Hoopa Tribe Files Points and Authorities in Case Against Former Chairman

Severance Check Taxes in Question

By Allie Hostler, Two Rivers Tribune

The Hoopa Tribe was due to file a motion for damages in their case against former Chairman Clifford Lyle Marshall 30 days post the original Oct. 20, 2011 judgment. Marshall was sued by the tribe in its own court for taking a severance check illegally at the end of his term as chairman.

Although the tribe prevailed in the Oct. 20 final judgment rendered by Judge M.K. Tescher, Jr. pro tem to the Tribal Court, the issue of damages, or what the tribe believes is owed to them by Marshall, is just now beginning to take shape.

On Friday, Dec. 2, Thomas Peterson, who is representing the Hoopa Tribe, filed a Points and Authorities document in support of the damages phase of the trial.

The HVT  claims that they currently owe approximately $11,000 to the Internal Revenue Service (IRS) for unpaid taxes, penalties, and interest regardless of tax returns and taxes the defendant may have filed.

Marshall contested claiming he followed proper procedure to collect severance pay that was already approved by the Tribal Council, and that had accrued into a separate account throughout his term as chairman. He has also stated that he’s paid all taxes due on the severance money.

The question was never whether or not Marshall was entitled to a severance check, it was the procedure used to collect it that the tribe contested, and the amount.

“The Tribal Council adopted a policy that provided for one month’s salary severance pay per year that the Chairman worked up to a maximum of four months severance,” the judgment read. “The amount in the account was $28,584.88, but from that, the employee withholding and employers costs were to be deducted.”

The day after Marshall lost his bid for chairmanship, on June 17, 2009, he began the process to collect his severance pay. A check was cut for the total amount in his severance pay account, $28,584.88. But, the tribe argues that employee taxes were subsumed in the same account and should have been deducted from the check.

The Dec. 2 document states that the total amount owed for four months salary would total $26,666.67 and he difference, $1,918.21, was intended to go toward paying employer taxes, but since it was paid to Marshall, the tribe believes it was an overpayment of the severance.

A declaration filed by Edward Lamb, the current CFO of the Hoopa Tribe states that wages under salary had been paid historically as employee wages with federal income tax, social security tax, Medicare and Disability withheld. In addition, for each biweekly paycheck, the tribe paid the following taxes on Marshall’s wages: Social Security, Medicare, and TERO.

Depending on which amount was to be taxed, Lamb said the Hoopa Tribe owes the IRS $7,346.50 or $6,725 plus about $3,673 in penalties and interest.

Either way, the damages listed in the Dec. 2 document total between $11,000 and $12,000—the higher figure accounting for an overpayment, should the judge find that an overpayment was made.

The December document reads, “The HVT claims that the Lamb declaration and the IRS tax publications hold that the fact that the defendant may have paid some taxes (the amount and nature of which are currently not know) on the check, does not relieve the Tribe its obligation and continuing liability for employment taxes it should have withheld and paid on the check in 2009.”

The Hoopa Tribe also requested they be given the opportunity to establish at trial damages, a pre-trial conference to set a discovery schedule, witness list, and date to conclude the matter.

Editor’s Note: All information in this report was obtained from public court records. No interviews were conducted with either party and quotes were taken verbatim from the public court documents.

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