No. 00-507 

In the Supreme Court of the United States 

THE CHICKASAW NATION AND 

THE CHOCTAW NATION OF OKLAHOMA, PETITIONERS 

v. 

UNITED STATES OF AMERICA 

ON WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE TENTH CIRCUIT 

BRIEF FOR THE UNITED STATES 

THEODORE B. OLSON 

Solicitor General 

Counsel of Record 

CLAIRE FALLON 

Acting Assistant Attorney 

General 

LAWRENCE G. WALLACE 

Deputy Solicitor General 

EDWARD C. DUMONT 

Assistant to the Solicitor 

General 

GARY R. ALLEN 
DAVID ENGLISH CARMACK 

Attorneys 

Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

QUESTION PRESENTED 

Whether Section 20(d) of the Indian Gaming Regula- 
tory Act, 25 U.S.C. 2719(d), exempts Indian Tribes 
from the wagering excise and occupational taxes im- 
posed by Sections 4401 and 4411 of the Internal Reve- 
nue Code. 

(I) 

TABLE OF CONTENTS 

Page 

Opinions below ............................................................................... 
1 

Jurisdiction ...................................................................................... 2 

Statutory provisions involved ..................................................... 
2 

Statement ........................................................................................ 2 

Summary of argument .................................................................. 
6 

Argument: 

Section 20(d) of the Indian Gaming Regulatory Act 

cannot properly be construed to exempt tribal 

gaming operations from the federal wagering excise 

taxes ......................................................................................... 9 

A. The language of the IGRA does not exempt Tribes 

from the wagering excise taxes ................................... 
12 

B. The legislative history confirms that the IGRA 

does not grant Tribes an excise tax exemption ........ 

16 

C. The policy of encouraging tribal economic devel- 
opment does not permit courts to construe the 

IGRA to confer a tax exemption that Congress 

did not grant .................................................................... 

19 

D. The canon that ambiguities should be resolved in 

favor of Indian interests does not call for a 

different result in this case ........................................... 

22 

Conclusion ....................................................................................... 29 

Appendix ......................................................................................... 1a 

TABLE OF AUTHORITIES 

Cases: 

Armstrong v. United States, 759 F.2d 1378 (9th Cir. 

1985) ......................................................................................... 18 

Cabell Huntington Hosp., Inc. v. Shalala, 101 

F.3d 984 (4th Cir. 1996) ........................................................ 

16 

Carpenter v. Shaw, 280 U.S. 363 (1930) ............................. 25 

(III) 

IV 

Cases—Continued: Page 

Chevron U.S.A. Inc. v. Natural Resources Defense 

Council, Inc., 467 U.S. 837 (1984) ...................................... 

27 

Choate v. Trapp, 224 U.S. 665 (1912) ................................. 

25 

Choctaw Nation v. United States, 119 U.S. 1 

(1886) ........................................................................................ 22 

Choteau v. Burnet, 283 U.S. 691 (1931) .............. 

24, 25-26, 27 

Choteau v. Commissioner, 38 F.2d 976 (10th Cir.), 

cert. denied, 281 U.S. 759 (1930) ......................................... 

26 

Circuit City Stores, Inc. v. Adams, 121 S. Ct. 1302 

(2001) ........................................................................................ 24 

Citizens’ Bank v. Parker, 192 U.S. 73 (1904) ................... 

27 

Connecticut Nat’l Bank v. Germain, 503 U.S. 249 

(1992) ........................................................................................ 

27, 28 

Cotton Petroleum Corp. v. New Mexico, 490 U.S. 

163 (1989) ................................................................................. 

28 

County of Oneida, New York v. Oneida Indian 

Nation, 470 U.S. 226 (1985) ........................................ 

22, 25, 26 

County of Yakima v. Confederated Tribes & 

Bands of the Yakima Indian Nation, 502 U.S. 251 

(1992) ........................................................................................ 22-23 

DeCoteau v. District County Court, 420 U.S. 425 

(1975) ........................................................................................ 28 

Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186 

(1974) ........................................................................................ 18 

Hagen v. Utah, 510 U.S. 399 (1994) .................................... 

27, 28 

INS v. Cardoza-Fonseca, 480 U.S. 421 (1987) .................. 

18 

Jones v. Meehan, 175 U.S. 1 (1899) .................................... 

22 

Lindh v. Murphy, 521 U.S. 320 (1997) ............................... 

27 

Little Six, Inc. v. United States, 210 F.3d 1361 

(Fed. Cir. 2000), petition for cert. pending, 

No. 00-1115 ............................................ 

10, 12, 14, 16, 18, 20, 22 

McClanahan v. Arizona State Tax Comm’n, 411 

U.S. 164 (1973) ........................................................................ 

26 

Mescalero Apache Tribe v. Jones, 411 U.S. 145 

(1973) ........................................................................................ 

18, 23 

Montana v. Blackfeet Tribe, 471 U.S. 759 (1985) ............. 25, 26 

V 

Cases—Continued: Page 

Morton v. Mancari, 417 U.S. 535 (1974) ............................ 

26 

Oklahoma Tax Comm’n v. Chickasaw Nation, 

515 U.S. 450 (1995) ................................................................ 

25 

Oklahoma Tax Comm’n v. United States, 319 U.S. 

598 (1943) ................................................................................. 

23 

Oregon Dep’t of Fish & Wildlife v. Klamath Indian 

Tribe, 473 U.S. 753 (1985) .................................................... 

28 

Pennsylvania Dep’t of Pub. Welfare v. Davenport, 

495 U.S. 552 (1990) ................................................................ 

15 

Ratzlaf v. United States, 510 U.S. 135 (1994) ................... 

14, 28 

Reno v. Koray, 515 U.S. 50 (1995) ...................................... 

27 

Rice v. Olson, 324 U.S. 786 (1945) ...................................... 

26 

Rice v. Rehner, 463 U.S. 713 (1983) .................................... 

28 

Shakopee Mdewakanton Sioux Cmty. v. Hope, 

16 F.3d 261 (8th Cir. 1994) ................................................... 

20 

Solem v. Bartlett, 465 U.S. 463 (1984) ................................ 

26 

South Carolina v. Catawba Indian Tribe, 476 U.S. 

498 (1986) ................................................................................. 

28 

Squire v. Capoeman, 351 U.S. 1 (1956) ...................... 

23, 24, 27 

Superintendent of Five Civilized Tribes v. Commis- 
sioner, 295 U.S. 418 (1935) .............................................. 

24, 27 

The Cherokee Tobacco, 78 U.S. (11 Wall.) 616 

(1870) ........................................................................................ 

24, 27 

United States v. Anderson, 625 F.2d 910 (9th Cir. 

1980), cert. denied, 450 U.S. 920 (1981) ............................. 

20 

United States v. Kagama, 118 U.S. 375 (1886) ................. 

26 

United States v. Monjaras-Castaneda, 190 F.3d 326 

(5th Cir. 1999), cert. denied, 528 U.S. 1194 (2000) ........... 

16 

United States v. Santa Fe Pac. R.R., 314 U.S. 

339 (1941) ................................................................................. 

26 

United States v. Wells Fargo Bank, 485 U.S. 351 

(1988) ........................................................................................ 24 

VI 

Cases—Continued: Page 

United States Trust Co. of New York v. Helvering, 

307 U.S. 57 (1939) ................................................................... 

26 

Washington v. Washington State Commercial 

Passenger Fishing Vessel Ass’n, 443 U.S. 658 

(1979) ........................................................................................ 26 

White Mountain Apache Tribe v. Bracker, 448 U.S. 

136 (1980) ................................................................................. 

26 

Whitman v. American Trucking Ass’ns, 121 S. Ct. 

903 (2001) ................................................................................. 

27 

Constitution and statutes: 

U.S. Const: 

Art. I, § 8, Cl. 3 ....................................................................... 

26 

Art. II, § 2, Cl. 2 ..................................................................... 

26 

Amend. V ................................................................................ 

25 

Energy Policy Act of 1992, Pub. L. No. 102-486, 

§ 1942(a), 106 Stat. 3036 ....................................................... 

13 

Indian Gaming Regulatory Act, Pub. L. No. 100-497, 

102 Stat. 2467 (25 U.S.C. 2701 et seq.)................................. 

2 

§ 3(1), 25 U.S.C. 2702(1) ................................................... 

