Chickasaw Nation v. United States

Background

Two Native American Tribes, the Choctaw and Chickasaw Nations, challenged whether a subsection of the Indian Gaming Regulatory Act protects them from certain federal gambling taxes. The law’s subsection says it makes certain Internal Revenue Code provisions “apply … in the same manner as … State” operations, and it lists several tax-reporting rules and, in a parenthetical, “chapter 35,” which actually imposes wagering excise and occupational taxes from which some State operations are exempt. Lower courts disagreed about whether that parenthetical exempted tribes from paying those chapter 35 taxes.

Reasoning

The majority read the statute to cover only provisions about reporting and withholding. It explained that chapter 35 does not concern reporting or withholding and that the parenthetical listing was most reasonably a drafting mistake or an illustrative but inapt example. The Court relied on the statute’s text and legislative history showing an earlier draft mentioned “taxation” but that word was deleted in committee. The majority also said tax exemptions must be clearly stated and that interpretive canons favoring tribes do not override the clear statutory reading.

Real world impact

As a practical matter, tribes do not receive the same automatic exemption from federal gambling excise and occupational taxes that some State gambling receives under chapter 35. Tribal gaming operations therefore remain subject to those federal taxes unless Congress changes the law. The ruling resolves a federal appeals court split and affects tribal gaming revenue planning.

Dissents or concurrances

Justice O’Connor, joined by Justice Souter, dissented, arguing the statute is genuinely ambiguous and that the long-standing interpretive rule favoring Indians should resolve doubts in the tribes’ favor.