ) (Scal ia, J ., co ncu rri n g ). Oni t s face, IRA s ec. 1 7 i s p lai n l y i n t en d edt o b e b ro ad . Itex p res s l y s et s o u t wh atFed eral ch art ers i s s u ed b y DOI “ m ay

co n vey t o the i n co rp o rat edtri b e”. Th i s p erm i s s i v e p ro v is i on i m

p l i es d i s cret i o n . See Lo pez v . Dav i s , 5 3 1 U.S. 2 3 0 , 2 4 1 (2 0 0 1) (“ [U] s e o f t h e p erm is s i v e ‘ m ay ’ * * * co n tras t s wi th th e l eg i s l at o rs ’ u s e o f a
m an d at o ry

‘ s h al l ’ i n t h e v ery

s am e s ect i o n . El s ewh ere * * * , Co n gres s u s ed‘ s h al l ’ t o i m p o s e d i s cret io nl es s o b l i g at i o n s [.] ”). IRA s ec. 1 7 d o es n o ts p eci fy an
ex h au s t i v e l i s t o f t h e p o wers th atDOI can co n v ey t o an IRA s ec. 1 7 co rp o rat i o n ; rat h er i tfram es th e k in d s o f p o wers thatDOI m ay g ran tth ro u g h th e i s s u an ce o f a Fed eral ch art er. IRA s ec. 1 7 co n t ai ns n o ex p l i ci tg ran to f au th o ri ty fo r a DOI i s su edch art er t o al l o w a co rp o rat i o n t o creat e s ub d i vi s i o n s wi th l eg al l y d is t i n ct
as s et s an dl i ab i l it i es . Ho wev er, i ti s cl ear fro m th e b rev i ty

o f IRA s ec. 1 7 th atth e
s t atu te i s n o ti n t en d edt o s erv e as a co m p reh en s i v e l i s to f p o wers DOI m ay p ro p erl y g ran tth ro u g h an IRA s ec. 1 7 ch art er. In fact , o n l y two p o w ers are
ex p res s l y m en t i o n edi n th e t ex to f t h e s t atu t e: “ th e p ower t o p u rch as e, t ak e b y g i ft , o r b eques t , o r o th erwi s e, o wn , h o l d , m an ag e, o p erat e, an dd i s p o s e o f p ro p ert y ” an d

“ th e p o wer t o p u rch as e res tri ct edIn d i an l an ds ”.- 3 6 -

IRA s ec. 1 7 al s o p l aces v ery few l i m i tat i o n s o n the b ro adp o wer i t o th erwi s e g ran t s DOI t o i s su e Fed eral ch art ers t o In d i an Tri b es . Inp art i cu l ar, i tex p res s l y d i s al lo ws th e g ran t in g o f ch art ers th atwo u l dp erm i tco rp o rat io n s “ to s el l,
m o rt g ag e, o r l eas e fo r a p eri o dex ceed i n g twen ty -fi v e y ears an y tru s to r res tri ct ed l an d s i n cl u d edi n t h e l i m i t s o f t h e res erv at i o n .” Th e o n l y o ther res tri ct i o n i n th e
s t atu te i s th e g en eral p ro v i s i o n th atg ran t s can n o tb e “ i n co n s i s t en twi th l aw”, wh i ch we h av e al read y

h el dt o m ean Fed eral l aw. Rath er t h an s earch th e ex p res s l i sto f p o wers in IRA s ec. 1 7 fo r t h e au th o ri ty t o creat e l eg al l y

d i s t i n ctd iv i s i o n s o f
an IRA s ec. 1 7 co rp o rat i o n , p et i t i o n ers co n t en d t h ats u ch a p o wer i s d eri v edfro m th e b ro adau th o ri ty o f DOI t o g ran tch art ers th at co n v ey “ fu rt h er p o wers as m ay

b e i n ci d en t al t o th e co n du cto f co rp o rat e b u s i n es s ”. Res p o n d en t ’ s cen tral arg u m en tth ro ug h o u tth es e p ro ceed i n g s i s th ata t ri b e i n co rp o rat edu nd er IRA s ec. 1 7 can n o th av e p o w ers th ata co rp orat i on i n co rp o rat edu nd er St at e l aw wo u l d n o th av e. Res p on d en t ’ s p o s i t i o n i s
s u m m ari zedi n h i s rep l y

b ri ef: “ Cl earl y , a p o wer t h atn on -s ect i o n 1 7 co rp o rat i o n s d o n o t p o s s es s can n o tb e i n ci d en t al t o th e co ndu ct o f co rp o rat e b u s i nes s .” W e h av e al read y

ex p l ai n edwh y

we d o n o tb el i ev e t h at IRA s ec. 1 7 co rp o rat e p o wers
s h o u ldb e l i m i t edt o th os e o f St at e co rp o rat io n s . W e m u s tas su m e t h atab s en t“ a p l ai n i nd i cat i o n t o th e co n trary , * * * Co n g res s wh en i t en act s a s tatu t e i s n o t- 3 7 -

m ak i n g t he ap pl i cat i on o f th e fed eral actd ep en d en t o n s t at e l aw.” M i s s . Ban do f Ch o ct aw In d ian s v . Ho l y fi el d , 4 9 0 U.S. 3 0 , 4 3 (1 9 89 ) (ci tat i o n s o m i tt ed ). 9 Th e can o n o f s t atu t o ry