11, 20 

§ 3(2)-(3), 25 U.S.C. 2702(2)-(3) ....................................... 

20 

§ 20(d), 25 U.S.C. 2719(d) ............................................. 

passim 

§ 20(d)(1), 25 U.S.C. 2719(d)(1) ....................................... 

12, 17 

Indian Reorganization Act, 25 U.S.C. 461 et seq. ................ 

18 

Indian Tribal Governmental Tax Status Act of 1982, 

Pub. L. No. 97-473, § 202(a), 96 Stat. 2608 ........................ 

4, 21 

Internal Revenue Code (26 U.S.C.): 

Ch. 1: 

§ 871(a)(1) ........................................................................... 

12 

§ 871(j) ................................................................................. 

12 

Ch. 3: 

§ 1441 ................................................................................... 

13 

§ 1441(a) .............................................................................. 

12 

§ 1441(c)(11) ....................................................................... 12 

VII 

Statutes—Continued: Page 

Ch. 24: 

§ 3402(q) .............................................................................. 

12, 13 

§ 3402(q)(1) ......................................................................... 

13 

§ 3402(q)(3) (1988) ............................................................. 

13 

Chs. 31-33 ................................................................................ 

11 

Ch. 35 ................................................................................... 

passim 

§ 4401 .................................................................. 

2, 9, 10, 12, 28 

§ 4401(a) .............................................................................. 

2, 10 

§ 4401(c) .............................................................................. 

10 

§ 4402 ........................................................................ 

2, 11, 12, 21 

§ 4402(3) ....................................................... 

2, 4, 10, 11, 15, 21 

§ 4403 ................................................................................... 

15 

§ 4411 ............................................................................. 

2, 10, 28 

§ 4411(a) .............................................................................. 

10 

§ 4412 ................................................................................... 

15 

§ 4421 ................................................................................... 

2, 14 

§ 4421(1) .............................................................................. 

2 

Ch. 36 ....................................................................................... 

11 

Ch. 61: 

§ 6011(a) .............................................................................. 

12 

§ 6041 ................................................................................... 

13, 14 

§ 6041(a) .............................................................................. 

12 

§ 6050I ................................................................................. 

14 

Ch. 80: 

§ 7871 .................................................................... 

2, 5, 11, 21, 1a 

§ 7871(a)(2) ................................................................... 

2, 21, 1a 

§ 7871(a)-(b) ........................................................................ 

11 

§ 7871(b) .............................................................................. 

21, 3a 

Miscellaneous: 

H.R. Rep. No. 984, 97th Cong., 2d Sess. (1982) ................... 

10 

Rev. Rul. 57-258, 1957-1 C.B. 418 .......................................... 
3 

Rev. Rul. 67-284, 1967-2 C.B. 55 ............................................ 
10 

Rev. Rul. 94-81, 1994-2 C.B. 412 ............................................ 21 

VIII 

Miscellaneous—Continued: Page 

S. 555, 100th Cong., 1st Sess. (1987) ...................................... 
17 

S. Rep. No. 646, 97th Cong., 2d Sess. (1982) ........................ 
10, 21 

S. Rep. No. 446, 100th Cong., 2d Sess. (1988) ...................... 17, 20 

In the Supreme Court of the United States 

No. 00-507 

THE CHICKASAW NATION AND 

THE CHOCTAW NATION OF OKLAHOMA, PETITIONERS 

v. 

UNITED STATES OF AMERICA 

ON WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE TENTH CIRCUIT 

BRIEF FOR THE UNITED STATES 

OPINIONS BELOW 

The opinion of the court of appeals in Chickasaw 
Nation v. United States (Pet. App. 1a-28a) is reported 
at 208 F.3d 871. The order of the court of appeals in 
Choctaw Nation v. United States (Pet. App. 29a-32a) is 
unpublished, but the decision is noted at 210 F.3d 389 
(Table). The opinions of the district court in Chickasaw 
Nation v. United States (Pet. App. 47a-65a) and 
Choctaw Nation v. United States (Pet. App. 33a-46a) 
are unreported. 

(1) 

2 

JURISDICTION 

The judgment of the court of appeals in each case was 
entered on April 5, 2000. Petitions for rehearing were 
denied on July 5, 2000. Pet. App. 66a-67a. The petition 
for a writ of certiorari was filed on October 3, 2000, and 
granted on January 22, 2001. The jurisdiction of this 
Court rests upon 28 U.S.C. 1254(1). 

STATUTORY PROVISIONS INVOLVED 

Section 20(d) of the Indian Gaming Regulatory Act, 
25 U.S.C. 2719(d), and Sections 4401, 4402, 4411 and 
4421 of the Internal Revenue Code of 1986, 26 U.S.C. 
4401, 4402, 4411 and 4421, are set forth at Pet. App. 90a- 
98a. Relevant portions of Section 7871 of the Code are 
set forth at App., infra, 1a-4a. 

STATEMENT 

1. Section 4401(a) of the Internal Revenue Code of 
1986 (I.R.C. or the Code) imposes an excise tax on all 
wagers. Section 4411 imposes an occupational tax on 
each person liable for the wagering excise tax. (We 
sometimes refer to these taxes jointly as the “wagering 
excise taxes.”) The term “wager” includes any lottery. 

I.R.C. § 4421(1). Section 4402(3) grants an exemption 
from the wagering excise taxes for state-conducted 
lotteries, but that exemption does not apply, by its 
terms, to tribal lotteries. Section 7871(a)(2) of the Code 
provides that Tribes are to be treated as States for pur- 
poses of exemption from a number of federal excise 
taxes (so long as the transaction at issue involves the 
exercise of an essential government function), but the 
taxes specified do not include the wagering excise 
taxes. 

The Indian Gaming Regulatory Act (IGRA), Pub. L. 
No. 100-497, 102 Stat. 2467 (25 U.S.C. 2701 et seq.), 

3 

provides a federal regulatory framework for tribal 
gaming operations. Section 20(d) of the IGRA, 25 
U.S.C. 2719(d), provides in part: 

The provisions of the Internal Revenue Code of 1986 
(including sections 1441, 3402(q), 6041, and 6050I, 
and chapter 35 of such Code) concerning the report- 
ing and withholding of taxes with respect to the 
winnings from gaming or wagering operations shall 
apply to Indian gaming operations * * * in the 
same manner as such provisions apply to State 
gaming and wagering operations. 

Chapter 35 of the Internal Revenue Code includes 
Sections 4401-4424 of the Code. 

2. Petitioners are federally recognized Indian Tribes 
that operate gaming activities, including the sale of 
“pull-tabs.” Pet. App. 2a, 30a. In a pull-tab game, a 
player buys a card and then peels back tabs on the card 
to reveal hidden symbols, which determine whether the 
card may be exchanged for a cash prize. Ibid.; see 
Choctaw C.A. App. CH.0152. The cards are manufac- 
tured in sets of 24,000, and each set has a predeter- 
mined number of winners. Pet. App. 3a, 31a. Pull-tab 
games are “lotteries” for purposes of the federal 
wagering excise taxes. Rev. Rul. 57-258, 1957-1 C.B. 
418. 

The Internal Revenue Service audited petitioners 
and issued assessments for unpaid wagering and 
occupational taxes with respect to various periods from 
1988 to 1994. Petitioners paid a portion of the taxes 
assessed and then filed suits in federal district court 
seeking refunds of the taxes paid. The United States 
counterclaimed in each case for the unpaid portion of 
the assessments. Pet. App. 34a, 47a-48a. 

4 

The district court rejected petitioners’ refund claims 
and granted summary judgment for the government in 
each case. Pet. App. 33a-46a, 47a-65a. As relevant 
here, the court in each case rejected the argument 
advanced by petitioners that imposition of the excise 
taxes was inconsistent with the IGRA. Id. at 41a-44a, 
64a.1 

3. The court of appeals affirmed in each case. Pet. 
App. 1a-28a, 29a-32a. In its opinion in the Chickasaw 
Nation case, the court addressed and rejected the 
argument that IGRA § 20(d)’s parenthetical reference 
to Chapter 35 of the Internal Revenue Code extends to 
Tribes the wagering tax exemption afforded to state 
lotteries under I.R.C. § 4402(3). Pet. App. 19a-26a. The 
court considered it “clear that [25 U.S.C.] § 2719(d) does 
not expressly prohibit the imposition of federal wager- 
ing excise or federal occupational taxes on Indian 
gaming activities.” Id. at 22a. Rather, Section 2719(d) 
(IGRA § 20(d)) “provides only * * * that Indian gam- 
ing operations, like state gaming operations, must 
report certain player winnings to the federal govern- 
ment, and must likewise withhold federal taxes if 
players’ winnings exceed a certain level.” Pet. 
App. 22a. 

