14 0 T.C. No . 13

UNITED STAT ES TAX COURT
UNIBAND, INC., Peti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 47 18 -0 6. Fil edMay 22, 2 01 3.

P is a Dela ware co rp or at io n, wh ol ly owne d b y T, an In di an tri be . For t he y ears at i ss ue P at te m pt edto fil e co ns ol id at edreturns with C , ano th er co rp or at io n wh ol ly owne d b y T. P con te nd s tha t T is th e co m m on pa ren t co rp or at io n o f P an d C an d t ha t t og ethe r th ey co ns ti tu te anaffi li at edgro up eli gi bl e to fil e a co ns ol id at edreturn. On th e returns fil ed , P di d n otcla im Ind ian e m

pl oym en t cr ed it s u nd er I.R.C. s ec. 4 5A ev enth ou gh P was e nt it le d t o t he m ; i ns te adP de du ct edth e en ti rety

of i ts em pl oyee ex pe ns es . R det erm in edth atth e co ns ol id at edreturns th atP joi ne d i n fi li ng were i nv al idan d t ha t P was requi redto cla im

a cred itun de r I.R.C. s ec. 4 5A an d re du ce i ts wag e d educ ti on by the en ti re cr ed itam ou nt(witho utreg ardto cred it li mit at io ns forparti cu lar ta x years) . P no w con te nd s tha t i t i s n ot subjec t t o c or

po rat e in co m e ta x b ecau se itis anin te gr al pa rt o f T, whi chbe cau se itis anInd ian t rib e is ex em ptfro m in co m e ta x.- 2 - Held : P, as a St at e-ch art eredco rp or at io n, i s a s ep arat e an d di st in cten ti ty from

T andis no t ex em

ptfro m th e co rp or at e in co m e ta x. Held , furth er, the co ns ol id at edreturns fil edforth e y ears in is su e were i nv al idbe cau se T, as anInd ian t rib e, was no t el ig ib le to joi n i n t he fil in g o f a co ns ol id at edreturn, an d P an d C alo ne di d n ot co ns ti tu te anaffi li at edgro up . Held , furth er, the Ind ian e m pl oym en t cr ed it s u nd er I.R.C . sec . 45 A are n otele ct iv e; an d a s a r es ul t, P’s em pl oyee ex pe ns e de du ct io ns forth e y ears at i ss ue m us t b e reduc edby the am ou ntof t he cred itas d et erm in edun de r I.R.C. s ec. 4 5A wi th ou t re ga rdto li mit at io ns on th e al lo wab le am ou ntof the cred it
.
Sco ttA. Tay lo r, fo r pe ti ti on er. Ja ckMart in Fo rs be rg , forres po nd en t.
CONTENTS
FINDINGS OF FACT.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 TMBC I an d i ts co rp or at io ns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Uni ba nd , Inc
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 TMMC
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 The sec ti on17 co rp or at io n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 The tax returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 In di anem

pl oym en t cr ed it
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 OPINION.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 I. Fed eral in co m e ta x e xe m pt io n i ss ue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19- 3 -

A. In di antri be s ar e n otsubjec t t o F ed eral in co m e ta x.. . . . . . . . . . . . . 19 1. TMBC I ha s n o i nh eren t i m m un ity fro m Fed eral tax es .. . . . . 19 2. No treat y

ex em pt s TMB CI fro m

Fed eral in co m e ta x.. . . . . . 21
a. An ex em

pt io n m us t b e “ de fin it el y

ex pr es se d”
.. . . . . . 21 b. The cit edtre at ie s d o n otex pr es s an in co m e ta x ex em pt io n.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3. The Co de do es no t i m po se in co m e ta x l iabi li ty on TM BCI.. 24 B. Uni ba nddo es no t s ha re TMB CI’s “ ex em pt io n” fro m Fed eral in co m e ta x.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 1. Apa rt f

ro m it s as so ci at io n wi th TMBCI , Uni ba nd is tax ab le
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 2. As a g en eral rul e, co rp or at io ns are d is ti nc t fr om th ei r own ers , fortax pu rp os es .. . . . . . . . . . . . . . . . . . . . . . . . 27 3. Uni ba ndis no t an “ in te gr al pa rt” of TM BCI..
. . . . . . . . . . . 28
a. Aut ho rit ie s ad dr es si ng in te gr al pa rts of S ta te s. . . . . . 29 b. So ve rei gn imm

un ity . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 (1 ) Ana lysis of s ov erei gnimm un ity . . . . . . . . . . . . 33 (a) Arm

of t he tri be
. . . . . . . . . . . . . . . . . . . . 34 (b ) Trib al est ab li sh m en t. . . . . . . . . . . . . . . . 36 (c) Oth er cr it eri a. . . . . . . . . . . . . . . . . . . . . . 38 (2 ) So ve rei gn imm

un ity do es no t n eces sa ril y co nf er “ in te gr al pa rt” st atus . . . . . . . . . . . . . . . . 42
c. “ In di antri ba l o rg an iz at io n”
. . . . . . . . . . . . . . . . . . . . . 45 d. Si m il ari ty to s ect io n 1 7 c or po rat io ns . . . . . . . . . . . . . . 47 (1 ) The ori gi n o f se ct io n 1 7 c or po rat io ns .. . . . . . . 49 (2 ) Ch arac te ris ti cs of s ect io n 1 7 c or po rat io ns . . . . 50- 4 - (3 ) Tax at io n o f se ct io n 1 7 c or po rat io ns . . . . . . . . . 52 (4 ) Uni ba nd ’s di ffer en ces fro m a se ct io n 1 7 co rp or at io n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 II. Co ns ol id at edreturn i ss ue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 A. Uni ba ndwas n otpa rt o f anaffi li at edgro up .. . . . . . . . . . . . . . . . . . 56 1. Bo dy po li ti c. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 2. An en ti ty tax edas aco rp or at io n. . . . . . . . . . . . . . . . . . . . . . . 58 B. The co ns ol id at edreturns were n otva li d..
. . . . . . . . . . . . . . . . . . . . 59 1. TMBC I di d n otm ak e th e co ns ol id at edreturns .. . . . . . . . . . . 59 2. TMBC I di d n otco ns en t t o t he co ns ol id at edreturns .. . . . . . . 60 3. TMBC I di d n otrep ort i ts it em s o n t he co ns ol id at ed returns for19 96 or 1 99 7..
. . . . . . . . . . . . . . . . . . . . . . . . . . . 62 III. W ag e d educ ti on reduc ti on is su e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 IV. Co nc lu si on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 GUSTAFSON, Ju dg e: In ano ti ce o f de fic ie nc y m ai le d t o p et it io ne r Uni band , Inc . (“ Uni ba nd ”), p ur su an t t o s ect io n 6 21 2 onNov em be r 28 , 20 05 , th e 1 In te rn al Rev enue Serv ic e (“ IRS” ) de te rm in edin co m e ta x d efi ci en ci es of $ 22 0,8 51 fo r 19 96 , $7 54 ,75 8 fo r 19 97 , and$3 08 ,49 8 fo r 19 98 . Uni ba ndti m el y fil eda

Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o t he Int ern al 1 Rev enue Co de of 1 98 6 (c od ifi edin26 U.S.C. andrefe rredto he rei n a s “ th e Co de ”), an d a ll Ru le refe ren ces are t o t he Tax C ou rt R ul es of P ract ic e an d Pro cedur e.- 5 -

pe ti ti on reque st in g t hi s C ou rt t o re de te rm in e th os e d efi ci en ci es . After c on ces si on s by the pa rti es th ree i ss ue s re m ai n fo r de ci si on : (1 ) Whe th er Un ib an d, as a St at e-ch art eredco rp or at io n wh ol ly owne d b y
anInd ian t rib e, is subjec t t o t he co rp or at e in co m e ta x und er s ect io n 1 1. We ho ld th atitis subjec t t o t ax . (2 ) Whe th er, i f Uni ba ndis subjec t t o t ax , th e co ns ol id at edreturns th at Uni bandan d i ts si st er co rp or at io n jo in edinfil in g fo r 19 96 , 19 97 , and19 98 were
va li d u nd er s ect io n 1 50 1. We ho ldth atth ey were n otva li d. (3 ) Whe th er s ect io n 2 80 C(a) requi res th atUni ba nd ’s sec ti on 16 2 de du ct io ns forwage an d e m pl oyee expe ns es be reduc edby the en ti re am ountof th e In di anem

pl oym en t cr ed itforwhi chUni ba ndwas e li gi bl e und er s ect io n 45 A(a), ev enif Un ib an d d idno t cl ai m th e cre di t. We ho ldth atitdo es requi re the reduc ti on . FINDINGS OF FACT The pa rti es subm itte d t hi s ca se ful ly sti pu la te d p ur su an t t o R ul e 1 22
. The

2 pa rti es ’ st ip ul at edfact s ar e in co rp or at edhe rei n b y th is refe ren ce. At the ti m e
The bu rd enof p ro of

is ge ne ral ly on the tax pa y er, s ee Ru le 14 2( a)(1 ), an d 2 th e subm is si onof acas e fu ll y st ip ul at edun de r Ru le 12 2 d oe s n otalt er tha t b ur de n, se e Bo rch ers v. Co m

m is si on er, 9 5 T.C. 8 2, 9 1 (1 99 0) , aff’d, 9 43 F.2d22 (8t h Ci r.19 91 ).- 6 -

Uni bandfil edit s p et it io n, i t m ai nt ai ne d i ts pri nc ip al pl ace o f bu si ne ss inBel co urt, NorthDako ta . TMBC I an d i ts co rp or at io ns The Turt le Mo un ta in Ban d o f Ch ip pe wa In di an s (“ TMBC I” o r “ th e Ban d” ) is a fed eral ly recog ni zed , un in co rp or at edba ndof I nd ians act in g u nd er a re vi se d
co ns ti tu ti on an d b y laws ap pr ov edby the Secr et ary of th e In te rio r on Ju ne 16 , 19 59 . TMBCI’s re se rv at io n i s ap pr ox im at el y 68 squa re m il es an d i s i n R ol et te Co un ty, North Dako ta . Belc ou rt, No rth Dako ta , is on th e res erv at io n. TMB CI h as
ne ve r fi le d aFed eral in co m e ta x re tu rnon it s o wn b eh al f or on be ha lf o f an y

ot he r
en ti ty. Fo r th e y ears inis su e, TMBC I was th e so le own er o f th ree c or po rat io ns rel ev an t i n t hi s ca se : (1 ) pe ti ti on er Un ib an d, In c., ch art eredinDelaware; (2 ) Turtl e Mo un ta in Manuf actur in g C o. (“ TMMC ”), ch art eredinNort h Dak ot a;
an d (3 ) a fed eral ly chart eredco rp or at io n t ha t was als o n am edUni bandCo rp . and th atwe refe r to he re as th e “ se ct io n 1 7 c or po rat io n” forreas on s we e xp la in be lo w. 3

The reco rdin di cat es th atTMBCI was a ls o t he so le own er o f Uni ba nd 3 Trib al Co rp ., a cor

po rat io n c ha rte redun de r tr ib al law. Th attri ba l co rp or at io n i s no t re le va ntinth is cas e.- 7 -

Uni band , Inc
. Pet it io ne r Uni ba nd , Inc ., was i nc or po rat edun de r th e la ws o f Del aware on Ju ly 28, 1 98 7. Fro m

th enun ti l Se pt em

be r 19 90 , TMBCI o wne d 5 1% o f Uni band ’s st oc k, an d t he rem ai ni ng 49 % was o wne d b y Uni ba se Tech no lo gi es , In c., a Dela ware co rp or at io n i n wh ic h TM BCI h adno own ers hi p i nt eres t. Si nc e Sep te m be r 19 90 , TMBCI h as be enth e 1 00 % own er o f Uni ba nd ’s st oc k. The reco rdin di cat es th atUni ba ndwas e ng ag edinco m m erci al act iv it ie s. In it s b rie f Uni ba ndst at es th atitreg ul arl y pe rfo rm edda taen try serv ic es forsev eral Fed eral Gov ern m en t ag en ci es . Uni ba ndcit es no ev id en ce fo r th is pro po si ti on , bu t
we as su m e itis tru e. Uni ba nd ’s ori gi na l ce rti fic at e o f in co rp or at io n s ta te s: The na tu re o f th e b us in es s an d t he pu rp os e to be co nduc te d o r pr om ot edby the co rp or at io n i s t o e ng ag e in an y lawf ul actor a ct iv ity fo r whi chco rp or at io ns m ay be org an iz edun de r th e Gen eral Co rp or at io n Law o f th e St at e o f Del aware . [ 4 ]

* * * * * * *

The cert ifi cat e as res ta te d i n 1 99 1 app aren tl y de le te d wo rd s fr om

th is 4 pr ov is io n, p res um ab ly ina dv ert en tl y , so th atitth erea fte r rea d: “ The na tu re o f th e bu si ne ss an d t he pu rp os e to be co nduc te d o r pr om ot edby the co rp or at io ns [ap pa ren t d el et io n] m ay

be org an iz edun de r th e Gen eral Co rp or at io n Law o f th e St at e o f Del aware .”- 8 -

No p ro vi si on inUni ba nd ’s art ic le s o f in co rp or at io n o r bylaws furth er re st ric ts th e act iv it ie s o f th e co rp or at io n. Th e certi fic at e g iv es Uni ba nd ’s bo ardof d ire ct or s the
un il at eral po wer t o “ m ak e, al te r orrep eal th e By-Laws of th e co rp or at io n.” The cert ifi cat e o f in co rp or at io n a ls o re se rv es th e co rp or at io n’s ri gh t “ to am en d, al te r, ch an ge or r ep eal an y

pro vi si on co nt ai ne d i n t hi s C ert ifi cat e o f In co rp or at io n” . In Mar ch19 91 , Uni ba ndex erci se d t ha t ri gh t an d fi le d ares ta te d c ert ifi cat e o f in co rp or at io n wi th th e Del aware sec ret ary of st at e. The re st at edcert ifi cat e ad de d
an“ Arti cl e Nin th ” en ti tl ed“ W ai ve r of So ve rei gn Im

m un ity ”, un de r whi ch Uni bandis ab le
-- To s ue an d t o b e su edinco urts of c om pe te ntjuri sd ic ti on withi n t he Uni te d S ta te s, * * * ov er al l m at te rs rel at in g t o t he Co rp or at io n’s rel at io ns hi p wi th th e Uni te d S ta te s Sm al l Bu si ne ss Adm in is tra ti on (SBA) * * *
. W ith re ga rdto Uni band ’s m an ag em en t, Un ib an d’s b y laws ad op te d F eb ru ary 28 , 19 91 , pro vi de : Sect io n 3 .11 Elec ti on of Di rect or s. At e ach ele ct io n o f Dire ct or s ev ery sh areh ol de r ha vi ng th e ri gh t t o v ot e in th atele ct io n sh al l b e aff

or de d t he rig htto vo te th e num be r of sh ares own edby hi m , eit he r in pe rs on or b y pro xy, for as m an y

pe rs on s as th ere a re Dire ct or s t o b e el ect ed . The ca nd id at e rec ei vi ng th e h ig he stnu m be r of vo te s s ha ll be de em edto be ele ct ed . * * *

* * * * * * *- 9 -

Sect io n 4 .1 Exe rci se of C or po rat e Po wer. The bu si ne ss affa irs of th e co rp or at io n s ha ll be m an ag edby the Bo ardof Di rect or s (h erei na fte r, th e Bo ard ). Sect io n 4 .2 Qua li fic at io ns . Direc to rs ne edno t b e res id en ts of Dela ware o r sh areh ol de rs of t he co rp or at io n. Th ey ne edha ve no ot he r qu al ifi cat io ns .

* * * * * * * Sect io n 1 6.1 W ai ve r of So ve rei gn Im

m un ity . The co rp or at io n m ay su e an d b e su edinco urts of c om pe te ntjuri sd ic ti on withi n t he Uni te d S ta te s, i nc lu di ng , bu t n otli mit edto , Uni te d S tate s fe de ral co urts ; p ro vi de d h owe ve r, th atth e g ran t o r ex erci se of s uc h p owe r to su e o r be su edsh al l n otbe de em eda co ns en t b y th e Turtl e Mo un ta in Ban d o f Ch ip pe wa In di an s (“ Trib e”) t o t he lev y of a ny j ud gm en t, li en , att ach m en t o r ot he r en cu m br an ce upo n a ny pro pe rty of the Trib e ot he r th anpro pe rty sp eci fic al ly ple dg e o r as si gn edby the Trib e. All in he ren t s ov erei gn rig ht s o f th e Trib e as a fed eral ly reco gn iz edInd ian t rib e with re sp ectto th e ex is te nc e an d a ct iv it ie s o f th e co rp or at io n are h ereb y ex pr es sl y

res erv ed , in cl ud in g s ov erei gn imm un ity fro m su itinan y

st at e, fed eral or t rib al co urt. No th in g i n th es e By-Laws no r an y

act io n o f th e Bo ardof Di rect or s, s ha reh ol de rs , of fic ers , age nt s o r em

pl oyees o f th e co rp or at io n s ha ll waiv e th e so ve rei gnim

m un ity fro m su itof t he Trib e, orto be a co ns en t o f th e Trib e to th e juri sd ic ti on of the Uni te d S ta te s o r of any st at e o r an y tri be with re ga rdto an y

act iv it ie s o f th e Trib e, orto be a co ns en t o f th e Trib e to an y

cau se of a ct io n, ca se or c on tro ve rs y , or t o t he lev y of an y jud gm en t, l ie n o r at ta ch m en t upo n a ny pro pe rty of the Trib e; or a co ns en t t o s ui t i n re sp ectwith any lan d wi th in th e ex te rio r bo un dr ie s [s ic ] of th e Trib e’s Res erv at io n, o r anco ns en t t o a ny ali en at io n, at ta ch m en t o r en cu m

br an ce o f su chlan ds
. Not hi ng inth ere [ si c] By -Laws no r an y act iv ity of the co rp or at io n s ha ll im

pl ic at e o r in an y

way in vo lv e th e cre di t o f th e Trib e.- 10 - The co rp or at io n s ha ll have on ly tho se ass et s ac qu ire d b y itin th e n am e o f th e co rp or at io n. No act iv ity of t he co rp or at io n n oran y in de bt edne ss in cu rredby the co rp or at io n s ha ll im pl ic at e o r in an y way in vo lv e an y

ass et s o f tr ib al m em

be rs or t he Trib e n otass ig ne d o r ot he rwis e tr an sf

erre d i n wri ti ng to th e co rp or at io n i n i ts co rp or at e na m e. Ourreco rddo es no t s ho w who Uni ba nd ’s off ic ers an d d ire ct or s wer e dur in g t he y ears at i ss ue , no r whe th er the y were m em

be rs of TM BCI. Neit he r Uni ba nd ’s res ta te d c ert ifi cat e o f in co rp or at io n n orit s b y laws s et fo rth any li m it at io ns on th e al ie na ti on of Un ib an d s ha res , andou r rec or d i nc lu de s
no Uni ba ndsh areh ol de r ag reem en t i m po si ng an y

su chli m it at io n. Un ib an d’s
res ta te d c ert ifi cat e o f in co rp or at io n a ndit s b y laws d o n otpl ace any restric ti on s o n whe n o r un de r wha t ci rcu m st an ces Uni ba ndm ay di ss ol ve . Apa rt f ro m th e fac t tha t TMB CI i s i ts so le sh areh ol de r, Uni ba ndha s n ot of fere d a ny evi de nc e reg ard in g t he fin an ci al rel at io ns hi p b etweenTMBCI an d Uni band . In p art ic ul ar, the reco rddo es no t s ho w any con tri bu ti on s o f cap it al th at TMBC I m ad e to Uni ba nd , do es no t s ho w any loan g ua ran ti es by T MBC I, an d sh ows no li ab il ity

on TMBCI ’s part fo r any de btof Un ib an d; an d s ect io n 1 6.1 of th e b y laws (quo te d abo ve ) expl ic it ly pro vi de s tha t TMB CI wi ll no t b e li ab le for Uni band ’s deb ts . Uni ba ndm ai nt ai ne d i ts pri nc ip al pl ace o f bu si ne ss withi n TMBC I’s res erv at io n, b utwe can no t t el l wh ethe r Uni ba ndco nduc te d a ny acti vi ty- 11 -

orha d a ny ass et s o ut si de of t he res erv at io n. A p orti onof Un ib an d’s wo rk fo rce were TMB CI m em

be rs ; h owe ve r, ou r reco rddo es no t i nd ic at e h ow m an y TMBCI
m em be rs Uni ba ndem

pl oyed fo r th e y ears inis su e. 5 Uni ba ndus es th e acc ru al m etho d o f acc ou nt in g fo r bo th tax an d fi na nc ia l rep orti ng pu rp os es an d h as a ta xabl e y ear e nd in g Oct ob er 3 1. Du rin g t he y ears in is su e, Uni ba ndtre at edit se lf a s a C co rp or at io n, tho ug h i t n ow m ai nt ai ns th atitis
no t s ub ject t o c or

po rat e in co m e ta x. Atno po in t h as Uni ba ndown edan y sh ares of TMMC
. TMMC TMMC is a North Dako taco rp or at io n, i nc or po rat edinJan ua ry

