Fla. tribe wants court to stop IRS subpoenas
MIAMI (AP) — A Florida Indian tribe asked skeptical federal appeals judges Thursday to stop the Internal Revenue Service from obtaining its financial records as part of a tax investigation into gambling profits.
Bernardo Roman III, attorney for the Miccosukee tribe, told a three-judge panel of the 11th U.S. Circuit Court of Appeals that the IRS has no explicit authority to subpoena banks for tribal records. Roman wants the court to overturn a judge's 2011 ruling that the IRS is permitted to get the records despite the tribe's assertion that it is protected by its status as a sovereign entity.
"When it comes to Indian tribes there has to be specific mention in the statute that applies to them," Roman said. "The statute does not include the records of an Indian tribe."
All three of the judges sharply questioned that position. Circuit Judge Rosemary Barkett noted that tribes are included in broad definitions in the federal tax code, including the sections dealing with IRS tax evasion investigations.
"So you're saying they really can't investigate at all," she said. "Why do they need something specific?"
The IRS is investigating whether federal tax withholding and reporting requirements were met for gambling profits distributed to the estimated 600 members of the Miccosukee tribe, which is based in the Everglades west of Miami. The case argued Thursday involves the years 2006 through 2009, but recently the IRS has widened the investigation to include other years and is seeking additional tribal records.
The tribe has previously acknowledged in a related lawsuit that more than 100 individual Miccosukees owe the IRS more than $25 million in back taxes, penalties and interest. The broader investigation likely involves much more money than that.
The tribe itself is not subject to federal taxation, but under IRS rules it must withhold and report taxes on income it distributes to tribe members. Last year, U.S. District Judge Alan Gold ruled that an Indian tribe cannot use sovereign immunity to prevent actions against it by the federal government such as the IRS probe.
"Tribal sovereign immunity may not be asserted against the United States," Gold wrote in that order.
The appeals panel will issue a ruling in the coming months.
The Miccosukees have also sued their former chairman, Billy Cypress, contending that he stole $26 million in gambling profits for his own lavish lifestyle. That lawsuit also contends former tribe attorneys Guy Lewis and Dexter Lehtinen — both former Miami U.S. attorneys — conspired with Cypress and others to hide the theft from other tribal leaders.
Cypress and the attorneys deny the allegations.
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