The court of appeals observed that in the Indian Tri- 
bal Governmental Tax Status Act of 1982, Pub. L. No. 
97-473, § 202(a), 96 Stat. 2608, Congress added to the 

1 Petitioner Choctaw Nation argued generally that imposition 
of the excise taxes was inconsistent with the IGRA, but it “[did] 
not argue that § 2719(d) (IGRA § 20(d)) provides an excise tax ex- 
emption for Indian gaming activities,” and the district court 
accordingly “[did] not address” that issue in the Choctaw case. 
Pet. App. 43a-44a. The magistrate judge’s decision in the Chick- 
asaw Nation case did address that argument, and rejected it. Id. 
at 64a. 

5 

Internal Revenue Code a new Section 7871, which 
“granted tribes some of the tax advantages enjoyed by 
states,” and in particular “extended to tribes many, but 
not all, of the federal excise tax exemptions typically 
enjoyed by the states.” Pet. App. 23a. “Among the 
federal excise tax exemptions enjoyed by the states but 
not granted to tribes * * * was the exemption found 
in the IRC for ‘State-conducted lotteries.’ ” Ibid. That 
situation, the court explained, provided the backdrop 
for Congress’s consideration of the IGRA. During that 
consideration, the original version of the provision that 
became Section 2719(d) would have expressly granted 
an exemption of the sort sought by petitioners. That 
language, however, was deleted before the statute was 
enacted. Id. at 23a-24a. 

The court found unpersuasive petitioners’ reliance on 
a letter from Senator Daniel Inouye to the Commis- 
sioner of Internal Revenue, in which the Senator 
“suggest[ed] that by specifically referring to Chapter 
35 in § 2719(d), ‘it was the intention of Congress that 
the tax treatment of wagers conducted by Tribal 
governments be the same as that for wagers conducted 
by state governments under Chapter 35.’ ” Pet. App. 
25a; see id. at 112a-114a (reprinting letter). The court 
noted that “the comments of a single senator, made 
years after the statute at issue was enacted, are of little 
value in interpreting the statute,” and that in any event 
the proffered interpretation was “inconsistent with 
both the language and the legislative history of the 
statute.” Id. at 25a. The court concluded: 

Although it is true that § 2719(d)’s reference to 
Chapter 35 is somewhat cryptic (since Chapter 35 
pertains solely to wagering excise taxes and has 
nothing to do with the reporting and withholding of 

6 

taxes on wagering winnings), we believe the most 
reasonable conclusion is that the reference was 
included in order to incorporate Chapter 35’s defini- 
tions of the terms “wager” and “lottery.” In any 
event, we are unwilling to assume, based solely 
upon the inclusion of this parenthetical reference to 
Chapter 35, that Congress intended to provide 
tribes with the exemption from federal wagering 
excise taxes enjoyed by the states. Such an as- 
sumption would fly directly in the face of § 2719(d)’s 
express reference to “the reporting and withholding 
of taxes with respect to the winnings from gaming 
or wagering operations.” Had Congress intended to 
provide tribes with an exemption from the federal 
wagering excise taxes, it clearly knew how to draft 
such an exemption. 

Id. at 25a-26a.2 

The court of appeals also affirmed the grant of sum- 
mary judgment for the government in the Choctaw 
case, characterizing the issues on appeal in that case as 
“identical” to those at issue in the Chickasaw case, and 
relying on its opinion in the latter case. Pet. App. 
29a-32a. 

SUMMARY OF ARGUMENT 

Petitioners do not contest that the federal wagering 
excise taxes apply by their terms to tribal gaming 
operations. Nor does any provision of the Internal 

2 The court of appeals also considered and rejected petitioner 
Chickasaw Nation’s arguments that the purchase of a pull-tab card 
is not a “wager” subject to the federal excise tax (Pet. App. 5a- 
12a), that the Nation is not a “person” subject to the federal wa- 
gering taxes (id. at 12a-18a), and that an 1855 treaty between the 
Nation and the United States exempts it from those taxes (id. at 
26a-28a). Those holdings are not at issue in this Court. See Pet. i. 

7 

Revenue Code, including the provision that exempts 
state lotteries from the wagering excise taxes and the 
provision that exempts Tribes from various other ex- 
cise taxes, provide an exemption here. Petitioners 
therefore argue instead that Section 20(d) of the Indian 
Gaming Regulatory Act, 25 U.S.C. 2719(d), creates an 
exemption from the federal wagering taxes in favor of 
petitioners and other Tribes. That is not a reasonable 
construction of the IGRA. 

The operative language of Section 2719(d) directs 
that all provisions of the Code “concerning the report- 
ing and withholding of taxes with respect to * * * [a 
player’s] winnings” are to apply to Tribes as they 
would to States. (Emphasis added.) That language 
cannot plausibly be read to refer to Code provisions 
concerning the imposition of excise taxes on a game 
operator’s own receipts or employment. Petitioners’ 
argument accordingly rests, not on the statute’s 
operative language, but on its parenthetical listing of 
illustrative examples: “(including sections 1441, 3402(q), 
6041, and 6050I, and chapter 35 of such Code).” In 
particular, petitioners rely on the reference to Chapter 
35 of the Code, which imposes the federal wagering 
taxes, and includes an exemption from those taxes for 
state lotteries. 

We agree with the court of appeals that Section 
2719(d)’s reference to Code Chapter 35, as an example 
of the scope of the IGRA provision, is “somewhat 
cryptic,” because that Chapter bears no obvious re- 
lation to the reporting and withholding of taxes on 
wagering winnings. Whatever meaning might plausibly 
be given to that reference, however, or even if it simply 
cannot be harmonized with the statute’s operative text, 
it does not create a federal tax exemption. The refer- 
ence is merely one of a series of unexplained cross- 

8 

references in an illustrative parenthetical. It cannot 
fairly be said to contradict limitations that inhere in the 
provision’s central textual command. That is parti- 
cularly true where the result that petitioners seek is a 
complete exemption from two federal excise taxes that 
are wholly unrelated to the reporting and withholding 
provisions to which Section 2719(d) otherwise refers. 

The history of the IGRA confirms that conclusion. 
As originally proposed, the bill that became the IGRA 
included language that would indeed have extended to 
Tribes the state-lottery exemption to the wagering 
excise taxes. That language, however, was deleted 
from the bill, by the same committee that added the 
parenthetical illustrations at issue here. Deletion of the 
express exemption language is strong evidence of an 
intention not to create an exemption; and there is 
nothing to suggest that the new parenthetical language 
was intended to provide Tribes with a shorthand ver- 
sion of the express exemption that the drafters had just 
considered and deleted. 

Finally, the purposes of the IGRA do not justify an 
inference of congressional intent to extend to Tribes the 
excise tax exemption granted to state lotteries. Al- 
though the goal of fostering tribal economic develop- 
ment and self-sufficiency is surely important, Congress 
can advance that goal without exempting Tribes from 
all federal taxes, or always treating Tribes in the same 
way that it treats States. The Internal Revenue Code 
expressly accords Tribes the benefit of some of the ex- 
cise tax exemptions enjoyed by States. That provision 
does not, however, extend to the wagering excise taxes; 
and the express exemption from those taxes for 
state lotteries does not, by its terms, apply to Tribes. 
Against that background, the IGRA cannot plausibly be 
read to pursue general policies of tribal development by 

9 

conferring a federal tax exemption through a “cryptic” 
cross-reference in an illustrative parenthetical. 

