Federal Judge Cecilia Altonaga recently ruled that Sally Jim, a member of the Miccosukee Tribe of Florida, must pay federal taxes on her 2001 gaming per-capita payment of 2,000. Jim had claimed she didn’t owe taxes because the money was a “general welfare” payment, and therefore not subject to taxation. The 600-member tribe operates Miccosukee Resort and Gaming in Miami.
The 600-member tribe operates Miccosukee Resort and Gaming, a Class II facility. Court records indicated distributions from a Miccosukee trust fund totaled nearly $33.3 million in the fiscal year ending September 2001. The following year distributions rose to $36.3 million. Per capita payments are distributed equally to all members. Jim testified she was received payments in cash on behalf of herself and three other adults in her home, or $68,000 per person.
In a 13-page decision, Altonaga wrote, “Jim is subject to federal income tax on all her income from whatever source derived. While Indian tribes are not subject to federal income taxation, individual American Indians are subject to the same requirement to pay income taxes as non-Indians, unless specifically exempted by a treaty or agreement with the tribe or an act of Congress.”
Under the 2014 Tribal General Welfare Exclusion Act cited by Jim, Congress exempted “general welfare” payments from federal income tax. But the law does not exempt gaming per-capita payments, Altonaga said. The Indian Gaming Regulatory Act requires such payments to be taxed. Altonaga wrote, “The Tribal GWE Act was not meant to supplant the IGRA; that is, per capita distributions of gaming revenue remain taxable income, even if these distributions arguably promote the general welfare of a tribe.”
The decision only applies to Jim, but other tribal members who allegedly failed to pay taxes on their per-capita payments could be affected
