U.S. Eleventh Circuit - The FindLaw 11th Circuit Court of Appeals Opinion Summaries Blog

Tribe Must Pay Taxes on Gaming Money

Sally Jim, a member of the Miccosukee Tribe, had a good year at the casino.

She made $272,000 without ever playing a game. That was her per capita distribution as a member of the 400-member, Florida tribe.

There was one problem, however. In United States of America v. Jim, a federal appeals court said she should have paid her taxes.

Indian Gaming Revenue Act

The U.S. Eleventh Circuit Court of Appeals said tribes and their members have to pay taxes on gaming revenues. Congress mandated it under the Indian Gaming Revenue Act in 1988.

The tribe, however, intervened in the case to argue that Congress changed the law in 2014 through the Tribal General Welfare Exclusion Act. The statute excludes federal taxation on "any payment made or services provided ... pursuant to an Indian tribal government program."

The question for the appeals court was whether the general welfare law changed the specific gaming law. The Eleventh Circuit said it did not.

"Congress spoke clearly when it imposed federal income taxation on per capita payments derived from gaming revenue," the appeals panel said. "If Congress intended GWEA to undo this arrangement, it knew the words to do so. It chose not to use them."

$36 Million Question

As a result, Jim is on the hook for $267,237.18 for failing to file a tax return. It is a significant tax bill for anyone.

But the tribe may be in for a bigger sticker shock. According to the appeals court, the tribe distributed more than $36 million to its members in 2002.

"Despite this fact, the tribe neither reported the distributions nor withheld federal taxes on them," Judge Gerald Tjoflat wrote for the court.

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