Petitioners scarcely contest that these traditional 
tools of statutory construction—text, history, purpose 
and context—do not support their quest for an ex- 
emption. Instead, they rely almost exclusively on the 
proposition that “ambiguity in an Indian-law-related 
federal statute is to be liberally construed in favor of 
tribal interests.” Pet. Br. 12 (capitalization and em- 
phasis omitted). If Section 2719(d) were genuinely sus- 
ceptible of the construction that petitioners seek to 
place on it, it might be appropriate for the Court to take 
that principle into account—although even if it applied, 
it would not simply dictate resolution of the case in 
petitioners’ favor, because the Court would also have to 
take into account the countervailing and similarly ven- 
erable principle that exemptions from federal taxation 
may not be inferred, but must be expressly stated. This 
case, however, does not resolve itself into a duel be- 
tween competing canons of construction. Such canons 
are properly applied only after, or at least alongside, 
the central tools of statutory interpretation, and to 
resolve interpretive ambiguity, not to create it. In this 
case, those basic tools make clear that Section 2719(d) 
cannot be construed to extend the state-lottery tax 
exemption to tribal gaming. 

ARGUMENT 

SECTION 20(D) OF THE INDIAN GAMING REGULA- 
TORY ACT CANNOT PROPERLY BE CONSTRUED TO 
EXEMPT TRIBAL GAMING OPERATIONS FROM THE 
FEDERAL WAGERING EXCISE TAXES 

Section 4401 of the Internal Revenue Code imposes 
an excise tax, in this case equal to .25% of every amount 
wagered, on “[e]ach person who is engaged in the busi- 

10 

ness of accepting wagers” or “who conducts any wager- 
ing pool or lottery.” 26 U.S.C. 4401(a) and (c). Section 
4411 of the Code imposes an occupational tax, in this 
case equal to $50 per person, on “each person who is 
liable for the tax imposed under section 4401 or who is 
engaged in receiving wagers for or on behalf of any 
person so liable.” 26 U.S.C. 4411(a). Petitioners do not 
contest in this Court that each of these taxes applies, on 
its face, to a wagering or lottery business conducted by 
an Indian Tribe, and in particular to the sale of pull-tab 
cards by petitioners. The question presented is 
whether Section 20(d) of the Indian Gaming Regulatory 
Act, 25 U.S.C. 2719(d), nonetheless creates an exemp- 
tion from these taxes in favor of petitioners and other 
Tribes.3 

The federal wagering taxes also apply on their face to 
lotteries or wagering businesses conducted by States. 

3 This case deals with excise taxes, not income taxes. Com- 
pare Rev. Rul. 67-284, 1967-2 C.B. 55, 58 (concluding that Indian 
Tribes are not taxable entities for purposes of the federal income 
tax); see also Pet. App. 12a-18a; S. Rep. No. 646, 97th Cong., 2d 
Sess. 8 (1982); H.R. Rep. No. 984, 97th Cong., 2d Sess. 15 (1982). 
Amici Seminole Tribe of Florida et al. argue (Br. 9-10) that Section 
4401 does not apply to wagers placed with Tribes because tribal 
gaming is authorized by federal, not state, law, and amici San 
Manuel Band (passim) and San Carlos Apache Tribe (Br. 7-8) 
argue that the federal taxes do not apply because tribal gaming 
businesses are operated to support governmental functions, not for 
private profit. Neither of those arguments is germane to the 
question presented in this case. See Pet. i. In any event, the state- 
authorization argument fails for reasons set out by the Federal 
Circuit in Little Six, Inc. v. United States, 210 F.3d 1361, 1363-1364 
(2000), petition for cert. pending, No. 00-1115 (filed Jan. 10, 2001) 
(see Pet. App. 104a-106a), and it suffices to observe that the “pro- 
fit” argument would render superfluous the express tax exemption 
granted to state lotteries by Section 4402(3) of the Code—the very 
provision on which petitioners seek to rely. 

11 

Section 4402 of the Code, however, expressly exempts 
from taxation any wager placed with a state agency or 
agent “in a sweepstakes, wagering pool, or lottery 
which is conducted by an agency of a State acting under 
authority of State law.” 26 U.S.C. 4402(3). Section 7871 
of the Code in turn provides that, in transactions in- 
volving its “essential governmental function[s],” “[a]n 
Indian tribal government shall be treated as a State” 
for various specified federal tax purposes, including “for 
purposes of any exemption from * * * an excise tax 
imposed by” Chapters 31-33 and 36 of the Code (re- 
lating generally to special fuels, certain manufactured 
goods, communications services, and use of certain 
highway vehicles). 26 U.S.C. 7871(a)-(b). Section 7871 
does not, however, apply to the federal wagering excise 
taxes, which are imposed by Chapter 35 of the Code 
(Sections 4401-4424). The Code itself does not, there- 
fore, provide Tribes, as opposed to States, with any 
exemption from those taxes. 

Petitioners accordingly rely instead on the IGRA, 
which Congress enacted in 1988 in order, among other 
purposes, “to provide a statutory basis for the opera- 
tion of gaming by Indian tribes as a means of promot- 
ing tribal economic development, self-sufficiency, and 
strong tribal governments.” 25 U.S.C. 2702(1). Near 
the end of that Act, in a Section that otherwise deals 
with the Act’s application to certain lands acquired in 
trust for Tribes after the Act’s effective date, Congress 
provided that: 

The provisions of the Internal Revenue Code of 1986 
(including sections 1441, 3402(q), 6041, and 6050I, 
and chapter 35 of such Code) concerning the report- 
ing and withholding of taxes with respect to the 
winnings from gaming or wagering operations shall 

12 

apply to Indian gaming operations conducted pur- 
suant to this Act, or under a Tribal-State compact 
entered into under section 11(d)(3) [25 U.S.C. 
2710(d)(3)] that is in effect, in the same manner as 
such provisions apply to State gaming and wagering 
operations. 

IGRA § 20(d)(1), 102 Stat. 2486 (25 U.S.C. 2719(d)(1)). 
Petitioners argue that the IGRA’s parenthetical refer- 
ence to Chapter 35 of the Code confers on Tribes the 
same exemption from the tax imposed by Section 4401 
of the Code that is extended to States by Section 4402. 
See Little Six, Inc. v. United States, 210 F.3d 1361 
(Fed. Cir. 2000) (adopting that view), petition for cert. 
pending, No. 00-1115 (filed Jan. 16, 2001). That is not, 
however, a reasonable construction of Section 2719(d). 

A. The Language Of The IGRA Does Not Exempt Tribes 

From The Wagering Excise Taxes 

The operative language of 25 U.S.C. 2719(d) (IGRA 
§ 20(d)) directs that all provisions of the Internal Re- 
venue Code “concerning the reporting and withholding 
of taxes with respect to * * * winnings” are to apply 
to Tribes as they would to States. That language 
ensures that tribal gaming operations, like state 
operations, are required to report, withhold, and pay 
over to the IRS a specified percentage of any player’s 
winnings over a certain amount, or of a nonresident 
alien player’s winnings from certain games. See, e.g., 26 
U.S.C. 871(a)(1) and (j) (imposing tax on nonresident 
aliens), 1441(a) and (c)(11) (withholding of tax imposed 
on nonresident aliens), 3402(q) (withholding of tax on 
winnings above certain threshold amounts), 6011(a) (re- 
quirement to make return where tax has been with- 
held), 6041(a) (information returns with respect to 

13 

payments of $600 or more). It forecloses, for example, 
any argument, similar to one made by petitioners in the 
lower courts in this case (see Pet. App. 12a-18a), that a 
Tribe is not a “person” subject to those requirements. 
See, e.g., 26 U.S.C. 3402(q)(1) (requiring withholding by 
“[e]very person, including * * * a State, * * * 
making any payment of winnings”). It also extends to 
Tribes any special rules applicable to States with re- 
spect to reporting or withholding of taxes on winnings, 
such as the higher amount that was necessary to trig- 
ger the withholding requirement under Section 3402(q) 
at the time that the IGRA was enacted.4 Section 
2719(d)’s language addressing “the reporting and 
withholding of taxes with respect to * * * [a player’s] 
winnings” cannot, however, plausibly be read to extend 
to Code provisions concerning the imposition of excise 
taxes on a game operator’s receipts or employment. 

