Perkins v. Commissioner, 970 F.3d 148

Alice and Fredrick Perkins, Seneca Nation members living on the Allegany Territories, operated A&F Trucking and mined/sold gravel under a Seneca-issued permit, paying royalties to the Nation.
The Seneca Nation holds Allegany land in fee simple; individual members have lifetime possessory interests; the land was not allotted to individuals nor held in trust by the United States.
The Perkinses filed late 2008–2009 tax returns claiming the gravel-sale income was tax-exempt (initially under the General Allotment Act/Squire, later under two treaties: the 1794 Treaty of Canandaigua and the 1842 Treaty with the Seneca).
The IRS issued a notice of deficiency and assessed late-filing penalties; the Tax Court granted summary judgment for the Commissioner, finding no treaty-based exemption for the Perkinses’ income and assessing late-filing penalties.
On appeal, the Second Circuit reviewed whether either treaty (or Squire) exempted the Perkinses’ gravel-sale income from federal income tax and affirmed the Tax Court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the Treaty of Canandaigua exempt individual income from sale of resources on Seneca land from federal income tax?	"Free use and enjoyment" should be read liberally to exempt income derived directly from the land.	The phrase protects land possession/use, not individual income; no historical/textual support for income exemption.	No — Treaty does not exempt the Perkinses’ gravel income.
Does Article IX of the 1842 Treaty with the Seneca exempt individual income derived from Seneca land?	Article IX’s protection of "lands... from all taxes" should extend to income derived from those lands.	Article IX targets taxes on real property (state taxes/assessments), not federal individual income tax or sales of extracted resources.	No — Article IX does not exempt the Perkinses’ income.
Does Squire/General Allotment Act exemption apply here?	(Initially) Squire applies to preserve income from allotted land and exempts resource sale proceeds.	Seneca land was never subject to the Allotment Act and the Perkinses’ income came from Nation land under permit, not allotted/trust land.	No — Squire inapplicable; Perkinses abandoned that claim and it does not cover non-allotted tribal land.

Squire v. Capoeman, 351 U.S. 1 (1956) (exempted certain proceeds from sale of timber on allotted trust land under the General Allotment Act)
Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172 (1999) (treaties interpreted in historical context and as Indians would have understood them)
Choctaw Nation of Indians v. United States, 318 U.S. 423 (1943) (treaties construed liberally for tribes but not rewritten beyond clear terms)
Mescalero Apache Tribe v. Jones, 411 U.S. 145 (1973) (tax exemptions are not implied; must be clearly expressed)
Superintendent of Five Civilized Tribes v. Commissioner, 295 U.S. 418 (1935) (tax exemptions must be plainly derived from treaty/statute)
Lazore v. Commissioner, 11 F.3d 1180 (3d Cir. 1993) (interpreting Treaty of Canandaigua; rejected broad income-exemption theory)
Hoptowit v. Commissioner, 709 F.2d 564 (9th Cir. 1983) (discussed limits of treaty language to exempt income "derived directly from the land")
Ramsey v. United States, 302 F.3d 1074 (9th Cir. 2002) (requirement that treaty language show federal intent to exempt Indians from taxation)