co n s tru ct i on u n i qu e t o In d i an l aw al s o wei g h s ag ai n s tres p on d en to n th i s p oi nt . W e are m i n dfu l th atcan o n s are “ o n l y g ui d el i n es , n o ts ub s t an t i v e l aws , an ds h o u l dn o tb e u s ed t o d efeat th e m an ifes ti n ten to f Co n g res s .” Un i tedSt at es v . At l . Ri ch fi el dCo ., 6 1 2 F.2 d1 1 3 2 , 1 1 3 9 (9 th Ci r. 1 9 8 0 ). Ho wev er, t he Sup rem e Co u rth as g u i d edu s t o co n s tru e s t atu t es l i b eral l y i n fav o r o f In di an s . Bl ack feet Tri b e o f In d i an s , 4 71 U.S. at7 6 6 . Co n g res s wi l l i n g l y ced edb ro ad au tho ri ty

t o DOI an d v es t edi twi th th e s ol e d i s cret io n as t o wh at p o wers m ay

au tho ri zedfo r IRA s ec. 1 7 co rp o rat i o n s . See Un ib an dv . Co m m i s s i o n er, 1 4 0 T.C. at2 6 1-2 6 2 . M oreo v er, wh i l e we are n o t“ free t o creat e fav o rab l e ru les ” b as ed o n th i s p ri n ci p l e o f s t atu t o ry co n s tru ct i o n , Fry

v . Un i t ed St at es , 5 5 7 F.2 d6 4 6 , 6 4 9 (9 th Ci r. 1 9 7 7 ), IRA s ec. 1 7 can b e l i b eral l y co n s tru ed t o g i v e DOI b ro adp o wer t o i s s u e ch art ers t o In di an Tri bes wi th o utcreat i n g a fav o rab l e ru le u ns upp o rt edb y th e s t atu t o ry

t ex t
.

9 Th i s s t at em en ti s al s o co n s i s t en twi th o u r read in g o f IRA s ec. 1 7 i n Un i ban dwh ere we ex p l ai n edth e d i s t i n ct i on s b et ween a St at e-ch art ered co rp o rat i o n an d an IRA s ec. 1 7 co rp o rat i o n t h atl edu s t o h o l dth at St at e-ch art ered co rp o rat i o ns are s ub

jectt o Fed eral i n co m e t ax wh ere IRA s ec. 1 7 co rp o rat i o n s are n o t . Un i ban d, In c. v . Co m m i s s i o n er, 1 4 0 T.C. at 2 6 4 (“ Ins u m , * * * [t h e St at ech art eredco rp o rat i o n ] l ack s th e s p eci al ch aract er o f a s ect i o n 1 7 co rp o rat i o n an d i t s s p eci al rel at i on s hi p t o an In d i an tri b e.”).- 3 8 -

Al th ou g h IRA s ec. 1 7 co rp orat i o ns m ay b e v es t edwi th b ro ad p owers , i n cl u d i n g o n es n o tav ai l ab le t o St at e co rp o rat i o n s , we m u s ts t i l l d et erm i n e wh et h er th e p o w er t o creat e l eg al l y d is t i n cts ub d i v i s i o n s i s o n e “ in ci den t al ” t o co ndu ct i n g
co rp o rat e b u s i n es s . Pet i t i o n ers s u g g es tth atwe s ho u l dl o o kath o w co u rt s h av e i n t erp ret edth e wo rd“ in ci d en t al ” i n th e Nat io n al Ban kActo f 1 8 6 4 (Nat io n al Ban k Act ) t o g u i de o u r u nd ers t an d i n g o f t h e wo rdas i ti s u sedi n IRA s ec. 1 7 . InBan k
o f Am . v . Ci ty & Ct y . o f S.F., 3 0 9 F.3 d5 5 1, 5 6 2 (9 th Ci r. 2 0 0 2 ) (qu o t in g M & M Leas i n g Co rp . v . Seat t l e Fi rs tNat ’ l Ban k , 5 63 F.2 d 1 3 7 7 , 1 3 8 2 (9 th Ci r. 1 9 7 7 )), th e Co u rto f Ap p eal s fo r th e Ni n th Ci rcu i th el dth atas u sedi n th e Nat i o n al Ban k Act“ [i ] n ci den t al po wers i n cl u d e act i v i t i es th atare ‘ co n v en i en to r u sefu l i n
co n nect io n wi th th e p erfo rm an ce o f o n e o f t h e b an k ’ s es t ab l i s h edact i vi t i es p u rs u an t t o i t s ex p res s p o wers u n d er t h e Nat i o n al Ban kAct .’ ” Ho wev er, ab s en t cl ear i n t en tth at Co n gres s i n t en d edth e m ean in g i n b o th s t atu t es t o b e t he s am e, we wi l l n o tap pl y th i s s am e read in g h ere. No th in g i n IRA s u g g es t s t o u s th at Co n g res s i n ten d edth e u s e o f t he wo rd “ in ci d en tal ” i n IRA s ec. 1 7 t o h av e t h e
s am e m ean i n g as th e “ i n ci d en t al p o wers ” p h ras e i n th e Nat io nal Ban k Act
. In s t ead , we wi l l rel y

o n t he p l ai n m ean i n g o f t h i s p ro v i s i o n wi thi n th e co nt ex to f IRA s ec. 1 7
.- 3 9 -

