Chickasaw Nation v. United States
The Court ruled that a tax-code cross-reference tucked into the Indian Gaming Regulatory Act does not exempt tribes from federal excise and occupational taxes on gambling, even though states are exempt from those same taxes.
The Court concluded that the reference to 'chapter 35' in the statute was simply a leftover drafting mistake rather than a deliberate grant of a tax break, meaning tribes must keep paying the gambling-related taxes states don't.
“The presence of a bad example in a statute does not warrant rewriting the remainder of the statute’s language.”
Explaining why an erroneous cross-reference doesn't change the statute's overall meaning.
How it got here: The Tenth Circuit ruled against the tribes while the Federal Circuit reached the opposite conclusion in a similar case; the Supreme Court took the case to resolve that split.
The Case in Depth
What happened
The Choctaw and Chickasaw Nations operate gambling operations and argued that a provision of the Indian Gaming Regulatory Act exempted them from federal excise and occupational taxes on wagering, the same taxes states don't have to pay. The dispute centered on a subsection referencing tax-code "chapter 35," which imposes those gambling taxes, inside a list of provisions otherwise about reporting and withholding requirements.
The question before the Court
Does a federal gaming law's cross-reference to a tax code chapter give Native American tribes the same exemption from gambling taxes that states enjoy?
Why it matters
Tribes operating gaming facilities will continue paying federal wagering excise taxes and occupational taxes that state-run gambling operations don't have to pay, affecting the revenue tribal governments can keep from gaming. The ruling also signals that ambiguous cross-references in statutes won't automatically be read to create tax exemptions for tribes.
What changes now
This is a final merits decision resolving a circuit split between the Tenth Circuit and the Federal Circuit. The judgment against the tribes is affirmed, meaning the Choctaw and Chickasaw Nations and similarly situated tribes must continue paying the federal gambling excise and occupational taxes at issue. No further proceedings are directed; the ruling settles the statutory interpretation question nationally.
What this does not decide
The Court did not decide whether tribes could be exempted from these taxes through some other statutory provision or future legislation, and it did not address the broader validity or wisdom of applying the Indian-favorable interpretive canon in other tax contexts; it decided only that this particular cross-reference is a drafting error.
Concurrences and dissents
Dissent — Justice O'Connor
“Faced with the . unhappy choice of determining which part of a flawed statutory section is in error, I would thus rely upon the long-established Indian canon of construction and adopt the reading most favorable to the Nations.”O'Connor's conclusion that the pro-Indian canon should break the tie in favor of the tribes.
Justice O'Connor argued the statute is genuinely ambiguous because either the chapter 35 reference or the surrounding 'reporting and withholding' language, not necessarily the cross-reference, could be the drafting error. She would apply the pro-Indian interpretive canon as a tiebreaker, which she says has historically taken priority over the canon disfavoring implied tax exemptions, and rule in the tribes' favor.
Concurrence in part — Justice Scalia
Justice Scalia, joined by Justice Thomas, joined the Court's opinion except for Part II-B, which relied on the bill's legislative history (committee deletions, hearing testimony, and a legislator's later letter) to support the majority's reading. He and Thomas evidently did not think it necessary or appropriate to rely on that legislative-history analysis to reach the result.
How the Court got there
The legal reasoning, step by step
- The Court read the statute's operative language, which says covered tax provisions are those 'concerning the reporting and withholding of taxes' on gambling winnings, and asked whether the parenthetical's mention of chapter 35 could override that limit.
- Applying ordinary rules of grammar, the Court held that a parenthetical introduced by the word 'including' is meant only to illustrate the category named outside the parenthetical, not to add a separate, unrelated category of its own.
- Because chapter 35 concerns imposing taxes rather than reporting or withholding them, the Court concluded the reference did not fit the illustrative list and must be a drafting error rather than a deliberate expansion of the exemption.
- The Court looked at the bill's drafting history, noting that an earlier version referred to both 'taxation' and 'reporting and withholding,' and that the committee deleted 'taxation' but inadvertently left the chapter 35 cross-reference in place, reinforcing that its presence was a holdover mistake.
- The Court weighed two competing interpretive canons — one favoring giving every statutory word effect and the tribal-benefit canon, against the canon requiring tax exemptions to be clearly and unambiguously expressed — and concluded the clear-exemption canon controlled because the statute's language was not genuinely ambiguous.
- Having found no genuine ambiguity and no clear congressional intent to grant a tax exemption, the Court held that the statute does not exempt tribes from chapter 35 taxes.
Doctrinal impact
Cases affected by this decision
Distinguishes Mescalero Apache Tribe v. Jones (411 U.S. 145)
The majority treats this case as an instance where clear statutory language defeated a tribal tax exemption claim.