William H. Hoptowit v. Commissioner of Internal Revenue

The question presented by this case is whether payments to a Yakima Indian for service as a Tribal Council Member are exempt from federal income taxation under the Treaty with the Yakimas. The Tax Court, 78 T.C. 137 , ruled that these payments are taxable. We affirm.

I

Appellant William Hoptowit is a noncom-petent, enrolled member of the Yakima Indian Nation (the “Tribe”).

In November 1975, Hoptowit was elected by the Tribe to the Yakima Tribal Council. The Tribal Council is the Tribe’s governing body. Council Members handle the Tribe’s business on a day-to-day basis. Serving as a Council Member is not a full-time job, but involves a significant expenditure of time.

Council Members receive per diem payments for time spent on Council matters. The per diem amount is determined annually by the Tribe, and the payments are made from funds originally held in trust by the United States for the Tribe’s benefit. Approximately 90 percent of the funds held in trust by the United States is generated from “trust resources,” primarily the sale of timber from reservation land. The remaining ten percent of Tribal funds is from interest on money deposited with the Bureau of Indian Affairs.

In…