19 79 . From TMMC ’s creat io n thr ou gh Apri l 1 98 9, TMB CI i nd ire ct ly owne d a t l eas t 5 1% o f TMMC . In M ay

19 89 , TMBCI b ecame T MM C’s so le sh areh ol de r. At al l t im es si nc e in co rp or at io n, TMM C h as us edth e acc ru al m etho d o f acc ou nt in g fo r bo th ta x a ndfin an ci al rep orti ng pu rp os es an d h as ha d afis cal an d t ax ab le y ear e nd in g The pa rti es ha ve st ip ul at edth atfor Uni ba nd ’s 19 98 tax ab le y ear, i t p ai d 5 ab ou t $ 4.5 m il li on in“ qu al ifi edwage s” an d “ qu al ifi edem pl oyee he al th in su ran ce co st s” (as de fin edby sect io n 4 5A( b) (1 ) an d (2 )) t o m em be rs of TM BCI. Ho wev er, th atam ou ntap pe ars to acco un t fo r le ss th ana qu art er o f Uni ba nd ’s to ta l em pl oyee ex pe ns es of $ 29 mil li on : Un ib an d o n i ts 19 98 returns de du ct ed$1 .5 m il li on for “ sa larie s an d wag es ” an d i nc lu de d, i n i ts co stof g oo ds so ld , $1 6.7 m il li on for “ co stof l ab or ” an d $ 10 .8 m il li onfor“ co nt ractlab or ”. Thes e fi gu res su gg es t tha t Uni bandem

pl oyed s ig ni fic an t n um

be rs of p ers on s wh o wer e n otTMBCI m em be rs .- 12 -

Sep te m be r 30 . Thro ug h t he y ears inis su e TMMC ha s treat edit se lf a s a C
co rp or at io n. Atno po in t h as TMMC own edan y sh ares of Un ib an d. The sec ti on 17 co rp or at io n On Se pt em

be r 23 , 19 98 , th e Sec ret ary of th e In te rio r, pu rs ua ntto sec ti on 17 of th e In di anReo rg an iz at io n Actof 1 93 4 (“ IRA”) , ch. 5 76 , sec . 17 , 48 Sta t. at98 8 (co di fie d a s amend edat 2 5 U.S.C. s ec. 4 77 (19 94 )), g ran te d t o TM BCI aFed eral ch art er o f in co rp or at io n fo r a s o- cal le d s ect io n 1 7 c or po rat io n. Th e ch art er i s di ffer en t i n m at eri al res pe ct s fr om Uni band ’s cert ifi cat e o f in co rp or at io n a nd pr ov id es inpe rti ne ntpa rt:

1. Is su an ce o f Ch art er. The Secr et ary of

th e In te rio r is su es th is ch art er o f in co rp or at io n (“ Ch art er”) to th e Turtl e Mo un ta in Ban d o f Ch ip pe wa In di an s (“ Trib e”) * * * . This Ch art er s ha ll be co m e o pe rat iv e whe n ra ti fie d by the go ve rn in g b ody

of t he Trib e, it s Tri ba l Co un ci l. * * * * * * * 3. Tri ba l Own ers hi p; Exer ci se d b y Trib al Co un ci l; No Tri ba l Liab il ity . The [se ct io n 1 7] Co rp or at io n s ha ll be who ll y own edby the Trib e. The ri gh ts , du ti es an d p rero ga ti ve s o f th e Trib e as so le own er of th e Co rp or at io n s ha ll be ex erci se d a ndpe rfo rm edon be ha lf o f th e Trib e b y it s Tri ba l Co un ci l * * *
. * * * * * * *- 13 - 6. Re or ga ni zat io n o f St at e Co rp or at io n, Un ib an d, In c., or Trib al Co rp or at io n, Un ib an d Tri ba l Co rp or at io n. As an in it ia l m at te r, th e [s ect io n 1 7] Co rp or at io n h as be en or ga ni zedas ave hi cl e fo r reo rg an iz at io n o f Uni ba nd , Inc ., a Dela ware co rp or at io n [i .e., pet it io ne r] whol ly owne d b y th e Trib e, an d/ or Uni ba ndTrib al Co rp or at io n, a t rib al ly-charte redco rp or at io n who ll y own edby the Trib e. To tha t en d, thi s [s ect io n 1 7] Co rp or at io n i s au th or iz edto acqui re the ass et s an d l iabi li ti es of Uni ba nd , Inc . and/o r Uni ba ndTrib al Co rp or at io n b y m erg er, co ns ol id at io n, ex ch an ge , trans fer, s to ckacqui si ti on or o th er m ean s, an d t o t he reaf

te r carry on all or a ny partof t he bu si ne ss of Un ib an d, In c. an d/ orUni ba ndTrib al Co rp or at io n, i n t he nam e o f th is [s ect io n 1 7] Co rp or at io n.

* * * * * * * 8. Gen eri c Po wers . a. Po wers un de r Sec ti on 17 . The [s ect io n 1 7] Co rp or at io n s ha ll have * * * the po wer t o p ur ch as e trus t o r res tri ct ed In di anlan ds an d t o i ss ue inex ch an ge th eref orin te res ts inCo rp or at e pr op erty * * *, p ro vi de d t he Co rp or at io n s ha ll ha ve no au th or ity to se ll , m ortg ag e, orlea se fora pe rio d e xc eed in g t wen ty-fiv e y ears an y tru stor r es tri ct edlan ds own edby the Co rp or at io n t ha t ar e wit hi n t he Res erv at io n. * * * * * * * 13 . Boa rdof Di rect or s. The bu si ne ss an d a ffai rs of t he [se ct io n 1 7] Co rp or at io n s ha ll be m an ag edby a bo ardof d ire ct or s (“ Bo ardof Di rect or s” or “ Bo ard ”) in acco rd an ce wi th th e fo ll owi ng pro vi si on s:

a. Co m po si ti on , App oi nt m en t an d Des ig na ti onof Ch ai rm an . There sh al l b e fi ve Bo ardsea ts . The Tri ba l Co un ci l s ha ll- 14 -

ap po in t o ne pe rs on (“ Dire ct or ”) t o fi ll each op enBo ardsea t an d s ha ll de si gn at e o ne Dire ct oras C ha irman of th e Bo ard* * * b. Qu al ifi cat io ns . (1 ) To b e el ig ib le to serve as aDire ct or , a pe rs on m us t: -- n otbe a m em be r of th e Trib al Co un ci l; * * * (2 ) At l eas t a m ajor ity

of t he Dire ct or s m

us t b e en ro ll edm em

be rs of t he Trib e. * * * * * * * 22 . By -Laws
. The Bo ardof Di rect or s m ay ad op t, am en d, o r rep eal by-laws of th e [s ect io n 1 7] Co rp or at io n, p ro vi de d t he by-laws m ay no t co nt ai n pr ov is io ns in co ns is te ntwith t he pro vi si on s o f th is Ch art er o r ap pl ic ab le law. 23 . Am en dm en t. As p ro vi de d i n S ect io n 1 7 o f th e IRA, thi s C ha rte r m ay be am en de d b y

th e Sec ret ary of

th e In te rio r up on pe ti ti onby the Trib e, pr ov id edanam en de d c ha rte r sh al l n otbe effe ct iv e unt il rat ifi edby th e Trib al Co un ci l. The ch art er al so pro vi de d t ha t TMB CI’s s ect io n 1 7 c or po rat io n c ou ldsu e an d “ by
ex pl ic itres ol ut io n o f th e Co rp or at io n’s Bo ardof Di rect or s, wai ve th e Co rp or at io n’s i m

m un ity fro m su it ”. By

tri ba l Re so lu ti on Num

be r TMBC 11 21
- 10 -9 8, TMB CI’s trib al co un ci l ra ti fie d t hi s ch art er o n Oct ob er 2 , 19 98
.- 15 -

Howev er, the pa rti es st ip ul at e th atas o f th e fi li ng of t he pe ti ti oninth is cas e, TMBC I’s se ct io n 1 7 c or

po rat io n h as no t m erg edwith Un ib an d. Thus , th e

“ Reo rg an iz at io n” auth or iz edinsec ti on 6 o f th e ch art er, quo te d abo ve , has ne ve r ta ke n p la ce. 6 The tax returns The pa rti es ha ve st ip ul at edth atTMBCI it se lf h as no t fi le d a ny Fede ral in co m e ta x re tu rn s. Uni ba ndan d TM MC fi le d t he fol lo win g s ep arat e Fo rm s 1 12 0, “ U.S. Co rp or at io n In co m e Tax Return” , forth e y ears 19 95 an d 1 99 6: Sep arat el y

Fil edReturns Fo rm Fi li ng co rp or at io n TYE Fi le d 11 20 Uni ba nd Oct. 3 1, 1 99 5 Ju ly 199 6 11 20 Uni ba nd Oct. 3 1, 1 99 6 Feb . 19 97 11 20 T MM C Sep t. 3 0, 1 99 6 Aug . 19 97

Rev enue Ru li ng 94 -6 5, 1 99 4- 2 C .B. 14 , st at edth atth e IRS wou ldno t 6 ch al le ng e th e ex em

pt io n fr om

tax of atri be ’s who ll y

own edSta te -ch art ered co rp or at io n’s i nc om e earne d a fte r Sep te m be r 30 , 19 94 , if the tri be co ul d de m on st rat e (i n a n app li cat io n fo r rel ie f un de r se ct io n 7 80 5( b) ) th atitwas i n g oo d fai th see ki ng to co m

pl y with R ev . Rul . 94 -1 6, 1 99 4- 1 C .B. 19 , by di ss ol vi ng it s St at e-ch art eredco rp or at io n a ndorg an iz in g a s a s ect io n 1 7 c or po rat io n. Un ib an d fil edsu chanap pl ic at io n u nd er s ect io n 7 80 5( b) on Aug us t 4 , 20 09 (m or e th an th ree years a fte r fi li ng th is su it ), bu t af te r le arn in g t ha t the IRS i nt en de d t o ru le adve rs el y on th e reque st , Uni ba ndwithd rew i ts rul in g re qu es t i n J anua ry 20 10
.- 16 -

Altho ug h t he return i s n otinou r rec or d, TMM C ap pe ars to ha ve als o fi le d a
no nc on so li da te d c or

po rat e return fo r it s t ax ab le y ear e nd edSep te m be r 30 , 19 95
. Inan y ev en t, the two co rp or at io ns fil edsep arat el y , with d iff eren t t ax ab le y ears . The reaf te r Uni ba ndfil edpu rp orte d c on so li da te d F ed eral co rp or at e in co m e ta x re turn s fo r th e y ears 19 95 th ro ug h 1 99 8, as fol lo ws: Co ns ol id at edReturns Fo rm Fil in g co rp or at io n Oth er i nc lu de d e nt it ie s TYE Fi le d 11 20 Uni ba nd TMMC Oct. 3 1, 1 99 7 Ju ly 199 8 11 20 X Uni ba nd TMMC Oct. 3 1, 1 99 5 Sep t. 1 99 8 11 20 X Uni ba nd TMMC Oct. 3 1, 1 99 6 Sep t. 1 99 8 11 20 Uni ba nd TMMC Oct. 3 1, 1 99 8 Ju ly 199 9 11 20 X Uni ba nd TMMC an d TM BCI Oct. 3 1, 1 99 8 Aug . 19 99 W ith t he ex cep ti on of the 19 98 Fo rm 11 20 X, “ Am en de d U.S. Co rp or at io n In co m e Tax Return” , no ne of t he co ns ol id at edreturns fil edforth e y ears inis su e
co nt ai ne d i nf

orm at io n re ga rd in g TM BCI o r it s t ax att rib ut es ; an d e achreturn o n it s re sp ect iv e Fo rm

85 1, “ Affi li at io ns Sch edul e”, rep orte d Un ib an d a ndno t TMBC I as th e co m

m on pa ren t o f TMMC
. The 1 99 8 F orm 11 20 X, li ke th e fi li ng s 7
The affi li at io n s ch edul e at ta ch edto th e 1 99 5 F orm 11 20 X (a y ear n ot 7 be fo re u s) sh owe d TM BCI a s the co m m on pa ren t o f th e g ro up an d Un ib an d a nd TMMC as wh ol ly owne d s ub si di ari es of TM BCI. Al th ou ghth e ex pl an at io n (co nt in ue d...)- 17 -

be fo re i t, l is te d t he nam e o f th e ta xp ay er as “ Uni ba nd , Inc .”, an d i t m ad e n o ch an ge s t o t ax ab le in co m e o r ta x; bu t i t am en de d the Fo rm 85 1 t o s ho w TMBCI a s
own in g 1 00 % of b ot h Un ib an d a ndTMMC . Also , th e co ns ol id at io n s ch edul es at ta ch edto th e 1 99 8 F orm 11 20 X were am en de d t o i nc lu de forth e fi rs t t im e a
co lu m n fo r “ Turt le Mo un ta inBan d o f Ch ip pe wa In di an s” --b utwith z ero s en te red
on each li ne inth e co lu m n fo r TMBC I. In ast at em en t at ta ch edto th e 1 99 8
am en de d re tu rn , Uni ba ndex pl ai ne d: Thi s amend edreturn i s b ei ng fil edto rep ort the in co m e an d de du ct io ns of t wo wh ol ly owne d s ub si di ary co rp or at io ns of t he Turt le Mo un ta in Ban d o f Ch ip pe wa In di an s, EIN - * * * . The two co rp or at io ns are Un ib an d, In c. - EIN * * * an d Tu rtl e Mo un ta in Man uf actur in g C o, In c. - EIN * * *. Onth e o rig in al 11 20 in co m e ta x return, the Fo rm

85 1 i nc orrect ly repo rte d Tu rtl e Mo un ta in Man uf actur in g a s b ei ng who ll y

own edby Uni band , Inc . The co m m on own er o f th e two co rp or at io ns is th e Turtl e Mo un ta in Ban d of Ch ip pe wa In di an s. En cl os edis anam en de d a ffi li at io ns sch edul e, Fo rm 85 1, wh ic h c orrect ly repo rts th e Turtl e Mo un ta in Ban d o f Ch ip pe wa In di an s as th e co m m on pa ren t an d Un ib an d, In c. an d Tu rtl e Mo un ta in Manuf

actur in g C o., In c. as th e subs id iary co rp or at io ns . [Ori gi na l i n a ll cap it al s.] The co ns ol id at edreturns all ha d o ne in te nd edan d c la im edeffe ct --i .e., to larg el y off se t Un ib an d’s i nc om e wit h TM MC’s l os se s, re su lt in g i n l it tl e o r no (...co nt inue d) 7 at ta ch edto th e 1 99 6 a m en de d re tu rndi d d is cl os e th atUni ba ndan d TM MC wer e own edby T MBC I, itals o s ta te d t ha t “ [t]he Taxp ay er, Un ib an d, In c. * * * i s am en di ng th is 11 20 tax return fo r th e y ear e nd edOcto be r 31 , 19 96 to in cl ud e th e ta xabl e in co m e o f it s s ub si di ary, Turt le Mo un ta in Man uf actur in g C o., In c.”- 18 -

cl ai m edtax li ab il ity

forth e supp os edco ns ol id at edgro up . The IR S d et erm in ed th atth e co ns ol id at edreturns fil edforth e y ears inis su e were n otap pr op ria te fil in gs an d t ha t Un ib an d’s t ax li ab il ity sh ou ldbe cal cu la te d o n asep arat e b as is fro m TMMC ’s, resu lt in g i n d efi ci en ci es forUni ba nd
. In di anem

pl oym en t cr ed it On b ot h i ts ori gi na l an d a m en de d re turn s Un ib an d d educ te d wh atap pe ars to be th e en ti rety

of i ts sal ary, wage , andot he r em pl oyee expe ns es (no t re du cedby
an y cred itam ou nt ), an d the pa rti es ha ve st ip ul at edth e p ert in en t am ou nt s fo r eac h rel ev an t year. On it s re tu rn s Un ib an d d idno t cl ai m an y ge ne ral bu si ne ss cred it s (in pa rti cu lar, th e In di anem pl oym en t cr ed itpro vi de d i n s ect io n 4 5A) . The IR S de te rm in ed , ho wev er, tha t Un ib an d was en ti tl edto th e In di anem pl oym en t cr ed it de te rm in edun de r se ct io n 4 5A, re du cedby the cred itli m it at io ns setforth in
se ct io n 3 8( c) (i n a m ou nt s n otindi sp ut e h ere) . To Uni ba nd ’s adv an ta ge , th e IRS ap pl ie d t ha t l im it edcred itag ai ns t Un ib an d’s d et erm in edtax li ab il ity ; b utto Uni band ’s gre at er d is adva nt ag e, th e IRS reduc edUni ba nd ’s deduc ti bl e wag es by th e cre di t am ou ntde te rm in edun de r se ct io n 4 5A. The ne t re su ltof t he IRS’s ad jus tm en ts (i.e ., th e al lo wan ce o f th e li m it ed In di anem

pl oym en t cr ed it s an d t he reduc ti on of wa ge de du ct io ns ) res ul te d i n- 19 -

gr eat er t ax de fic ie nc ie s fo r Uni ba nd . Uni ba ndno w cha ll en ge s the IRS’s de fic ie nc y

de te rm in at io ns . OPINION I. Fed eral in co m e ta x e xe m pt io n i ss ue Uni ba ndbe gi ns by argu in g t ha t the de fic ie nc ie s tha t the IRS d et erm in edare in co rrec t b ecau se Uni ba ndis ex em ptfro m tax (an d tha t Un ib an d i ts el f erre d b y fil in g re tu rn s fo r th e y ears at i ss ue as i f itwere a t ax ab le C co rp or at io n) . Uni ba nd
co nt en ds th atas a n i nt eg ral pa rt o f it s o wne r, TMBCI --a fe de ral ly recog ni zed In di antri be --Un ib an d s ha res inTMBCI ’s imm un ity fro m Fed eral in co m e ta x. Th e Co m m is si on er ag rees th atTMBCI is no t s ub ject t o F ed eral in co m e ta x b utass ert s th atUni ba ndis a se pa rat e ta xabl e en ti ty tha t i s s ub ject t o i nc om e ta x. A. In di antri be s ar e n otsubjec t t o F ed eral in co m e ta x. The pa rti es ag ree t ha t fe de ral ly recog ni zedInd ian t rib es are n otsubjec t t o Fed eral in co m e ta x; bu t the y di sa gr ee ab ou t wh y . Res ol vi ng th atdi sp ut e wil l h el p
us to res ol ve th e arg um en ts adva nc edinth is cas e.