In th e ab s en ce o f a s t atu t o ry d efi n it i o n , “ we co n s tru e a s t atu t o ry t erm i n
acco rd an ce wi th i ts o rd i naryo r n atu ral m ean i ng .” FDIC v . M ey er, 5 1 0 U.S. 4 7 1 , 4 7 6 (1 99 4 ). Co urt s freq u en t l y tu rn t o d i ct i o n ari es t o d et erm i n e a wo rd ’ s o rd i n ary
m ean i n g . See i d .; s ee al s o , e.g ., As gro w Seed Co . v . W in t erb o er, 5 1 3 U.S. 1 7 9 , 1 8 7 (1 99 5 ); Co m

m i s si o ner v . So l i m an , 5 0 6 U.S. 1 6 8 , 1 7 4 (1 9 9 3 ). At th e t i m e IRA
s ec. 1 7 was en act ed , “ i n ci d en t al ” was d efi n ed as “ h ap p en i n g as a ch an ce o r
u n d es i g nedfeat u re o f s o m et hi ng el s e; cas u al ; h en ce, n o t o f p ri m e co n cern ;
s ub o rd i n at e; co l l at eral ”. W eb st er’ s New In t ern at i o n al Di ct i o naryo f t h e En g l i s h Lan gu ag e 1 0 8 8 (1 9 3 0 ). Itwas l i k ewi s e d efi n edb y Ox fo rdas “ o ccu rri n g o r l i ab l e t o o ccu r i n fo rtu i t o u s o r s ubo rd i n at e co n jun ct i o n wi th s o m ethi n g el se o f wh i ch i t fo rm s n o es s en t i al p art ; cas ual .” Ox fo rdNew En g l i s h Di ct i o n ary o n Hi s t o ri cal Pri n ci p l es Vo l um e V2 1 5 2 -1 5 3 (1 9 0 1 ). Co n s i s t en tth ro ug h o u tth es e d efi ni t i o n s i s th e t h em e t h at “ i n ci d en tal ” d en o t es a n o nes s en ti al , cas u al , o r s ub ord i n at e p arto f a l arg er s ch em e. In 1 9 3 3 , a y ear b efo re th e en act m en to f IRA s ec. 1 7 , Bl ack ’ s Law Di ct i o n ary

9 4 3 (3 ded . 1 9 3 3 ) s t at ed : Th e t erm “ i n ci d en t al p o wers ,” wi th in th e ru l e t h ata co rp o rat i o n p o s s es ses o nl y

tho s e p o w ers wh i ch i ts ch art er co n fers up o n i t , ei th er ex p res s l y o r as i n ci den t al t o i t s ex i s t en ce, m ean s s u ch p o w ers as are d i rect l y an di m m ed iat el y ap p ro p ri at e t o th e ex ecu ti o n o f t h e p o wers- 4 0 -

ex p res s l y g ran t edan dex i s t o n l y

t o en ab l e th e co rp o rat i o n t o carry o u t th e p u rp o s e o f i t s creat i o n . * * * In th e l i g h to f t h es e d efi n i t i o n s , we u nd ers t an d i n ci d en t al p o wers t o i n cl u de
o n es th atare n o n es s en t i al an d s ub o rd i n at e, b u tn ev erth el es s ap p ro p ri at e t o th e p o wers ex p res s l y

g ran t edi n th e co rp o rat i o n ’ s ch art er. Fu rt her, t h es e p o wers m u s t
ex i s t o n l y t o ai dth e co rp orat i o n, ev en i f o n ly cas u al l y , i n carry i n g o u tth e p u rp o s e fo r wh i ch i twas creat ed
. Ap p ly i n g th i s m ean i ng t o th e i n s t an t cas es , p o wers i n ci den tal t o an IRA s ec. 1 7 co rp o rat i o n are p o wers , ev en n o n es s en t i al o n es , wh i ch are ap p ro p ri at e t o th e
ex ecu t i o n o f t h e p o wers ex p res s l y s t at edi n th e co rp o rat io n ’ s ch art er an dai dth e
co rp o rat i o n i n carry i n g o u tth e ex p res s p u rp o s e fo r wh i ch i twas creat ed . Th i s
en co m p as s es a b ro ad arrayo f co rp o rat e p o wers . Cert ai n l y , as BLREDCo arg u es , th e creat io n o f l eg al l y d i s ti n cts ub d i v i s i o n s wh o se as set s an d l i ab i l it i es are n o t
co l l ect i b l e fro m th e co rp o rat i o n as a wh o l e h as a ro l e i n fu rt heri n g th e p u rp o s e o f BLREDCo --i .e., t o p ro m ot e th e eco n o m ic s tab i li ty o f t h e Tri b e. In fact , BLREDCo ’ s ch art er ex p l i ci t l y p ro v i d es thats u ch p ower i s es s en t i al t o p ro tect i n g th e “ eco n o m i c s ecu ri ty ” o f t h e Tri b e an d fu rt h eri n g th e p u rp o se o f BLREDCo
. Gi v en th e p l ai n m ean i ng o f t h e wo rd “ in ci d en tal ”, we u n ders t an d th e p h ras e

