IRS hits Miccosukee tribe with $170M tax bill
MIAMI (AP) -- The Internal Revenue Service has hit the Miccosukee Indians with a $170 million bill for failing to report and withhold taxes from its distribution of gambling profits to tribal members.
The IRS also sent bills totaling $58 million to hundreds of the South Florida tribe's members for failure to pay personal taxes on those distributions from 2000 to 2005.
The newspaper says the agency has been fighting with the tribe for years over its refusal to pay taxes on distributions of profits from the casino in west Miami-Dade County. The numbers are expected to rise as IRS examiners are now auditing the tribe's gambling distributions for 2006-2010.
The tribe contends it does not have to withhold taxes on gambling distributions.
"The Miccosukee people will continue to pay all applicable lawful taxes, as they always have, and we will continue our efforts to find a fair and workable solution to this dispute," Chairman Colley Billie wrote in a statement Tuesday to The Miami Herald.
"The Miccosukee people, however, will not be intimidated or coerced by these tax liens into surrendering tribal sovereignty or principles for which so many of our ancestors have paid a very high price in blood, lives, and tears."
The tribe's general counsel, Bernardo Roman III, wrote the IRS in 2011 that the distributions at issue are not subject to federal income taxation and therefore not subject to federal reporting and withholding under applicable Supreme Court precedent.
Federal law states that the Miccosukee Tribe's status as a sovereign nation means the entity itself is not subject to taxes. But several legal experts told The Herald that once the tribe distributes profits from its casino to members, they are individually responsible for reporting and paying income taxes on their annual tax returns. Moreover, the tribe itself must withhold taxes on the income and turn those deductions over to the IRS.
"Ultimately, reality will set in and, ultimately, taxes will be paid," Miami defense attorney and CPA David Garvin said. "I think they have kicked the can a little bit down the road, but the problem is the number is going to increase substantially when the next round of years hits.
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