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Miccosukee Tribe Not Immune to IRS

Yesterday, a federal judge in Florida ruled that the IRS may compel certain financial institutions to produce records relating to all internal financial operations of the Miccosukee Tribe and their payments of gambling profits from the tribe’s casino to its members. You can read the judge’s order in its entirety here.

The Tribe went to court to challenge the validity of third-party summonses issued by an IRS agent. The Tribe’s chief contention was that the doctrine of sovereign tribal immunity bars the IRS from obtaining the Tribe’s financial records. The judge disagreed with this argument, noting that the documents sought in the summonses are not in the possession of the Tribe, but instead held by third parties.

Although the Tribe as a sovereign nation is not subject to federal taxes, individual members of the tribe do not fall under the exemption. The IRS is examining whether the Miccosukee Tribe met its reporting and withholding obligations on certain payments. Specifically, the IRS believes the Tribe may have failed to meet its reporting and withholding obligations with respect to three types of transactions: (1) income distributions to members from the gross receipts tax; (2) income distributions to members from net gaming revenue; and (3) payments to service providers.

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