“p o wers i n ci d en tal t o th e co n du cto f co rp o rat e b u s i nes s ” t o en co m p as s p o wers- 4 1 -

s ub o rd i n at e an d n o nes sen t i al t o th e co rp o rat i o n ’ s o v eral l b u si nes s an dwh i ch are ap p ro p ri at e t o th e ex ecu ti o n o f o th er p o wers s p eci fi cal l y g ran t edt o an IRA s ec. 1 7
co rp o rat i o n t h ro u gh i t s ch art er an dai dth e IRA s ec. 1 7 co rp o rat i o n i n carry i n g o u t i t s ex p res s l y s tat edp urp os e. In th es e cas es , th e p ower at i s s u e i s o n e t h e Tri b e h as
ex p res s l y d es cri bedi n i t s Fed eral ch art er as es s en t i al t o th e co rp o rat i on ’ s p u rp o se. Ev en i f i twere n o t es s en t i al , h o wev er, we b el i ev e i tcl earl y ai ds BLREDCo i n carry i n g o u ti t s ex p l i ci tp urp os e an di s th erefo re i n ci d en t al t o th e ex ecu t io n o f
o th er p o wers ex p res s edi n BLREDCo ’ s IRA s ec. 1 7 ch art er. W e b el i ev e t h e p l ai n m ean i n g o f p o wers “ i n ci d en t al t o th e co n du cto f
co rp o rat e b u s i n es s ” al lo ws fo r b ro add i s cret i o n i n t h e p o wers g ran tedt o an IRA
s ec. 1 7 co rp o rat i o n th ro u g h i t s ch art er. No th i n g i n th e l eg is l at iv e h i s t o ry s u g g es t s t o u s th atCo n gres s i n t en d ed a d i fferen t res u l t . Thu s, we fi n dth at i ti s wi th i n th e
s co p e o f IRA s ec. 1 7 t o g ran t tri b al co rp o rat i o ns i nco rp o rat edu n der i t s p ro v i s i o n s th e p o w er t o creat e l eg al l y d is t i n cts ub d i v i s i o n s . D. Sub s equen tAg en cy In t erp ret at io n Gi v en th e p l ai n m ean i ng o f t h e rel ev an ts t atu t o ry t ex t , i n fo rm edb y

th e l eg i s lat i v e h i s to ry , th e p o w er DOI g ran t edt o BLREDCo --t o es t ab l i s h l eg al l y d i s t i n cts ub d i v i s i o n s o f t h e co rp o rat i o n --i s o n e en co m p as s edwi thi n th e p h ras e

“p o wers as m ay

b e i n ci d en tal t o th e co n du cto f co rp o rat e b u s in es s , n o t- 4 2 -

i n co n s i s t en twi th l aw”. A b ri ef o v erv i ew o f t he s ub s equ en ti nt erp ret at io n o f IRA
s ec. 1 7 b y DOI co n fi rm s o ur read i n g . Un d er IRA s ec. 1 7, DOI i s t as k ed wi th i ss u i n g ch art ers t o Fed eral In d i an Tri b es . DOI h as i s s u eds ev eral ch art ers wi th t erm s s ub s t an t i al ly s i m i l ar t o th e t erm s fo u n di n BLREDCo ’ s ch art er, al l o wi n g tri b al co rp o rat i o n s t o creat e
s ub d iv i s i o n s wh o s e l i ab il i t i es an das s et s are l eg al l y d i s ti n ctfro m

th o s e o f t h e res t
o f t h e co rp orat i o n . Infact , th e reco rdrefl ect s th atDOI h as i s s u ed atl eas t2 7 ch art ers w i th s u ch t erm s , o th er t h an th e o n e i s s u edt o BLREDCo . Cl earl y , DOI’ s p rev al en ti s s u an ce o f s u ch ch art ers i n d i cat es a b el ief t h ati ti s em p o weredb y

IRA
s ec. 1 7 t o g ran ts u ch a p o wer t o In d i an Tri bes
. In ad d i t i o n DOI h as i s su edth ree So l i ci t o r Op i n i on s o n IRA s ec. 1 7
. Th e DOI So l i ci t o r, ap p o i n t ed by th e Pres i d en tan dco nfi rm edb y the Sen at e, i s
res p o n s i b l e fo r p erfo rm i n g th e l eg al wo rko f DOI. Act o f J un e 2 6, 1 9 4 6 , ch . 4 9 4, 6 0 St at . 3 1 2 (co di fi edas am en d edat4 3 U.S.C. 1 45 5 (Sup p . II 2 0 1 4)). As p arto f h i s res po n s i b i li t ies , th e So l i ci t or h as th e au th o ri ty “ [t ] o i ss u e fi n al l eg al i n t erp ret at io n s , i n th e fo rm o f M -Op i n io n s * * * , o n al l m at ters wi th i n th e juri s d i ct i o n o f t h e Dep art m en t ”. DOI Dep art m en t al M an u al , 2 0 9 DM 3 .2 (A)(1 1 ). So l i ci t o r Op in i o n s are “ b in di n g , wh en s i g n ed , o n al l o th er Dep art m en t al o ffi ces
an d o ffi ci al s an d* * * m ay b e o v erru l edo r m o d i fi edo n l y b y th e So l i ci t o r, th e- 4 3 -

Dep ut y Secret ary , o r t he Secret ary .” Id . Of co u rs e, t h es e o p i n i on s are n o tb i n d i n g
o n u s , b u twe fi ndth em p ers uas i v e i n si g h ti n to h o w DOI i n t erp ret s th e s t atu t es i ti s t as k edwi th ex ecu t i ng . Wh i l e n o n e o f t h e o p i n i o n s i s s u ed b y th e So l i ci t o r d i rect ly

d eal wi th th e p o wer DOI co nferred o n BLREDCo i n th es e cas es , they d o d es cri b e DOI’ s v i ews
o f IRA s ec. 1 7 g en eral ly . Th e fi rs to f t h es e o p in i o n s , i s s u edM ay 1 5 , 1 93 4 , b efo re th e en act m en to f IRA, d is cu s s edth e co n s t i tu t io n al au th o ri ty o f t h e Co n g res s t o i n co rp o rat e an In d i an Tri b e. So l i ci t o r’ s Op i n io n , In d i an Co rp o rat i o ns --Fed eral Ch art ers (M ay

