A three-judge panel of the 11th U.S. Circuit Court of Appeals ruled that the IRS can subpoena banks for the records, despite the Miccosukee tribe’s claims that it is protected by sovereign immunity.
The tribe is based in the Everglades west of Miami. The IRS is investigating whether federal tax withholding and reporting requirements were met for gambling profits distributed to 600 members of the tribe from 2006 to 2009.
The tribe itself does not have to pay taxes under federal law, but it does have to deduct and withhold income taxes from gambling revenues that are paid to tribal members.
The tribe failed to comply with its tax obligations from 2000 to 2005, according to the judges’ ruling, which led the IRS to also investigate finances from 2006 to 2009. The tax agency subpoenaed the documents from four different banks because the tribe had refused to hand over the records, the judges said.
Tribal officials also had argued that the records would reveal confidential financial information and force them to change their banking practices to keep money on the reservation. The judges rejected that argument, noting that the Miccosukees gave the information to the banks. That made the records property of the banks, not the tribe, the judges said.
The decision upholds a lower court ruling.
An attorney for the Miccosukee tribe did not immediately return a phone call from The Associated Press.
The tribe has previously acknowledged that at least 100 Miccosukee members owe the IRS more than $25 million in back taxes, penalties and interest. The broader investigation likely involves much more money.
The Miccosukees sued their former chairman, Billy Cypress, arguing he stole $26 million in gambling profits for his lavish lifestyle. That lawsuit argues that two former U.S. attorneys conspired with Cypress to hide the theft. All three men deny the allegations.