Judge Backs Seminole Tribe in State Tax Dispute

                                                                

By JIM SAUNDERS
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, September 11, 2014..........A federal judge has sided with the Seminole Tribe of Florida in a dispute with the state Department of Revenue about utility and rental taxes on tribal property, including at casinos in Hollywood and Tampa.

U.S. District Judge Robert Scola, Jr., issued a 15-page ruling last week that said federal law prevents the state from collecting a utility tax on electricity that helps power tribal reservations. Also, he found that a state rental tax could not be imposed on food-court operations at the Seminole Hard Rock casinos.

Scola rejected the state's arguments that the electricity tax is imposed on utility companies, rather than on their customers. He wrote that the tax is essentially a pass-through to customers and that the "legal incidence of the utility tax falls on the Seminole Tribe."

"The utility-tax scheme unavoidably requires utility companies to include the tax in their bill to consumers (whether separately stated or not),'' he wrote. "The scheme requires utility companies to collect the tax from consumers and then to deliver the tax to the Department of Revenue."

Along with arguing that the tax is imposed on utility companies, the state noted in a December court document that utility taxes are used to help pay for school construction and maintenance projects. It said the tribe operates a charter school in Glades County that has received money from the tax and that some members of the tribe attend other schools that benefit.

"The state of Florida provides significant services to plaintiff and its members by using the utility service tax to build and maintain schools that are open to all children, including plaintiff's members who choose to attend these schools,'' the state argued in the document.

But the Seminole Tribe in court documents cited federal laws aimed at exempting tribal lands from state taxation. It also said, for example, that the utility tax is not narrowly tailored but is a "tax of general application whose revenues are allocated to the state's general fund for use in providing services to the state's residents in general."

Scola also agreed with the tribe on the rental tax. The issue stemmed from leases the tribe entered into with two companies to operate food courts at the casinos and the state's attempt to collect taxes on rental payments, according to court documents.

While the tribe argued that federal laws barred the tax, the state contended in the December document that "the rental tax is not a tax on tribal land; rather it is a privilege tax imposed on non-Indian tenants for the use of commercial property, and is not prohibited."

Scola, however, cited federal laws and wrote, in part, that current "federal regulations expressly prohibit the rental tax, as applied to tribal leases."