In a unanimous decision, the 11th Circuit Court of Appeals recently ruled the Miccosukee Tribe must pay taxes on gaming revenue. Judge Gerald Tjoflat wrote, “Congress spoke clearly when it imposed federal income taxation on per capita payments derived from gaming revenue. If Congress intended the Tribal General Welfare Exclusion Act to undo this arrangement, it knew the words to do so. It chose not to use them.”
GWEA, which became law in September 2014, ensures tribal citizens do not have to pay taxes on certain benefits received through tribal general welfare programs. Tribal member Sally Jim cited GWEA as a way to exempt gaming revenues from quarterly per capita payments. But the court ruled the “Tribal GWE Act was not meant to supplant” the Indian Gaming Regulatory Act, which became law in 1988.
Tribal attorney Robert Saunooke said, “We’re disappointed. We’re looking at our options, including an appeal to the U.S. Supreme Court.”
The court’s ruling means Jim owes $267,237.18 for not filing a tax return in 2011. She eventually filed one in 2015 but claimed $272,000 of her income was not taxable. If the court’s decision is extended to other tribal citizens who did not report or pay taxes, they could owe more than $1 billion, according to the Miami Herald.
The tribe operates the Miccosukee Resort and Gaming on its southern Florida reservation. Revenue from the facility, referred to as Miccosukee Indian Bingo and Gaming in the ruling, go into a non-taxable distributable revenue account from which per capita checks are paid quarterly to citizens. The court said, “MIBG contributed the vast majority of the funds for distribution. Despite this fact, the tribe neither reported the distributions nor withheld federal taxes on them.”
In fact, previously a trial judge found Miccosukee Chairman Billy Cypress “instructed its members, including Jim, to take active measures to conceal from the IRS their distributions from” gaming income to avoid paying federal taxes. At the time, Jim claimed she forgot to file the return and also that tribal officials and its former lawyer, Dexter Lehtinen, said she didn’t have to. The trial judge found Jim’s testimony “not credible.” Lehtinen testified he did not represent Jim or advise her not to file her 2001 tax return.
