District Judge Lawrence Vilardo

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Plaintiffs, one of whom was “an enrolled member of the Seneca Nation,” sold gravel removed from the Seneca Nation Allegany Territory. After receiving an IRS deficiency notice, they paid taxes on the income. Their amended complaint claimed a refund, interest and penalties, totaling $9,863.68 because the gravel’s sale was exempt from federal income tax under the 1794 Treaty with the Six Nations at Canandaigua (Canandaigua Treaty) and the 1842 Treaty with the Seneca (1842 Treaty). The court denied the government dismissal. In a case of first impression, it found plaintiffs stated a claim for relief under the two treaties. Taxing income from gravel mined on land that is part of the Seneca territory interferes with that land’s “free use and enjoyment.” The Canandaigua Treaty benefited not only the Seneca Nation itself, but also its “Indian Friends” residing on and using the nation’s land. Nor did the explicit tax exemption in the 1842 Treaty apply solely to taxes on real property. The treaty protected “the lands of the Seneca Indians…from all taxes.” The language of the 1842 Treaty provided no reason to distinguish between exemptions from what was thought of as a real property tax and exemptions from a tax on what made up that real property.

District Judge Lawrence Vilardo

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Plaintiffs, one of whom was “an enrolled member of the Seneca Nation,” sold gravel removed from the Seneca Nation Allegany Territory. After receiving an IRS deficiency notice, they paid taxes on the income. Their amended complaint claimed a refund, interest and penalties, totaling $9,863.68 because the gravel’s sale was exempt from federal income tax under the 1794 Treaty with the Six Nations at Canandaigua (Canandaigua Treaty) and the 1842 Treaty with the Seneca (1842 Treaty). The court denied the government dismissal. In a case of first impression, it found plaintiffs stated a claim for relief under the two treaties. Taxing income from gravel mined on land that is part of the Seneca territory interferes with that land’s “free use and enjoyment.” The Canandaigua Treaty benefited not only the Seneca Nation itself, but also its “Indian Friends” residing on and using the nation’s land. Nor did the explicit tax exemption in the 1842 Treaty apply solely to taxes on real property. The treaty protected “the lands of the Seneca Indians…from all taxes.” The language of the 1842 Treaty provided no reason to distinguish between exemptions from what was thought of as a real property tax and exemptions from a tax on what made up that real property.