Petitioners’ contrary argument rests, not on the 
operative language of Section 2719(d), but on the 
provision’s parenthetical listing of illustrative ex- 
amples: “(including sections 1441, 3402(q), 6041, and 
6050I, and chapter 35 of such [Code]).” Of the Sections 
listed in the parenthetical, Sections 1441, 3402(q), and 
6041 are, as just noted, straightforward examples of 
“provisions * * * concerning the reporting and with- 
holding of taxes” on winnings: Section 1441 deals with 
withholding tax from the income of nonresident aliens, 
Section 3402(q) with withholding from winnings 

4 Under 26 U.S.C. 3402(q)(3) (1988), withholding generally ap- 
plied to wagering or lottery proceeds greater than $1000, although 
in some cases only if the proceeds were at least 300 times the 
amount wagered. A state lottery was required to withhold, how- 
ever, only when winnings exceeded $5000. In 1992 the withholding 
threshold was raised to $5000 for all types of proceeds. Energy 
Policy Act of 1992, Pub. L. No. 102-486, § 1942(a), 106 Stat. 3036. 

14 

exceeding certain threshold amounts, and Section 6041 
with the filing of information returns by businesses 
with respect to payments of certain amounts, including 
certain gambling winnings, that may be taxable income 
in the hands of the recipient. Section 6050I requires 
every person who conducts a business to report any 
receipt of more than $10,000 in cash in a single trans- 
action or group of related transactions. Cf. Ratzlaf v. 
United States, 510 U.S. 135 (1994) (involving prosecu- 
tion under related provisions of Title 31). Chapter 35 of 
the Code, as also noted above, imposes the federal 
excise and occupational taxes on gaming operations and 
operators (not on winnings or players), and includes 
various ancillary provisions. 

The Tenth Circuit characterized Section 2719(d)’s 
reference to Chapter 35 as “somewhat cryptic,” because 
that Chapter bears no obvious relation to the reporting 
and withholding of taxes on wagering winnings—the 
domain to which Section 2719(d)’s operative text ap- 
plies. Pet. App. 25a. The Court of Appeals for the 
Federal Circuit considered the reference “ambiguous” 
for the same reason. Little Six, 210 F.3d at 1365. We 
agree that “Chapter 35” is not a particularly apt ex- 
ample to use to illustrate the scope of the operative 
text. 

The Tenth Circuit suggested that the illustrative 
reference to Chapter 35 could be harmonized with the 
operative text by noting that Chapter 35 includes 
definitions of the terms “wager” and “lottery.” Pet. 
App. 25a. Although those definitions by their terms 
apply only “[f]or purposes of” Chapter 35 itself, see 26 
U.S.C. 4421, they could perhaps be instructive in the 
interpretation of the Code’s separate provisions dealing 
with gaming winnings—at least to the extent of 
ensuring that all forms of wagers and lotteries that fall 

15 

within the Chapter 35 definitions would also fall within 
the scope of the “gaming and wagering operations” to 
which Section 2719(d) refers, and from which winnings 
are to be reported and withheld under the more di- 
rectly pertinent provisions of the Code. 

Even apart from the court of appeals’ suggested ex- 
planation of the illustrative reference to Chapter 35, 
that reference would not necessarily (or properly) be 
read to confer an exemption from federal excise taxes, 
as petitioners contend, merely because Chapter 35 con- 
tains a single provision conferring such an exemption on 
state lotteries. See I.R.C. § 4402(3). Nothing in the 
text of Section 2719(d) suggests that the reference was 
intended to invoke that exemption, rather than other 
provisions in Chapter 35 that deal with matters of tax 
administration, more akin to the “reporting and with- 
holding” concerns with which Section 2719(d) expressly 
deals. See I.R.C. §§ 4403 (requiring persons liable for 
excise tax to keep daily records of gross amount of 
wagers), 4412 (requiring registration of persons subject 
to occupational tax). 

Finally, even if Section 2719(d)’s reference to 
Chapter 35 of the Code simply could not be harmonized 
with the IGRA provision’s operative language concern- 
ing the withholding and reporting of taxes on winnings, 
that circumstance would not justify reading the IGRA 
to create a federal tax exemption. While it is certainly 
preferable to give meaning to each word in a statute, 
see, e.g., Pennsylvania Dep’t of Pub. Welfare v. Daven- 
port, 495 U.S. 552, 562 (1990), the text at issue here is 
merely one of a series of unexplained cross-references 
in an illustrative parenthetical. It cannot fairly be said 
to contradict limitations that inhere in the provision’s 
central textual command. If a substantive statutory 
command and a parenthetical example are truly incon- 

16 

sistent, it is hard to imagine circumstances under which 
the command rather than the example should give way. 
Cf. United States v. Monjaras-Castaneda, 190 F.3d 326, 
330 (5th Cir. 1999) (“[a] parenthetical is, after all, a 
parenthetical, and it cannot be used to overcome the 
operative terms of the statute”) (quoting Cabell 
Huntington Hosp., Inc. v. Shalala, 101 F.3d 984, 990 
(4th Cir. 1996)), cert. denied, 528 U.S. 1194 (2000). 
Certainly there are no such circumstances here. See 
Little Six, Inc. v. United States, 229 F.3d 1383, 1385 
(Fed. Cir. 2000) (Dyk, J., dissenting from denial of 
rehearing en banc) (“It is far easier to make sense out 
of [Section 2719(d)] if the inconsistent specific examples 
are read out of the statute because they conflict with 
the limitation.”). 

To the contrary, it would be particularly inappropri- 
ate to allow Section 2719(d)’s passing reference to 
Chapter 35 to supersede its central limitation. What 
petitioners seek is not some marginal reduction in the 
applicability of the wagering-tax administrative re- 
quirements addressed by the IGRA, but a complete 
exemption from two entirely different federal excise 
taxes on petitioners’ own gaming businesses. Courts 
are not free to infer federal tax exemptions: Congress 
must expressly grant them. See p. 24, infra. Whatever 
else may be said about Section 2719(d), it does not 
expressly grant petitioners, or other Indian Tribes, any 
exemption from the excise taxes imposed on their 
gaming businesses by Chapter 35. 

B. The Legislative History Confirms That The IGRA 

Does Not Grant Tribes An Excise Tax Exemption 

The history of Section 2719(d) confirms that con- 
clusion. As originally proposed in the Senate, the bill 

17 

that became the IGRA included language that would 
indeed have exempted tribes from the federal wagering 
excise taxes: 

Provisions of the Internal Revenue Code of 1986, 
concerning the taxation and the reporting and with- 
holding of taxes with respect to gambling or wag- 
ering operations shall apply to Indian gaming opera- 
tions conducted pursuant to this Act the same as 
they apply to State operations. 

S. 555, 100th Cong., 1st Sess. 37 (1987) (emphasis 
added). That language, however, was never enacted. 
The Senate Indian Affairs Committee instead made two 
critical changes, which are reflected in the language of 
the final Act: It deleted any reference to provisions 
“concerning the taxation * * * [of] wagering opera- 
tions,” and it added language specifically restricting the 
provision’s scope so that Tribes would be treated as 
States only for purposes of Internal Revenue Code 
provisions “concerning the reporting and withholding 
of taxes with respect to the winnings from gaming or 
wagering operations.” 25 U.S.C. 2719(d)(1) (emphasis 
added). It also added the illustrative parenthetical on 
which petitioners rely. 

The Senate Report on the IGRA indicates simply 
that the provision “applies the Internal Revenue Code 
to winnings from Indian gaming operations”—a state- 
ment fully consistent with the enacted language. 
S. Rep. No. 446, 100th Cong., 2d Sess. 20 (1988) (em- 
phasis added). It does not further explain the drafting 
changes. One might speculate that the Indian Affairs 
Committee could have deleted language that would 
have had the effect of conferring a tax exemption in 
order to avoid a possible jurisdictional conflict with the 
Finance Committee, or perhaps even with the House of 

18 

Representatives. Cf. Armstrong v. United States, 759 
F.2d 1378, 1381-1382 (9th Cir. 1985) (bills reducing or 
increasing taxes must originate in the House); Little 
Six, 229 F.3d at 1385 (Dyk, J., dissenting from denial of 
rehearing en banc) (reciting history showing that pre- 
cursor legislation, including an express exemption, 
originated in the House, while the bill that was ulti- 
mately enacted, in the next Congress, originated in the 
Senate). It is also possible that the particular seeming 
anomaly at issue here, the inclusion of Chapter 35 in 
the exemplary parenthetical, is simply an inadvertent 
vestige of some interim version of the bill, created 
during the committee’s internal deliberations (but 
never published), that included both the examples and 
the express tax exemption. See ibid. (“The language of 
the provision has all the earmarks of a simple mistake 
in legislative drafting. The better explanation * * * is 

* * * that it was included inadvertently after Con- 
gress had decided to eliminate the reference to ‘taxa- 
tion.’ ”). 