1. TMBC I ha s n o i nh eren t i m m un ity fro m Fed eral tax es . Uni ba ndass ert s tha t i ts own er TMB CI p os se ss es an“ in he ren t s ov erei gn ty
an d i m m un ity fro m th e fed eral in co m e ta x” (whi chUni ba ndco nt en ds itsh ares ). Thi s i s i nc orrect . As th e Supr em e Co urt h as ex pl ai ne d:- 20 -

The so ve rei gn ty that the Ind ian t rib es ret ai n i s o f a uni qu e an d l im it ed ch arac te r. It ex is ts on ly at th e su ffer an ce o f Co ng res s an d i s s ub ject to co m pl et e d efea sanc e. Bu t unt il Co ng res s ac ts , th e tr ib es ret ai n th ei r ex is ti ng so ve rei gn po wers . In s um , Ind ian t rib es st il l p os se ss th os e as pe ct s o f so ve rei gn ty notwithd rawnby treaty or s ta tu te , or b y im pl ic at io n a s a n eces sa ry

res ul t o f th ei r de pe nd en t s ta tu s. * * * Uni te d S tate s v . Whe el er, 4 35 U.S. 31 3, 3 23 (19 78 ). Thu s, i f an d wh enCo ng res s act s t o s ub

ject I nd ian t rib es to Fed eral tax li ab il ity , th ey be co m e li ab le --fo r
ex am pl e, fo r th e Fed eral ex ci se tax on wage rin g u nd er s ect io n 4 40 1( c), s ee Ch ic ka sa w Nati onv. Un it edSta te s, 5 34 U.S. 84 (20 01 ), aff’g 2 08 F.3d87 1, 8 78
- 87 9 (1 0th C ir. 2 00 0) ; fo r ot he r ex ci se tax es , see , e.g., Co nf ed erat edTrib es of t he W arm Sp rin gs Res erv at io n o f Or. v. Ku rtz , 69 1 F .2d87 8 (9 th Cir . 19 82 ) (h ol di ng a tr ib e subjec t t o “ (1 ) a t ax on th e u se of c ert ai n h ig hwa y m ot orve hi cl es , 26 U.S.C. § 4 48 1( a); (2) a ta x o n d ie se l fu el us edinhi gh way ve hi cl es , 26 U.S.C. § 40 41 (a); (3) a ta x o n s pe ci al fue ls us edinm ot orve hi cl es , 26 U.S.C. § 4 04 1( b) ;
an d (4 ) a t ax on m anuf

actur in g, i n t hi s ca se a tr

uc k c ha ss is ass em

bl edby the Trib e, 26 U.S.C. §§ 40 61 (a), 4 21 8( a)”) ; o r fo r ta x u nd er s ect io n 5 11 (a)( 2) (b ) on th e
un rel at edbu si ne ss in co m e o f tr ib al ly owne d c ol le ge s o r un iv ers it ie s, s ee
se c. 78 71 (a)( 5) . TMBCI h as no “ in he ren t” imm un ity fro m Fed eral in co m e ta x t ha t Uni bandco ul d s ha re.- 21 - 2. No treat y

ex em pt s TMB CI fro m

Fed eral in co m e ta x. Nex t Un ib an d a ss ert s tha t TMB CI h as anex em pt io n fr om

in co m e ta x (wh ic h e xe m

pt io n Un ib an d c on te nd s i t s ha res ) by virtu e o f tr eat ie s i nt o wh ic h i t ha s en te redwith t he Uni te d S ta te s. Uni ba ndcit es si x t reat ie s ge ne ral ly as th e 8 9 ba si s fo r it s cl ai m

forex em pt io n fr om

co rp or at e in co m e ta x a ndpo in ts to two pa rti cu lar tr eaty

pro vi si on s. Un ib an d’s treaty arg um en ts have pre vi ou sl y be en reject ed , as we d is cu ss be lo w.

a. An ex em

pt io n m us t b e “ de fin it el y

ex pr es se d”
. W e g en eral ly con st ru e st atut es an d treat ie s i n fa vo r of Ind ians , see Ch oa te v. Trap p, 2 24 U.S. 66 5, 6 75 (19 12 ); J ourd ai n v . Comm is si on er, 7 1 T.C. 9 80 , 99 0 (1 97 9) , aff’d, 6 17 F.2d50 7 (8 th Cir . 19 80 ); a nda ta x e xe m pt io n wi ll be he ldto
ex is t wh ere ast atut e o r tr eaty co nt ai ns “ ex pr es s ex em

pt iv e la ng ua ge ”, Uni te d
Uni ba ndco nt en ds th at“ [a] clo se read in g o f th os e tr eat ie s s ho ws tha t * * * 8 [TMBC I] has no t co ns en te d t o i m po si ti on of the fed eral in co m e ta x o n i ts el f oron th os e en ti ti es th atco m

pr is e it s co ns ti tu en t p art s.” (Em ph as is ad de d.) To th e ex te ntUni ba ndarg ue s TMB CI i s i nh eren tl y ex em ptfro m Fed eral tax un le ss it co ns en ts to be tax ed , th atarg um en t i s an swe redinpa rt I .A.1 ab ov e. The tre at ie s re li edup on by Uni ba ndare: (1) 17 95 Treaty with t he 9 Wy an do ts , Etc., Aug . 3, 1 79 5, 7 Sta t. 4 9; (2) 18 15 Treaty with t he Wy an do t, Etc ., Sep t. 8 , 18 15 , 7 St at . 13 1; (3) Treaty with t he Sio ux , Etc., Aug . 19 , 18 25 , 7 St at . 27 2; (4) Treaty

with t he Ch ip pe wa, Aug . 5, 1 82 6, 7 Sta t. 2 90 ; (5 ) Treat y with t he Ch ip pe wa, RedLake an d P em bi naBan ds , Oct. 2 , 18 63 , 13 Sta t. 6 67 ; an d (6 ) 18 92 Agr eem en t wi th Turt le Mo un ta in Ban d, Actof Ap ril 21 , 19 04 , ch. 1 40 2, 3 3 S ta t. 18 9, 1 94 -1 96
.- 22 -

St at es v. An de rs on , 62 5 F .2d91 0, 9 13 (9t h C ir. 1 98 0) . Howev er, we can no t u se th is can on “ to create fav or ab le rul es ” fo r In di an s, J ou rd ai n v . Comm is si on er, 7 1 T.C. at 9 90 ; an d i n the ab se nc e o f a “ ‘defi ni te ly exp res se d’ ex em pt io n” , Ind ians
are s ub ject t o t ax at io n, M es cal ero Apac he Trib e v . Jo ne s, 4 11 U.S. 14 5, 1 56 (1 97 3) (qu ot in g C ho te auv. Bu rn et , 28 3 U.S. 6 91 , 69 6- 69 7 (1 93 1) ).

b. The cit edtre at ie s d o n otex pr es s an in co m e ta x ex em pt io n. To s up po rt i ts tre aty

arg um en t, Un ib an d p oi nt s t o t wo p art ic ul ar p ro vi si on s in th e tr eat ie s. Un ib an d fi rs t re li es on th e fo ll owi ng lan gu ag e fro m art ic le 5 o f th e 17 95 Treaty

with t he Wy an do t, Etc ., Aug . 3, 1 79 5, 7 Sta t. 4 9, 5 2 (“ Treaty of Green vi ll e”):

To p rev en t an y

m is un de rs tand in g abo utth e In di anlan ds rel in qu is he d b y

th e Uni te d S ta te s i n t he fou rth art ic le , itis no w ex pl ic it ly decl ared , th atth e m ean in g o f th atrel in qu is hm en t i s thi s: The Ind ian trib es who have a ri gh t t o tho se lan ds , are qui et ly to en joy th em , hu nt in g, p lant in g, an d dwell in g t he reo n s o l on g a s the y pl eas e, witho utan y

m ol es tati on fro m

th e Uni te d S ta te s * * * . [Em ph as is ad de d.] Whe n p rev io us ly pres en te d wi th th e is su e o f whe th er the “ m ol es ta ti on ” p ro vi si on in th e Treat y

of Gre en vi ll e ex em

pt s i nd iv idua l In di an s fr om Fed eral in co m e ta x,
we co nc lu de d: “ It i s ap pa ren t tha t the m ol es ta ti onth e p art ie s h adinm in d was- 23 -

in te rfer en ce i n t he Ind ians ’ rig ht s t o h un t, et c., no t the rig htto be free fro m ta xa ti on .” Jo ur da inv. Co m m is si on er, 7 1 T.C. at99 0. Seco nd , Uni ba ndcit es th e 1 89 2 Ag reem en t wi th Turt le Mo un ta in Ban d, Act of Apri l 2 1, 1 90 4, ch . 14 02 , 33 Sta t. 1 89 , 19 4- 19 6 (“ Turt le Mo un ta in Agr eem en t” ), whi chwas e nt eredin to by the Uni te d S ta te s an d TM BCI o n Oct ob er 2, 1 89 2, an d p ro vi de s i n a rti cl e VII: So lo ng as t he Uni te d S ta te s re ta in s an d h ol ds th e ti tl e to an y lan d i n th e u se or o ccupa ti on of a ny m em be r of th e Turtl e Mo un ta in [B]and of Ch ip pe wa In di an s o r th e ti tl e to ot he r pr op erty inth e p os se ss io n o f an y Ind ian o f sa idba nd , whi chitm ay do fortwen ty y ears , th ere s ha ll be no tax or o th er dut y

lev ie d o r as se ss edup on th e p ro pe rty, the ti tl e to whi chis he ldor r et ai ne d b y th e Uni te d S ta te s. [Em

ph as is ad de d.] Reg ard in g t he “ no tax or o th er dut y ” cl au se inart ic le VII, we ha ve ob se rv edth at

“ Thi s treat y

pro vi si on refe rs to a ta x upo n t he pro pe rty for a 2 0- y ear p eri od
. Neit he r th is pro vi si on no r an y of t he ot he r tr eat ie s ci te d b y pe ti ti on er p ro vi de to th e Turtl e Mo un ta in Ban d o f Ch ip pe was a bl an ke t ex em pt io n fr om

Fed eral in co m e ta x o n a ll in co m e.” LaFo nt ai ne v. Co m m is si on er, T.C. Mem o. 1 97 5- 16 5, af f’d pe r
cu ria m , 53 3 F .2d38 2 (8 thCir . 19 76 ). The treaty pre cl ud es tax oncert ai n p ro pe rty

“ he ldor r et ai ne d b y

th e Uni te d S ta te s” ; i t s ay s n ot hi ng ab ou t i nc om e ta x o r an y
ex em pt io n t he refr om .- 24 -

TMBC I th us ha s n o t reat y imm un ity fro m Fed eral in co m e ta x tha t Un ib an d
co ul d s ha re. 3. The Co de do es no t i m po se in co m e ta x l iabi li ty on TM BCI. In co m e ta x i s i m

po se d i n s ect io n 1 on “ in di vi du al s” an d i n s ect io n 1 1 o n

“ co rp or at io ns ”; bu t as anInd ian t rib e, TMBC I is ne ithe r anin di vi du al no r (s in ce i t ha s n otbe enin co rp or at ed ) a co rp or at io n. Se e p artII.A. bel ow. It i s tru e th atth e ta x l aw de fin es “ co rp or at io ns ” b ro ad ly eno ug h t ha t the te rm “ in cl ud es ass oc iati on s” , sec . 77 01 (a)( 3) ; b utan y arg um en t tha t TMB CI sh ou ldbe tax ab le as a“ co rp or at io n” be cau se itis an“ as so ci at io n” wou ldfai l i n vi ew of th e Co m m is si on er’s co nc es si on refl ect edinhi s p ub li c ru li ng s, s ee n ot e 1 0 be lo w. Mor eo ve r, th e Supr em e Co urt h as reject edth e ch arac te riz at io n o f an In di antri be as am ere a ss oc ia ti on . In Un it edSta te s v . Mazu rie , 48 7 F .2d14 , 19 (1 0t h C ir. 1 97 3) , rev ’d, 41 9 U.S. 5 44 (19 75 ), th e Co urt o f App eal s ac kn owl ed ge d th atInd ian t rib es are “ ve ry im po rta ntorg an iz at io ns whi chex erci se a br oa d t rib al
au th or ity ov er the ir m em

be rs ” b utob se rv edth at“ [t]ri ba l m em be rs are ci ti zen s o f th e Uni te d S ta te s” an d h adch arac te riz edth e tr ib e as “ anass oc iati on of c it iz en s”
. The Supr em e Co urt co un te red“ th atInd ian t rib es are uni qu e ag gr eg at io ns po ss es si ng att rib ut es of s ov erei gn ty ove r bo th th ei r m em be rs an d t he ir t erri to ry ”- 25 -

an d “ th atInd ian t rib es withi n ‘Ind ian c ou nt ry ’ are ago odde al m or e th an‘ pr iv at e,
vo lu nt ary or gani zat io ns ’”. Maz ur ie , 41 9 U.S. at55 7. Thu s, the reas on TMBCI is no t s ub ject t o F ed eral in co m e ta x i s n otth at In di antri be s ar e in he ren tl y im m un e fro m Fed eral in co m e ta x, n or

th atth ey ha ve be enex em

pt edfro m Fed eral in co m e ta x b y

tre aty or s ta tu te , bu t ra th er s im pl y th at Co ng res s h as ne ve r im

po se d t he Fed eral in co m e ta x o n In di antri be s. Fo r de cad es th e Co m m is si on er’s p os it io n h as refl ect edth is tru is m . 1 0 Howev er, the pe rs is te nc e o f th is cir cu m st an ce o f no n- li ab il ity ov er s o m any de cad es sh ows th atitcanha rd ly be th e res ul t o f co ng res si on al ov ers ig htbu t m us t in st eadbe de li be rat e. Thu s, wh il e th ere i s n o p os it iv e p ro vi si on inth e Co de
ex em pt in g In di antri be s fr om

th e in co m e ta x, Co ng res s’s p ers is te ntex cl us io n o f th em fro m th e Fed eral in co m e ta x re gi m e m ay be th ou gh t o f as an“ ex em pt io n” ,
See R ev . Rul . 94 -1 6, 1 99 4- 1 C .B. at 2 0 (“ Bec au se anInd ian t rib e is no t a 1 0 ta xabl e en ti ty, an y

in co m e earne d b y

anun in co rp or at edtri be * * * i s n otsubjec t t o fed eral in co m e ta x” ); R ev . Rul . 81 -2 95 , 19 81 -2 C.B. 1 5, 1 6 (“ no tax li ab il ity ha s be enass ert edag ai ns t a t rib e wit h re sp ectto tri ba l i nc om e fro m act iv it ie s ca rri ed on withi n t he bo un da rie s o f th e res erv at io n” ); R ev . Rul . 67 -2 84 , 19 67 -2 C.B. 5 5, 58 (“ In co m e ta x s ta tu te s d o n ottax Ind ian t rib es . The trib e is no t a t ax ab le en ti ty”); s ee al so H.R. Con f. Rep t. No . 97 -9 84 , at 1 6 (1 98 2) , 19 83 -1 C.B. 5 22 , 52 3 (“ The am en dm en t d oe s n otch an ge th e p res en t i nc om e ta x t reatm en t o f In di an tri ba l g ov ern m en ts sp eci fie d i n R ev . Rul . 67 -2 84 ”); Sta ff o f J. Co m m . on Tax at io n, “ Ove rv ie w of Fe de ral Tax Pr ov is io ns an d An al y si s o f Sel ect edIss ue s Rel at in g To Nati ve Am eri canTrib es an d Th ei r Mem be rs ”, at3-4 (J. Co m

m . Prin t 20 12 ).- 26 -

an d t he Co m

m is si on er’s b rie fs refe r to itas s uc h. Un ib an d arg ue s tha t TMB CI’s

“ ex em pt io n” (ho wev er i t ar is es ) ex te nd s t o Un ib an d- -ei th er as an“ in te gr al pa rt” of TMBC I oras t he equi va le ntof asec ti on 17 co rp or at io n o f TMBC I--a ndwe no w tu rnto th atarg um en t. B. Uni ba nddo es no t s ha re TMB CI’s “ ex em pt io n” fro m

Fed eral in co m e ta x. 1. Apa rt f

ro m it s as so ci at io n wi th TMBCI , Uni ba ndis tax ab le
. TMBC I is anInd ian trib e; an d, as we have sh own , th e in co m e ta x h as no t be enim po se d o n In di antri be s. Un ib an d, h owe ve r, is no t a trib e b uta co rp or at io n;
an d s ect io n 1 1 p ro vi de s: “ A tax is he reb y im po se d fo r eac h t ax ab le y ear o n t he ta xabl e in co m e o f ev ery co rp or at io n.” (Em ph as is ad de d.) As th e U.S. Co urt o f App eal s fo r th e Nin th Cir cu itob se rv edinCo m m is si on er v . W al ke r, 32 6 F .2d26 1, 26 3 (9 thCir . 19 64 ), aff’g i n p art , rev ’g inpart 3 7 T.C. 9 62 (19 62 ): A gen eral Act o f Co ng res s ap pl y in g t o a ll pe rs on s i nc lu de s In di an s an d t he ir p ro pe rty int eres ts . Fed eral Po wer Co m m is si on v. Tu sc aro ra In di anNati on , 36 2 U.S. 9 9, 1 16 , 80 S.Ct . 54 3, 5 53 , 4 L.Ed.2 d 5 84 (1 96 0) . Sect io ns 1 an d 6 1( a) o f th e In te rn al Rev enue Co de of 1 95 4 subjec t the in co m e o f “ ev ery in di vi du al ” to tax , andin cl ud e in co m e “ fro m an y so ur ce wh at ev er”, tha t i s n otels ewh ere s pe ci fic al ly ex cl ud ed . Becau se th e In te rn al Rev enue Co de is a ge ne ral Act o f Co ng res s, i t fo ll ows th atInd ians are s ub ject t o p aym en t o f fed eral in co m e ta xe s, as are o th er ci ti zen s, u nl es s an ex em pt io n fr om

tax at io n canbe fou ndinth e la ng ua ge of aTreaty or Ac t o f Co ng res s. * * *- 27 -

W e can li ke wis e o bs erv e th atsec ti on s 1 1 a nd61 (a) o f th e Co de are g en eral , app ly to all pe rs on s, an d s ub

ject t he in co m e o f “ ev ery co rp or at io n” to in co m e ta x, s o t ha t
co rp or at io ns own edby Ind ians or I nd ian t rib es are s ub ject t o p aym en t o f Fed eral in co m e ta xe s, as are o th er co rp or at io ns , “un le ss anex em pt io n fr om

tax at io n c anbe fo un d i n t he lan gu ag e o f a Treat y or Ac t o f Co ng res s.” C omm is si on er v . W al ke r, 32 6 F .2dat 2 63 . W e h av e al ready see n t ha t n o t reat y

pro vi de s s uc h a n e xe m

pt io n fo r TMBC I (o r Uni ba nd ), an d we n ow co ns id er Un ib an d’s ar gu m en ts to de te rm in e whe th er an “ Act o f Co ng res s” --i .e., th e Co de , as p ro pe rly con stru edan d app li ed
-- pr ov id es su chanex em

pt io n fo r Uni ba nd , no twi th st an di ng th e g en eral lan gu ag e o f
se ct io n 1 1. 2. As a g en eral rul e, co rp or at io ns are d is ti nc t fr om th ei r own ers fo r ta x p ur

po se s. Und er an y

rat io na le , th e arg um en t tha t Un ib an d o bt ai ns anex em pt io n b y vi rtu e o f it s as so ci at io n wi th it s o wne r TMBC I is inten si on with aba si c p rin ci pl e of tax law- -i.e ., th ata co rp or at io n i s treat edas d is ti nc t fr om it s s ha reh ol de rs . See Mo li ne Pro ps ., Inc . v. Co m m is si on er, 3 19 U.S. 43 6, 4 38 -4 39 (19 43 ). Und er thi s ge ne ral rul e, Uni ba ndas aSta te -ch art eredco rp or at io n i s a s ep arat e ta xabl e en ti ty
an d i s d is ti nc t fr om

it s s ol e sh areh ol de r, TMBCI
. Howev er, thi s g en eral rul e adm it s ex cep ti on s:- 28 -

An en ti ty form edun de r lo cal law i s n otalwa y s re co gn iz edas a se pa rat e en ti ty for fed eral tax pu rp os es . For e xa m pl e, anorg an iz at io n who ll y own edby a Stat e is no t re co gn iz edas asep arat e en ti ty for fed eral tax pu rp os es if i t i s an in te gr al pa rt o f th e St at e. Sim il arl y , tri be s i nc or

po rat edun de r se ct io n 1 7 o f th e In di anReo rg an iz at io n Act of 19 34 , as a m en de d, 2 5 U.S.C. 4 77 , or u nd er s ect io n 3 of t he Okl ah om a In di anW el fare Act, as am en de d, 2 5 U.S.C. 5 03 , are n ot reco gn iz edas s ep arat e en ti ti es forfed eral tax pu rp os es . 26 C.F.R. s ec. 3 01 .77 01 -1 (a)( 3) , Pro ced . & Adm in . Reg s. Th is reg ul at io n
m en ti on s the two fo ldba si s fo r Uni ba nd ’s arg um en t-- “ in te gr al pa rt” an d s ect io n 1 7 of th e IRA. 3. Uni ba ndis no t an “ in te gr al pa rt” of TM BCI. Uni ba ndarg ue s tha t i t i s an “ in te gr al pa rt” of TM BCI a ndsh ou ldth eref or e 1 1 sh are i n TM BCI’s ex em

pt io n fr om

Fed eral in co m e ta x, n ot withs tand in g i ts
os te ns ib ly dis ti nc t co rp or at e st atus . W e n ot e th atth e reg ul at io n quo te d abo ve st at es anex cep ti on for

