A Miccosukee tribal member owes back taxes on gambling revenue, a federal appeals ruled Monday in a decision that experts believe could pave the way for the federal government to collect more than $1 billion in overdue personal income taxes.
The U.S. 11th Circuit Court of Appeals upheld a Miami federal judge who ruled that tribal member Sally Jim must pay the Internal Revenue Service $278,758 in taxes, interest and penalties for failing to file a tax return in 2001. The ruling came two years after U.S. District Judge Cecilia Altonaga decided her family's gaming income — a distribution of casino profits — was not exempt from U.S. tax laws.
The panel of three appellate judges agreed, saying lawmakers long ago mandated that Indian gambling money must be taxed.
"Congress spoke clearly when it imposed federal income taxation on per capita payments derived from gaming revenue," said the 21-page opinion.
The legal fight may not be over.
"We're disappointed. We're looking at our options, including an appeal to the U.S. Supreme Court," the tribe's lawyer, Robert Saunooke, said on Monday night.
The West Miami-Dade tribe has been engaged in a long-running legal battle with the IRS over tax revenue stemming from its lucrative resort and casino. The tribe's 600-plus members receive between $120,000 to $160,000 yearly from gaming revenue — and Monday's ruling may strengthen the IRS hand in trying to collect taxes on that money earned over years.
The trial judge found that chairman Billy Cypress, who had served as Miccosukee chairman from 1995 to 2009 and regained power in 2016, "instructed its members, including Jim, to take active measures to conceal from the IRS their distributions from" gaming income to avoid paying federal taxes.
As for Jim, she claimed that she not only forgot to file the return but that she also thought she didn't have to pay taxes based on instructions from the tribe and its lawyer at the time, Dexter Lehtinen. But Altonaga found Jim's testimony "not credible." Lehtinen, the tribe's former attorney, testified that he did not represent Jim or advise her not to file her 2001 tax return.