Tribal casino revenues to pay taxes

According to a ruling by the Court of Appeals, Florida tribes aren’t exempt from paying taxes over their revenue and disbursements.

US.- The federal government has been cleared to continue collecting taxes from Floridian tribes over their gaming revenues after a ruling by the Court of Appeals. The tribunal upheld the decision of U.S. District Judge Cecilia Altonaga, who compelled Sally Jim to pay taxes on US$272,000 in disbursements she received from the Miccosukee Tribe in 2001.

“When an Indian tribe decides to distribute the revenue from gaming activities… the distributions are subject to federal taxes,” wrote Eleventh Circuit Judge Gerald Tjoflat.

Tribes usually distribute their casino revenues to members so they can live on tribal lands. However, the government argued that Jim had to pay taxes under the 1988 Indian Gaming Revenue Act, which was elaborated “to protect the Indian gaming industry from corruption and to provide for extensive federal oversight,” the court said. However, Jim – unsuccessfully – argued that the IGRA was superseded by the Tribal General Welfare Exclusion Act, which usually precludes taxation of tribal revenues.

“[P]er capita distribution of gaming revenue remains taxable income, even if the distribution arguably promotes the welfare of a tribe,” Judge Tjoflat said. “The distribution payments cannot qualify as Indian general welfare benefits under the TGWEA because Congress specifically subjected such distributions to federal taxation in IGRA.”

However, Jim’s attorney said they will take the case to the Supreme Court and stated: “The Eleventh Circuit got it wrong. Tribes have the right to collect revenues and distribute those revenues as they see fit without being subjected to taxation.”