1 5 , 1 9 3 4 ). In fi n d i n g t h at“ th ere i s n o co n st itu t i o n al res tri ct i o n
up o n the m et h odo f i nco rp o rat i o n th atCo ng res s m ay s el ect ”, th e So l ici t o r
ex p lai n edth at th e l eg i s l at i on u n d er co n s i d erat i o n “p u t s th e res p o n s i b i l i ty fo r
wo rk i n g o u t* * * [ad m i n is trat i v e] d et ai l s up o n th e Secret ary o f t h e In t eri o r an d th e In d i an s s eek in g the ch art er.” Id
. Fo l l owi n g en act m en to f t h e IRA, t h e So l i ci to r i s s u edtwo m o re o p in i o n s o n IRA s ec. 1 7 . Inan o pi n i o n d i s cu s s i n g wh et h er an IRA s ec. 1 7 ch art er co u l d p erm i tan In d i anTri b e t o i g n o re s t atu t o ry req u i rem en t s rel at edt o m ak i n g a
co n tract , th e So li ci t o r n o t ed : “ Its eem s t o b e cl ear fro m th i s l an g uag e t h ats ect i o n 1 7 p erm i t s th e Secret ary

t o g ran tt o i n co rp o rat edtri b es far-reach i n g p o wers wi th
res p ectt o t h e co n du cto f b u s i n es s act i v it i es ”. So li ci t o r’ s Op i n i o n M -3 6 1 1 9 ,- 4 4 -

Co n tract s fo r th e Em

p l o ym en to f M an ag ers o f In di an Tri bal En t erp ri s es (Feb . 1 4 , 1 9 5 2 ). Th e So l i ci t o r wen t o n t o ex p l ai n thatth e Secret ary ’ s p o wer i s s ubjecto n l y t o the ex p res s l i m i t at i on s o f IRA s ec. 1 7 : Th e Secret ary m ay n o tau th o ri ze a t ri b al
co rp o rat i o n t o s el l res erv at i o n l an do r l eas e th e s am e fo r a p eri o do f m o re t h an 1 0 y ears , an dth e Secret ary

m ay n o tau th ori ze i n ci d en t al co rp o rat e p o w ers th atare i n co n s i s t en twi th l aw. Id . Th es e are t h e s am e ex p res s l i m i t at i o n s we h av e i d en t i fi edi n th e s tatu t o ry t ex t . Fu rt h er, t h e So li ci to r ex p l ai n edth at p o w ers i n co n s i s t en twi th l aw are o n es “ wh i ch can n o tl awfu l l y b e g i v en t o an y
co rp o rat i o n”. Id . Cl earl y , th e p o wer ati s s ue i n th es e cas es i s o n e t hatco u l db e g i v en t o St at e co rp o rat i o n s ; res p o n d en t ’ s arg u m en ti s s i m p ly th ati th as n otb een , an d th erefo re, h e cl ai m s , i tcan n o tb e g i v en t o IRA s ec. 1 7 co rp orat i o n s. In 1 9 5 8 th e So li ci t o r res t at edan d reaffi rm edh i s p o s it i o n fro m the 1 9 5 2 o pi n i o n . See So l i ci t o r’ s Op i n i o n M -3 6 5 1 5 , Sep arab i l i ty o f Tri b al Org an i zat i o n s Org an i zed Un d er Sect i o n s 1 6 an d1 7 o f t h e In d i an Reo rg an i zat i o n Act(No v . 2 0 , 1 95 8 ). Al th ou g h thes e o p i ni o n s are n o tb i n d i n g au th o ri ty o n u s , th ey

are h el p fu l i n
co n fi rm i n g o u r u n d ers t an di n g o f t h e b ro adau th o ri ty DOI h as u nd er IRA s ec. 1 7
. E. Co n cl u si o n Th e p l ai n t erm s o f IRA s ec. 1 7 cl earl y b es to w b ro ad d i s cret i o n ary p o wer o n DOI t o i s s u e Fed eral ch art ers o f i n co rp o rat i o n t o In d i an Tri b es . Th e p o wers th at- 4 5 -

m ay b e co n ferred o n a t ri b al co rp o rat i o n u n d er IRA s ec. 1 7 are n o tl i m i t edt o th o s e h el db y St at e co rp o rat i o n s, n o r are t hey l i m it edb y

St at e l aw. Co ns equen t l y , th e p o wer g ran t edt o BLREDCo “ [t ] o creat e s ub d iv i s i o ns o f t h e Co rp o rat io n fo r t h e p u rp os e o f l eg al ly

s eg reg at in g th e as s et s an dl i ab i l it i es o f d is cret e b u s i n es s
en d eav o rs o f th e Co rp o rat i on reg ard l es s o f co m m o n d i rect o rs h i p ” i s wi th i n th e
s co p e o f IRA s ec. 1 7
. II. Op erat i on s o f BLREDCo an dM BS Res p o n d en tfram ed h i s arg u m en t p ri m ari l y as a l eg al o n e, co n t en di n g th at th e i s s ue i n th es e cas es i s wh eth er an IRA s ec. 1 7 ch art er can al l o w BLREDCo t o creat e s ubd i vi si o n s wh o s e as s et s an dl i ab il i t i es wo u l db e l eg al l y d i s ti n ctfro m th o s e o f t h e co rp o rat i o n . Ho w ev er, res p on d en tal s o s u g g es tedat tri al an di n h i s b ri ef t h atev en i f s u ch a p ower was wi th in the s co p e o f IRA s ec. 1 7 , as we h av e d et erm i n edi ti s , M BS was n ot i n facta l eg al l y d i s t i n ctd i v i s i o n o f BLREDCo an d th u s can n o tco u nto n th e b en efi to f h av i n g i t s l i ab il i ti es s eg reg at edfro m th o s e o f th e co rp o rat io n. Al th o u g h n ei th er p art y d ev o t edm

u ch at t en t i o n t o t h i s i s s ue--a
co m b i neds i x p ag es o f b ri efi n g --we are co m p el ledt o ex am i n e res p o n d en t ’ s
co n cern an d ad dres s wh et h er M BS was i n facto p erat edas a l eg al l y d i s ti n ct d i v i s i on o f BLREDCo
.- 4 6 -