“ anin te gr al pa rt o f th e St at e” (e m ph as is ad de d) ; b utan In di antri be is no t a S ta te . See, e.g ., Chi ck as aw Nati on , 53 4 U.S. at86 (ho ld in g In di antri be s s ub

ject t o g am

bl in g- rel at edtax es fro m

whi chSta te s ar e ex em

pt ); Lac Co urte Orei ll es Ban d o f Lak e Supe rio r Ch ip pe wa In di an s v . Uni te d S ta te s, 8 45 Uni ba ndst at es th is co nt en ti on invario us way s- -th atitis an“ in te gr al pa rt” 1 1 of TMBCI , an “ in te gr al an d c on st itue ntpa rt” of TM BCI, an d a n “ arm ” o f TMBC I. Bu t i ts m os t fr eque ntco nt en ti on is th atitis an“ in te gr al pa rt” , forwhi chterm th ere is auth or ity , i.e., 2 6 C .F.R. se c. 30 1.7 70 1- 1( a)(3 ), Pro ced . & Adm in . Reg s., tha t canbe co ns ul te d t o a na lyze Uni ba nd ’s st atus , so we co ns id er the arg um en t u nd er th atrub ric
.- 29 -

F.2 d 1 39 , 14 3- 14 4 (7 th Cir . 19 88 ); C on fed erat edTrib es of Warm Sp rin gs Res erv at io n o f Or., 69 1 F .2dat 8 80 (“ Trib al go ve rn m en ts , whi le po ss es si ng
as pe ct s o f se lf- ru le , th us are qui te di st in ctfro m th e se ve ral st at es ”). Howe ve r, Uni bandco nt en ds th atth e sa m e rea so ni ng th attre at s a S ta te as i nc lu di ng th e St at e’s in te gr al pa rts sh ou ldres ul t i n t reat in g a n In di antri be as i nc lu di ng th e tri be ’s in te gr al pa rts . Ass um in g t hi s co nt en ti on is co rrec t, th e is su e b eco m es 1 2 whe th er Un ib an d i s an in te gr al pa rt o f TMBC I, an d Un ib an d’s ar gu m en t ci te s fo ur st ran ds of aut ho rit y

infav orof t ha t s ta tu s:
a. Aut ho rit ie s ad dr es si ng in te gr al pa rts of S ta te s Uni ba ndpo in ts to Sta te -aff il iate d e nt it ie s tha t h av e b eenhe ldno t s ub ject t o ta x a ndarg ue s tha t i ts rel at io n t o TM BCI m ak es itequi va le ntto th os e en ti ti es . In
supp ort o f th is arg um en t Un ib an d c it es Mi ch ig anv. Un it edSta te s, 4 0 F .3d81 7, 82 3 (6 thCir . 19 94 ), an d a dm in is tra ti ve rul in gs cit edth erea t. In M ic hi ga n v . 1 3 Uni te d S tate s, the Gov ern m en t ar gu edth ataneduc at io n t ru stcrea te d b y th e

W e as su m e b utdo no t d eci de th ata tr ib e m ay ha ve “ in te gr al pa rts ” th at 1 2 sh are t he tri be ’s no n- li ab il ity forFed eral in co m e ta x. Th e la ng ua ge of 2 6 C .F.R. se c. 30 1.7 70 1- 1( a)(3 ), is ex em pl ary an d n on -ex cl us iv e, m ak in g i t re as on ab le to arg ue th atth e si tu at io n o f a St at e’s in te gr al pa rts is an al og ou s t o t he si tu at io n o f an In di antri be ’s in te gr al pa rts . See R ev . Rul . 87 -2 , 19 87 -1 C.B. 1 8; Rev . Rul . 71 -1 31 , 19 71 -1 C.B. 2 9; 1 3 Rev . Rul . 71 -1 32 , 19 71 -1 C.B. 2 9; G.C.M. 14 ,40 7, 1 93 5- 1 C .B. 10 3.- 30 -

Mi ch ig anleg is la tu re was subjec t t o c or po rat e in co m e ta x. Th e Co urt o f App eal s fo r th e Si xt h C irc ui t re

jecte d t he Gov ern m en t’s ar gu m en t, co nc lu di ng in st eadth at th e trus t was an“ in te gr al pa rt o f th e st at e”. Id . at 8 23 . In re ach in g t hi s
co nc lu si on , th e Co urt o f App eal s en ga ge d i n afact -in te ns iv e an al y si s, i d. at82 6- 82 7, b as edoncri te riagi ve n i n R ev enue Ru li ng 57 -1 28 , 19 57 -1 C.B. 3 11 , 31 2. Tha t ru li ng st at ed :

Incas es in vo lv in g t he st atus of an o rg an iz at io n a s an in st ru m en ta li ty of on e o r m or e st at es or p ol it ic al subd iv is io ns , th e fo ll owi ng fact or s ar e ta ke n i nt o c on si de rat io n: (1) whethe r itis us ed fo r a g ov ern m en ta l p ur

po se an d p erfo rm s a g ov ern m en ta l fu nc ti on ; (2 ) whe th er p erfo rm an ce o f it s fu nc ti on is on be ha lf o f on e o r m or e st at es or p ol it ic al subd iv is io ns ; (3 ) whe th er the re ar e an y pri va te in te res ts in vo lv ed , or wh ethe r th e st at es or p ol it ic al subd iv is io ns in vo lv edha ve th e p owe rs an d i nt eres ts of a n o wne r; ( 4) whet he r co nt ro l an d s up erv is io n o f th e o rg an iz at io n i s v es te d i n p ub li c au th or ity or aut ho rit ie s; (5) if e xp res s o r im pl ie d s ta tu to ry

or o th er au th or ity is ne ces sa ry

forth e cre at io n a nd/o r us e o f su chan in st ru m en ta li ty, an d wh ethe r su chau th or ity ex is ts ; an d (6 ) th e d eg ree of fin an ci al au to no m

y an d t he so ur ce o f it s o pe rat in g e xp en se s. The se si x c rit eri a are lar ge ly ans weredinth e n eg at iv e inUni band ’s si tu at io n. (1 ) Eve n t ho ug h Un ib an d i s anim po rta ntso ur ce o f em

pl oym en t fo r TMBC I m em

be rs , Uni ba ndis st il l a c omm erci al ve ntur e an d d oe s n otpe rfo rm a

“ go ve rn m en ta l fu nc ti on ”. (2 ) Altho ug h o ne cansay tha t Un ib an d, i n p ur su in g i ts bu si ne ss , ina se ns e “ func ti on [s ] * * * o n b eh al f of ” TMBC I (as inth e se co nd fact or li st edab ov e), o ne m

us t s ay m or e p reci se ly tha t l ik e an y co rp or at io n- 31 -

Uni bandfun ct io ns init s o wn n am e an d o n i ts ownbe ha lf, p ay in g i ts pro fit s t o i ts sh areh ol de r. (3) Ther e are curren tl y no “pr iv at e in te res ts in vo lv ed ” in Uni ba nd , si nc e TMBC I is curren tl y it s s ol e sh areh ol de r; b utitwas n otun ti l thr ee years af te r Uni bandwas i nc or

po rat edth atTMBCI be cam e Uni ba nd ’s so le sh areh ol de r, an d th ere i s n ot hi ng th atpre ve nt s TMB CI fro m sel li ng so m e o r al l o f it s Un ib an d sh ares . (4) Th e “ co nt ro l an d s up erv is io n” of Un ib an d c anbe sai d t o b e “ ve st edin publ ic [tr ib al ] au th or it ie s” on ly in the sen se th at , as s ol e sh areh ol de r, th e tr ib e h as th e u lt im at e p owe r to na m e th e o ffi cers an d d ire ct or s o f Uni band . Howev er, the re is no th in g i n Un ib an d’s co rp or at e ch art er o r bylaws th atgi ve s TMB CI’s co un ci l
au th or ity to di rect ly m an ag e th e o pe rat io ns of Un ib an d o r supe rs ed e th e act io n o f th e b oa rdof d ire ct or s, n or is th ere a ny requ ire m en t tha t TMB CI m em be rs be on th e b oa rd . (5) Th ere i s n o “ ex pr es s s ta tu to ry au th or ity ” th atcreate d Un ib an d o r

“pr ov id edfor[it s] * * * m an ag em en t” . On th e co nt rary, T MBC I’s ab il ity to
co nt ro l o r ab ol is h Un ib an d a ris es no t fr om st atut e b utfro m

TMBCI ’s po wer as Uni band ’s so le sh areh ol de r. (6) Nothi ng inou r rec or d s ug ge st s tha t, i n i ts da y -to da y op erat io ns , Uni ba ndlac ks “ fin an ci al au to no m y ” fro m TMBCI or d ep en ds on it
as a “ so ur ce o f it s o pe rat in g e xp en se s”
. Co ns id eri ng all th e fac ts an d c irc um st an ces , we fin d t ha t Un ib an d i s re ad il y di st in gu is habl e fro m

th e educ at io na l tru stinMi ch ig anv. Un it edSta te s, 4 0 F .3d- 32 -

81 7, an d t he othe r en ti ti es th atha ve be enhe ldto be in te gr al pa rts of the ir
so ve rei gn s, an d c on cl ud e th atUni ba ndis no t an in te gr al pa rt o f TMBC I.

b. So ve rei gn imm

un ity Insupp ort o f it s “ in te gr al pa rt” arg um en t, Un ib an d c on te nd s tha t i t h as
so ve rei gn imm

un ity th atitde riv es fro m

TMBCI be cau se itis anin te gr al pa rt o f TMBC I. Howev er, thi s ar gu m en t h as two fla ws: (1) Uni ba ndha s fa il edto
es tabl is h t ha t i t p os se ss es so ve rei gn imm un ity an d (2 ) Uni ba ndha s n otest ab li sh ed th atbe in g e nt it le d t o s ov erei gn imm un ity m ean s i t wo ul d b e anin te gr al pa rt o f TMBC I fo r Fed eral tax purp os es . Firs t, Un ib an d e ss en ti al ly ass um es th atitha s
so ve rei gn imm

un ity , witho utoff

eri ng ad equa te an al y si s. Itarg ue s: Fed eral cas e la w, ho wev er, m ak es itcle ar tha t a wh ol ly owne d c or po rat io n op erat es as a n a rm

of t he tri be an d h as so ve rei gnimm un ity . Br. forPet ., p. 23 -2 4. Ob vi ou sl y , so ve rei gn im m un ity , enjo y edon ly by

go ve rn m en ts , ex te nd s t o P et it io ne r be cau se itis anin te gr al pa rt o f th e Trib e. Pet it io ne r m ad e a l im it edwaiv er o f it s s ov erei gnimm un ity inart ic le ni ne of i ts res ta te d a rti cl es of i nc or

po rat io n. Ex . 2-J . The wai ve r es tabl is he s tha t Pet it io ne r, as anarm

of t he Trib e, ha d s ov erei gnimm un ity . Uni banddo es cit e cas es inwhi cha tr ib al ly owne d c or po rat io n i s h el d t o h av e
so ve rei gn imm

un ity ; bu t i t i s cl ear t ha t n otev ery tri ba l o rg an iz at io n h as

1 4
W e are aware o f on ly a few cas es ho ld in g t ha t a S ta te -ch art ered 1 4 co rp or at io n (l ik e Uni ba nd ) is en ti tl edto tri ba l s ov erei gn imm un ity . See J .L. W ard Ass oc s., In c. v. Gre atPla in s Tri ba l Ch ai rm en ’s Healt h B d., 8 42 F. Sup p. 2 d 1 16 3, 11 76 (D.S.D. 20 12 ); R an so m v. St . Reg is Mo ha wk Educ . & Cmty. Fund , Inc ., 65 8 (co nt in ue d...)- 33 -

so ve rei gn imm

un ity ; an d Un ib an d p ro vi de s es se nt ia ll y no an al y si s t o s ho w th atit 1 5 is th e so rt o f en ti ty tha t d oe s. Ra th er, Un ib an d s eem s t o a ss um e th atit s p ur po rte d waiv er o f so ve rei gn imm un ity (init s ce rti fic at e o f in co rp or at io n) co ul d e st ab li sh th atitpo ss es se s s ov erei gn im m un ity --b utth atco ul d h ard ly be so . W e th eref or e
m us t an al yze furth er Un ib an d’s en ti tl em en t t o s ov erei gn imm un ity . (1 ) Ana lysis of s ov erei gnimm un ity

“ In di antri be s h av e lo ng be enreco gn iz edas p os se ss in g t he co m m on -la w imm un ity fro m su ittra di ti on al ly enjoyed b y so ve rei gn po wers .” San taCla ra Pu eb lo v. Ma rti ne z, 43 6 U.S. 4 9, 5 8 (1 97 8) . This im m un ity canex te ndto bo th bu si ne ss an d g ov ern m en ta l ac ti vi ti es of t he tri be , Kio wa Trib e o f Okl a. v. M fg
. Tech s., In c., 52 3 U.S. 7 51 , 75 8- 76 0 (1 99 8) ; an d t he Co urt o f App eal s fo r th e Eig ht h C irc ui t (t o wh ic h a n app eal inth is cas e wou ldap pa ren tl y li e) h as he ldth at

“ a tr ib e’s so ve rei gn imm

un ity m ay ex te ndto tri ba l ag en ci es ”, Hage n v . Si ss et on -Wahp et on Cmty. Co ll ., 20 5 F .3d10 40 , 10 43 (8t h C ir. 2 00 0) (em ph as is (...co nt in ue d) 1 4 N.E.2d98 9, 9 93 (N.Y. 19 95 ). It ap pe ars th atbe in g i nc or po rat edun de r St at e la w rathe r th antri ba l l aw “ m il it at e[s ] ag ai ns t s ov erei gn im m un ity ”. J.L. W ardAss oc s., 84 2 F . Sup p. 2 d a t 1 17 6. See S om erl ot t v . Che ro ke e Nat io n Di st rib s., In c., 68 6 F .3d11 44 , 11 50 1 5 (1 0t h C ir. 2 01 2) (“ a se parat e le ga l en ti ty org an iz edun de r th e la ws o f an ot he r so ve rei gn , Okl ah om a, can no t s ha re i n t he Nati on ’s [i.e., the tri be ’s] imm un ity fro m su it ”).- 34 -

ad de d) (ci ti ng Dil lo n v . Yank to n S io ux Trib e Hou s. Au th ., 14 4 F .3d58 1, 5 83 (8 th Cir . 19 98 )). Altho ug h t he Co urt o f App eal s fo r th e Eig ht h C irc ui t h as no t ad op te d sp eci fic cri te riato de te rm in e whe th er an org an iz at io n i s en ti tl edtri ba l s ov erei gn imm un ity , itha s co ns id eredwhet he r th e o rg an iz at io n s erv es as a n “ arm of t he tri be ” an d wh ethe r a trib al co un ci l es tabl is he d t he org an iz at io n p ur su an t t o t he
co un ci l’s p owe r of

sel f-g ov ern m en t. W e wil l the refo re co ns id er tho se cri te ria
. 1 6 (a) Arm

of the tri be

“ A subd iv is io n o f tr ib al go ve rn m en t o r a co rp or at io n a tt ach edto a tr ib e m ay be so clo se ly alli edwith a ndde pe nd en t upo n t he tri be th atitis effe ct iv el y anarm of th e tr ib e. It i s the n a ctua ll y a pa rt o f th e tr ib e p er s e, an d, thu s, cl ot he d wi th tri ba l i m m un ity .” Runyonexrel . B.R. v. As s’n o f Vil l. Co un ci l Pr es id en ts , 84 P.3 d 4 37 , 43 9- 44 0 (Al as ka20 04 ) (i nt ern al qu ot at io n m ark s an d fn . refs . om it te d)
. See Hag env. Si ss et on -Wahp et onCmty. Co ll ., 20 5 F .3d10 40 , 10 43 (8t h 1 6 Ci r. 20 00 ) (“ [T]he Co ll eg e se rv es as a n a rm of the tri be an d n otas am ere b us in es s an d i s thu s en ti tl edto tri ba l s ov erei gnimm un ity ”); Dil lo n v . Yank to n S io ux Trib e Hou s. Au th ., 14 4 F .3d58 1, 5 83 (8t h C ir. 1 99 8) (ho ld in g t ha t a t rib al ho us in g au th or ity est ab li sh edby trib al co un ci l p ur su an t t o i ts po wers of s el f-g ov ern m en t was a tr ib al ag en cy

rathe r th an“ a se pa rat e co rp or at e en ti ty creat edby the tri be ”); W eek s C on st r., Inc . v. Og la laSio ux Hou s. Au th ., 79 7 F .2d66 8, 6 70 -6 71 (8t h C ir. 19 86 ) (“ As an arm

of t rib al go ve rn m en t, a trib al ho us in g aut ho rit y po ss es se s at tri bu te s o f tr ib al so ve rei gn ty * * * an d s ui ts ag ai ns t an ag en cy li ke th e Hou si ng Aut ho rit y no rm al ly are ba rredab se nta waiv er o f so ve rei gn im m un ity ”).- 35 -

