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David Stanley Ford

High court rejects Potawatomi tribe leader’s tax case

BY CHRIS CASTEEL    Comments Comment on this article2
Published: October 14, 2009

WASHINGTON — The chairman of the Citizen Potawatomi Nation lost his last legal bid to avoid taxes on his salary Tuesday when the U.S. Supreme Court rejected his appeal.

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On Tuesday, the Supreme Court also took the following actions:


• Agreed to rethink a lower court’s decision to throw out the sex trafficking and forced labor conviction of Glenn Marcus, dubbed the "S&M Svengali.” Federal prosecutors want their conviction to stand. A lower court said Marcus was convicted of breaking a law that wasn’t in place when some offenses happened. Marcus was imprisoned for abusing a woman he photographed for a sadomasochism Web site.


• Appeared inclined to reinstate a death sentence for Frank Spisak, a neo-Nazi convicted of murdering three men in Ohio more than a quarter-century ago. Spisak’s attorney says his client had an ineffective lawyer in 1983 and jurors got improper sentencing instructions. Most of the justices were skeptical.


• Questioned whether defendants should expect their lawyers to advise them on allconsequences of a guilty plea. Jose Padilla wants his guilty plea thrown out because his lawyer incorrectly told him it would not affect his immigration status.


• Will decide whether the death conviction of Albert Holland should be upheld despite his lawyer missing the deadline for filing an appeal.


• Will decide whether a federal health plan’s administrator can be sued in state court.

Without comment, the high court declined to hear the case of John "Rocky” Barrett, who claimed that his wages should be tax-exempt because he was being paid from tribal trust funds that weren’t subject to state or federal taxes.

Barrett lost his challenge to the IRS, a federal district court in Oklahoma City and the 10th Circuit Court of Appeals before taking it all the way to the Supreme Court.

According to court documents, Barrett first decided in 1996 that his salary as chairman could be paid from earnings on tribal trust funds that had been exempted from taxes, and he soon directed that no taxes be withheld from his paychecks.

The IRS audited Barrett’s 2001 tax return and determined that his salary was taxable income. Barrett paid about $23,000 in taxes and penalties and then sued for a refund.

Barrett didn’t argue that American Indians generally are exempt from taxes. Rather, he contended that his compensation fit within the tribal growth and development purposes that were carved out for the tax-exempt money in the tribal trust funds.

Federal courts at all levels disagreed.

The U.S. Justice Department urged the Supreme Court not to hear Barrett’s case, saying other federal courts had ruled that salaries paid to tribal officials are not exempt from taxes, even if paid from tax-exempt trust funds.

The department rejected Barrett’s argument that taxation of his salary "improperly chills” the tribe’s ability to use its power to spend tax-exempted funds, saying the penalty was imposed on Barrett, not the tribe.

And, the department said, Barrett "unilaterally” decided that his salary was tax-exempt and ignored numerous cases that held tribal salaries are not exempt from taxation.

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David Stanley Ford


Related Topics: Public Finance, Business, Judiciary, U.S. Courts, Income Taxes, Taxes, Native American Issues, Jobs and Labor, Employee Compensation


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Congratulations! Now... If they would just take a look at the Cheyenne & Arapaho Tribal Governor Darrell Lyingham and see what HE'S up to, I'll bet they'd find some misappropriations going on there as well.
EyeSpy, All Over The Place - Oct 15, 2009 at 9:37 am
Yippee!! As a tribal member I could not be happier that Chairman Barrett, who has sucked the tribe dry for 25 years, finally got his fingers slapped for stealing from the cookie jar. Imagine the hubris. You get caught cheating on your taxes, you have to pay up, then you sue the IRS for the money back alleging that the tribe is paying you money set aside for elders and the medical devices. Now, about transparency in tribal governments in Oklahoma and freedom of the press. The Oklahoman needs to get on board with those issues and it will be like pulling the lid off an ants nest.
Johnny, Indianapolis - Oct 14, 2009 at 5:40 pm

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