Such speculation is not a firm basis for statutory 
interpretation. Here, only one confident conclusion can 
be drawn from the history of Section 2719(d): Deletion 
of the express exemption language from the original 
draft bill is strong evidence of Congress’s intention not 
to allow such an exemption. See, e.g., INS v. Cardoza- 
Fonseca, 480 U.S. 421, 442-443 (1987); Gulf Oil Corp. v. 
Copp Paving Co., 419 U.S. 186, 200 (1974); see also Mes- 
calero Apache Tribe v. Jones, 411 U.S. 145, 157 (1973) 
(noting that tax immunity provisions were dropped 
from bills before enactment of Indian Reorganization 
Act, 25 U.S.C. 461 et seq.). Certainly nothing in the 
Senate report, let alone in the enacted statutory langu- 
age, suggests that the new, parenthetical language that 
emerged from the committee was intended to contra- 

19 

dict, rather than to exemplify, the newly limited opera- 
tive language—by providing Tribes with a shorthand 
version of the expressly exemptive language that the 
drafters had just considered and deleted.5 

C. The Policy Of Encouraging Tribal Economic Develop- 
ment Does Not Permit Courts To Construe The IGRA 

To Confer A Tax Exemption That Congress Did Not 

Grant 

Finally, the purposes and policies of the IGRA do not 
justify an inference of congressional intent to create a 
new excise tax exemption for Tribes, outside the Inter- 
nal Revenue Code—certainly not in a parenthetical list 
of examples for a very different substantive proposi- 
tion, and without any substantive discussion in the 

5 Petitioners seek to rely (Br. 39-40) on a letter sent to the 
Commissioner of Internal Revenue in 1991, three years after 
enactment of the IGRA, in which Senator Inouye, then Chairman 
of the Indian Affairs Committee, sought to “advise” the Com- 
missioner “that it was the intention of the Congress that the tax 
treatment of wagers conducted by tribal governments be the same 
as that for wagers conducted by state governments under Chapter 

35.” See Pet. App. 113a. In this case that “advi[ce]” is entitled to 
even less weight than might normally be accorded to a post-enact- 
ment statement by a single legislator (if that is possible), because it 
rests on a materially incorrect statement of the statutory language 
that it purports to explain. If Congress had enacted the language 
quoted in the Senator’s letter (ibid.)—“[t]he provisions of the 
Internal Revenue Code of 1986 (including . . . chapter 35) shall 
apply to Indian gaming operations conducted pursuant to this Act 

. . . in the same manner as such provisions apply to State gaming 
and wagering operations”—this would be a very different case. 
That is not, however, the enacted language of Section 2719(d), and 
it never has been. Whatever its worth in other circumstances, 
therefore, the Senator’s letter is of no value as an aid to con- 
struction of the actual statutory language. 

20 

legislative history. In Little Six, the Federal Circuit 
relied too heavily on the statutory policy of fostering 
tribal economic development and self-sufficiency in 
concluding that it should read Section 2719(d) to require 
treating Tribes as States for purposes of the excise tax 
exemption. Pet. App. 110a-111a. Although that goal is 
surely important, and is set out as a primary general 
purpose of the IGRA, see 25 U.S.C. 2702(1), it does not 
sweep all before it.6 To the contrary, “[i]f federal courts 
were free to create federal tax exemptions for Indians 
based on policy alone, the federal policy of Indian eco- 
nomic advancement, implicit in almost all of the many 
federal enactments regarding Indians, would soon have 
the unintended effect of exempting all Indians from all 
federal taxation.” United States v. Anderson, 625 F.2d 
910, 917 (9th Cir. 1980), cert. denied, 450 U.S. 920 
(1981); see also Little Six, 229 F.3d at 1385-1386 (Dyk, 
J., dissenting from denial of rehearing en banc) (“The 
fact that a statute confers a set of benefits on tribes 
cannot mean that the statute should be extended be- 
yond its terms to grant additional benefits to the 
tribes.”). 

Congress can pass (indeed, has passed) legislation 
that seeks to encourage tribal economic development 
without exempting Tribes from all federal taxes, or 
always treating Tribes in the same way that it treats 

6 Nor is it the only purpose that motivates the IGRA. As the 
Act itself makes clear, Congress was also concerned to provide a 
federal statutory framework for the regulation of tribal gaming 
enterprises, to combat organized crime, to ensure that gaming 
benefits flowed primarily to Tribes, and “to assure that gaming is 
conducted fairly and honestly by both the operator and players.” 
See 25 U.S.C. 2702(2)-(3); Shakopee Mdewakanton Sioux Cmty. v. 
Hope, 16 F.3d 261, 265 (8th Cir. 1994); S. Rep. No. 446, supra, at 
1-4. 

21 

States. As noted above, Congress has provided tar- 
geted tax support for tribal development through 
Section 7871 of the Internal Revenue Code, which was 
added by the Indian Tribal Governmental Tax Status 
Act of 1982, Pub. L. No. 97-473, § 202(a), 96 Stat. 2608. 
See also S. Rep. No. 646, 97th Cong., 2d Sess. 11 (1982) 
(Act was intended to “facilitate [the] efforts of the 
Indian tribal governments” to “assist their people by 
stimulating their tribal economies and by providing 
governmental services.”). Section 7871 grants Tribes 
the benefit of, among other things, some of the excise 
tax exemptions enjoyed by States—but only with re- 
spect to certain taxes, and only to the extent that a 
particular transaction “involves the exercise of an 
essential governmental function of the Indian tribal 
government.” 26 U.S.C. 7871(a)(2) and (b) (set out at 
App., infra, 1a-4a); see S. Rep. No. 646, supra, at 11-13. 
The taxes subject to express exemption under Section 
7871 do not include the gaming excise taxes. See 26 
U.S.C. 7871(a)(2); Rev. Rul. 94-81, 1994-2 C.B. 412. Nor 
does the Code extend to Tribes the express exemption 
from the gaming taxes that Section 4402(3) accords to 
state-run “sweepstakes, wagering pool[s], or 
lotter[ies.]” 

If, at the time it enacted the IGRA, Congress had 
wished to extend that exemption to Tribes, it could 
easily have availed itself of either of these existing 
frameworks within the Code. As it stands, however, 
both before and after the IGRA, Section 4402 provides 
an express exemption from the gaming taxes, but not to 
Tribes; and Section 7871 treats Tribes as States for 
purposes of express exemption from various excise 
taxes, but not the gaming taxes. Against that back- 
ground, Section 20(d) of the IGRA, 25 U.S.C. 2719(d), 
cannot plausibly be construed to pursue general policies 

22 

of tribal development by conferring a federal excise tax 
exemption on Tribes, through a “cryptic” cross-refer- 
ence (see Pet. App. 25a) in a parenthetical that in terms 
merely illustrates an operative provision that deals 
with distinctly different subject matter. 

D. The Canon That Ambiguities Should Be Resolved In 

Favor Of Indian Interests Does Not Call For A 

Different Result In This Case 

Recognizing that the statutory basis for their claim 
to a tax exemption is doubtful at best, petitioners rest 
their case squarely on the proposition that “ambiguity 
in an Indian-law-related federal statute is to be liberally 
construed in favor of tribal interests.” Pet. Br. 12 
(capitalization and emphasis omitted). While we agree 
with petitioners that that canon of construction is 
“eminently sound and vital” (Br. 34) where it properly 
applies, in this case petitioners seek to “place[] more 
weight on the canon * * * than [it] can bear.” Little 
Six, 229 F.3d at 1386 (Dyk, J., dissenting from denial of 
rehearing en banc).7 

The principle of resolving ambiguity in favor of 
Indian interests has its origin and core application in 
cases involving the interpretation or abrogation of 
Indian treaties or treaty rights. See, e.g., County of 
Oneida, New York v. Oneida Indian Nation, 470 U.S. 
226, 247-248 (1985); Jones v. Meehan, 175 U.S. 1, 11-12 
(1899); Choctaw Nation v. United States, 119 U.S. 1, 27- 
28 (1886). The canon extends as well to the interpreta- 
tion of federal enactments pertaining to Indian Tribes, 
see County of Yakima v. Confederated Tribes & Bands 

7 Indeed, for reasons we have explained, the parenthetical 
reference to Chapter 35 on which petitioners rely is perhaps more 
accurately described as a “mystery” rather than an “ambiguity.” 

