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On January 22, 2001, the U.S.
Supreme Court granted certiorari in Chickasaw Nation v. United
States, No. 99-7042 (10th Cir. April 5, 2000). The Federal and
Tenth Circuits are split as to whether Indian gaming is exempt
from excise tax. The Tenth
Circuit Court of Appeals held that the Chickasaw Nation are not
exempt from gambling excise and occupational taxes imposed under
IRC Sections 4401 and 4411. The Nation argued that pull-tab games
are not a taxable lottery under IRC Section 4421. The court
rejected this argument. The
Nation also argued that it is not a person subject to federal
wagering taxes under Section 7701(a)(1). The court rejected this
argument. The Nation argued
that its 1855 treaty with the U.S. government provided that nation
with an exemption from federal taxes through the treaty right of
self-government. The court rejected this argument. In
Little Six, Inc., et al. v. United States, No. 99-5083 (Fed. Cir.
April 24, 2000), the Court held that Indian pull-tab games are
exempt from federal wagering taxes. This decision reversed the
holding of the Court of Federal Claims. The Shakopee Mdewakanton
Sioux (Dakota) community operating gaming through Little Six, Inc.
a corporation organized under tribal law. Little Six argued that
the tribe is exempt from the taxes under the Indian Gaming
Regulation Act. The Court of Federal Claims rejected this
argument. While the Court of
Appeals held that wagers placed on pull-tab games are subject to
taxation under IRC Section 4401 and 4411 unless an exemption
applies. The court found an exemption through the Indian Gaming
Regulation Act as argued by the tribe.
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