Oglala Sioux President John Yellow Bird Steele: IRS on Fishing Expedition

Levi Rickert, editor-in-chief in Native Currents. Discussion »

WASHINGTON – There is a common belief that American Indians don't pay taxes. While tribes are exempt from federal taxes, the welfare benefits distributed to tribal citizens is now under scrutiny of the Internal Revenue Service.

Oglala Sioux President John Yellow Bird Steele
in Washington

President John Yellow Bird Steele of the Oglala Sioux Tribe testified on Thursday testimony before the US Senate Committee on Indian Affairs. The purpose of Thursday's hearing was to see how the General Welfare Doctrine is being administered in Indian Country. Others who made testimony on behalf of tribes were: Lynn Malerba, chief, Mohegan Tribe and Athena Sanchey-Yallup, secretary of the Tribal Council Confederated Tribes and Bands of the Yakama Nation.

Citing treaties, President Steele implied the Internal Revenue Service is overstepping its boundaries when it comes to American Indian tribes.

“We fix houses, and they want us to put a value on how much that lumber cost to patch a hole in a roof or a floor, put shingling on, they want us to put a value on that and give the person a 1099 tax form to possibly be taxed on the help,”

Steele said.

“The next year, where are those people going to find the money to pay the IRS”

In written testimony, Steele said

"The IRS has sent an incredibly burdensome audit form to our Oglala Sioux tribal government, which seeks the records of:

This is what we would call a fishing expedition. There is nothing that says the Oglala Sioux Tribe has not complied with the IRS, but the IRS is imposing a burden - a tremendous burden - on us. That burden interferes with our self-governance."

“The IRS violates our treaties when it seeks to tax the basic government services that our tribal government provides our citizens,”

President Steele said in his written testimony.

Representatives of the IRS who work with American Indian tribes testified they are doing nothing wrong. They testified they are justified in taxing compensation made to tribal members for services given to tribal members.

posted June 16, 2012 7:59 am edt