23 

of the Yakima Indian Nation, 502 U.S. 251, 269 (1992), 
and this Court has invoked it in considering whether 
general language in an Indian statute sufficed to ex- 
empt from federal tax certain otherwise taxable income 
that had been derived from Indian trust lands. Squire v. 
Capoeman, 351 U.S. 1, 6-7 (1956).8 If Section 2719(d) 
were genuinely susceptible of the construction that 
petitioners seek to place on it, it might be appropriate 
for the Court to take into account this principle of 
generous construction. 

But even if it applied, the Indian canon would not 
simply dictate resolution of the case in petitioners’ 
favor, as petitioners seem to suggest (Br. 21-27). 
“Canons of construction need not be conclusive and are 
often countered, of course, by some [other] maxim 

8 In Squire, the Court analyzed the structure and purposes of 
the Indian General Allotment Act; a proviso in the 1906 amend- 
ment to the Act; legislative history; and a series of “relatively 
contemporaneous official and unofficial writings,” and concluded 
that Congress intended to exempt certain Indians from tax on 
gains from the sale of timber from a restricted allotment (i.e., land 
allotted to an Indian, title to which was held in trust by the United 
States for a specified period, during which the land was subject to 
restrictions on alienation and encumbrance). The Court reasoned 
that the language of the original Act might be ambiguous on the 
point, but that the import of the “literal language” of the 1906 
proviso “evince[d] a congressional intent” that the income would 
not be taxable until the government removed the restrictions from 
the land. 351 U.S. at 6-9. Squire reflects the proper practice of 
using traditional tools of statutory construction to reach a result 
consistent with congressional intent, rather than relying reflex- 
ively on any particular canon of construction. See also Mescalero, 
411 U.S. at 156 (citing Squire as support for the proposition that 
“tax exemptions are not granted by implication,” a rule applied “to 
taxing acts affecting Indians as to all others,” and that an ex- 
emption “cannot rest on dubious inferences”) (quoting Oklahoma 
Tax Comm’n v. United States, 319 U.S. 598, 606-607 (1943)). 

24 

pointing in a different direction.” Circuit City Stores, 
Inc. v. Adams, 121 S. Ct. 1302, 1309 (2001). Here, the 
Court would, at a minimum, have to balance the Indian 
canon against the countervailing principle, also re- 
cognized in Squire, that exemptions from federal taxa- 
tion must be expressly stated, and may not simply be 
inferred by the courts from unclear statutory language. 
See Squire, 351 U.S. at 6 (“We also agree that, to be 
valid, exemptions to tax laws should be clearly ex- 
pressed.”). That principle has long been a touchstone of 
federal tax law, and it is as venerable in that critically 
important sphere as the Indian canon is in the realm of 
Indian law. See, e.g., United States v. Wells Fargo 
Bank, 485 U.S. 351, 354-355 (1988); United States Trust 
Co. of New York v. Helvering, 307 U.S. 57, 60 (1939). 
Indeed, this Court has long disfavored implied exemp- 
tions in cases involving both income and excise taxation 
of Indians. See Superintendent of Five Civilized Tribes 

v. Commissioner, 295 U.S. 418, 421 (1935) (no exemp- 
tion for surplus income from allotted land, where no law 
“expresses definite intent to exclude [it] from taxa- 
tion”); Choteau v. Burnet, 283 U.S. 691, 693-694, 696- 
697 (1931) (Indian who had received federal “certificate 
of competency” was thenceforth liable for federal in- 
come tax in the absence of any express statutory ex- 
emption; “[t]he intent to exclude must be definitely 
expressed, where, as here, the general language of the 
Act laying the tax is broad enough to include the 
subject matter.”); The Cherokee Tobacco, 78 U.S. (11 
Wall.) 616, 618, 620 (1870) (federal excise tax on tobacco 
“within the exterior boundaries of the United States” 
applied to Indians within the territory of the Cherokee 
Nation; language was broad enough to encompass 
Indians, and any intended exemption “would doubtless 
have been expressed”). 

25 

Petitioners seek (Br. 15-21) to counter reliance on the 
anti-exemption principle by quoting this Court’s state- 
ment that that “although tax exemptions generally are 
to be construed narrowly, in ‘the Government’s deal- 
ings with the Indians the rule is exactly the contrary. 
The construction, instead of being strict, is liberal.’ ” 
Montana v. Blackfeet Tribe, 471 U.S. 759, 766 n.4 (1985) 
(quoting Choate v. Trapp, 224 U.S. 665, 675 (1912)). The 
citation is inapt, however, because Montana, Choate, 
and the other cases on which petitioners rely (with the 
exception of Squire, discussed above) all involved the 
very different context of state taxation of Indians or 
Tribes.9 In that context, this Court, cognizant of “the 
unique trust relationship between the United States 
and the Indians,” County of Oneida, 470 U.S. at 247, 
has made clear that “first, the States may tax Indians 
only when Congress has manifested clearly its consent 
to such taxation; [and] second, statutes are to be con- 
strued liberally in favor of the Indians, with ambiguous 
provisions interpreted to their benefit.” Montana, 471 
U.S. at 766 (citation omitted); see also Oklahoma Tax 
Comm’n v. Chickasaw Nation, 515 U.S. 450, 455, 458 
(1995). 

The situation is very different, however, in federal 
taxation cases such as this one. Unlike state govern- 
ments, Congress has plenary authority to legislate over 
Indian affairs, and that authority unquestionably in- 
cludes the power to impose federal taxes. See Choteau, 

9 In Choate, moreover, unlike in this case, there was no dis- 
pute that the relevant statute contained an express exemption. 
The issue was whether that exemption conferred a property right 
protected by the Fifth Amendment. 225 U.S. at 671; see also Car- 
penter v. Shaw, 280 U.S. 363 (1930). 

26 

10 Historically, moreover, the Tribes’ 
legal and practical relationship to the federal govern- 
ment has been entirely different from their relationship 
to the governments of the States. See, e.g., United 
States v. Kagama, 118 U.S. 375, 383-385 (1886); Mc- 
Clanahan v. Arizona State Tax Comm’n, 411 U.S. 164, 
168 (1973) (“The policy of leaving Indians free from 
state jurisdiction and control is deeply rooted in the 
Nation’s history.”) (quoting Rice v. Olson, 324 U.S. 786, 
789 (1945)). The Court has frequently relied on the 
unique nature of that relationship to require clear 
congressional consent to state taxation, as well as clear 
expression of congressional intent to abrogate Indian 
treaty rights. 

11 The Court has not, however, required 
that Congress speak with the same clarity in order to 
bring Indians or Tribes within the coverage of general 
federal tax laws. See Superintendent of Five Civilized 
Tribes, 295 U.S. at 419-420 (rejecting rule in Chouteau 

v. Commissioner, 38 F.2d 976, 977 (10th Cir.), cert. 
denied, 281 U.S. 759 (1930), that federal income tax 
laws must manifest a specific intent to apply to 
Indians). To the contrary, where a federal tax statute 
is broad enough to cover the subject matter, any ex- 
emption for Indians “must be definitely expressed.” 

10 As to Congress’s plenary authority, see, e.g., U.S. Const. 
Art. I, § 8, Cl. 3; id. Art. II, § 2, Cl. 2; Montana, 471 U.S. at 764-765; 
County of Oneida, 470 U.S. at 234; White Mountain Apache Tribe 

v. Bracker, 448 U.S. 136, 142 (1980); Morton v. Mancari, 417 U.S. 
535, 551-552 (1974). 