Inho ld in g t ha t a c ol le ge serve d a s “ anarm of t he tri be an d n otas am ere bu si ne ss ”, th e Co urt o f App eal s fo r th e Eig ht h C irc ui t i n Hag enrel ie d o n t he fact s th atth e co ll eg e was “ ch art ered , fun de d, an d c on tro ll edby the Trib e to pro vi de educ at io n t o t rib al m em

be rs on Ind ian l an d” . Hagen , 20 5 F .3dat 1 04 3. Si m il arl y , in th e few ca se s tha t h av e h el d aSta te -ch art eredco rp or at io n t o b e en ti tl edto tri ba l
so ve rei gn imm

un ity , fact or s i m

po rta ntto th atho ld in g wer e: (1) th e co rp or at io n’s pu rp os e o f im

pr ov in g the ge ne ral welf

are o f th e tr ib e, an d (2 ) th e as su ran ce tha t th e co rp or at io n’s g ov ern in g b od y co ul d b e co m

po se d o nl y

of t rib al rep res en ta ti ve s. See J.L. W ardAss oc s., In c. v. Gre atPla in s Tri ba l Ch ai rm en ’s Heal th Bd ., 84 2 F . Sup p. 2 d 1 16 3, 1 17 6 (D.S.D. 2 01 2) ; Ra ns om v. St . Reg is Mo ha wk Educ . & Cmty. Fund , Inc ., 65 8 N.E.2d98 9, 9 93 (N.Y. 19 95 ). Uni ba nd ’s fact s ar e o th erwi se . Fi rs t, al th ou gh it s b rie f as se rts th at“ fro m th e b eg in ni ng [Uni ba nd ] was a
m ean s t o p ro m ot e eco no m ic de ve lo pm en t o n TM BCI’s d is adva nt ag edres erv at io n
su ffer in g fr om

hi gh an d c hr on ic un em

pl oym en t” , Uni ba ndcit es no reco rdsupp ort fo r th is pro po si ti on . In fa ct , Uni ba nd ’s cert ifi cat e o f in co rp or at io n s ta te s tha t i ts pu rp os e is si m

pl y to en ga ge in“ an y

lawf ul actor a ct iv ity ”--n otjus t ac ti vi ti es th at

“pr om ot e eco no m ic de ve lo pm en t”
.- 36 -

Seco nd , Uni ba ndha s n ot hi ng init s co rp or at e ch art er o r bylaws to en su re th atUni ba nd ’s go ve rn in g b ody is co m po se d o f TMBC I’s tri ba l re pr es en ta ti ve s. Rathe r, art ic le IV, sec ti on 4.2 of Un ib an d’s b y laws s et s fo rth th e qua li fic at io ns for Uni band ’s di rect or s an d s ta te s s im pl y : “ Dire ct or s n eedno t b e res id en ts of Dela ware o r sh areh ol de rs of t he co rp or at io n. Th ey ne edha ve no ot he r qu al ifi cat io n.” Thu s, Un ib an d’s g ov ern in g b od y m ay be bu t n eedno t b e
co m po se d o f TMBC I’s tri ba l re pr es en ta ti ve s. Un ib an d’s d ire ct or s m ay be un de r th e d e fac to co nt ro l o f TMBC I by virtu e o f TMBC I’s so le own ers hi p o f Uni ba nd , bu t the same can b e sa idforan y who ll y own edin ve st m en t, wh ethe r orno t i t h as
an y ot he r cl ai m

to be in g a n “ arm ” o f it s o wne r. Mo reo ve r, no th in g p rev en ts TMBC I fro m

sel li ng so m e o r al l o f it s s ha res an d d es tro y in g t ha t d e fac to co nt ro l. Si nc e Uni ba nd ’s pu rp os es m ay or m ay no t p ro m ot e th e g en eral welf are o f TMBC I’s m em

be rs , andsi nc e itm ay

or m ay no t b e m an ag edan d c on tro ll edby TMBC I’s tri ba l re pr es en ta ti ve s, we co nc lu de itfai ls to be an“ arm ” o f TMBC I. (b ) Trib al est ab li sh m en t Ano th er fa ct orth atdi st in gu is he s an org an iz at io n e nt it le d t o trib al so ve rei gn imm un ity (as op po se d t o am ere b us in es s i nt eres t o f a trib e) i s tha t the tri ba l
co un ci l es tabl is he s the org an iz at io n p ur su an t t o i ts po wers of s el f-g ov ern m en t. See Di ll on , 14 4 F .3dat 5 83 (co nc lu di ng th ata ho us in g aut ho rit y “ es tabl is he d b y

a- 37 -

tri ba l co un ci l p ur su an t t o i ts po wers of s el f-g ov ern m en t” is a tr ib al ag en cy en ti tl ed to tri ba l s ov erei gnimm

un ity ). Uni ba nd , ho wev er, ch art eredno t b y th e tr ib e b utby th e St at e o f Del aware , is anen ti ty tha t ex is ts by virtue of the so ve rei gn po wers of Dela ware, an d Un ib an d’s p owe rs are d efi ne d a ndli m it edby D el aware law. In pa rti cu lar, Uni ba nd , li ke ev ery ot he r co rp or at io n c reat edun de r ti tl e 8 of t he Dela ware Co de (in cl ud in g c hapt er 1 en ti tl ed“ Gen eral Co rp or at io n Law” , pu rs ua nt to whi chUni ba ndwas e st ab li sh ed ), “ sh al l h av e p owe r to : * * * [s]ue an d b e su ed in all co urts an d p art ic ip at e, as a pa rty or o th erwi se , inan y jud ic ia l, ad m in is tra ti ve , arb itrat iv e o r ot he r pr oc eed in g, i n i ts co rp or at e n am e”. Del . Cod e Ann . ti t. 8 , sec . 12 2 (2 01 1) (em

ph as is ad de d) . Uni ba nddo es no t ex pl ai n wh atm ig httru m p t hi s st atut ory pro vi si on . Mo reo ve r, Uni ba ndwas e st ab li sh edas aDela ware co rp or at io n i n 1 98 7 b y TMBC I an d ath ird -p arty no t af fil ia te d wi th TMBCI , andforth ree years TM BCI he ldon ly 51% o f Uni ba nd . Thu s, TMB CI d idno t es tabl is h Un ib an d b y it se lf; at it s i nc ep ti on Uni ba ndwas s im pl y a bu si ne ss own edinpa rt b y TMBCI an d was cl earl y “ a se pa rat e co rp or at e en ti ty creat ed[in pa rt] by the tri be ”. Dil lo n, 1 44 F.3d at58 3; see als o M yric k v . Devi ls Sio ux Mfg . Cor p., 7 18 F. Sup p. 7 53 , 75 5 (D.N.D. 19 89 ) (h ol di ng th ata St at e-ch art eredco rp or at io n p art ia ll y own edby an In di antri be was n ota tr ib al ag en cy ). Uni ba ndha s n otsh own us ho w TMBCI’s- 38 -

pu rch as in g a n a dd it io na l 4 9% o f Uni ba ndtra ns fo rm edUni bandfro m a m ere bu si ne ss ho ld in g i nt o atri ba l ag en cy est ab li sh edby a trib al co un ci l p ur su an t t o t he tri be ’s po wers of s el f-g ov ern m en t. See McNal ly CPA’ s & Co ns ul tant s, S.C. v . DJ Hos ts , Inc ., 69 2 N.W.2d 2 47 , 25 3 (Wis . Ct. Ap p. 2 00 4) (reject in g t he arg um en t th attri ba l i m

m un ity att ach es to a co rp or at io n wh ena tr ib e acqui res 10 0%
own ers hi p o f th e co rp or at io n)
. (c) Oth er cr it eri a Oth er co urts have us edsev eral ad di ti on al fact or s t o d et erm in e whe th er trib al
so ve rei gn imm

un ity is po ss es se d b y

a tr ib al bu si ne ss , whi ch , if s o, i s s om et im es refe rredto as a“ subo rd in at e eco no m ic en ti ty”, an d t ho se fact or s d o n otsupp ort 1 7 Uni band ’s cla im . Cou rts ha ve co ns id eredso m e o r al l o f th e fo ll owi ng fact or s: (1 ) th e an no un cedpu rp os e fo r whi chth e en ti ty w as form ed ; (2 ) whe th er the en ti ty w as form edto m an ag e o r expl oi t s pe ci fic tri ba l res ou rces ; (3 ) whe th er fe de ral po li cy de si gn edto pro te ctInd ian a ss et s an d t rib al cu ltur al au to no m y is furth eredby the ex te ns io n o f so ve rei gnim

m un ity to th e en ti ty; (4) whet he r th e en ti ty is o rg an iz ed un de r th e tr ib e’s la ws o r co ns ti tu ti on rathe r th anfed eral law; (5 ) whe th er the en ti ty’ s p ur po se s ar e si m il ar t o o r se rv e th os e o f th e tri ba l g ov ern m en t; (6) whet he r th e en ti ty’ s g ov ern in g b od y is co m pr is edm ai nl y

of trib al off

ic ia ls ; (7 ) whe th er the tri be ha s l eg al The subo rd in at e eco no m ic en ti ty doc tri ne was i ni ti al ly arti cu la te d b y 1 7 Ariz on a St at e co urts , see , e.g., Dix on v. Pi co paCo ns tr. C o., 7 72 P.2d11 04 , 11 08 (Ari z. 19 89 ); Whi te Mo un ta in Apac he Ind ian Tri be v. Sh el le y , 48 0 P .2d65 4, 6 57 (Ari z. 19 71 ), an d h as be enad op te d b y th e Co urt o f App eal s fo r th e Ten thCir cu it , se e, e.g ., Som erl ot t v . Che ro ke e Nat io n Di st rib s., In c., 68 6 F .3dat1 14 8- 11 50
.- 39 -

ti tl e o r own ers hi p o f pr op erty us edby the en ti ty; (8) whet he r tr ib al of fic ia ls ex erci se co ntro l o ve r th e adm in is tra ti on or a cco un ti ng act iv it ie s o f th e o rg an iz at io n; (9) whethe r th e tr ib e’s go ve rn in g b od y ha s p owe r to di sm is s m em be rs of t he org an iz at io n’s g ov ern in g b od y , an d (1 0) whet he r th e en ti ty gen erat es it s o wn re ve nu e, whe th er a s ui t ag ai ns t the en ti ty w ou ldim pa ctth e tr ib e’s fi sc al res ou rces , and whe th er i t m ay

bi ndor o bl ig at e tr ib al fun ds Jo hn so n v . Harrah ’s Kan. Ca si no Co rp ., No. 5: 04 -CV-0 41 42 -J AR, 20 06 W L 46 31 38 , at * 4- *6 (D. Kan. Fe b. 2 3, 2 00 6) (fn . ref. o m it te d)
. Whi le sev eral of 1 8 th es e fac to rs ov erl ap with t he Co urt o f App eal s fo r th e Eig hth C irc ui t’s an al y si s
an d t he refo re ar e ad equa te ly addres se d abo ve , th e rem ai nd er-- in pa rti cu lar, th e pr om ot io n o f tr ib al auto no m y , th e fi nanc ia l re lati on sh ip be twee n t he en ti ty andth e tri be , andwhet he r th e en ti ty w as crea te d u nd er St at e la w--b ear f urth er an al y si s he re.

Inth e fo ll owi ng cas es , cou rts ha ve co ns id eredso m e o r al l o f th e fac to rs

1 8 li st edinJo hn so n v . Harrah ’s Kan. Ca si no Co rp ., No. 5: 04 -CV-0 41 42 -J AR, 20 06 W L 46 31 38 , at * 4- *6 , (D. Kan. Feb . 23 , 20 06 ): So m erl ot t v . Che ro ke e Nat io n Dis tri bs ., Inc ., 68 6 F .3dat 1 14 8- 11 50 ; Br eakth ro ug h M gmt. Grp ., Inc . v. Ch uk ch an si Econ . Dev. Au th ., 62 9 F .3d11 73 (10 th Cir . 20 10 ); Al le n v . Gol d Co un try Casi no , 46 4 F .3d10 44 , 10 46 -1 04 7 (9 thCir . 20 06 ); J .L. W ardAss oc s., 84 2 F . Sup p. 2 d a t 1 17 6; Bu ch er v . Dako taFin . Cor p. (I n re Whi ta ke r), 4 74 B.R. 68 7, 6 96 -6 97 (B.A.P. 8t h C ir. 2 01 2) ; Ru nyonex rel B.R. v . Ass ’n of Vi ll . Cou nc il Pres id en ts , 84 P.3d43 7, 4 40 (Ala sk a 2 00 4) ; Am . Pro p. M gmt. Co rp . v. Supe rio r Co urt, 1 41 Cal . Rpt r. 3d80 2, 8 09 (Ct . App . 20 12 ); C as h Adva nc e & Pre ferr ed Cas h Lo an s v . Col o. ex rel . Sut he rs , 24 2 P .3d10 99 , 11 09 (Co lo . 20 10 ); Ga vl e v . Lit tl e Si x, In c., 55 5 N.W.2d 2 84 , 29 4 (M in n. 1 99 6) ; Ai rv at or , Inc . v. Turtl e Mo un ta inMfg . Co., 3 29 N.W .2d59 6, 6 04 (N.D. 19 83 ); Wrig htv. Pra iri e Ch ic ke n, 57 9 N.W.2d 7 , 10 (S.D. 19 98 ).- 40 -

Pro m ot io n o f tr ib al au to no m y . In Al le n v . Gol d C ou ntry Cas in o, 4 64 F.3d 10 44 (9t h C ir. 2 00 6) , th e Co urt o f App eal s fo r th e Nin th Cir cu ithe ldth ata tr ib e’s
cas in o was “ no ord in ary bu si ne ss ” an d was en ti tl edto tri ba l i m m un ity be cau se th e
cas in o’s “ crea ti on was d ep en de ntup on [tr ib al ] go ve rn m en t ap pr ov al at num ero us le ve ls ”, an d the Fed eral st atut e und er wh ic h t he cas in o was crea te d i nt en de d t ha t
crea ti on an d o pe rat io n o f In di ancas in os pro m ot e “ ‘trib al eco no m ic de ve lo pm en t,
se lf- su ffi ci en cy , andstro ng tri ba l g ov ern m en ts ’”. Id . at 1 04 6- 10 47 (qu ot in g 2 5 U.S.C. se c. 27 02 (1 ) (1 99 4) ); s ee al so J.L. W ardAss oc s., 8 42 F. Sup p. 2 d a t 1 17 7; Cas h Advanc e & Pre ferr edCas h Lo an s v . Col o. ex rel . Sut he rs , 24 2 P .3d10 99 , 11 09 (Co lo . 20 10 ); Ga vl e v . Litt le Six , Inc ., 55 5 N.W.2d 2 84 , 29 4 (M in n. 1 99 6)
. Whi le Uni ba ndap pe ars to ha ve em pl oyed TMB CI m em

be rs to pe rfo rm

it s d at a
en try serv ic es , itha s n otsh own th e ex te ntof i ts em pl oym en t o f TMBC I m em be rs
no r de m on st rat edth atitwas e st ab li sh edto pro m ot e TMBC I’s eco no m ic de ve lo pm en t, as op po se d t o s im pl y ge ne rat in g re ve nu e. Uni ba ndha s n otsh own th atit s o pe rat io n p ro m ot es tri ba l “ se lf- su ffi ci en cy ” o r “ st ro ng tri ba l g ov ern m en t” , no r th atex te nd in g t rib al imm un ity to su chanop erat io n wo ul d “pr ot ectInd ian
as se ts an d t rib al cu ltur al au to no m y ”. Mo reo ve r, as we ha ve alr eady di sc us se d ab ov e, Uni ba nd ’s creat io n d idno t d ep en d o nl y on TMBCI ’s app ro va l.- 41 -

Fi na nc ia l re la ti on sh ip . A relat edan d c rit ic al fact orfor so m e co urts in
ex te nd in g t rib al so ve rei gn imm un ity to tri ba l b us in es se s i s the bu si ne ss en ti ty’ s fin an ci al rel at io ns hi p wi th th e tr ib e. See R an so m v. St . Reg is Mo ha wk Educ . & Cmty. Fund , Inc ., 65 8 N.E.2dat 9 92 -9 92 . “ [I]f a jud gm en t ag ai ns t * * * [an
en ti ty] wil l n otreac h t he tri be ’s ass et s o r if itlac ks th e ‘po wer t o b in d o r ob li ga te th e fu nd s o f th e [trib e],’ itis un li ke ly tha t the tri be is th e rea l p arty inin te res t. If,
on th e o th er h an d, the tri be wou ldbe leg al ly resp on si bl e fo r th e en ti ty’ s ob li ga ti on s, i t m ay

be anarm

of the tri be .” Ru nyonex rel B.R. v . Ass ’n of Vi ll
. Co un ci l Pr es id en ts , 84 P.3dat 4 40 -4 41 (qu ot in g R an so m , 65 8 N.E.2dat 9 92 ). Uni bandha s n otsh own th atitis fun de d b y TMBCI or tha t i ts act io ns wou ld

“ ex po s[ e] the tri ba l treas ury ”, id ., andth e rec or d s ho ws o th erwi se . Crea ti on un de r St at e la w. Ano th er cruc ia l fa ct orform an y co urts th atha s weig he d a ga in stth e ex te ns io n o f so ve rei gn imm un ity ha s b eenth e tr ib e’s crea ti ng
anen ti ty und er St at e la w. Som erl ot t v . Che ro ke e Nat io n Di st rib s., In c., 68 6 F .3d at11 48 -1 15 0 (1 0t h C ir. 2 01 2) (“ th e subo rd in at e eco no mic en ti ty testis in ap pl ic ab le to en ti ti es whi chare l eg al ly dis ti nc t fr om th ei r m em

be rs an d wh ic h
vo lu nt ari ly sub

ject t he m se lv es to th e au th or ity of a no th er s ov erei gn ”); see als o Am . Pro p. M gmt. Co rp . v. Supe rio r Co urt, 1 41 Cal . Rpt r. 3d80 2, 8 10 (Ct . App
. 20 12 ); Ai rv at or , Inc . v. Turtl e Mo un ta in Mfg . Co., 3 29 N.W .2d59 6, 6 02 -6 04- 42 -

(N.D. 19 83 ); Wrig htv. Pra iri e Ch ic ke n, 5 79 N.W .2d7, 1 0 (S .D. 19 98 ). Thu s, Uni band ’s in co rp or at io n u nd er Del aware law wei gh s h eav il y ag ai ns t trib al
so ve rei gn imm

un ity . Eve n u nd er m or e ex pa ns iv e st an da rd s, Un ib an d h as fai le d t o e st ab li sh th atit
wou ldbe en ti tl edto so ve rei gn imm un ity . (2 ) So ve rei gn imm

un ity do es no t n eces sa ril y

co nf er “ in te gr al pa rt” st atus Uni ba nd ’s so ve rei gn im

m un ity arg um en t as su m es th atif an o rg an iz at io n i s
en ti tl edto tri ba l s ov erei gn im m un ity , th enth e o rg an iz at io n i s the refo re an in te gr al pa rt o f th e tr ib e. Whi le th e two co nc ep ts are n otun rel at ed , th e que st io n wh ethe r th e so ve rei gn imm

un ity of atri be ex te nd s t o a n o rg an iz at io n i s d is ti nc t fr om th e qu es ti on whet he r anorg an iz at io n i s an in te gr al pa rt o f a s ov erei gn en ti ty for t ax pu rp os es . The en ti ty clas si fic at io n re gu la ti on th atUni ba ndrel ie s o n h ere i s n ot th e o nl y in st an ce i n wh ic h “ in te gr al pa rt” st atus ari se s i n t ax law, b utwe fin d n o
an al og ou s p ro vi si on inwhi chso ve rei gn im m un ity ass ur es th atst atus . Und er s ect io n 5 01 (c)( 3) , go ve rn an ce i s n ota ta x- ex em ptpurp os e, so th at whi le a m ere “ in st ru m en ta li ty” of a St at e m ay be ex em ptfro m tax un de r th at pr ov is io n, an “ in te gr al pa rt” is no t. See Rev . Rul . 60 -3 84 , 19 60 -2 C.B. 1 72
. Und er thi s an al y si s, an “ in te gr al pa rt” of aSta te go ve rn m en t i s an “ in te gr al- 43 -

go ve rn m en ta l i ns tru m en ta li t[y] ex erci si ng ‘ so ve rei gn ’ po wers ”. OldCo lo ny Trust Co . v. Un it edSta te s, 4 38 F.2d68 4, 6 87 (1s t Ci r. 19 71 ); s ee al so Tex. Learn in g Tech . Grp. v . Comm is si on er, 9 58 F.2d12 2, 1 26 -1 27 (5t h C ir. 1 99 2) , aff’g 9 6 T.C. 68 6 (1 99 1) . Suc h “ so ve rei gn po wers ” m ig htin cl ud e so ve rei gn im m un ity , see Brea kt hr ou gh Mg m

t. Grp ., Inc . v. Ch uk ch an si Econ . Dev. Au th ., 62 9 F .3d11 73 , 11 82 -1 18 3 (1 0t h C ir. 2 01 0) ; b utinfactth e th ree p owe rs us ua ll y ex am in edinth is
co nt ex t ar e “ [t]he po wer t o t ax , th e p owe r of em in en t d om ai n, an d t he po li ce po wer”, Tex . Learn in g Tec h. Grp . v. Co m m is si on er, 9 58 F.2dat 1 24 --n on e o f whi chUni ba ndcla im s t o p os se ss . Si m il arl y , sec ti on 89 2 e xe m pt s fr om tax U.S.-so ur ce i nc om e earne d b y

