Text of the decision: Miccosukee Tribe [PDF 53 KB]
Summary
Indian tribes are required to deduct and withhold income taxes from gambling revenues paid to Indian tribe members, and thus are subject to backup withholding and reporting requirements.
The IRS investigated the tribe’s compliance with the reporting and withholding requirements, and determined that from 2000 to 2005, the tribe had failed to withhold the required amounts and had failed to file annual tax returns for withholding.
The IRS expanded the investigation to the period 2006 to 2009.
In 2010, the IRS issued summonses to several banks to produce documents associated with bank and brokerage accounts maintained by the tribe at those institutions. The tribe filed petitions to quash the summonses, asserted among other items that the summonses were unenforceable because the tribe was protected from such summonses by tribal sovereign immunity.
The federal district court denied the petitions to quash, holding that tribal sovereign immunity does not prevent the issuance of summonses, that the summonses were not overbroad, and that the IRS had satisfied the good faith requirements for tax enforcement.
The tribe appealed to the Eleventh Circuit which, today, affirmed denial of the motions to quash summonses issued to the third-party financial institutions by the IRS.
The appeals court concluded that tribal sovereign immunity does not bar the issuance of these third-party summonses, and that the district court did not clearly err when it found that the summonses were issued for a proper purpose, and the tribe lacked standing to challenge the summonses for being overbroad.