Billy Cypress, Miccosukee Tribe Casino Probed by IRS

The Internal Revenue Service is investigating Billy Cypress, the former leader of the Miccosukee Tribe for income tax violation. Cypress, who oversaw the construction of the tribe's casino in Southwest Miami Dade, had a high roller's reputation that included frequent trips to Las Vegas, says the Miami Herald. Guess the glitzy Valhalla in his own backyard wasn't enough.

But what makes the probe so consequential is that it might allow the government to take a look at the tribe's books for the first time.

In a story last month, we wrote about the seedy business of non-Indian casino owners. They make millions with their slots and dog and horse tracks. The Seminoles and the Miccosukees, on the other hand, make billions with their casinos.

As semi-sovereign nations, the tribes don't have to pay income taxes, and they're the big breadwinners of Florida's gambling market.

However, while the tribe is exempt from reporting its revenue, members who receive income from the tribe's businesses are in fact required to file tax returns.That's where Cypress failed.

He was the tribe's chairman for nearly 20 years until he lost his title in January. He might have bilked the government during his whole tenure, but it's not clear if that's the case because the IRS is only seeking financial records from 2003 through 2005.

Bob Jarvis, a gaming law professor at Nova Southeastern University, says the probe is similar to the agency's investigation of Max Osceola Jr. and the Seminole Tribe. In 2007, Osceola, one of the wealthiest and most powerful Indian politicians, owed the IRS almost $1 million in unpaid income taxes dating back a decade. And he owed the tribe $227,000 for cigarettes sold at his tax-free smoke shops.

The Miccosukees have never been investigated before, Jarvis says. What changed now is that they've become successful. "This is not terribly surprising," he says. "For as the amount of money generated by a tribe's gambling operations increases the incentive to under-report also increases." The tribe's lawyers are arguing that as a sovereign nation they don't have to turn over any financial records to the government. Jarvis says that this is unlikely to stand in court because tribal members are still subject to audits.

But, in the end, the probe may not yield much information on the tribe's business as public records advocates would like. "Due to the confidential nature of tax investigations, we generally learn little about tribes when the IRS goes after them or their members," Jarvis says. "They almost always result in some sort of out-of-court settlement. I would expect the same to be true regarding the Cypress case."

[erik.maza@miaminewtimes.com | on twitter]

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