Little Six Inc. v. U.S.
| Citation | 210 F.3d 1361 |
| Parties | (Fed. Cir. 2000) LITTLE SIX, INC. and SHAKOPEE MDEWAKANTON SIOUX (DAKOTA) COMMUNITY, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee. 99-5083 DECIDED: |
| Decision Date | 24 April 2000 |
| Court | U.S. Court of Appeals — Federal Circuit |
Mary J. Streitz, Dorsey & Whitney, LLP, of Minneapolis, Minnesota, argued for plaintiffs-appellants. Of counsel on the brief was Kurt V. BlueDog, BlueDog, Olson & Small P.L.L.P., of Minneapolis, Minnesota.
Charles F. Marshall, Attorney, Tax Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Loretta C. Argrett, Assistant Attorney General; and David English Carmack, Attorney.
James M. Schoessler, Jacobson, Buffalo, Schoessler & Magnuson, Ltd., of St. Paul, Minnesota, for amici curiae, Lower Sioux Indian Community in Minnesota, et al.
Before MAYER, Chief Judge, LOURIE and SCHALL, Circuit Judges.
The Shakopee Mdewakanton Sioux (Dakota) Community and its wholly-owned corporation, Little Six, Inc., (collectively "Little Six") appeal from the decision of the United States Court of Federal Claims denying their claim for a refund of federal excise taxes and related occupational taxes paid on gaming operations conducted on their reservation between 1986 and 1992. See Little Six, Inc. v. United States, No. 96-468 T (Fed. Cl. Mar. 2, 1999). Because we conclude that Indian pull-tab games are exempt from federal wagering taxes under Chapter 35 of the Internal Revenue Code, we reverse.
Little Six filed suit for a refund of federal excise taxes paid on wagers placed on "pull-tab" games operated on its reservation in Minnesota.1 See Little Six, 43 Fed. Cl. At 81. After conducting an audit, the Internal Revenue Service (IRS) assessed taxes against Little Six according to I.R.C. §§ 4401 and 4411. See id. Under section 4401(a)(1), a federal excise tax is imposed on "state authorized" wagers. Any person who is liable for the tax imposed by section 4401 must also pay a related occupational tax under section 4411. The taxes assessed for the period in question totaled $174,289, which Little Six paid under protest. See id. After the IRS denied its administrative claim, Little Six filed this suit in the Court of Federal Claims. See id.
The Court of Federal Claims granted the government's motion for summary judgment, and denied Little Six's cross-motion. See id. at 84. The court held that Indian gaming was subject to taxation under sections 4401 and 4411, rejecting Little Six's argument that those taxes did not apply to wagers on pull-tab games because they were not "state authorized." See id. at 82, 84. The court further held that Little Six had not demonstrated any valid exemption to such taxes, rejecting Little Six's alternative argument that 25 U.S.C. § 2719(d)(1) exempts Indian tribes from the taxes at issue. See id. at 82-84. Little Six now appeals to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) (1994).
We review the Court of Federal Claims' grant of a motion for summary judgment "completely and independently, construing the facts in the light most favorable to the non-moving party." See American Airlines, Inc. v. United States,204 F.3d 1103, 1108(Fed. Cir. Feb. 24, 2000) (quoting Good v. United States, 189 F.3d 1355, 1360 (Fed. Cir. 1999)). In reviewing a denial of a motion for summary judgment, we give considerable deference to the trial court, and "will not disturb the trial court's denial of summary judgment unless we find that the court has indeed abused its discretion." Suntiger, Inc. v. BluBlocker Corp., 189 F.3d 1327, 1333 (Fed. Cir. 1999). Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See id. When both parties move for summary judgment, the court must evaluate each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration. See McKay v. United States, 199 F.3d 1376, 1380 (Fed. Cir. 1999). If there are no material facts in dispute precluding summary judgment, "our task is to determine whether the judgment granted is correct as a matter of law." Marathon Oil Co. v. United States, 177 F.3d 1331, 1337 (Fed. Cir. 1999).
We first address the parties' arguments concerning whether wagers placed on Indian pull-tab games are subject to taxation under I.R.C. §§ 4401 and 4411. Little Six argues that these tax provisions only apply to wagers authorized under state law and therefore do not apply to pull-tab games, which are authorized under federal law. The government responds that these tax provisions do apply to wagers on pull-tab games because all legal wagers, including those authorized under federal law, are "state authorized."
