Frank Warren Bibeau ( 2023 )

United States Tax Court
T.C. Memo. 2023-66FRANK WARREN BIBEAU,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
—————
Docket No. 11483-20L. Filed May 24, 2023.
—————
Frank Warren Bibeau, pro se.
Lisa R. Jones and Beth A. Nunnink, for respondent.
MEMORANDUM OPINION
HOLMES, Judge: Frank Bibeau is an enrolled member of the
Chippewa tribe who lives and practices law on the Leech Lake
Reservation in Minnesota. In a treaty with the United States, the
Chippewa kept the right to “hunt, fish, and gather the wild rice” on their
traditional lands. Bibeau says this is really the right to “food, clothing
and shelter and travel, whereby the new canoe is the automobile.” He
argues that this means that income from his law practice is tax exempt.
The Commissioner in reply urges us instead to follow binding
Eighth Circuit and Supreme Court precedent.
Background
Bibeau and his wife filed joint returns for their 2016 and 2017 tax
years. For both years, Bibeau reported income from his law practice and
a sizable net operating loss carryforward that was enough to shield his
income from income tax. But his self-employment income still led to a
Served 05/24/23
2
[*2] total self-employment tax liability for both years of $6,000. He has
never paid this tax debt.
In January 2019, the Commissioner sent him a letter asking him
to pay. Bibeau timely requested a collection due process (CDP) hearing.1
During the hearing, his only argument was that the income he earned
in 2016 and in 2017 was exempt from self-employment tax under
treaties between the Chippewa and the United States. The
Commissioner disagreed and sent him a notice of determination
sustaining the IRS’s decision to levy on his property to collect the tax. 2
Bibeau timely petitioned our Court, and challenges only his liability. 3
The parties submitted the case for decision on stipulated facts.
Discussion
Like all Americans, Indians 4 are subject to federal tax laws unless
there is a specific law or treaty that provides otherwise. Squire v.
Capoeman, 351 U.S. 1, 6 (1956). The canons that require us to strictly
construe exemptions from income tax, however, are in tension with
those that govern the interpretation of treaties between Indian tribes
and the United States. While exemptions from income taxation are to be
strictly construed, see, e.g., McCamant v. Commissioner, 32 T.C. 824,
834 (1959), Indian treaties “are to be construed, so far as possible, in the
1The IRS at first denied his request for a CDP hearing on the grounds that his
arguments were frivolous. Bibeau objected, and the IRS did finally grant him a
hearing.
2 The settlement officer referred in one section to “Notice of Federal Tax Lien,”
rather than a “Notice of Intent to Levy.” There are somewhat different rules for liens
and levies, but neither party made any allegation that this mistake in nomenclature
in any way prejudiced Bibeau. The notice is therefore valid. See John C. Hom & Assocs.
v. Commissioner, 140 T.C. 210, 213 (2013) (“Mistakes in a notice will not invalidate it
if there is no prejudice to the taxpayer.”)
3 Because the Commissioner assessed the tax as Bibeau reported it on his
returns, he had the right to challenge this liability at the hearing and before us. See
Montgomery v. Commissioner, 122 T.C. 1, 10 (2004). Because he was a resident of
Minnesota when he filed his petition, appellate venue presumptively lies in the Eighth
Circuit. See 26 U.S.C. § 7482(b)(1)(G)(i).
Since Bibeau and his wife filed jointly for both of the years at issue, the
Commissioner sent the notice of determination to both of them. Bibeau’s wife, however,
did not sign the petition and is therefore not a party to this case.
4 Nomenclature is fraught in this field. Bibeau refers to himself, however, as
an “Indian” and the Chippewa as a “tribe.” Much of the literature in this area also
refers to “Indian law” and “Indian treaties” and the like; to maintain some continuity
with this legal-historical past, we too will use the traditional terms.
3
[*3] sense in which the Indians understood them,” Choctaw Nation of
Indians v. United States, 318 U.S. 423, 432 (1943). This means that
“[t]he construction, instead of being strict, is liberal; doubtful
expressions, instead of being resolved in favor of the United States, are
to be resolved in favor of [the Indians].” Choate v. Trapp, 224 U.S. 665,
675 (1912).
This canon telling us to construe Indian treaties favorably to
Indians does not, however, “create favorable rules.” Jourdain v.
Commissioner, 71 T.C. 980, 990 (1979). And in the case of exemptions
from taxation, the Supreme Court has held that “to be valid, exemptions
to tax laws should be clearly expressed.” Capoeman, 351 U.S. at 6(emphasis added).
Bibeau had two arguments for how the treaties between the
United States and the Chippewa express an exception from taxation for
his self-employment income. He first argues that the 1837 Treaty with
the Chippewa, July 29, 1837, art. 5, 7 Stat. 536, 537, protects his right
to make a “modest living.” 5 The actual language of this 1837 Treaty
doesn’t use this phrase, but only states that the Chippewa will be
guaranteed “[t]he privilege of hunting, fishing, and gathering the wild
rice, upon the lands, the rivers and the lakes included in the territory
ceded.”
