More than 50 years after U.S. recognition as a tribe, and more than 25 years after collecting their first dollar via gambling, the steadfastly independent Miccosukee Tribe of Florida is finally approaching a day of reckoning – paying up on more than $1 billion in taxes that tribal members have dodged for decades.
Like almost 240 Native American tribes across the United States, the Miccosukees operate a casino. But unlike every other tribe, the Miccosukees, planted in west Miami-Dade County, have claimed that the revenues distributed to tribal members are exempt from federal income taxes. That claim is made despite the statement in the U.S. Constitution (Article I, Section 8) that tribes are subject to federal law, and a despite a federal law specifically written in 1988 to address Native American casino operations.
Almost everyone familiar with the case shakes their head at the Miccosukees’ belligerence, saying that tribal leaders know that they’ve been holding a ticking time bomb.
On August 19, U.S. District Judge Cecilia Altonaga ruled that a tribal member must pay $278,758 in taxes, interest, and penalties to the Internal Revenue Service for failing to file a tax return in 2001. That’s more than a quarter of a million dollars for just one tribal member, and for just a single year’s tax return.
The District Court decision provides the IRS with the legal power to compel other tribal members to pay personal income taxes on casino gaming distributions dating back more than a decade, attorneys said.
The Miccosukees’ stand hasn’t changed since they opened a bingo hall in 1990 (they opened their casino in 1999). They claim their operation doesn’t have to follow U.S. tax rules. They’ve also used that argument to avoid payments when tribal members have been found liable after drunken-driving fatalities.
Tribal leader Billy Cypress stonewalled the IRS when he led the tribe from 1995 to 2009; in 2009 he was removed and accused of swindling $26 million in casino revenues. When rival Colley Billie took over as leader, he began properly withholding taxes on the checks sent to tribal members.
What’d that get him? Ousted! Billie was impeached last November and Cypress came back into power – pledging all the way to keep taxes from going to the U.S. government.
The Miccosukees are the lesser-known tribe in Florida, having broken off from the Seminole Tribe, historians say. The Seminoles now operate seven casinos and are working to continue an agreement that allows them to offer blackjack and other table games. They paid more than $1 billion to the state of Florida in the first five years of their recent agreement; because of that agreement, we know how much they earn ($2.2 billion in the last fiscal year). The Miccosukees – here comes that steadfast sovereign thing again – have chosen not to enter an agreement with the state, and while they legally could swap out their Class II bingo-style machines for the regular, Class III machines, they have chosen not to.
I once estimated the tribe’s slot revenues to be $72 million to $106 million per year. (I used the revenue figure of the weakest of the four Miami-Dade casinos as the low end, and the county average of $182 per machine times the tribe’s 1,600 machines as the high end.) Properly, the Miccosukees pay no state taxes on their slot revenues, while racetrack casinos pay 35 percent to the state, so the Miccosukee bottom line is likely the best in the county.
Reports say each of 600 tribal members receives $120,000 to $160,000 annually as a share of the casino profits, which the government has always said is taxable. That position was cemented by the Indian Gaming Regulatory Act (IGRA) of 1988, which spells out how tribes and the government handle casino business. (Note that calling a tribe a “sovereign nation” is a misnomer. Tribes must abide by all federal laws, but not state ones. So, more accurately, Indian tribes are “sovereign states.”)
IGRA spells out how gambling revenues can be spent. Among the priorities are funding tribal government programs and the general welfare of the tribe – taking care of everyone. If those needs are met, a tribe can then distribute annual payments to tribal members. But the tribe must have a Revenue Allocation Plan, which is approved by the Secretary of the Interior. Guess which tribe refuses to do that?
So, what happens next? The U.S. government points to the recent court ruling as even more reason for the Miccosukees to pay up. Long-term, the Internal Revenue Service could place a lien on Miccosukee casino revenues, or the feds could flat-out shut the place down. Boy, wouldn’t that make for some compelling video?
And why do we care? Well, $1 billion isn’t a large piece of a federal budget any more, but it sure could help at least some federal programs that have suffered budget cuts. And the $1 billion not being properly recycled is money bet by all casino visitors, not just tribal members. Thinking of the tribe pocketing an unfair amount of the cash that we have dropped at their bingo, slots, and poker games should, I hope, puncture any romanticized vision of stoic tribal members holding out against The Man.
