Suzan Harjo, executive director of the National Congress of American Indians, was incorrectly described as a lawyer in a story yesterday on Page A3.
From a spit of a reservation in the extreme northwest tip of Washington state, members of the Lummi Indian tribe set out each summer to dip their salmon nets into the blue waters of Puget Sound.
They go to fish, perchance to catch and then to sell. It is a right reserved to the Lummi by the Treaty of Point Elliott 131 years ago and confirmed by the Supreme Court as recently as 1979.
The historic arrangement is occasionally tested by non-Indian commercial and sports fishermen who covet Lummi salmon and steelhead, but the tribe now faces a different and potentially more threatening adversary: the great white taxman.
In a reversal of policy, the Internal Revenue Service has decided that the Lummi must pay federal taxes on salmon income, which the Lummis contend would effectively abrogate their 1855 treaty and could lead to the loss of their tiny 12,500-acre reservation.
The IRS argues that Lummis must be treated like other American citizens, and that treaties were never intended to let Indians "take advantage" of the U.S. tax code. The Lummis respond that their members are not like any other American citizen and they have a 131-year-old document to prove it.
The spat has attracted the attention of tribes nationwide because, while the potential tax take from salmon is small fry, financially speaking, tribal leaders are concerned that it could open the way for the IRS to lay claim to millions of dollars in tax revenue from Indian-owned oil, natural gas, minerals and timber.
"This has nothing to do with salmon," said Jewell James, head of the Lummi Treaty Rights Task Force. "It's a test case to get at the coal, oil and uranium. We're being set up for a domino effect."
"The IRS could use it, and they would," said Suzan Harjo, a lawyer and executive director of the National Congress of American Indians. "There has never been a tax on a reservation-derived resource."
The battle between the Internal Revenue Code and the Treaty of Point Elliott has sharply divided the Reagan administration.
Interior Secretary Donald Hodel, like former secretary James G. Watt before him, backs the Lummis. In letters last year to Attorney General Edwin Meese III and Treasury Secretary James A. Baker III, Hodel warned that IRS pursuit of the Lummis is not only an "attack" on treaty law but an "abrupt departure" from President Reagan's 1983 policy statement confirming the government's trust responsibility toward Indians.
Meese, however, has sided with the IRS. Because the Justice Department cannot represent both agencies, the Lummis must defend themselves.
"I have great sympathy for the tribe's position," said Ross O. Swimmer, assistant Interior secretary for Indian affairs. "I think the tribe has a good argument."
It is also, to hear the Indians tell it, a very well-used argument.
"Every time there's an economic crunch in the government, Treasury tries to tax some Indian resources," said Joe DeLaCruz, chairman of the Quinault Indian Nation, another Washington state tribe that relies on salmon income. "They're looking around and saying, 'Geez, where can we get some more revenue?' "
Indians, like other Americans, pay federal and state taxes on income earned off the reservation. On-reservation income is taxed if it derives from sources not connected to the land -- such as sales of tobacco, gas, groceries or clothing.
But because reservations are sovereign nations -- Indians hold dual citizenship, in their nations and in the United States -- income derived from their natural resources has long been held exempt from state and federal taxes.
"You must remember that these were nation-to-nation treaties," said Raymond Field, director of the National Tribal Chairmen's Association.
The exemption makes Indian resources particularly attractive to developers, who can, through joint ventures on reservation land, skirt the oil-windfall tax, coal-severance tax and other brambles of the tax code.
Until a few years ago, the Lummis' salmon, while not technically attached to the land, enjoyed the same exemption. "In the past, some Indians have received forms and filled them out and paid the tax, and, lo and behold, the IRS refunded the tax," tribal official Samuel Cagey said.
In 1982, however, the IRS dunned Roy D. Earl, a Puyallup Indian from Washington state, for nonpayment of taxes on fishing income. IRS lawyers argued that Indians must pay the same taxes as other American citizens "unless an exemption from taxation can be found in the language of a treaty."
Earl argued in vain that Northwest fishing treaties, which predated the federal income tax by more than half a century, could not be expected to contain such language. The Tax Court decided for the IRS.
Since then, the IRS has filed more than 60 identical cases against members of the Lummi tribe, the largest fishing tribe with about $11 million in salmon and steelhead sales each year.
The Interior Department and Indian lawyers argue that the IRS is relying on what they politely term a lousy precedent. Earl was not enrolled in the Puyallup tribe, was not fishing in reserved Indian areas and was not represented by a lawyer who might have pointed out those discrepancies and led the court through the intricacies of treaty law.
The decision also runs contrary to most federal court decisions, which have held that Indian treaties must be interpreted as the Indians understood them when they were signed. Under that rationale, the courts have tossed out most attempts to assess Indians for state taxes, licensing fees and whatnot.
"It is no more likely that the Indians understood that the federal government would tax their fishing right than that they understood that future states would be able to impose a charge upon it," former Interior solicitor William Coldiron wrote in an opinion to Watt two years ago.
The IRS, however, has quite another view.
Treaties or no treaties, the agency told Interior, "as Indians individually attain an economic level comparable to that of other Americans, then it is to be expected that they will be taxed accordingly."
To allow otherwise, the IRS said, would leave the tax code at the mercy of Indians with "business expertise advanced well beyond the more primitive, land-oriented cultural stages."
Indians read that as a broad attack on all treaties and tribal resources, despite assurances to the contrary from Interior officials. "This would never result in Indians losing the fish," Swimmer said. "It's a very pure legal argument."
But on the Lummi reservation, the pure legal argument has a decidedly monetary edge. Unemployment on the reservation runs 85 percent most of the year, dropping to 40 percent during the four-month salmon season.
According to tribal secretary Cagey, one-third of the tribe's 3,000 members are registered to fish. Those who have boats, usually small skiffs, average $6,000 a year in sales. Those who crew on larger boats average $5,600.
Spread over more than 1,000 Lummi members, the $11 million in fishing income for the tribe would bring the treasury about $70,000 a year in tax payments, according to Interior estimates. Together with all the other fishing tribes, the IRS is looking at a potential tax take of $120,000.
"When Justice came in on this, they said, 'We side with the IRS on tribal resources,' " Cagey said. "They didn't say fishing resources. They can only get $70,000 from salmon, but they can get billions out of the natural resources of other tribes."
The IRS has suggested that the Lummis ask Congress for a specific exemption from the law, a move that Harjo and other Indian lawyers contend amounts to an admission that an exemption is needed and could prejudice cases involving other tribes and other resources.
"It doesn't make sense to go to Congress and clarify this because it's clear," she said.
But the Lummis acknowledge concern about what might happen if the tribe members lose. The IRS is seeking back taxes to 1978, and few of the members have cash to satisfy the debt. The taxman may have no recourse but to confiscate the Lummis' fishing boats, which the government helped buy in an effort to strengthen the reservation economy, and their homes on the reservation.
"That's probably the way it will happen," Cagey said glumly.