Bibeau points us to United States v. Brown, 777 F.3d 1025, 1031
(8th Cir. 2015), an Eighth Circuit case where that court held that the
1837 Treaty “indicate[s] that the Indians believed they were reserving
unrestricted rights to hunt, fish, and gather throughout a large
territory.” In deciding whether the right to fish included the right to sell
fish, the court looked to history and concluded that the “Chippewa
Indians’ exercise of their usufructuary rights included selling what they
hunted, fished, or gathered in order to make a modest living.” Id.(emphasis added). Bibeau says that his law practice is analogous to
hunting, fishing, and gathering wild rice in that it also enables him to
make a “modest living.” 6 He asserts that the right to make a “modest
5The Supreme Court held that the rights granted under the 1837 Treaty were
not abrogated by a subsequent treaty entered into in 1855, when Minnesota was
admitted to the Union, or the President’s 1850 Executive Order. Minnesota v. Mille
Lacs Band of Chippewa Indians, 526 U.S. 172, 195, 202, 207 (1999).
6 In 2016, Bibeau earned his income through representing the Leach Lake
Band of Ojibwe in the tribal court regarding an on-reservation dispute and conducting
historical research, data-gathering, compilation, and assembly of the treaties for the
4
[*4] living” is what the 1837 Treaty means by its preservation of the
Indians’ rights to “hunting, fishing, and gathering the wild rice.”
Continuing the analogy, Bibeau argues that the right to “hunt, fish, and
gather the wild rice” really means the right to “food, clothing and shelter
and travel, whereby the new canoe is the automobile.”
We are not persuaded.
The right to hunt, fish, and gather may be the means to a “modest
living,” but the Treaty does not clearly express an intent that it means
a modest, tax-free living. Brown made no holding about whether
Chippewa would owe tax on the sale of the fish they caught, much less
a broad holding that includes an exemption from tax of any Chippewa
earning a “modest income” from any other source. It held only that the
Chippewa were not criminally liable for violating federal law because of
their right to fish retained under the 1837 Treaty. Brown, 777 F.3d at
1032. There is no discussion in the opinion about whether the right to
sell fish under the 1837 Treaty created an exemption from tax on the
sale.
We ourselves have held that “we are constrained from finding [a
tax] exemption in the absence of some textual support.” Perkins v.
Commissioner, 150 T.C. 119, 128–29 (2018) (quoting Lazore v.
Commissioner, 11 F.3d 1180, 1187 (3d Cir. 1993), aff’g in part, rev’g in
part T.C. Memo. 1992-404), aff’d, 970 F.3d 145 (2d Cir. 2020). Practicing
law or conducting research does not yield income derived from “hunting,
fishing, or gathering the wild rice.” There is nothing in the language of
the 1837 Treaty to expand the activities that it protects beyond those it
explicitly lists. 7 Interpreting the 1837 Treaty to imply exemption from
tax on income from activities not even mentioned in the treaty would
undoubtably generate a new rule. This is something we cannot do.
Jourdain, 71 T.C. at 990.
Mille Lacs Band of Ojibwe. Similarly, his 2017 income was earned by representing a
nonprofit charity to protect tribal and individual rights on and off the reservation.
7 The Eighth Circuit was even careful to reserve the question of whether the
Treaty entitled the Chippewa to use modern technology in the exercise of their Treaty
rights—“This case presents no issue of whether the treaty protection includes the use
of new technologies since the Chippewa used nets to catch fish at the time the treaty
was made.” Brown, 777 F.3d at 1031. This suggests that the right to fish, and in turn
sell fish, may be limited to the understanding of what it meant to fish at the time the
1837 Treaty was executed.
5
[*5] Bibeau has a second argument as a fallback. He argues that he is
exempt from federal taxation because there is no treaty in which the
Chippewa granted the United States any right to tax members of the
tribe or their income from any activity. Bibeau contends, quoting United
States v. Winans, 198 U.S. 371, 381 (1905), that treaties between the
United States and Indians are “not a grant of rights to the Indians, but
a grant of rights from them—a reservation of those not granted.”
When it comes to exemptions from tax, however, the Supreme
Court has stated “that Indians are citizens and that in ordinary affairs
of life, not governed by treaties or remedial legislation, [Indians] are
subject to the payment of income taxes as are other citizens.” Capoeman,
351 U.S. at 6. This means that the absence of tax terms from a treaty
does not imply the Indians reserved their right to be free of taxation—
instead, it means that an exemption from taxation does not exist. In
other words, “tax exemptions are not granted, by implication, to
Indians.” Jourdain, 71 T.C. at 990.
Bibeau acknowledges that Capoeman is precedent, but he flags
for us what he considers to be a mistake in the Supreme Court’s
reasoning, that is, its failure to consider the 1924 Indian Citizenship Act
in its legal analysis. The Indian Citizenship Act stated that by granting
Indians citizenship, the Act “shall not in any manner impair or
otherwise affect the right of any Indian to tribal or other property.”
Indian Citizenship Act of 1924, ch. 233, 43 Stat. 253, 253. Bibeau argues
that this is evidence that Congress intended to preserve not only the
rights that were explicitly granted by treaties, but also those that were
implicitly reserved—including the right to be free of taxation.
Here Bibeau crashes into clear Eighth Circuit caselaw. That court
has squarely held that the Indian Citizenship Act maintained Indians’
“pre-existing right to tribal and other property” but “does not create a
tax exemption.” Fond du Lac Band of Lake Superior Chippewa v. Frans,
649 F.3d 849, 851 (8th Cir. 2011). 8 We are therefore constrained from
inferring from the silence of the Indian Citizenship Act an exemption for
Indians from federal income taxation.
8 Bibeau also argues that the right to be free of taxation can only be abrogated
if it was clearly relinquished by treaty or modified by Congress. Since we are
constrained to hold there is no such right, we need not discuss what it might take to
relinquish it.
6
[*6] We must find for the Commissioner and hold that Bibeau’s self-
employment income is taxable.
Decision will be entered for respondent.