IRS Demands Tribal Chair’s Documents

Miccosukee Tribal Chairman Colley Billie (l.) lost a round in appeals court, which ordered him to give the IRS documents regarding $300 million in annual gaming distributions, about $100,000 paid to each of the tribe's 600 members between 2000 and 2005. Besides claiming sovereign immunity, Billie said the distributions are "general welfare payments" and not taxable.

The 11th Circuit Court of Appeals in Atlanta recently ruled that Miccosukee Tribal Chairman Colley Billie must turn over records to the Internal Revenue Service regarding more than 0 million paid in gaming distributions between 2000 and 2005, an average of 0,000 annually for each of the West Miami-Dade tribe’s 600 members. The tribe operates the Miccosukee Resort and Gaming in Miami.

The three-judge panel said the tribe’s claim of sovereign immunity does not protect Billie from having to turn over the records to a “superior sovereign”–the U.S. government. The judges also dismissed the tribe’s more recent claim that the casino distributions are not taxable because they are “general welfare payments” under a 2014 law passed by Congress. The panel ruled much of that new law “at least arguably conflicts with separate U.S. Code provisions that mandate reporting, withholding and taxation of distributions of tribal gaming revenue.”

The appellate court’s decision reinforces a previous ruling ordering American Express, Citibank, Morgan Stanley and Wachovia Bank to turn over to the IRS casino distribution records.

The IRS has been after the Miccosukee Indians for years over the tribe’s refusal to report and withhold taxes—and now back taxes, interest and penalties–on the distribution of gambling profits from 2000 to 2005. The agency’s frustration peaked, prompting the IRS to present the tribe with a bill of $170 million for not reporting and withholding taxes from its gambling profits distributions between 2000 and 2005. The IRS also sent separate bills totaling $58 million to hundreds of tribe members for not paying personal income taxes on those distributions during the same period.

And soon things could go from bad to worse for the tribe and its members since IRS examiners also are auditing Miccosukees gambling distributions for 2006 to 2014, when individual payouts sometimes hit $160,000 annually.