We agree with the government that wagers placed on Indian pull-tab games are subject to taxation under sections 4401 and 4411, because they are "state authorized." We reach this conclusion based upon the plain language of the relevant statutes. See Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980) ( ). Section 4401(a) provides as follows:
(1) State authorized wagers.-There shall be imposed on any wager authorized under the law of the State in which accepted an excise tax equal to 0.25 percent of the amount of such wager.
(2) Unauthorized wagers.--There shall be imposed on any wager not described in paragraph (1) an excise tax equal to 2 percent of the amount of such wager.
I.R.C. § 4401(a) (emphasis added). Section 4411 imposes a related occupational tax and provides in relevant part that:
(a) In general.--There shall be imposed a special tax of $500 per year to be paid by each person who is liable for the tax imposed under section 4401 . . .
(b) Authorized persons.--Subsection (a) shall be applied by substituting "$50" for "$500" in the case of--
(1) any person whose liability for tax under section 4401 is determined only under paragraph (1) of section 4401(a), and
(2) any person who is engaged in receiving wagers only for or on behalf of persons described in paragraph (1).
I.R.C. § 4411. Thus, according to the clear language of these two statutes, all wagers are either "state authorized" or "unauthorized," and any person who is liable for the excise tax under section 4401 must also pay the related occupational tax under section 4411.
The statutory basis for the regulation of Indian gaming is set forth in the Indian Gaming Regulation Act (IGRA), Pub. L. No. 100-497, 102 Stat. 2467 (1988) (). Under the IGRA, tribes may operate "class II gaming" activities, which includes pull-tabs, provided that "such Indian gaming is located within a State that permits such gaming for any purpose by any person, organization or entity." 25 U.S.C. § 2710(b)(1)(A); see also 25 U.S.C. § 2703(7)(A)(i) (). Thus, in order for pull-tab games to be authorized under federal law, class II gaming must be permitted by the state in which such gaming is located.
In the present case, the parties do not dispute the fact that Minnesota permits non-profit organizations to conduct pull-tab games. Thus, "such Indian gaming is located within a state that permits such gaming" by an organization. 25 U.S.C. § 2710(b)(1)(A). Accordingly, any wagers placed on Indian pull-tab games cannot be "unauthorized," because they are authorized under the IGRA. See id.; 25 U.S.C. § 2703(7)(A)(i). We therefore conclude that pull-tab games are authorized under both federal law and the law of the state in which they are conducted, and that wagers placed on those games are "state authorized" for the purpose of assessing taxes under sections 4401 and 4411 of the Internal Revenue Code.
Having determined that wagers placed on Indian pull-tab games are subject to taxation under sections 4401 and 4411, we next turn to the parties' arguments concerning whether Little Six is nevertheless exempt from excise and occupational taxes. Little Six argues that, under 25 U.S.C. § 2719(d)(1), Indian gaming is exempt from wagering taxes in the same manner as state gaming. Little Six contends that Indian pull-tab games should be exempt from the taxes imposed by sections 4401 and 4411, because state-conducted lotteries are exempt from them under I.R.C. § 4402(3) (). Little Six further contends that, to the extent that section 2719(d)(1) may be unclear, the Indian canon of construction requires any ambiguity in the statute to be resolved in favor of the Indians.
The government responds that there is no provision in the IGRA that expressly exempts Indian pull-tab games from the taxes at issue. The government argues that section 2719(d)(1) only applies to the reporting and withholding of taxes from the winnings of players, and does not affect the tax liability of the entities that operate these games. The government finally argues that the Indian canon of construction does not apply in this case because: (1) Congress did not intend to create an excise tax exemption; (2) the statute cannot be reasonably construed to confer a tax exemption; and (3) tax exemptions must be clearly expressed, not implied.
We agree with Little Six that, although wagers placed on Indian pull-tab games are subject to taxation under I.R.C. §§ 4401 and 4411, Indian tribes are nevertheless exempt from such taxes under 25 U.S.C. § 2719(d)(1). Again, we begin with the language of the relevant statutes. Section 2719(d)(1...
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