“ fo rei gn go ve rn m en ts ”, an d t he tem po rary regu la ti on s d efi ne “ fo rei gn go ve rn m en t” to m ean“ on ly the in te gr al parts * * * o f a fo rei gn so ve rei gn .” 26 C.F.R. s ec. 1 .89 2- 2T(a )(1 ), Tem po rary Inco m e Tax Reg s., 5 3 F ed . Reg . 24 06 1 (Jun e 2 7, 1 98 8) . Howev er, the de fin it io n o f “ in te gr al pa rt” inth e te m po rary reg ul at io ns m ak es no m en ti on of s ov erei gn imm un ity . Id. s ec. 1 .89 2- 2T(a )(2 ) (“ An ‘in te gr al part’ of

a fo rei gn so ve rei gn is an y pe rs on , bo dy of p ers on s,
or ga ni zat io n, ag en cy , bureau , fun d, i ns tru m en ta li ty, orot he r bo dy, howe ve r de si gn at ed , th atco ns ti tu te s a g ov ern in g autho rit y of afor ei gn co un try. T he ne t
earn in gs of t he go ve rn in g aut ho rit y m us t b e cre di te d t o i ts ownacco un t o r to ot he r- 44 -

acco un ts of t he for ei gn so ve rei gn , with n o p orti on in ur in g t o t he be ne fitof a ny pr iv at e p ers on ”). Und er tha t d efi ni ti on , th ou gh itis no t co nt ro ll in g i n thi s ca se , ev enif Un ib an d h adso ve rei gn imm un ity , itco ul d n otbe an“ in te gr al pa rt” of TMBC I, be cau se itis no t “ a g ov ern in g aut ho rit y ”. Uni ba ndrel ie s o n G.C.M . 38 ,85 3 (M ay 17 , 19 82 ) as th e fo un da ti on forit s
so ve rei gn imm

un ity arg um en t, s in ce tha t m em or an du m do es rel at e so ve rei gn imm un ity to tax ex em

pt io n. Ho wev er, a g en eral co un se l m em or an du m is m erel y a le ga l o pi ni on fro m

on e d iv is io n o f th e Co m

m is si on er’s Offi ce o f Ch ie f Co un se l t o
an ot he r, an d i s n otpre ced en ti al . OldHarb orNati ve Co rp . v. Co m mis si on er, 1 04 T.C. 19 1, 2 06 -2 07 (19 95 ). Bu t ev enif G.C.M . 38 ,85 3 wer e b in di ng au th or ity , it do es no t s up po rt Un ib an d’s co nc lu si on . G.C.M. 38 ,85 3 l is ts so ve rei gn imm un ity
as on e o f se ve ral fact or s to supp ort the IRS’s co nc lu si on th ata se ct io n 1 7 1 9
co rp or at io n i s n otsubjec t t o t he co rp or at e in co m e ta x. Itdo es no t s ta te whet he r a
se ct io n 1 7 c or

po rat io n i s an in te gr al pa rt o f a trib e, or di sc us s wh atfact or s t o
co ns id er t o d et erm in e if

anen ti ty is an in te gr al part o f a trib e. Ther efo re, ev enif
Inad di ti on , G.C.M. 38 ,85 3 re li edon “ th e tr ad it io na l fe de ral in co m e ta x 1 9 imm un ity of I nd ian t rib es , th e Co ng res si on al purp os e in en act in g s ect io n 1 7 o f th e [In di anReo rg an iz at io n] Act, the lac k o f any in di cat io n t ha t s uc h i m

m un ity wou ld be waiv edby inc or

po rat io n, [a nd ] th e im

pl ic at io n i n the leg is la ti on th atth e tr ib e an d t he co rp or at io n a re o ne ”. Uni ba ndarg ue s tha t i t ac hi ev es th e sa m e p ur po se s th atCo ng res s h adforsec ti on 17 co rp or at io ns , bu t as we di sc us s b el ow i n p art I.B.3 .d., Un ib an d i s cl earl y no t a s ect io n 1 7 c or

po rat io n.- 45 -

Uni bandha d e st ab li sh edth atitpo ss es se s s ov erei gn imm un ity , itwou ldno t
ne ces sa ril y

ha ve th ereb y

est ab li sh edth atitis an“ in te gr al pa rt” of TM BCI f or pu rp os es of e nt ity

cla ss ifi cat io n i n 2 6 C .F.R. se ct io n 3 01 .77 01 -1 (a)( 2) , Pro ced . & Adm in . Reg s.
c. “ In di antri ba l o rg an iz at io n” Uni ba ndlays gr eatstres s o n t he factth atitis an“ In di antri ba l o rg an iz at io n” (“ ITO”) fo r pu rp os es of 1 8 U.S.C. s ect io n 1 16 3 (1 99 4) an d arg ue s tha t i t i s th eref or e anin te gr al pa rt o f TMBC I. It ap pe ars th ata St at e-ch art eredco rp or at io n
canbe anITO, an d we a ss um e th atUni ba ndis anITO; bu t i t d oe s n otfol lo w 2 0 2 1 th atUni ba ndis th eref

or e anin te gr al pa rt o f TMBC I fo r Fed eral tax pu rp os es . Sect io n 1 16 3 o f Tit le 18 m ak es ita Fed eral cri m e to em be zzl e m on ey

or ot he r pr op erty

“be lo ng in g t o a ny Ind ian t rib al org an iz at io n” . Sect io n 1 16 3 pr ov id es th at“ th e te rm

‘ In di antri ba l o rg an iz at io n’ m ean s an y tri be , ban d, o r See Un it edSta te s v . Log an , 64 1 F .2d86 0, 8 62 (10 th Cir . 19 81 ) (a St at e- 2 0 ch art eredco rp or at io n e st ab li sh edun de r th e g ui de li ne s o f th e In di anFin an ci ng Act of 19 74 is a “ co rp or at io n o rg an iz edun de r th e la ws o f th e Uni te d S ta te s re la ti ng to In di anaffa irs withi n the m ean in g o f [1 8 U.S.C.] sec ti on11 63 ”). The Co m mis si on er d is pu te s Un ib an d’s ITO s ta tu s, b utUni ba ndpo in ts to 2 1 anin st an ce i n wh ic h t he Uni te d S ta te s p ro se cu te d (a nden te redin to a pl ea ag reem en t wi th ) anin di vi du al who ha d e m be zzl edfun ds fro m

Uni ba nd ; an d i n th atin st an ce the in di vi du al was c ha rg edwith v io lati ng 18 U.S.C. sec ti on 11 63 (am on g o th er p ro vi si on s) , andth e p le a ag reem en t i nc lu de d the ass ert io n t ha t Uni bandis anITO.- 46 -

co m m un ity of I nd ians whi chis subjec t t o the laws of t he Uni te d S ta te s re la ti ng to In di anaffa irs or a ny corp or at io n, as so ci at io n, o r gr oup wh ic h i s o rg an iz edun de r
an y of s uc h l aws ”--a nditst at es th atth e te rm is so de fin ed“ [a]s u se d i n t hi s
se ct io n” . The s ta tu te th us in cl ud es no th in g t o s up po rt t he su gg es ti on th atITO st atus ha s l eg al im

pl ic at io ns ou ts id e o f th e cri m e d efi ne d i n s ect io n 1 16 3. Uni bandha s n otcit edan d we h av e n otfou ndan y au th or ity to supp ort i ts
co nt en ti on th atif an o rg an iz at io n i s an ITO for p ur po se s o f 18 U.S.C.
se ct io n 1 16 3, i t s ho ul d, the refo re, b e tr eat edas a n i nt eg ral pa rt o f th e tr ib e fo r pu rp os es of t he Int ern al Rev enue Co de
. Thi s l ackof aut ho rit y

is no t s ur pr is in g, s in ce the cri min al -la w pu rp os es of 18 U.S.C. sec ti on 11 63 ha ve no res on an ce wi th th e ta xa ti on -la w pri nc ip le s atis su e he re. The re i s n o app aren t re as on th e cri m in al st atut e sh ou ldreac h o nl y en ti ti es th atsh are t he tax att rib ut es of atri be . Mor eo ve r, if e ve ry ITO were b y

de fin it io n
an“ in te gr al pa rt” of an In di antri be , th enev ery “ co rp or at io n, as so ci at io n, o r gr oup whi chis org an iz ed ” und er “ th e la ws o f th e Uni te d S ta te s re la ti ng to Ind ian a ffai rs ”
wou ldbe ex em

ptfro m in co m e ta x- -a b ro adpro po si ti on th atcan no t b e jus ti fie d. The Co m m is si on er ap tl y

st at es th atUni ba nd ’s ITO st atus “ is at b es t p eri ph eral to th e is su e o f whe th er the Pet it io ne r is subjec t t o t he co rp or at e in co m e ta x”
.- 47 - d. Si m il ari ty to s ect io n 1 7 c or po rat io ns The fou rth strai n o f Uni ba nd ’s arg um en t tha t i t i s an in te gr al pa rt o f TMBC I
an d t he refo re s ha res it s ex em pt io n s tarts with the pro po si ti on th atco rp or at io ns
es tabl is he d p ur su an t t o s ect io n 1 7 o f th e IRA, co di fie d at 2 5 U.S.C. 4 77 --re ferr ed to as “ se ct io n 1 7 c or

po rat io ns ”--a re n otsubjec t t o t he co rp or at e in co m e ta x, as is st at edin26 C.F.R. s ect io n 3 01 .77 01 -1 (a)( 3) (effe ct iv e Ja nu ary 1, 1 99 7) , andas t he IRS p rev io us ly hel d i n R ev enue Ru li ng 94 -1 6, 1 99 4- 1 C .B. 19
. Uni ba ndass ert s 2 2 Uni ba nd ’s arg um en t fo r it s p re-1 99 7 s ta tu s (b efo re the reg ul at io n b ecame 2 2 effe ct iv e) ap pe ars to be ba se d s ol el y on “ th e lo gi c b eh in d R ev . Rul . 94 -1 6” . A rev enue rul in g i s n ota reg ul at io n i ss ue d a fte r no ti ce an d c omm en t, PB S Hol di ng s, In c. v. Co m

m is si on er, 1 29 T.C. 13 1, 1 44 -1 45 (20 07 ); andth is Co urt h as he ldth at su cha ru li ng canbe in vo ke d b y a ta xp ay er an d wi ll be en fo rcedon ly as a co nc es si on by the Co m

mis si on er, Rau enho rs t v . Comm is si on er, 1 19 T.C. 15 7, 1 71 (2 00 2) , andth atsu cha co nc es si on wil l b e li m it edto it s s pe ci fic fact s an d h ol di ng . Tha t i s, a t ax pa y er ca n re ly on arev enue rul in g o nl y to th e ex te ntth atth e ta xp ay er’s fac ts are “ subs tant ia ll y th e sa m e as ” th os e inth e ru li ng an d o nl y as t o th e is su e ad dr es se d i n the rul in g. Se e 2 6 C .F.R. se c. 60 1.6 01 (d )(2 )(v )(e) , St at em en t o f Pro cedur al Ru le s. Inth is in st an ce, Un ib an d’s fa ct s ar e n ot subs tant ia ll y

th e sa m e as th os e in Rev . Rul . 94 -1 6 (r athe r, Uni bandis no t a se ct io n 1 7 c or

po rat io n) , andon e o f th e h ol di ng s i n the rul in g (i .e., th ata St at ech art eredco rp or at io n d oe s n otsh are atri be ’s exe m pt io n) fla tl y

co nt rad ic ts th e po si ti onth atUni ba ndadva nc es . Accor di ng ly, th e ru li ng cle arl y can no t b e co ns tru edas aco nc es si on by the Co m m is si on er tha t Un ib an d s ho ul d b e ex em pt fro m tax . Howev er, Un ib an d n on ethe le ss tak es th e (s om ewh atawkwa rd ) po si ti on th atth e h ol di ng of R ev . Rul . 94 -1 6 re ga rd in g s ect io n 1 7 c or po rat io ns sh ou ldbe reg ard edas p ers ua si ve an d s ho ul d b e ex te nd edto th is cas e, se e Uni te d S tate s v . Mea d C or

p., 5 33 U.S. 21 8, 2 34 -2 35 (20 01 ) (anag en cy ’s in te rp ret at io n m ay m eri t de fere nc e und er Sk id m or e v . Swift& Co ., 32 3 U.S. 1 34 (19 44 )), b utth atsec on d ho ld in g o f Rev . Rul . 94 -1 6 re ga rd in g S ta te -ch art eredco rp or at io ns was i nc orrect . (co nt in ue d...)- 48 -

th at“ th e lo gi c b eh in d R ev . Rul . 94 -1 6” th atex em pt s s ect io n 1 7 c or

po rat io ns fro m Fed eral in co m e ta x app li es equa ll y to tri ba l co rp or at io ns ch art eredun de r St at e law. Unib an d t hu s ar gu es th ata St at e-ch art eredco rp or at io n wh ol ly owne d b y an In di antri be an d asec ti on 17 co rp or at io n a re es se nt ia ll y th e sa m e, an d t ha t the y sh ou ldth eref

or e o bt ai n t he same tax tre atm en t. 2 3 To ap pl y th e “ lo gi c o f Rev . Rul . 94 -1 6” an d t he reg ul at io n t o Un ib an d’s fact s, we m

us t as k: Why are se ct io n 1 7 c or po rat io ns no t s ub

ject t o t he co rp or at e in co m e ta x? The p art ie s arti cu la te th atlo gi c d iff eren tl y : Un ib an d s ta te s tha t “ ta xex em ptst atus is ap pr op ria te for a se ct io n 1 7 c or

po rat io n b ecau se th e tr ib e an d i ts
co rp or at io n are the same go ve rn m en ta l en ti ty, ev enth ou gh th e so le purp os e o f th e
se ct io n 1 7 c or

po rat io n m ay

be pri m ari ly com

m erci al * * * [a nd ] fed eral cas es in vo lv in g t rib al so ve rei gn imm un ity jus ti fy a paral le l treatm en t fo r fed eral in co m e
(...co nt in ue d) 2 2 Eve n s o, s in ce the reg ul at io n e ffec ti ve ly establ is he d t he po si ti oninth e ru li ng , and si nc e we h ol d t ha t Un ib an d i s m at eri al ly dis ti ng ui sh ab le fro m a se ct io n 1 7 co rp or at io n, the same anal y si s s uf fic es forbo th it s p re- andpo st -reg ul at io n years. Uni ba ndarg ue s tha t g iv in g i t t ax tre atm en t d iff eren t fr om

th atof a 2 3 se ct io n 1 7 c or

po rat io n wo ul d yiel d “ in equi tabl e res ul ts ”, ci ti ng th e uni fo rm ity cl au se of t he Uni te d S ta te s C on st itut io n. Se e U.S. Co ns t. art. I, s ec. 8 , cl. 1 . This co ns ti tu ti on al arg um en t fa il s b ecau se th e “ co ns ti tu ti on al requi rem en t o f un ifo rm ity is no t i nt rin si c, bu t g eo gr ap hi c”. Po e v . Seab orn, 2 82 U.S. 10 1, 1 17 (19 30 ). Bec au se Uni ba ndis m at eri al ly diff eren t fr om

sec ti on 17 co rp or at io ns , forth e reas on s we e xp la inbe lo w, itis no t en ti tl edto th e sa m e tr eatm en t the y rece iv e.- 49 -

ta x p ur po se s” , whi le th e Co m

m is si on er s ta te s tha t “ a se ct io n 1 7 c or po rat io n * * * is a fo rm of t he tri be . It i s p artof t he org an iz at io na l s tru ctur e o f th e tr ib e jus t as
m uc h a s i s a t rib al go ve rn m en t fo rm edun de r se ct io n 1 6”
. Uni ba nd ’s rat io na le actua ll y work s ag ai ns t i t, s in ce, as we he ldab ov e, Uni bandha s fa il edto sh ow tha t i t p os se ss es TMBCI ’s so ve rei gn imm un ity . Mo reo ve r, Uni ba nd ’s rat io na le is fau lty be cau se itm is ta ke s the effe ct(sh ari ng TMBC I’s so ve rei gn imm un ity) fo r th e cau se (be in g am an ife st at io n o r, inth e Co m m is si on er’s wo rd , a “ fo rm ”) o f TMBC I. See M em ph is Bio fu el s, LLC v
. Ch ic ka sa w Nati onIndus ., Inc ., 58 5 F .3d91 7, 9 21 (6t h C ir. 2 00 9) (“ th e la ng ua ge of Sect io n 1 7 i ts el f--b y

cal li ng th e en ti ty an ‘inc or po rat edtri be ’--su gg es ts th atth e
en ti ty is an arm

of t he tri be * * * tha t d o[ es ] no t au to m at ic al ly forfe ittri ba lso ve rei gn imm

un ity ”). If we s im

pl y ex am in e th e n atur e o f a s ect io n 1 7
co rp or at io n, we s ee tha t Un ib an d d iff ers rad ic al ly from

a se ct io n 1 7 c or

po rat io n i n way s tha t m arkitas d is ti nc t fr om TMBCI
. (1 ) The ori gi n o f se ct io n 1 7 c or po rat io ns Befo re the en act m en t o f th e IRA, b ot h the go ve rn m en ta l an d b us in es s func ti on s o f a trib e were c on du ct edinth e sa m e uni nc or po rat eden ti ty. In 1 93 4 Co ng res s en act edth e IRA, wh ic h a ll ows a tr ib e to op erat e it s g ov ern m en ta l af fai rs
an d c omm erci al m at te rs th ro ug h s ep arat e m ech an is m s. Sec ti on 16 of t he IRA- 50 -

(co di fie d at 2 5 U.S.C. s ec. 4 76 ) pe rm it s a trib e to ad op t a c on st itut io n a ndbylaws
un de r whi chitco nduc ts it s g ov ern m en ta l af fai rs ; an d s ect io n 1 7 o f th e IRA al lo ws a tr ib e to op erat e it s co m

m erci al en te rp ris es th ro ug h afed eral ly chart ered
co rp or at io n. Acco rd in g t o i ts leg is la ti ve hi st ory , th e p ur po se of s ect io n 1 7 was to “pe rm it In di antri be s t o e qu ip th em se lv es with t he de vi ces of m od ernbu si ne ss
or ga ni zat io n, thr ou ghform in g t he m se lv es in to bu si ne ss co rp or at io ns .” S. Rep t. No. 1 08 0, 7 3dCo ng ., 2dSes s. 1 (19 34 ). One fe atur e o f a s ect io n 1 7 c or po rat io n i s th atitgi ve s a t rib e th e ab il ity to waiv e tr ib al so ve rei gn imm un ity fora bu si ne ss op erat edby a sect io n 1 7 c or po rat io n wi th ou t h av in g t o wai ve th e tr ib e’s imm un ity fo r no nb us in es s l iabi li ty. Thi s wai ve r rem ov es a m ajor m ark ethurd le fora tr ib al bu si ne ss (be cau se th irdpa rti es ge ne ral ly do n otwantto en te r in to co nt ract s wi th pa rti es th ey

can no t s ue to en fo rce a gr eem en ts or t o s eekto rt d am ag es ) an d p ut s a tri ba l b us in es s o n e qu al foo ti ng with n on tri ba l b us in es se s. (2 ) Ch arac te ris ti cs of s ect io n 1 7 c or po rat io ns Sect io n 1 7 c or

po rat io ns ha ve sev eral di st in gu is hi ng ch arac te ris ti cs , all of whi chare re fle ct edinth e o rg an iz in g d oc um en ts of TM BCI’s s ect io n 1 7
co rp or at io n, as qu ot edab ov e atpa ge s 1 2- 14 . The fi rs t i s tha t the est ab li sh m en t o f
a se ct io n 1 7 c or

po rat io n i s wi th in th e d is cret io n o f th e Sec ret ary of th e In te rio r. A- 51 -

pe ti ti on in g t rib e h as th e p owe r on ly to ad op t o r to ve to th e co rp or at e ch art er i ss ue d by the Secr et ary of

th e In te rio r. See 2 5 U.S.C. s ec. 4 77 (“ The Secr et ary of th e In te rio r m ay , up on pe ti ti on by any tri be , is su e a ch art er o f in co rp or at io n t o s uc h tri be ”). Co ns eque nt ly, a se ct io n 1 7 c ha rte r wil l co nf er o nl y po wers th atth e Secr et ary of

th e In te rio r is wil li ng forth e co rp or at io n t o p os se ss . See Md . Cas
. Co . v. Ci ti zenNat’l Bankof W. Holl y woo d, 3 61 F.2d51 7, 5 20 (5t h C ir. 1 96 6) (“ th e p owe rs grant edto th e co rp or at io n wer e o nl y th os e whi chth e Sec ret ary of th e In te rio r, by the term s o f th e ch art er, co nv ey edto th em ”). Seco nd , “ Any chart er s o i ss ue d s ha ll no t b e rev ok edor s urren de redex cep t by Act of Co ng res s.” 2 5 U.S.C. s ec. 4 77
. Thi rd , 25 U.S.C. sec ti on 47 7 g iv es a se ct io n 1 7 c or po rat io n “ th e p owe r to pu rch as e res tri ct edInd ian l an ds ”, a ri gh t tha t i s o th erwi se ex cl us iv el y he ldby tri be s. See 25 U.S.C. sec . 46 4 (1 99 4)
. Fo urth , th e IRA p la ces res tri ct io ns on th e al ie na ti on of c or po rat e st oc k a nd of cert ai n c or

po rat e-o wne d l an d. Se e id . (“no sal e, de vi se , gi ft, e xc ha ng e, orot he r tra ns fer o f res tri ct edInd ian l an ds or o f sh ares inth e as se ts of a ny Ind ian t rib e o r
co rp or at io n o rg an iz edun de r th is Act s ha ll be m ad e o r ap pr ov ed ”, subjec t t o pr ov is os ); i d. s ec. 4 77 (“ no au th or ity sh al l b e g ran te d t o s el l, m ortg ag e, orlea se for- 52 -

a p eri odex ceed in g t wen ty-fiv e y ears an y tru stor r es tri ct edlan ds in cl ud edinth e li mit s o f th e res erv at io n” ). The se li m it at io ns are o bv io us ly aim edat p res erv in g t he tri be ’s ass et s an d
ex is te nc e--s ug ge st in g t ha t the tri be ex is ts , at l eas t i n p art , th ro ug h i ts sec ti on 17
co rp or at io n, n ot withs tand in g t he factth atth e co rp or at io n i s a d is ti nc t l eg al en ti ty. (3 ) Tax at io n o f se ct io n 1 7 c or po rat io ns The IRA m ak es no pro vi si onas t o t ax li ab il ity of s ect io n 1 7 c or

po rat io ns , bu t i n 1 97 3 t he Supr em e Co urt, i n M es cal ero Apac he Trib e, 41 1 U.S. at15 7- 15 8, sh edso m e li gh t o n t he is su e. InMes cal ero Apac he Trib e th e Supr em e Co urt fa ced th e que st io n wh ethe r a trib al ly owne d s ki res ort was ex em ptfro m Sta te tax when

