Miccosukee Tribe versus IRS and Former Counsel
Last August, I wrote about the IRS seeking records from financial institutions relating to all internal financial operations of the Miccosukee Tribe and payments of gambling profits from the tribe’s casino to its members.
Subsequently, the Miccosukee Tribe sued its former attorney Dexter Lehtinen for malpractice, claiming that he provided erroneous legal advice with respect to its tax matter. The Miami Herald is reporting that on Friday Mr. Lehtinen filed a motion to dismiss the malpractice suit, revealing previously confidential information in the process.
There’s a reason why we put legal advice in writing: Because if sometime in the future the client sues for malpractice, we can prove what legal advice was actually given. In this case, Lehtinen disclosed internal memos between he and his client, indicating he advised the tribe it could be facing a massive tax problem.
Although the tribe as a sovereign nation is not required to pay federal income tax, individual members are not exempt. Allegedly, many members received distributions from the tribe that were subject to reporting and withholding, but the tribe failed to report the income on informational returns or withhold any tax. If true, the tribe’s approximately 600 members could be facing tens of millions of dollars in personal income taxes covering the past decade.