Tribe suing for bigger share of relief funds
Miccosukee refused to pay taxes for years
For years, members of the Miccosukee Tribe in South Florida didn’t pay federal taxes on their earnings from the tribe’s lucrative casino, then fought in court for years to avoid paying its $1 billion IRS bill.
Now, the wealthy tribe is suing the United States, saying it deserves a bigger share of $8 billion in COVID-19 relief funds that were distributed among 574 tribal governments.
In a lawsuit filed July 31 in U.S. District Court in Miami, the tribe claimed it was allocated the minimum $100,000 after a formula used by the Treasury Department incorrectly determined its population was zero.
The tribe should have received $2 million because its actual population was 605 — a fact the department was informed about in numerous contacts with federal officials, the suit states.
The suit does not connect the Treasury Department’s decision to its yearslong court battle over tribal members’ failure to pay taxes on millions of dollars earned over the years from its western Miami-Dade County casino.
And the Treasury Department did not respond Tuesday to questions about whether its allocation of COVID-19 relief money to the tribe should be seen as a payback for the tribe’s refusal, at least until recently, to pay its estimated $1 billion debt to the IRS.
The tribe’s attorney, George Abney of the global
firm Alston & Bird LLP, said by email that the tribe “is not aware of ‘retribution’ playing any role in the Treasury Department’s use of obviously incorrect population data.” The Miccosukee Tribe was among 20 North American tribes whose population was listed as zero, Abney said.
The tribe’s suit argues that language in the Coronavirus Aid, Relief and Economic Security Act — or CARES — signed into law in March directed the government to divide the $8 billion among federally recognized tribal governments “based on increased expenditures” caused by the pandemic.
Instead, the department relied on a populationbased formula it believed would “correlate reasonably well” with increased costs of addressing health and medical needs, the suit states.
That formula resulted in all tribes listed as having fewer than 37 members limited to just $100,000.
By contrast, the Seminole Tribe of Florida, based in Broward County, was listed as having 1,749 members and projected to receive between $5.9 million and $8.5 million, according to a Harvard University analysis. The Seminole Tribe owns the Seminole Hard Rock Hotel & Casino, among other properties.
The Miccosukee Tribe, which owns vast swaths of Everglades acreage in western Miami-Dade and western Broward counties, said it provided accurate population data to the government and was assured the revised data would be used in calculating the disbursement. But that did not happen, the suit states.
“Thus, the Miccosukee Tribe had no other option but to file a lawsuit in order to fix the problem,” Abney asserted.
Suing the federal government over an alleged failure to provide the tribe its fair share of benefits marks a role reversal for the two sides after the government’s successful lawsuit to force tribe members to pay their fair share in taxes from their gambling revenues.
Sine opening the Miccosukee Indian Bingo and Gaming facility in 1990, the tribe has been distributing shares of its ever-growing gaming revenue to its members.
In 2014, the government sued a tribal member after discovering that she and her family failed to pay taxes on $272,000 in revenue that they received from the tribe’s gaming operations in 2001.
The tribe intervened, arguing that the income was exempt from taxation because it qualified as tax-exempt Native American welfare benefits.
A U.S. District Court judge rejected that argument in 2016. An appeals court affirmed the pro-government ruling in 2018, and the tribe lost a last-ditch effort to avoid paying personal income taxes in 2019 when the U.S. Supreme Court rejected the tribe’s request to take on the case.
The rulings cleared the way for the IRS to begin billing the tribe and its members a combined $1 billion in back taxes, late fees and penalties.
Former South Florida Sun Sentinel gambling reporter Nick Sortal, writing in 2016 for the Miami Herald, estimated that the tribe’s casino generates between $72 million and $106 million annually. He also cited filings in the court case stating that each tribe member earns between $120,000 and $160,000 a year.
Tribal chairman Billy Cypress testified in the case that he told tribe members that they were exempt from paying federal taxes on the distributions and that they should conceal the money from people outside the tribe, according to the 2016 court ruling.
In his email, Abney said the Miccosukee Tribe, despite having contended its members shouldn’t pay income taxes, is entitled to the pandemic relief funds “because Congress specifically allocated a portion of such funds to Native American tribes.”
“Taxation of Native American tribes is a complex issue. The Miccosukee Tribe pays significant federal taxes and is in compliance with its tax obligations.”
As for that $1 billion liability for past-due taxes, interest and penalties, Abney said, “The tribe and its members have amicably resolved their legitimate and good faith disagreements with the IRS.” But he added that they will “continue to use available legal remedies to pursue relief from taxation when appropriate.”