Res p o n d en tap p ears t o h av e co nced edth i s i s s ue i n h is rep l y b ri ef. He ack n owl ed ges th atM BS was en g ag edi n a “ s ep arat e an dd i s t i n ctb u s i n es s t h at g en erat edth e t ax l iab i l i ty ati s s u e * * * [an d ] was al way s o p erat i n g thi s b u s i n es s
en d eav o r as a d iv is i o n o f BLREDCo .” No n et h el es s, h e p o i n t s o u t th at“ wh en i t
was t o th ei r b en efi t , p et i t i o ners h adn o p ro b l em wi th o p erat i n g as BLREDCo db a M BS”. Res p o n den tp o i n t s t o two i n s t an ces wh ere h e cl ai m s M BS as s u m edth e i d en t i ty o f BLREDCo t o recei v e s o m e b en efi t . Hi s arg u m en t s eem s t o b e t h atth i s
s h o u ldp rev en t M BS fro m n o w cl ai m i n g t h e b en efi to f h av in g l i ab i l i t i es l eg al l y
s eg reg at ed fro m th o s e o f BLREDCo . W e wi ll ex am i n e res p o nd en t ’ s cl ai m s . Res p o n d en tfi rs tp o i n t s t o th e Co ol i d g e Pro p ert y as ev i den ce t h atM BS was wi l l i ng t o as s u m e t h e i d en t i ty o f BLREDCo wh en d o i n g s o was t o i t s b en efi t
. Al th o u g h th e Co o l i d g e Pro pert y was acq ui redi n t h e n am e o f BLREDCo d .b .a. M BS, M BS s t i l l as s u m edal l b en efi t s an d b urd en s o f o wn ers h i p o f t h e p ro p ert y i n cl u d i n g m ak i n g th e m o n th ly m o rt g ag e p aym en t , m ai n t ai n i n g l i ab i l i ty i n s u ran ce, p ay i n g th e u t i l i ty b i l l s , p ay i n g t h e p ro p erty t ax es , an dco l l ect i n g ren tfro m a
s ub l es s ee. Th e reco rdi s n o ten t i rel y cl ear as t o wh y t it le was t ak en i n the n am e o f BLREDCo . Ho wev er, Eri c Ram o s , th e CEO o f M BS, t es t ifi edth at i twas i n p art b ecau s e s o m e b an k s h av e t ro ubl e u n d ers t an d i n g wh ata d iv is i o n o f an IRA s ec. 1 7
co rp o rat i o n i s an dare wary ab o u ten t eri n g a fi n an ci n g arran gem en twi th s u ch an- 4 7 -

en t i ty . So m e b an k s m ay

al so b e co n cern edab o u t th e ab i l i ty o f an IRA s ec. 1 7
co rp o rat i o n t o t ak e t i t l e t o p ro pert y . Reg ard l es s o f wh o s e n am e t i t le was t ak en i n , we d et erm i n e o wn ers h i p fo r Fed eral t ax p u rp o s es o n the b as i s o f wh o p o s s es s es th e b en efi ts an db u rd en s o f
o wn ers hi p , rat h er t han l eg al t i tl e. See Ho u ch i n s v . Co m m i s s i o ner, 7 9 T.C. 5 7 0 , 5 9 1 (1 98 2 ); Gro d t& M cKay Real ty , In c. v . Co m

m i s s i o ner, 7 7 T.C. 1 2 2 1 , 1 2 3 7 (1 9 8 1). W e b el i ev e t h i s an al y s i s can b e ex trap o lat ed t o the fact s ath an d, an do n th e reco rdb efo re u s i ti s cl ear t h atth e b en efi t s an d b u rd en s o f o wn ers h i p were fel t b y M BS. See Ho u ch in s v . Co m m i s s i o ner, 7 9 T.C. at5 9 1 (“ Th e qu es t i o n o f wh et h er t h e b en efi t s an db urd en s o f o wn ers h i p h av e b een tran s ferred i s es s en t i al l y
o n e o f fact * * * . Am o n g th e fact o rs t o b e co n s i d eredi n m ak i n g th i s d et erm i n at i o n are: ” wh o h ol d s t i t l e, wh o h as co n tro l o v er t h e p ro p ert y an dth e
ex t en to f s uch co n tro l, wh o b ears th e ri s k o f l o s s o r d am ag e t o th e p ro pert y , an d wh o recei v es the b en efi t s fro m th e p ro pert y ). Th erefo re, M BS was th e o wn er i n fact o f th e Co o l id ge Pro p ert y , an dth e i s s u e rai s edb y res p o n d en ti s o f l i t t l e
co n seq u en ce. M o reo v er, ev en as s um i n g M BS t o o ko n the i d en t i ty o f BLREDCo fo r t h e p u rp o s e o f p u rch as i n g th e Co o l id g e Pro p ert y , we are n o t i n cl in edt o u s e th i s i s o lat edi n s tan ce t o i m p u t e al l as s et s an dl i ab il i t i es o f M BS t o BLREDCo i n- 4 8 -

