IRS Hounds Conservatives, Lets Rich Indian Tribe Evade Taxes

While the Internal Revenue Service (IRS) wastes resources going after conservative groups that have committed no wrongdoing, a wealthy Indian tribe in south Florida cheats the government out of hundreds of millions of dollars in taxes from its lucrative gambling businesses.

Perhaps this is because it’s not politically correct to go after minorities like the Miccosukee Indians, but it is quite ok to pursue groups linked to conservative movements like the Tea Party and other social causes viewed negatively by the left. What other explanation could there be for the huge discrepancy in the way the tax agency treats conservatives and liberals, who may have evaded taxes for years.

The scandal involving the witch hunt of conservatives broke earlier this month after an investigation by the Treasury Inspector General revealed what many conservative groups have known and alleged for years; that the IRS is used by the administration as a political tool to go after its enemies. Though illegal this appears to be rampant at the highest levels of the agency, as the inspector general’s scorching report indicates.

The IRS singles out groups with conservative-sounding phrases such as patriot and Tea Party in their titles when applying for tax-exempt status, the IG says. The probe determined that for more than 18 months the IRS “used inappropriate criteria” that singled out conservative organizations applying for tax-exempt status. This has ignited outrage among lawmakers—both Democrat and Republican—as well as President Obama who called it “intolerable and inexcusable.”

In the meantime, a south Florida Indian tribe has for years failed to pay taxes from distribution of gambling profits to tribal members, according to court records cited in a local news report. The IRS finally slapped the Miccosukee Indians with a bill of $170 million and hundreds of tribe members with separate bills totaling $58 million, the story says. The tribe’s tax evasion dates back more than a dozen years.

This is appalling considering the tribe is very rich thanks to its highly profitable casino enterprise, which nets a chunk of change each year. The wealth is spread among its 600 members, which get a sweet annual payout of up to $160,000 each. Miccosukee officials argue that they’re not obligated to withhold taxes on gaming distributions and that individual members don’t have to pay taxes on income derived from the tribe’s slot machines and poker.

Miccosukee’s Chairman says members won’t be intimidated or coerced into surrendering “tribal sovereignty or principles for which so many of our ancestors have paid a very high price in blood, lives, and tears.’’ Federal law says that the tribe’s status as a sovereign nation means the entity itself is not subject to taxes, however, once casino profits are distributed to members, Uncle Sam must get a cut. In fact, the tribe must withhold taxes on the income and turn the records over to the IRS, according to the 1988 Indian Gambling Regulatory Act.

A prominent defense attorney and accountant quoted in the story finds it “perplexing” that the tribe refuses to pay taxes. Clearly, the feds have allowed it. The Miccosukees are renowned for keeping their lucrative gambling revenues secret and refusing to reveal how money is distributed. In fact, the tribe is the only in the United States that fails to follow federal law when it hands out gambling profits.

So, why didn’t the IRS go after this wealthy tax-evading Indian tribe sooner? The beleaguered tax agency was probably too busy hounding conservatives.