FROM THE ARCHIVE

Okla. tribes told to pay gaming taxes

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WEDNESDAY, NOVEMBER 28, 2001

In a setback for two Oklahoma tribes, the Supreme Court on Tuesday ruled that Indian gaming law does not exempt them from paying certain federal taxes.

Despite the same privilege afforded to states, the Chickasaw Nation and the Choctaw Nation must pay the taxes, the Court said in a 7-2 decision. Even though there is an error in the Indian Gaming Regulatory Act that leads to varying interpretations on the issue, Congress never intended to treat tribes in the same manner as states, the Justices added.

"The language of the statute is too strong to bend as the tribes would wish," wore Justice Steven Breyer for the majority.

At issue are Class II devices known as "pull-tabs," which the two tribes offer at gaming centers, convenience stores and other locations in Oklahoma. Common elsewhere in Indian Country, pull-tabs are cards or tickets which consumers buy in hopes of winning a certain amount of money.

As such, the Internal Revenue Service considers a pull-tab to be a bet and subject to wagering excise and occupational taxes. But neither tax was paid, causing the I.R.S. to seek back payments the tribes have been challenging since 1996.

At every court, however, the tribes have lost their case. A federal district court and the 10th Circuit Court of Appeals agreed with the federal government and ordered the payment of the fees, last estimated in 1997 to total around $200,000 for both tribes.

The Supreme Court finally put to rest the debate, centering largely on the language and punctuation of the gaming law. Although all nine Justices agreed there is a dispute over the placement of parentheses in a particular portion of IGRA, the majority said there were issues that worked against the tribes.

The first was that any taxation exemption must be stated "explicitly" by Congress. But IGRA -- being confusing --didn't qualify, said the Court.

The second involved the principle that treaties and laws should be read in favor of tribes. But the Justices said the rule is not a mandatory one and can be offset by another allowing them to ignore certain words in laws as "surplusage."

A third issue regarding legislative history, however, conflicted the often divided Court. Two Justices believed it would favor the tribes while two others voiced no opinion on Congressional testimony and letters the tribes submitted to bolster their case.

The dispute might have rendered a split 5-4 decision or even resulted in a win for the tribes. But since Justices Thomas Scalia and Clarence Thomas agreed with the majority on the first two points and didn't offer a written explanation on the third, there is little to suggest they could have been swayed.

On the other hand, Justice Sandra Day O'Connor authored a dissent in which she said the majority was just guessing at its interpretation of the questionable parentheses and grammar. Echoing a blistering critique she made of her colleagues on another Indian law case, she also argued the other Justices were departing from their precedent.

"This is not a step to be undertaken lightly," wrote O'Connor in a dissent joined by Justice David Souter.

Choctaw Chief Greg Pyle was at a funeral and traveling out of state yesterday, making him unavailable for comment, his office said. Chickasaw Gov. Bill Anoatubby did not return a response by press time but was expected to comment, according to a spokesperson.

The Department of Justice said the attorney who worked on the case was no longer with the department.

Get the Decision Chickasaw Nation v. United States:
Syllabus | Opinion | Dissent

Related Documents:
Argument Transcript [PDF] | Tribal Brief [TXT] | Tribal Brief [PDF] | U.S. Brief [TXT] | U.S. Brief [PDF]

Related Decisions:
Chickasaw Nation v. US (10th Circuit No. 99-7042. April 2000)
Choctaw Nation v. US (10th Circuit No. 99-7042. April 2000)

Get a GAO report on Indian gaming taxation issues:
Tax Policy: A Profile of the Indian Gaming Industry (GAO GGD-97-91. April 1997)

Relevant Links:
The Choctaw Nation of Oklahoma - http://www.choctawnation.com
The Chickasaw Nation -http://www.chickasaw.net
The US Supreme Court - http://www.supremecourtus.gov

Related Stories:
Supreme Court Roundup: The 2000-2001 Term (6/19)
Supreme Court: The 2000-2001 Term (3/6)
Supreme Court accepts taxation case (01/23)
OK tribes told to pay pull-tab taxes (04/06)