co n trav en t i o n o f t h e i n t en d edb u s i n es s s tru ctu re as al l o wed b y BLREDCo ’ s IRA
s ec. 1 7 ch art er. Nex t , res p o n d en ts u g g es t s th atb ecau se M BS en tered i nt o a fi n an ci n g ag reem en tfo r i ts acco u n t s recei v ab l e as BLREDCo , p et i t i o n ers s ho u ldb e fo recl o s ed fro m

n ow arg u i n g M BS was a l eg al ly d i st in ctd i v is io n o f BLREDCo
. M BS i n i ti al l y

en t eredi n t o th e FF ag reem en t as i t s el f; th atag reem en td i d n ot
m en t i o n BLREDCo at al l . A y ear l at er M BS en t eredi n to th e am en d edFF ag reem en t , wh i ch p ro v i d edth at“ Bl u e Lak e Ran ch eri a Eco n o m i c Dev el op m en t Co rp o rat i o n was th e o ri g i n al co n tract i n g p art y . ” In s p i t e o f t hi s , fo l l o wi ng th e
en act m en to f t h e am en d edFF ag reem en t , M BS co n t i nu ed t o m ak e p aym en t s t o FF,
n o tBLREDCo . In ad d i t i on , th ere i s n o thi n g i n t h e reco rdi n d i cat i n g t h e BLREDCo h adan y acco u n t s o r o ther as set s th atco u ld actu al l y b e fo recl o s edo n b y FF u n d er t h ei r fi l edfi n an ci n g s t at em en t s i n th e ev en to f d efau l t
. 1 0 Rat h er t h an th e ex p l an at i o n res po n d en t en co u rag es , the m o re l i kel y ex p l an at i o n fo r t h i s

1 0 Iti s al so n o tcl ear fro m

th e reco rdwh et h er FF was au th o ri zedt o fi l e UCC fi nan ci n g s t at em en t s n am i n g BLREDCo as th e d eb t or. Au th o ri zat i o n m u s tb e p ro v id edb y

th e d eb t or fo r a fi n an ci n g s tat em en t t o b e v al i d . Cal . Co m . Co d e s ec. 9 5 0 9 (W es t2 0 1 0 ). Al th o ug h th e am en d edFF ag reem en tn am edBLREDCo as a co n tract in g p art y , th e s ect i o n o n co l l at eral au th o ri zed FF t o fi l e fi n an ci n g s t at em en t s o n l y ag ai ns tacco un t s h el d b y M BS.- 4 9 -

arran g em en ts eem s t o b e t h atFF was h es i tan tt o en t er i nt o an ag reem en t wi th M BS, an en t i ty

th ey d i dn o t fu l l y

co m p reh en d
. Th i s ex p l an at i o n i s b o l s t eredb y th e fact thatFF req u es t eda l i m i t edwai v er
o f s o v erei g n i m

m u ni ty as a co nd i t i o n o f co n t i n u i n g th e arran g em en t . BLREDCo
co n sen t edan dp as s eda res o l u t i o n cal l i n g fo r a l i m i t edwai v er o f s o v erei g n i m m u ni ty i n fav o r o f FF (wai v er res o l u t i o n ); i m p o rt an t l y , h o wev er, t h e wai v er
res o l ut i o n was l i m i t ed t o th e as s et s o f M BS. Res p o n d en t u rg es th atth e wai v er
res o l ut i o n b o l st ers h i s arg u m en tthatM BS an dBLREDCo were act i n g as o n e an d th e s am e b ecau se BLREDCo as s ert edth ati twas “ o p erat in g as M BS” wh en th e ag reem en t s wi th FF were s i g ned . W e b el i ev e, h o wev er, co n traryt o res p o nd en t ’ s
as s ert i o n , th atth i s wai v er d oes n o th i n g t o s upp o rt h is p o si t io n . Res p o n d en t ’ s arg u m en td i s i n t eg rat es wh en we t ak e i nt o acco u ntth atBLREDCo was th e o n l y
en t i ty p erm i t tedu nd er t h e IRA s ec. 1 7 ch art er t o wai v e s o v erei gn i m m u n i ty . Rat h er th an an ad m i s s io n thatM BS an dBLREDCo were o ne an dth e s am e, t h e wai v er res o l ut io n m erel y s t at es th e o b v i o u s . BLREDCo h adt o b e o p erat i n g as M BS i n o rd er t o wai ve s o v erei g n i m m un i ty as req u es t edb y

FF. See Un i b an d , In c.
v . Co m m i s s i o n er, 1 4 0 T.C. at2 6 1 (“ On e feat u re o f a s ect io n 1 7 co rp o rat i o n i s th at i t gi v es a t ri be t he ab il i ty t o wai v e t ri b al s ov erei g n i m m u n i ty fo r a b u s in es s
o p erat edb y

a s ect i o n 1 7 co rp o rat i o n [.] ”). Ev en as s u m i n g M BS p res en t ed i t s el f as- 5 0 -