11 See, e. g ., County of Oneida, 470 U.S. at 247 (quoting 
Washington v. Washington State Commercial Passenger Fishing 
Vessel Ass’n, 443 U.S. 658, 690 (1979)); Solem v. Bartlett, 465 U.S. 
463, 470 (1984) (diminishment of reservation boundaries); United 
States v. Santa Fe Pac. R.R., 314 U.S. 339, 346 (1941) (extinction of 
land title). 

283 U.S. at 697. 

27 

Superintendent of Five Civilized Tribes, 295 U.S. at 
419-420 (quoting Choteau, 283 U.S. at 696-697); see also 
Squire, 351 U.S. at 6; The Cherokee Tobacco, 78 U.S. (11 
Wall.) at 620. 

In any event, this case does not resolve itself into 
a duel between competing canons of statutory 
construction—that favoring Indians, on the one hand, 
and that disfavoring implied tax exemptions, on the 
other. Such special canons are properly applied only 
after, or at least alongside, the central traditional tools 
of statutory interpretation (themselves the primary 
“canons”): close examination of the statute’s language, 
history, and motivating purposes or legal context. See, 

e.g., Hagen v. Utah, 510 U.S. 399, 410-411 (1994); Con- 
necticut Nat’l Bank v. Germain, 503 U.S. 249, 253-254 
(1992). 

12 In this case, although there is doubt con- 
cerning exactly how Section 2719(d)’s reference to 
Chapter 35 may be given effect as an example of a pro- 
vision “concerning the reporting and withholding of 
taxes with respect to [players’] winnings” from tribal 
gaming operations, there is no doubt that the latter 
operative language cannot properly be construed to 
confer on Tribes an exemption from their own federal 
excise taxes. See pp. 12-22, supra. Thus, application of 

12 See also, e.g., Pet. Br. 15 n.5 (quoting Citizens’ Bank v. 
Parker, 192 U.S. 73, 85-86 (1904)); cf. Whitman v. American 
Trucking Ass’ns, 121 S. Ct. 903, 911 (2001) (doctrine of consti- 
tutional doubt); Lindh v. Murphy, 521 U.S. 320, 324-326 (1997) 
(presumption against retroactivity); Reno v. Koray, 515 U.S. 50, 
64-65 (1995) (rule of lenity); Chevron U.S.A. Inc. v. Natural 
Resources Defense Council, Inc., 467 U.S. 837, 843 n.9 (1984) 
(deference to administrative interpretation). 

28 

the basic tools of interpretation leaves no remaining 
scope for petitioners’ reliance on the Indian canon. 

13 

Although special canons of construction are often 
useful tools, like other such tools they are properly used 
to help resolve genuine interpretive ambiguity, not to 
create doubt about an interpretation where none would 
otherwise exist. See Connecticut Nat’l Bank, 503 U.S. 
at 253-254; cf. Ratzlaf, 510 U.S. at 147-148 (“[W]e do not 
resort to legislative history to cloud a statutory text 
that is clear.”). The Indian canon cannot justify inter- 
pretation of Section 2719(d) in a manner that cannot be 
reconciled with its language and history—the most 
basic tools of interpretation, and the best indicators of 
congressional intent. See, e.g., South Carolina v. Cata- 
wba Indian Tribe, 476 U.S. 498, 506 & n.16 (1986) 
(canon “does not permit reliance on ambiguities that do 
not exist”); DeCoteau v. District County Court, 420 
U.S. 425, 447 (1975); Hagen, 510 U.S. at 411-412, 421; 
Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 
177-178 (1989); Oregon Dep’t of Fish & Wildlife v. 
Klamath Indian Tribe, 473 U.S. 753, 774 (1985); Rice v. 
Rehner, 463 U.S. 713, 732-733 (1983). Accordingly, the 
court of appeals correctly held in this case that Sections 
4401 and 4411 of the Internal Revenue Code apply to 

13 Moreover, the same considerations that make it unnecessary 
to resolve this case as a contest between dueling canons of 
construction also indicate that, if a court were to reach the ques- 
tion, the canon disfavoring implied tax exemptions would prevail 
over the Indian canon under the particular circumstances of this 
case. Indeed, petitioners scarcely contest that the government has 
much the better of the statutory argument using the primary tools 
of construction. See Pet. Br. 29 n.16 (“Here, the face of the statute 
and the legislative history do not clearly demonstrate that the 
construction of § 2719(d)(1) proffered by the Petitioner Nations is 
incorrect.”). 

29 

petitioners’ gaming operations, and that petitioners 
enjoy no exemption from the federal excise taxes so 
imposed. 

CONCLUSION 

The judgments of the court of appeals should be 
affirmed. 

Respectfully submitted. 

THEODORE B. OLSON 

Solicitor General 

CLAIRE FALLON 

Acting Assistant Attorney 

General 

LAWRENCE G. WALLACE 

Deputy Solicitor General 

EDWARD C. DUMONT 

Assistant to the Solicitor 

General 

GARY R. ALLEN 
DAVID ENGLISH CARMACK 

Attorneys 

JUNE 2001 

APPENDIX 

Section 7871 of the Internal Revenue Code of 1986, 
26 U.S.C. 7871, as added by the Indian Tribal Govern- 
mental Tax Status Act of 1982, Pub. L. No. 97-473, Tit. 
II, 96 Stat. 2607, and subsequently amended, provides 
in part as follows: 

§ 7871. Indian tribal governments treated as 
States for certain purposes 

(a) General rule.— 

An Indian tribal government shall be 
treated as a State— 

(1) for purposes of determining whether 
and in what amount any contribution or transfer 
to or for the use of such government (or a 
political subdivision thereof) is deductible 
under— 

(A) section 170 (relating to income 
tax deduction for charitable, etc., 
contributions and gifts), 

(B) sections 2055 and 2106(a)(2) (relat- 
ing to estate tax deduction for 
transfers of public, charitable, and 
religious uses), or 

(C) section 2522 (relating to gift tax 
deduction for charitable and similar 
gifts); 

(2) subject to subsection (b), for purposes 
of any exemption from, credit or refund of, or 

(1a) 

2a 

payment with respect to, an excise tax imposed 
by— 

(A) chapter 31 (relating to tax on special 
fuels), 

(B) chapter 32 (relating to manufactur- 
ers excise taxes), 

(C) subchapter B of chapter 33 (relating 
to communications excise tax), or 

(D) subchapter D of chapter 36 (relating 
to tax on use of certain highway 
vehicles); 

(3) for purposes of section 164 (relating to 
deduction for taxes); 

(4) subject to subsection (c), for purposes 
of section 103 (relating to State and local bonds); 

(5) for purposes of section 511(a)(2)(B) 
(relating to the taxation of colleges and universi- 
ties which are agencies or instrumentalities of 
governments or their political subdivisions); 

(6) for purposes of— 

(A) section 105(e) (relating to accident 
and health plans), 

(B) section 403(b)(1)(A)(ii) (relating to 
the taxation of contributions of 
certain employers for employee 
annuities), and 

3a 

(C) section 454(b)(2) (relating to 
discount obligations); and 

(7) for purposes of— 

(A) chapter 41 (relating to tax on 
excess expenditures to influence 
legislation), and 

(B) subchapter A of chapter 42 (relat- 
ing to private foundations). 

(b) Additional requirements for excise tax 
exemptions 

Paragraph (2) of subsection (a) shall apply 
with respect to any transaction only if, in 
addition to any other require-ment of this title 
applicable to similar transactions involving a 
State or political subdivision thereof, the 
transaction in-volves the exercise of an essential 
governmental function of the Indian tribal 
government. 

* * * * * 

(d) Treatment of subdivisions of Indian tribal 
governments as political subdivisions 

For the purposes specified in subsection (a), a 
sub-division of an Indian tribal government shall 
be treated as a political subdivision of a State if 
(and only if) the Secretary determines (after 
consultation with the Secretary of the Interior) 
that such subdivision has been delegated the 
right to exercise one or more of the substantial 

4a 

governmental functions of the Indian tribal 
government. 

(e) Essential governmental function 

For purposes of this section, the term 
“essential governmental function” shall not include 
any function which is not customarily performed 
by State and local governments with general 
taxing powers.