2 4 itwas unc le ar wh ethe r th e res ort was anun in co rp or at eden ti ty ope rat in g u nd er
se ct io n 1 6 (i .e., as ago ve rn m en ta l o rg an iz at io n) or wa s a s ect io n 1 7 c or po rat io n. Id . at 1 57 n.1 3. Th e Co urt co nc lu de d t ha t u nd er ei th er fo rm th e sk i re so rt wo ul d be subjec t t o S ta te tax , si nc e th e act iv ity was c on du ct edou ts id e o f th e b or de rs of th e In di anres erv at io n. Id . at 1 57 -1 58 . In s o c on cl ud in g, the Supr em e Co urt s ta te d

The ex em pt io n a t i ss ue inMes cal ero Apac he Trib e v . Jo ne s, 4 11 U.S. 14 5 2 4 (1 97 3) , aro se un de r th e p ro vi si on th at“ an y lan ds or r ig ht s ac qu ire d” pu rs ua ntto an y pro vi si on of t he IRA “ sh al l b e ex em ptfro m Sta te an d l oc al tax at io n.” 25 U.S.C. sec . 46 5 (1 96 8)
.- 53 -

th at“ th e que st io n o f ta x i m m un ity can no t b e m ad e to tu rnon th e p art ic ul ar fo rm in whi chth e Trib e ch oo se s t o c on du ctit s b us in es s.” Id . at 1 57 n.1 3. In19 81 th e Co m

m is si on er, rel y in g o n t hi s s ta te m en t i n M es cal ero Apac he Trib e, co nc lu de d t ha t a “ fed eral ly chart eredInd ian t rib al co rp or at io n s ha res th e
sa m e ta x s ta tu s as th e In di antri be an d i s n ottax ab le on in co m e fro m act iv it ie s
carr ie d o n wi th in th e b ou nd ari es of t he res erv at io n.” Rev . Rul . 81 -2 95 , 19 81 -2 C.B. 1 5. Re ve nu e Ru li ng 81 -2 95 di d n otad dr es s St at e-ch art eredco rp or at io ns
own edby Ind ian t rib es . In19 94 th e Co m

m is si on er cl ari fie d R ev enue Ru li ng 81 -2 95 inRev enue Ru li ng 94 -1 6, 1 99 4- 1 C .B. at 2 0, i n wh ic h h e st at ed : An In di antri ba l co rp or at io n o rg an iz edun de r se ct io n 1 7 o f th e IRA sh ares th e sam e ta x s tatu s as th e tr ib e. Ther efo re, an y in co m e earne d by suc h aco rp or at io n, re ga rd le ss of t he lo cat io n o f th e b us in es s act iv it ie s tha t p ro du cedth e in co m e, is no t s ub ject t o fe de ral in co m e ta x. * * * [A] co rp or at io n o rg an iz edby an In di antri be un de r st at e law do es no t s hare the same tax st atus as t he tri be forfed eral in co m e ta x p ur po se s an d i s s ub

ject t o fe de ral in co m e ta x o n a ny inc om e earn ed , reg ard le ss of t he lo cat io n o f th e b us in es s ac ti vi ti es th at pr oduc edth e in co m e. The “ ch eck -th e-b ox ” reg ul at io ns , effec ti ve Jan ua ry 1, 1 99 7, fo ll owe d t he ap pr oa chof R ev enue Ru li ng 94 -1 6. Th e reg ul at io n a dd res se d t he cla ss ifi cat io n o f
se ct io n 1 7 c or

po rat io ns fortax pu rp os es by pro vi di ng th at“ tri be s i nc or po rat ed
un de r se ct io n 1 7 o f th e In di anReo rg an iz at io n Actof 1 93 4 * * * are n ot- 54 -

reco gn iz edas s ep arat e en ti ti es forfed eral tax pu rp os es .” 26 C.F.R. s ec. 3 01 .77 01
- 1( a)(3 ). Und er thi s re gu la ti on , a se ct io n 1 7 c or po rat io n i s n otreg ard edas s ep arat e fro m th e tr ib e fo r ta x p ur

po se s an d, as a res ul t, i s n otsubjec t t o F ed eral in co m e ta x. (4 ) Uni ba nd ’s di ffer en ces fro m a se ct io n 1 7 co rp or at io n Uni ba nddo es no t h av e th e d is ti nc ti ve ch arac te ris ti cs of asec ti on17
co rp or at io n, as ou tl in edab ov e. Fir st , un li ke a se ct io n 1 7 c or po rat io n t ha t i s
es tabl is he d a t the di sc ret io n o f th e Sec ret ary of th e In te rio r an d t ha t i s g iv enon ly th e p owe rs th atth e Sec ret ary of th e In te rio r ap pr ov es , Uni ba ndwas e st ab li sh edby th e d eci si on of TM BCI a ndit s co -s ha reh ol de r an d was gi ve n b y th em all th e lawfu l p owe rs th ata Dela ware co rp or at io n m ay po ss es s. Seco nd , un li ke a se ct io n 1 7 c ha rte r, whi ch“ sh al l n otbe rev ok edor
su rren de redex cep t b y

Act o f Co ng res s” , Uni ba ndex is ts at the pl eas ur e o f it s
own er, TMBC I, an d i ts ch art er ca n b e rev ok edby the Sta te of De laware. See Del. Co de Ann . ti t. 8 , sec . 28 4( a) (2 01 1) (“ The Co urt o f Ch an cery sha ll ha ve juri sd ic ti on to rev ok e o r fo rfei t the ch art er o f an y co rp or at io n fo r ab us e, mis us e o r
no nu se of i ts co rp or at e p owe rs , pri vi le ge s o r fran ch is es ”).- 55 -

Thi rd , Uni ba nddo es no t p os se ss th e sp eci al po wer t o p ur ch as e res tri ct ed In di anlan ds , a po wer tha t a s ect io n 1 7 c or po rat io n i s g iv enby statut e. Fo urth , Uni ba ndis no t b ou ndby the res tri ct io ns th e IRA p la ces on th e al ie na ti on of s ect io n 1 7 c or po rat e st oc k a ndof c ert ai n c or po rat e-o wne d l an d. TMBC I is free to sel l al l o r pa rt o f it s Un ib an d s to ck , as i t co ul d a ny inv es tm en t. Insu m , Uni ba ndlac ks th e sp eci al ch arac te r of a se ct io n 1 7 c or

po rat io n a nd it s s pe ci al rel at io ns hi p t o a n In di antri be . As a St at e-ch art eredco rp or at io n, i t i s an in ve st m en t o f TMBC I; i ts st oc k i s p ro pe rty owne d b y TMBCI . It i s n otanin te gr al pa rt o f TMBC I bu t i s a d is ti nc t co rp or at e en ti ty w ith i ts owntax ch arac te r. Acco rd in gl y , un li ke TMBCI , Uni ba ndis subjec t t o F ed eral in co m e ta x. II. Co ns ol id at edreturn i ss ue W e n ow turn t o Un ib an d’s al te rn at iv e cl ai m th atfortax y ears 19 96 , 19 97 , an d 1 99 8 i t was en ti tl edto an d d idpro pe rly fil e co ns ol id at edreturns with i ts si st er
co rp or at io n TM MC. Th e fi li ng of aco ns ol id at edreturn i s a “pr iv il eg e”, s ec. 1 50 1,
as to whi chth e Sec ret ary is ex pl ic it ly autho riz edto pro m ul ga te reg ul at io ns , 2 5
se c. 15 02 . To pr ev ai l wi th th is cla im , Uni ba ndm us t s ho w th atUni ba ndan d TMMC were p artof a n a ffi li at edgro up of c or po rat io ns an d t ha t the gro up fil ed The co ns ol id at edreturn re gu la ti on s ar e le gi sl at iv e in ch arac te r an d h av e 2 5 th e fo rce a ndeffe ctof l aw. Sal em Pack in g C o. v . Comm is si on er, 5 6 T.C. 1 31 , 14 1 (1 97 1)
.- 56 -

va li d c on so li da te d re tu rn s fo r th e y ears inis su e. Uni ba nd ’s cla im fai ls for 2 6
m ul ti pl e rea so ns . A. Uni ba ndwas n otpa rt o f anaffi li at edgro up . Sect io n 1 50 1 p ro vi de s tha t “ [a]n aff il ia te d g ro up of c or

po rat io ns sh al l * * * ha ve th e p riv il eg e o f m ak in g aco ns ol id at edreturn” . An affi li at edgro up is on e o r
m or e ch ai ns of “ in cl ud ib le co rp or at io ns ” co nn ect edth ro ug h t he requi si te st oc k
own ers hi p b y

a co m m onpa ren t co rp or at io n wh ic h i s al so an“ in cl ud ib le
co rp or at io n” . Sec. 1 50 4( a). An “ in cl ud ib le co rp or at io n” is an y co rp or at io n,
ex cep t tho se sp eci fic al ly excl ud edinsec ti on 15 04 (b ). See s ec. 1 50 4( b) (1 )-(8 ). Uni ba ndco nt en ds th atit se lf, TMM C, an d TM BCI a re al l co rp or at io ns withi n t he m ean in g o f se ct io n 7 70 1( a) an d 2 6 C .F.R. se ct io n 3 01 .77 01 -2 (b ), Pro ced . & Adm in . Reg s., an d t he refo re are “ in cl ud ib le co rp or at io ns ” in an

“ affi li at edgro up ”, el ig ib le to m ak e a co ns ol id at edreturn. With reg ardto TMBCI , Uni bandarg ue s tha t i t i s a c or po rat io n, fi rs t, b ecau se itis a “bo dy po li ti c” de sc rib edin26 C.F.R. s ect io n 3 01 .77 01 -2 (b )(1 ), an d, s eco nd , bec au se itis tre at ed

Bec au se we ho ldag ai ns t Un ib an d o n b ot h the se gro un ds , we nee d n ot 2 6 ad dr es s the Co m

m is si on er’s fu rth er co nt en ti on th atth e 1 99 6 c on so li da te d re tu rn , ev enif o th erwi se va li d, was un ti m el y .- 57 -

as a co rp or at io n fo r pu rp os es of the wage rin g t ax im po se d b y sec ti on 44 01
. W e

2 7 di sa gr ee wi th bo th of Un ib an d’s ar gu m en ts . 2 8

1. Bo dy po li ti c Fo r ta x p ur

po se s, the term

“ co rp or at io n” in cl ud es “ [a] bu si ne ss en ti ty
or ga ni zedun de r a Fed eral or S ta te st atut e, orun de r a s ta tu te of afed eral ly
reco gn iz edInd ian t rib e, if th e st atut e d es cri be s o r refe rs to th e en ti ty as
Uni ba ndinit s b rie fin g app ears to askus to reco ns id er o urord er s tri ki ng 2 7 Uni band ’s th irdco nt en ti on th atTMBCI is a co rp or at io n b ecau se itis an “ as so ci at io n” fortax pu rp os es . W e wil l n otdo so , si nc e in res po ns e to a reque st fo r adm is si on s, Un ib an d e xp li ci tl y adm itte d t ha t dur in g t he pe rio ds at i ss ue itwas no t “ anen ti ty of th e type d es cri be d i n Tre as . Reg . § 3 01 .77 01 -2 (b )(2 )” (i .e., an “ as so ci at io n” ) an d t he n a gr eedto th e sa m e as se rti oninth e p art ie s’ join t st ip ul at io n. Se e o rd er o f Dec. 1 0, 2 01 0; see als o Un it edSta te s v . Mazu rie , 41 9 U.S. 54 4, 5 57 (19 75 ) (“ In di antri be s ar e uni qu e ag gr eg at io ns po ss es si ng att rib ut es of so ve rei gn ty ove r bo th th ei r m em be rs an d t he ir t erri to ry ”; an d “ In di antri be s withi n ‘Ind ian c ou nt ry ’ are ago odde al m or e th an‘ pr iv at e, vo lu nt ary or ga ni zat io ns ’”), dis cu ss edab ov e in pa rt I .A.3. Uni ba nd ’s “ as so ci at io n” arg um en t ad dr es se s wh ethe r Uni ba ndan d TM MC wer e in anaffi li at edgro up (di sc us se d i n th is pa rt I I.A.), andif thi s ar gu m en t p rev ai le d, i t wo ul d, b y it se lf, s ti ll be un av ai li ng gi ve n o ur

co nc lu si on , see pa rt I I.B., th atev enif Un ib an d a ndTMMC were i n a n a ffi li at edgro up , th e co ns ol id at edreturns th atwere fi le d are s ti ll in va li d. The Co m

mis si on er ar gu es inth e al te rn at iv e th atsi nc e TMBC I is anInd ian 2 8 tri be an d t he Co de “pr ov id es forsp eci al tre atm en t o f th atorg an iz at io n” , 26 C.F.R. se c. 30 1.7 70 1- 1( b) , th e en ti ty clas si fic at io n re gu la ti on s d o n otap pl y to TMBCI
. Giv enou r co nc lu si on th atTMBCI is no t d es cri be d wi th in th e d efi ni ti on of a “ co rp or at io n” as p ro vi de d i n 2 6 C .F.R. se c. 30 1.7 70 1- 2( b) , Pro ced . & Adm in
. Reg s., we d o n otne edto ad dr es s wh ethe r th e Co de “pr ov id es forsp eci al tre atm en t” of TM BCI f

orpu rp os es of 2 6 C .F.R. se c. 30 1.7 70 1- 1( b) . Cf. pa rt I.A.3. ab ov e.- 58 -

in co rp or at edor a s a c or

po rat io n, b od y

co rp or at e, orbo dy po li ti c”. 2 6 C .F.R. se c. 30 1.7 70 1- 2( b) (1 ). TMBCI is anun in co rp or at edba ndof I nd ians org an iz edun de r a
rev is edco ns ti tu ti onan d b y -laws ap pr ov edby the Secr et ary of th e In te rio r pu rs ua nt to 25 U.S.C. sec ti on 47 6. No th in g i n TM BCI’s o rg an iz in g s ta tu te , 25 U.S.C.
se ct io n 4 76 , or e ve n TM BCI’s co ns ti tu ti on “refe rs to [TMBC I] * * * as * * * [a] bo dy po li ti c”. Acco rd in gl y , TMBCI c anno t b e co ns id ereda co rp or at io n und er the de fin it io n p ro vi de d i n 2 6 C .F.R. se ct io n 3 01 .77 01 -2 (b )(1 ).

2. An en ti ty tax edas aco rp or at io n The term “ co rp or at io n” als o i nc lu de s “ [a] bu si ne ss en ti ty tha t i s t ax ab le as a
co rp or at io n und er a p ro vi si onof t he Int ern al Rev enue Co de ot he r th ansec ti on 77 01 (a)( 3) ”. 26 C.F.R. s ec. 3 01 .77 01 -2 (b )(7 ). Uni ba ndarg ue s tha t TMB CI i s ta xe d a s a c or

po rat io n fo r pu rp os es of t he wage rin g t ax im po se d b y sec ti on44 01
an d t ha t i t i s the refo re a co rp or at io n u nd er 2 6 C .F.R. se ct io n 3 01 .77 01 -2 (b )(7 ). It is tru e th atInd ian t rib es , in cl ud in g TM BCI, ar e subjec t t o t ax un de r se ct io n 4 40 1,
se e Ch ic ka sa w Nati on , 53 4 U.S. at95 , bu t n otbe cau se tri be s ar e co rp or at io ns . Rathe r, se ct io n 4 40 1 i m

po se s an ex ci se tax on cert ai n wag ers an d p ro vi de s tha t

“ [e]achpe rs on who is en ga ge d i n t he bu si ne ss of a ccep ti ng wage rs sh al l b e li ab le fo r an d s ha ll pa y

th e ta x u nd er thi s s ub ch ap te r on all wage rs pl acedwith h im .” Sec. 4 40 1( c) (e m

ph as is ad de d) . An In di antri be is co ns id ereda “pe rs on ” fo r- 59 -

pu rp os es of s ect io n 4 40 1( c), s ee Ch ic ka sa w Nati on , 20 8 F .3dat 8 78 -8 79 , anditis th is cla ss ifi cat io n (i .e., as ape rs on , no t as a co rp or at io n) th atm ak es TMBCI ta xabl e und er s ect io n 4 40 1. Th eref or e, se ct io n 4 40 1 d oe s n otcau se TMBCI to be
a co rp or at io n und er the term s o f 26 C.F.R. s ect io n 3 01 .77 01 -2 (b )(7 ). B. The co ns ol id at edreturns were n otva li d. Eve n i f we as su m e, co nt rary to o urho ld in g i n p artII.A. abo ve , th atUni ba nd
was part o f anaffi li at edgro up en ti tl edto fil e a co ns ol id at edreturn, the pu rp orte d
co ns ol id at edreturns th atUni ba ndfil edwere i nv al idbe cau se TMBCI di d n otm ak e th e returns , di d n otco ns en t t o t he m , anddi d n otrep ort i ts it em s o n t he m .

