Flandreau Santee Sioux Tribe v. United States

Appeal from the United States District Court for the District of South Dakota Submitted: October 20, 1999 In 1988, the Flandreau Santee Sioux Tribe bought gasoline from a wholesaler and sold it to the public at a convenience store. When the Tribe bought the gasoline, the price included a federal excise tax. The Tribe asked the IRS for a refund of $12,300, the total amount of excise taxes it paid that year. The IRS initially gave the Tribe a refund, but then, after an audit, determined that the Tribe was not entitled to the refund after all. Not only did the IRS ask for the $12,300 back, but it also sought $24,600 in penalties imposed upon the Tribe for filing an excessive refund claim. The Tribe paid, but then filed the present suit challenging the penalties. The Tribe does not claim that it was entitled to a refund of the excise taxes; it only disputes the penalties. The District Court, on cross motions for summary judgment, held that the IRS could not collect the $24,600 in penalties because the relevant statute, 26 U.S.C. § 6675(a), does not apply to Native American tribes. The IRS appeals, and we reverse.