50 years ago
Social Security benefits lead to IRS study of Diné pay
By Bill Donovan
Special to the Times
WINDOW ROCK, April 3, 2014
In fact, he said, a majority of elderly Navajos living on the reservation had no idea what the Social Security program is or what it does.
"Many of them think of it as a welfare program," he said.
Of course those who have a regular income know what the program is because Social Security is taken out of their paychecks. But less than 10 percent of the Navajo adults living on the reservation are salaried and the great majority are ranchers or craftspeople and these are the people who are missing out on getting involved in the program or seeking Social Security benefits.
In 1963, only 3,918 Navajo elders were receiving Social Security checks. That amounts to about one out of every 14 Navajos who were eligible to receive Social Security benefits, said Robert D. Allen, who was on the board created by the tribe to figure out a way to get more Navajos involved in the program.
To solve this problem, the tribe established a Social Security office to inform Navajos about the program and to make sure that they get any benefits they deserved.
"We are aware of the fact that many Navajo people were missing out on Social Security benefits, particularly among the self-employed," he said.
A major reason for the problem was that in 1964 and, in fact, throughout the 60s, much of the money that was made was part of an underground economy that the Internal Revenue Service was just beginning to look at.
IRS officials said that only about 10 percent of the Navajos who earned money in one way or another actually filed their taxes, which was costing the federal government hundreds of thousands of dollars in lost income annually.
Those who made money as ranchers or as silversmith or rug weavers did much of their business with cash and didn't bother to report it. And IRS officials admitted that they were clueless on how they could change this.
Lloyd House, the director of the tribe's Social Security department, said the main reason for this was that most of the Navajos who didn't file had no idea that they were supposed to. Most thought that the tax program was something that salaried people did.
After all, some of the craftspeople had been operating for decades without ever having to file a tax report.
House pointed out that even if they knew about it, very few Navajos had the ability to understand how to file a tax return or how to keep track of their revenue and expenditures so that they would know how to fill out the forms.
The IRS would later provide the tribe with the following information.
The reservation at that time was believed to be the home of some 40,000 to 45,000 adult Navajos,Êmost of whom received some form of earnings in 1963, whether it be through a salary or through self-employment (craftspeople and ranchers).
The craftspeople relied heavily on cash transactions in their day-to-day operations and no one, not even the trader who purchased their items, kept track of how much they were paying out and who was getting it.
That would change in the 1980s when IRS officials began pushing arts and crafts traders on and off the reservation to supply information to the IRS on how much they were spending and where it was going to.
At that time, the IRS began requiring traders to keep these records and report the information back to the IRS so they could see who were not filling out their income tax reports as they should be.
One of the most difficult problems the IRS has had over the years, according to stories in the Navajo Times, was with Navajo medicine men and women. Not only did they not report any income they made as a medicine man, they refused to give out any information on the non-cash stuff they received for taking part in the healing ceremonies.
A medicine man received a sheep or goat and prepared it for a meal during the ceremony. Was this part of his or her compensation for doing the ceremony or was it a gift to them to make them happy and therefore increase the chance of the ceremony to be successful?
Back in 1964, the IRS was just beginning to look into the economyÊon the reservation and was getting little or no support from the general Navajo population. Medicine men were claiming that the ham they received from the family of someone they were doing a ceremony for was a gift.
With no regular salary, these individuals were going through life bargaining for this or that. "Bargaining is not earning money," they would tell the IRS but the IRS would say, "We don't care what you say. You will either follow the law or we will put you in jail."
But even the few times when a medicine man agreed to follow the law and report the gifts he received as well as the money, IRS officials found themselves having to work with the craftspeople and the medicine men and women on how to properly figure out their expenses.
This would prove very difficult because few Navajos kept records of that kind of thing and it would be up to the IRS to try and figure a fair way to judge their expenses.
So these stories in the April and May issues of the Navajo Times would try, for the first time, to get those Navajos who were self-employed to start keeping records to lower their tax burden and get more money from Uncle Sam.
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