Tribes Worried Irs Will Try To Collect Tax On Casino Profits

The businesses owned by American Indian tribes used to draw little interest from tax collectors. But tribes are worried the Internal Revenue Service is about to hit their bustling casinos for income taxes.

The matter will be a major issue as leaders of more than 100 tribes gather in Washington today for a daylong private meeting with senior Clinton administration officials.

“In the past the tribal economies have been so limited that we really haven’t gained the attention of the IRS,” said Ron Allen, chairman of the Jamestown S’Klallam tribe in Washington state and an organizer of today’s conference.

“Now that the tribes have started to get into gaming … we have their attention.”

The meeting is a follow-up to a historic gathering at the White House a year ago of President Clinton and about 250 tribes. It was believed to have been the first time all the federally recognized tribes were invited to the White House.

Interior Secretary Bruce Babbitt and Attorney General Janet Reno are expected at the meeting along with senior officials from the Treasury Department and other agencies that deal with Indian affairs.

Indian leaders say the Clinton administration has made some progress in the past year. They point to the naming of officials in several agencies, including the Environmental Protection Agency and the Justice Department, to specialize in Indian matters.

But numerous issues remain resolved, and taxation has emerged as an especially thorny one.

“The results of last year’s meeting have not shown any results on the streets of reservations,” John Sunchild, chairman of Montana’s Chippewa Cree tribe, said Thursday.

“They’ve already demonstrated a concern for the needs of native American people. It ended there,” said Darrell Drapeau, chairman of the Yankton Sioux tribe in South Dakota.

An IRS spokesman would not comment on the tax issue.

The IRS has never taxed income from businesses that are incorporated under tribal law, which include art shops and grocery stores as well as gaming operations, said Virginia Boylan, a Washington lawyer who specializes in Indian law.

But the IRS is rethinking its policy because of the advent of lucrative gaming operations on many reservations, she said.

Tribes could still avoid taxes by taking the gambling operations under their tribal governments, but that raises legal issues that could make it more difficult for them to find outside firms willing to manage the casinos, she said.