Most problems tribes have are with states. The federal government has settled into a nice pattern of benign neglect. But just when you thought it was safe to quit looking over our collective shoulder, the Internal Revenue Service is here to take what we have left.
Do not turn our development into an opportunity to use all your powers to restart a cycle of theft from us.
The IRS recently auctioned off 7,100 acres of land owned by the Crow Creek Tribe in South Dakota to pay for delinquent employment taxes. This land represents about 20 percent of the tribe’s land base. Ironically, the land was purchased with settlement funds from the last time the federal government stole this tribe’s land to build a dam in the 1950s. Just how many times can our government steal the same land? I believe that this is at least the third time for this particular tribe.
Not only has the IRS auctioned off 20 percent of the tribe’s land, they also take the personal tax refunds each year of approximately 20 current and former tribal council members to help pay the tribe’s penalties and interest on the tax claim. Interestingly, one of the reasons we even have trust land was to stop egregious tax seizures by state governments in the 1880s.
Just when you thought it was safe to quit looking over our collective shoulder, the Internal Revenue Service is here to take what we have left.
I am not saying that tribes shouldn’t pay their employment taxes. On the contrary, if you owe them you should pay them. But what the IRS is doing is different and basically wrong.
About 10 years ago, the IRS split off a special Tribal Government division that is focused solely on auditing, “educating,” and seemingly taxing every last penny from per caps to powwow winnings. This division has at least one employee for every nine tribes.
No tribe is safe from their educational efforts. I once sat in a meeting where IRS educators were trying to get the BIA to change the gaming regulations in a way that would have resulted in the taxation of children’s per capita trust funds. I also watched a tribe be forced to close its tribal college because the IRS threatened to seize the college’s rescue funds that were donated by a wealthy tribe.
The IRS Tribal Government division has all this positive propaganda they put out about tribal consultations and educating. Frankly, I don’t put much stock in the educational component. One of these IRS educators admitted to me that they use these education sessions to learn what tribes are doing and what possible mistakes they can audit. A few years ago, I had a meeting with a tribal IRS educator who had a file of newspaper clippings on the tribal company and print-outs from their Web site. These guys are researching and watching, and they know the tribes assigned to them very well.
You could argue that the Tribal Government division is just doing its job. The Tribal Government division agents I met have been ok, maybe a little suspicious, but not exactly evil. But they are not the real problem. The real problem is that when they find an issue they turn the collection over to their pit bulls in the IRS Enforcement Division, which has no sense of history or proportion. They don’t care that we are struggling governments. They don’t mind shutting down a tribal company or closing a tribal college in the name of employment taxes. They don’t care if students don’t have a college or employees lose their much needed jobs on the reservation. These actions strike me as terrible public policy. Exactly how does our federal government benefit from denying Natives educational and work opportunities?
You could argue that the Tribal Government division is just doing its job.
We have spent decades getting our act together and some of us take a few steps back occasionally, but we are all committed to making reservations a better place. The federal government’s policy of self-determination has allowed us to start to develop. Unfortunately, none of this matters to the Enforcement Division of the IRS. They simply go for the kill.
The IRS needs to recognize that they have a problem. We are governments, not targets. We are in our infancy and have been turned loose by the federal government because they didn’t want to deal with us anymore. Do not turn our development into an opportunity to use all your powers to restart a cycle of theft from us. The IRS needs to open their eyes to what their Enforcement Division is doing and introduce an element of perspective, history and compassion. If they do this, their educational efforts might actually work, but you can’t get tribal buy-in to a system by stealing our land – again!
Lance Morgan is the CEO of Ho-Chunk, Inc., a tribal corporation owned by the Winnebago Tribe of Nebraska and a partner in the Indian law firm of Fredericks, Peebles & Morgan.