1. TMBC I di d n otm ak e th e co ns ol id at edreturns . 26 C.F.R. s ect io n 1 .15 02 -7 5( h) (1 ), In co m e Tax Reg s., s ta te s: “ The
co ns ol id at edreturn s ha ll be m ad e o n F orm 11 20 forth e g ro up by the co m m on pa ren t co rp or at io n.” Ass um in g (a s Un ib an d c on te nd s) th atTMBCI were p ro pe rly tre at edas aco rp or at io n, the n i t wo ul d b e TMBC I th atwou ldbe “ th e co m m on pa ren t co rp or at io n” an d tha t wo ul d h av e to m ak e th e co ns ol id at edreturn i n o rd er fo r itto be a va li d c on so li da te d re tu rn . Howev er, Un ib an d h as st ip ul at edth at TMBC I ha s n otfil edan y tax returns forth e y ears at i ss ue . Ins te ad , itis Uni ba nd
an d n otTMBCI th atap pe ars as t he tax pay er o n e achof t he Fo rm s 1 12 0 fi le d fo r th e y ears at i ss ue . Accor di ng ly, al l o f th e co ns ol id at edreturns th atUni bandfil ed- 60 -

with TM MC fo r 19 96 , 19 97 , and19 98 (in cl ud in g t he am en de d 1 99 8 c on so li da te d return) are i nv al idbe cau se Uni ba nd , no t TMB CI, fi le d t he returns . This m ajor irr eg ul ari ty pro du ceda rel at edbu t d is ti nc t fa ta l fl aw:

2. TMBC I di d n otco ns en t t o t he co ns ol id at edreturns . Sect io n 1 50 1 p ro vi de s i n p art : The m ak in g o f a co ns ol id at edreturn s ha ll be up on th e co nd it io n t ha t al l co rp or at io ns whi chat a ny tim e dur in g the tax ab le y ear h av e b een m em be rs of t he affi li at edgro up co ns en t t o a ll th e co ns ol id at edreturn reg ul at io ns pre sc rib edun de r se ct io n 1 50 2 p rio r to th e la stda y pr es cri be d b y

law fo r th e fi li ng of s uc h re tu rn . The m ak in g o f a co ns ol id at edreturn s ha ll be co ns id eredas s uc h c on se nt . * * * [Em ph as is ad de d.] Co rres po nd in g re gu la ti on s p ro vi de : The co ns en t o f a co rp or at io n * * * [to all of t he co ns ol id at edreturn reg ul at io ns ] sh al l b e m ad e b y su chco rp or at io n jo in in g i n t he m ak in g of th e co ns ol id at edreturn fo r su chy ear. A co rp or at io n s ha ll be de em edto ha ve joi ne d i n t he m ak in g o f su chreturn fo r su chy ear i f it fil es a Fo rm

11 22 inth e m an ne r sp eci fie d i n p arag rap h (h )(2 ) of th is se ct io n. [2 6 C .F.R. se c. 1.1 50 2- 75 (b )(1 ).] The di rect io ns in26 C.F.R. s ect io n 1 .15 02 -7 5( h) (2 ) fo r fi li ng Fo rm 11 22 ,

“ Aut ho riz at io n a ndCo ns en t o f Subs id iary Co rp or at io n To Be In cl ud edina Co ns ol id at edInc om e Tax Return” , requi re tha t ea chsubs id iary ex ecu te a Fo rm 11 22 an d t ha t the form s b e atta ch edto th e co ns ol id at edreturn.- 61 -

Thu s, the pa ren t “ m ak [es ]” the return, 2 6 C .F.R. se c. 1.1 50 2- 75 (h )(1 ), an d th ereb y “ co ns en t[s ]” to i t, s ec. 1 50 1; an d t he subs id iary “ co ns en t[s ]” to the return by “ joi ni ng inm ak in g” it , 26 C.F.R. s ec. 1 .15 02 -7 5( b) (1 ). Parag rap h (h )(2 ) gi ve s di rect io ns forth e subs id iary to fil e th e “ Aut ho riz at io n a ndCo ns en t” , andno t fo r th e co m m on pa ren t t o d o s o, b ecau se th e p rece di ng pa rag rap h (h )(1 ) pr ov id es :

“ The co ns ol id at edreturn s ha ll be m ad e o n F orm 11 20 forth e g ro up by the
co m m on paren t co rp or at io n.” 26 C.F.R. s ec. 1 .15 02 -7 5( h) (1 ), (em ph as is ad de d)
. 2 9 Acco rd in gl y , a co m

m on pa ren t d oe s n otco ns en t b y “ joi n[ in g]” a return; in st ead , as s ect io n 1 50 1 i ts el f pr ov id es : “ The m ak in g o f * * * [t he return] sh al l b e
co ns id eredas s uc h [i .e., comm onpa ren t’s] con se nt ”. But TMB CI n ei th er “ m ad e” th e returns at i ss ue he re n or“ joi ne d” th em , anditth eref or e n ev er co ns en te d t o th em . 3 0
The co ns ol id at edreturn m us t b e ex ecu te d b y

th e co m m on pa ren t’s 2 9
“pr es id en t, v ic e p res id en t, treas ur er, as si st an t treas ur er, ch ie f acc ou nt in g o ffi cer o r an y ot he r of fic er dul y au th or iz edso to act .” Sec. 6 06 2 (c it edin26 C.F.R. s ec. 1.1 50 2- 75 (h )(3 ), In co m e Tax Reg s.). 26 C.F.R. s ect io n 1 .15 02 -7 5( e), s ug ge st s tha t fa il in g t o i nc lu de an 3 0 affi li at edco rp or at io n o n aco ns ol id at edreturn m ay no t b e fat al to th e return: If a co ns ol id at edreturn i s re qu ire d fo r th e ta xabl e y ear u nd er the pr ov is io ns of p arag rap h (a )(2 ) of th is sec ti on [requi rin g c on ti nu ed fil in g o f co ns ol id at edreturns , if the y were fi le d fo r th e p rece di ng y ear], th e ta x l iabi li ty of al l m em be rs of t he gro up for

su chy ear s ha ll

(co nt in ue d...)- 62 - 3. TMBC I di d n otrep ort i ts it em s o n t he co ns ol id at edreturns for 19 96 or 1 99 7. Altho ug h t he co ns ol id at edreturn re gu la ti on s re qu ire th at“ [a] con so li da te d return m us t i nc lu de th e co m

m on pa ren t’s i te m s o f in co m e, ga in , deduc ti on , lo ss , an d c red itforth e en ti re co ns ol id at edreturn year,” 2 6 C .F.R. se c. 1.1 50 2- 76 (b )(1 )(i ), In co m e Tax Reg s., n o s uc h i te m s fo r TMBC I ap pe ar o n Un ib an d’s
co ns ol id at edreturns for

19 96 or 1 99 7. Subs id iarie s ar e n oten ti tl edto fil e a
co ns ol id at edreturn t ha t d oe s n otin cl ud e a co m m on paren t’s t ax it em s. Ch arl es Sch ne id er & C o. v . Comm is si on er, T.C. Mem o. 1 97 3- 13 0, af f’d, 50 0 F .2d14 8 (8 th Cir . 19 74 ). Uni ba ndackno wled ge d a s m uc h wh enitfil edth e am en de d 1 99 8
co ns ol id at edreturn i nc lu di ng in fo rm at io n fo r TMBC I, al be itinth e fo rm of z ero s

(...co nt in ue d) 3 0 be co m pu te d o n aco ns ol id at edba si s ev enth ou gh * * * [t ]here h as be ena fai lu re t o i nc lu de inth e co ns ol id at edreturn t he in co m e o f an y m em be r of th e g ro up . Howev er, i n o rd er t o i nv ok e th is pro vi si on , th e p ro vi si on s o f 26 C.F.R. s ect io n 1.1 50 2- 75 (a)( 2) m

us t fi rs t ap pl y , whi chrequi res at l eas t o ne co rrec t an d v al id co ns ol id at edreturn t o h av e b eenfil edforth e p rio r y ear. No ne of the returns in th is cas e sa ti sf

y th is co nd it io n b ecau se no ne of t he returns was fi le d b y TMBCI , th e co m m on pa ren t, as requi redby 26 C .F.R. se ct io n 1 .15 02 -7 5( h) (1 ).- 63 -

fo r eac h i te m . Howev er, Un ib an d d idno t m ak e si m il ar co rrec ti on s fo r th e 1 99 6

3 1
am en de d re tu rnor the 19 97 return, wh ic h d o n otco nt ai n a ny of TMBC I’s ta x it em s. Acco rd in gl y , th e 1 99 6 and19 97 pu ta ti ve co ns ol id at edreturns were i nv al id fo r th atad di ti on al reas on . Fo r eac h year atis su e, Uni ba nd ’s con so li da te d re tu rn s h av e m ul ti pl e irr eg ul ari ti es th atren de r th em in va li d. Un ib an d’s t ax li ab il ity wil l the refo re b e cal cu la te d wi th ou t i nc lu di ng TMMC ’s tax it em s. III. W ag e d educ ti on reduc ti on is su e Fo r th e y ears at i ss ue Uni ba ndde du ct edth e en ti rety of i ts wage an d
em pl oyee ex pe ns es as b us in es s ex pe ns es un de r se ct io n 1 62 . The Co m m is si on er
m ai nt ai ns th ata po rti on of t ho se ex pe ns es --i .e., an a m ou ntequa l t o t he “ In di an

Bec au se th e 1 99 8 c on so li da te d re tu rnwas i nv al idfor ot he r rea so ns , we 3 1 ne edno t co ns id er wh ethe r in factth e zer o e nt rie s re nd er i nv al idth e p ur po rte d co ns ol id at edreturn. Itsee m s ce rta in th atUni bandrep orte d z ero s n otbe cau se th os e zer o a m ou nt s co rres po nd edto an yth in g o n TM BCI’s b oo ks bu t b ecau se Uni bandtak es th e p os it io n t ha t, b ecau se TMBCI is ex em pt , it s i te m s t o b e rep orte d a re al l ze ro . If so , th enth e returns do no t ac tu al ly “ co ns ol id at e” TMBC I’s real it em s wi th Uni ba nd ’s andTMMC ’s bu t i gn or e th em an d u se TMBC I as a fi gu reh ead . This de m on st rat es th e an om al y of a tt em pt in g a co ns ol id at edreturn wh ere t he pa ren t i s n otsubjec t t o t ax bu t the subs id iarie s ar e. See s ect io n 1 50 4( b) (1 ) (ex cl ud in g fr om th e d efi ni ti onof “ in cl ud ab le co rp or at io n” el ig ib le to joi n aco ns ol id at edreturn c or po rat io ns ex em

ptfro m tax un de r se ct io n 50 1) ; cf . 26 C.F.R. s ec. 1 .15 02 -1 00 , Inc om e Tax Reg s. (a ll owi ng a ta x- ex em pt co rp or at io n i n s pe ci al cir cu m st an ces to fil e co ns ol id at edreturns with o th er ex em pt co rp or at io ns , bu t ch an gi ng th e it em s tha t the co rp or at io ns are re qu ire d t o re po rt)
.- 64 -

em pl oym en t cr ed it ” d et erm in edun de r se ct io n 4 5A- -is no t d educ ti bl e p ur su an t t o
se ct io n 2 80 C. InUni ba nd ’s cas e, th e am ou ntof t he cred itas d et erm in edun de r
se ct io n 4 5A i s l im it edby sect io n 3 8( c)(1 ), so th atth e Co m mis si on er re du ced Uni band ’s wage de du ct io n b y am ou nt s o f cre di t tha t wer e n otactua ll y all owe d. Uni bandres po nd s wi th two arg um en ts . Firs t, i t ar gu es th atth e cre di t u nd er
se ct io n 4 5A i s n otm an da to ry , so th atif atax pay er ch oo se s n otto cla im th e al lo wedcred itde te rm in edun de r se ct io n 4 5A (a s was th e cas e o n Un ib an d’s returns ), th enth e wag e d educ ti on sh ou ldno t b e reduc ed . Seco nd , Uni bandarg ue s th atsec ti on 28 0C sh ou ldbe in te rp ret edas l im it in g t he de du ct ib il ity of wa ge an d
sa lary ex pe ns es on ly to the ex te ntof t he cred itactua ll y all owe d a fte r ap pl y in g t he li mit s i m po se d b y sec ti on 38 (c)( 1) , whi chsi gn ifi can tl y li m it edth e al lo wan ce o f cred it s i n Un ib an d’s ca se . Neithe r of Uni ba nd ’s arg um en ts pre va il s. 3 2 The st atut ory

fram ewo rk

is as f ol lo ws. Sec ti on28 0C (a) d is al lo ws a de du ct io n fo r “ wag es or s al ari es pa idor i nc urredforth e ta xabl e y ear wh ic h i s As ap pl ie d i n t hi s ca se , sec ti on 38 (c)( 1) li m it s the am ou ntof Un ib an d’s 3 2 ge ne ral bu si ne ss cred itto th e ex ces s o f Uni ba nd ’s netin co m e ta x (c al cu la te d witho utcred it s al lo wedun de r subp art s A an d B ) ov er Un ib an d’s t en ta ti ve m in im um tax forth e ta xabl e y ear. Fo r th e y ears at i ss ue , Uni ba nd ’s ten ta ti ve m in im um tax was re la ti ve ly hig h, caus in g asm al le r ex ces s b etweenth e n etin co m e ta x a ndten ta ti ve m in im

um tax , whi chintu rncau se d asi gn ifi can tl y sm al le r al lo wab le cred itforUni ba ndth anwas o th erwi se de te rm in edun de r se ct io n 4 5A. Any of Uni ba nd ’s un us edInd ian e m pl oym en t cr ed it s, h owe ve r, canbe carr ie d fo rwardfor20 y ears . Sec. 3 9.- 65 -

equa l t o t he su m

of t he cred it s d et erm in edforth e ta xabl e y ear u nd er s ect io n[ ] 45 A(a)” . Sect io n 4 5A( a) d et erm in es th e am ou ntof t he Ind ian e m pl oym en t cr ed it
an d p ro vi de s i n p art :

SEC. 4 5A( a). Am ou ntof C red it .--Fo r pu rp os es of s ect io n 3 8, th e am ou ntof t he Ind ian e m pl oym en t cr ed itde te rm in edun de r th is se ct io n wi th res pe ctto an y em pl oyer foran y

tax ab le y ear i s an am ou ntequa l t o 2 0 p erce ntof t he ex ces s (i f an y ) of
-- (1 ) th e su m

of- - (A) th e qua li fie d wag es pa idor i nc urreddu rin g su chtax ab le y ear, p lu s (B) qua li fie d e m

pl oyee he al th in su ran ce co st s p ai d orin curreddurin g s uc h t ax ab le y ear, o ve r (2 ) th e su m

of the qu al ifi edwage s an d qua li fie d em pl oyee he al thin su ran ce co st s (d et erm in edas i f th is sec ti on were i n e ffec t) wh ic h wer e p ai d o r in cu rredby the em pl oyer (or an y pre de ces so r) dur in g c al en da r y ear 1 99 3. The Ind ian e m

pl oym en t cr ed itis on e o f se ve ral cred it s tha t ar e in cl ud edin cal cu la ti on of t he ge ne ral bu si ne ss cred itall owe d u nd er s ect io n 3 8. Hen ce,
se ct io n 4 5A i ts el f do es no t ac tu al ly “ al lo w” a cre di t; rathe r, itpro vi de s an “ am ou nt * * * d et erm in ed ” (em

ph as is ad de d) th atbe co m es a co m po ne ntof wh atis

“ al lo wedas acred it ” b y

sec ti on 38 (a) (e m

ph as is ad de d) . This di st in ct io n i s im po rta ntto th e d educ ti onli mit at io n i n s ect io n 2 80 C, be cau se th e li m it at io n i s cal cu la te d n otby credi ts curren tl y “ al lo wed ” b utby “ cred it s d et erm in edforth e- 66 -

ta xabl e y ear u nd er s ect io n[ ] 45 A(a)” . Sec. 2 80 C (em ph as is ad de d) . Unl ik e so m e ot he r co m

po ne nt s o f th e g en eral bu si ne ss cred it , th ere i s n ot hi ng insec ti on 45 A whi chm ak es th e d et erm in at io n o f th e am ountof t he cred itpe rm is si ve . Thu s, 3 3
co nt rary to Un ib an d’s as se rti on s, the de te rm in at io n o f th e cre di t am ou ntun de r
se ct io n 4 5A- -an d c on se qu en tl y , th e d educ ti on li m it at io n u nd er s ect io n 2 80 C--
oc cu rs in de pe nd en tl y

of wh ethe r th e g en eral bu si ne ss cred itis curren tl y ful ly al lo wedun de r se ct io n 3 8( a) o r in st eadis li m it edby sect io n 3 8( c)(1 ). Uni ba ndask s u s t o d ep artfro m th e p la inlan gu ag e o f se ct io n 2 80 C an d in te rp retitas i f itli m it edth e d educ ti bi li ty of wag e an d s al ary ex pe ns es on ly to the
ex te ntcred it s ar e curren tl y all owe d a fte r ap pl y in g t he li m it s i m po se d b y
se ct io n 3 8( c)(1 ). Uni ba ndarg ue s we s ho ul d a do ptth is in te rp ret at io n b ecau se th e pu rp os e o f se ct io n 4 5A was to in crea se em pl oym en t o n t he res erv at io ns of Cf. s ec. 5 1(

j)(1) (“ A tax pa y er m ay

ele ctto ha ve th is sec ti on [work 3 3 op po rtu ni ty credi t] no t ap pl y for an y tax ab le y ear” ); s ec. 4 0( f)(1 ) (“ A tax pa y er m ay ele ctto ha ve th is sec ti on [al co ho l fu el cred it ] no t ap pl y foran y tax ab le y ear” ); se c. 43 (e)( 1) (“ A tax pa y er m ay ele ctto ha ve th is sec ti on [en ha nc edoi l re co ve ry cred it ] no t ap pl y

foran y tax ab le y ear” ), se c. 45 B(d )(1 ) (“ Thi s s ect io n [c red itfor po rti onof e m

pl oyer Soc ia l Se cu rit y

tax es pa idwith re sp ectto em pl oyee cas h t ip s] sh al l n otap pl y

to a ta xp ay er fo r an y

tax ab le y ear i f su chtax pa y er el ect s t o h av e th is sec ti on no t ap pl y

forsu chtax ab le y ear” ), se c. 45 E(e)(3 ) (“ Thi s s ect io n [s m al l em pl oyer pe ns io n p lan s tartup c os t cr ed it ] sh al l n otap pl y to a ta xp ay er fo r an y ta xabl e y ear i f su chtax pa y er el ect s t o h av e th is sec ti on no t ap pl y forsu chtax ab le y ear” ), se c. 45 H(g ) (“No cr ed it[fo r pr oduc ti on of l ow s ul fur di es el fue l] sh al l b e de te rm in edun de r subs ect io n (a ) fo r th e ta xabl e y ear i f th e ta xp ay er el ect s n otto ha ve subs ect io n (a ) ap pl y to su chtax ab le y ear” ).- 67 -

eco no m ic al ly dis advant ag edInd ian trib es , bu t the Co m m is si on er’s i nt erp ret at io n of sec ti on 28 0C fru st rat es th is pu rp os e. Uni ba ndha s a p oi nt . On it s fa ct s, an d gi ve n t he way

th e st atut es are wo rd ed , Uni ba ndwou ldap paren tl y ha ve be enbe tt er of f no t t o h ire as m an y

Ind ians as i t d id --a c irc um st an ce tha t Co ng res s d idno t li ke ly int en d. Howev er, “ If the pl ai n l an gu ag e o f th e st atut e is un am bi gu ou s, tha t lang ua ge is co nc lu si ve ab se ntcle ar l eg is lati ve in te ntto th e co nt rary. * * * The refo re, i f th e in te ntof C on gr es s ca n b e cl earl y di sc ern edfro m

th e st atut e’s lang ua ge , th e jud ic ia l i nqui ry m us t en d.” Uni te d S ta te s v . S.A., 12 9 F .3d99 5, 9 98 (8 th Cir . 19 97 ). The p la in lan gu ag e o f th e st atut es (se ct io ns 38 , 45 A, and28 0C ) refl ecta le gi sl at iv e in te ntto crea te a ta x a dv an ta ge to sp ureco no m ic de ve lo pm en t fo r In di anco m

m un it ie s- -b uta te m

pe redadva nt ag e th atha s b ui lt -in ch eck s (e .g.,
se ct io n 3 8( c)(1 )) t o p rev en t p ot en ti al ab us e. Mo reo ve r, Co ng res s h as sh own th atitis aware o f th e co nu nd ru m of t he so rt th atface s Un ib an d a ndth atitkn ows ho w to fix itwhen itwant s t o- -i.e ., by al lo win g acred itde te rm in at io n t o b e o pt io na l i n c ert ai n c as es . See n ot e 3 3 abo ve . Fo r ex am pl e, th e le gi sl at iv e h is to ry to th e res earc h c red itpro vi si on insec ti on 51 (g ), H.R. Rep t. No . 10 0- 79 5, 1 00 th Co ng ., 2dSes s., 4 53 (19 88 ), st at es : “ The el ect io n [i n s ect io n 5 1( g) ] is in te nd edto ad dr es s the si tu at io n i n wh ic h atax pa y er- 68 -

can no t cl ai m

th e fu ll am ou ntof t he res earc h c red itth atis ot he rwis e al lo wab le be cau se of the li m it at io n i m po se d b y th e al te rn at iv e m in im

um tax ; i n t ha t si tu at io n, the tax pa y er co ul d a vo idreduc ti onof t he de du ct io n b y ele ct in g n otto cl ai m th e cre di t.” Co ng res s m ad e n o s uc h p ro vi si on as t o t he Ind ian e m pl oym en t cred it . Accor di ng ly, we adhe re t o t he pl ai n l an gu ag e o f th e st atut es an d s us ta in th e Co m m is si on er’s d is al lo wan ce o f th e b us in es s ex pe ns es , no twi th st an di ng so m e arg uabl e an om al y

inth e res ul t. IV. Co nc lu si on Fo r th e fo reg oi ng reas on s we c on cl ud e th atUni ba ndis no t ex em ptfro m tax , th atth e co ns ol id at edreturns th atUni bandfil edwith TM MC wer e in va li d, an d t ha t Uni band ’s wage an d e m

pl oyee ex pe ns e d educ ti on s fo r th e y ears at i ss ue s s ho ul d ha ve be enreduc edby the am ou ntof t he Ind ian e m pl oym en t cr ed itde te rm in ed
un de r se ct io n 4 5A, wh ethe r or no t l im it edby sect io n 3 8( c)(1 ). To ef fectth e fo reg oi ng , Deci si on wil l b e en te red pu rs uantto Ru le 15 5.