BLREDCo i n it s d eal i ng s wi th FF, as res p o n d en tu rg es , we d o n o tfi n dth i s i n s t an ce en o u g h t o ju s t i fy p i erci n g th e en t i ret y

o f BLREDCo an dM BS’ ch o s en rel at i o n s h i p as p erm it t edb y th e DOI-au th o ri zed ch art er. Perh ap s m os ti m

p o rt an ti n th es e cas es i s wh atres po n d en td oes n o t arg u e o r d i s p u t e. Fo r i n s tan ce, t h ere i s n o i n d i cat io n i n the reco rd th atres p o n den twas
m i s l edas t o wh o o wedth e em p l o y m en tt ax es ati s s u e i n th es e cas es . M BS, u s i n g i t s u n i qu e FEIN, fi l edth e qu art erl y em p l o ym en tt ax retu rn s fo r t h e p eri o d s at i s su e. Ev en s o , res p on d en t at t em p t s t o co n fu s e th e i s s ue b y s u g g es t i n g th atM BS
n ev er fi l edi t s o wni nco m e t ax retu rn , rel y i n g o n th e i n co m e t ax ex cl u s i on fo r IRA
s ec. 1 7 co rp o rat i o n s p ro v id edt o BLREDCo
. 1 1 Ins p i t e o f res p o n d en t ’ s at t em p t s , th e u n den i ab l e fact rem ai ns th atM BS was n o t s eek in g t o d i s g ui s e i ts em pl o ym en t t ax o b li g at i o n s. Res p o n d en tev en ad m i t s th at i twas M BS’ s ep arat e an dd i st i n ct b u s i n es s act i v i t i es th atg en erat edth e t ax l iab i l i t i es ati ss ue i n th es e cas es , n o tth e act i vi t i es o f BLREDCo
. 1 2

1 1 M o reo ver, i t i s t el l i ng th atres po n d en td o es n ots u g g es tM BS’ rel i an ce o n th e i n co m e t ax ex cl us i on o f BLREDCo i s i m pro p er; res p o nd en t ’ s i n tro du ct i o n o f th e fact th atM BS d i d n o tfi l e Fed eral i n co m e t ax retu rn s i s s o l el y i n t en d edt o co n fu s e t h e i ss u e.

1 2 Al th o u g h n o p art y

rai s edth e i s s u e, we fi n d th i s an al y s i s t o b e s i m i l ar t o o u r ap pro ach t o al t er eg o cas es . Ind et erm i n i n g wh eth er an en t i ty i s m erel y th e al t er eg o o f an o th er an dth erefo re p ro p erl y l i ab l e fo r i ts t ax o b li g at i on s we l o o kat : (co n ti n u ed ...)- 5 1 -

Onth i s reco rdwe can n o taccep tres p o n d en t ’ s arg u m en tth atM BS fo rfei t ed i t s d i s t i nct i o n as a l eg al l y s ep arat e d i v i s i o n o f BLREDCo p erm i t tedu n d er t h e IRA
s ec. 1 7 ch art er. Acco rd i n g ly , we h o l dth at BLREDCo ’ s IRA s ec. 1 7 ch art er p ro p erl y al l o w edi tt o creat e s ub d i v is i o n s wh o s e as s et s an d l i ab i l i ti es were d i s t i nct fro m th o s e o f t h e co rp o rat i o n . 1 3 W e fu rt h er h o l dth atM BS was s u ch a l eg al l y d i s t i n ctd i v i s i on o f BLREDCo atal l rel ev an t t i m es , an dco n s equen tl y res p o n d en t
m ay n o t l o o kt o BLREDCo t o co l lectth e em p l o ym en tt ax l i ab il i t i es o w edb y M BS. Ho wev er, M BS rem ai n s l i ab l e t o res p o nd en t fo r th e em p l o ym en tt ax es i n i s su e, as refl ect edfo ll o wi ng co n ces s i o ns an ds t ip u l at i o ns b y th e p art i es .

1 2 (...co n t i nu ed ) (1 ) wh et h er t h e al t er eg o treat edth e co rp orat e as s et s as i t s o wn ; (2 ) wh et h er t h e al t er eg o h el d in s uran ce co v eri n g th e co rp o rat e as s et s ; (3 ) wh et h er co rp o rat e fu n d s were u s edt o p ay th e al t er eg o ’ s ex p en s es ; (4 ) wh et h er tran s act i o n s b et ween th e co rp o rat i o n an d t h e al t er eg o were atarm ’ s l en g th; an d(5 ) wh et h er th e co rp o rat i o n an d th e al t er eg o h av e an y s ep arat i o n i n co n tro l . See Lo v i n g Sav i o u r Ch u rch v . Un i ted St at es , 7 2 8 F.2 d1 08 5 , 1 0 8 6 (8 th Ci r. 1 98 4 ). In co n si d eri n g th es e fact o rs , we fi n dth atM BS was n o tm erel y an al t er eg o o f BLREDCo o r v i ce v ers a. Th ey o p erat edas s ep arat e an dl eg al l y d i s t in cten t i t i es , an dwe wi l l n o t h o l d BLREDCo l i ab l e fo r t he o b l i gat i o n s o f M BS.

1 3 Ou r h ol di n g i s l i m i t edt o an IRA s ec. 1 7 co rp o rat io n ’ s ab il i ty t o creat e d i v i s i on s wh o s e as s et s an d l i ab i l i t i es are l eg al l y d i s t i nctfo r Fed eral t ax p u rp o s es o n l y .- 5 2 -

In reach i n g o u r h o ld in g s h erei n, we h av e co n s id eredal l arg u m en t s m ad e,
an d , t o th e ex t en tn o t m en t io nedab o v e, we co n cl u d e t h ey are m oo t , i rrel ev an t , o r wi th o u tm eri t
. To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t eredfo r p et i t i o ner i n d o ck et No . 1 61 5 0 -1 7 L. Deci s i o n wi ll b e en t eredu n d er Ru l e 1 5 5 i n d o ck et No . 1 6 1 8 9 -1 7 L.