Court Lets Stand Rulings on Taxing Bingo Games in Spokane
Jun. 28, 1991
WASHINGTON (AP) _ The Supreme Court today let stand rulings that stopped Spokane, Wash., from taxing money raised in bingo games sponsored by the American National Red Cross.
The court, without comment, refused to hear arguments that Spokane wrongly was forced to halt imposing such taxes and to refund about $800,000 to its local Red Cross chapter.
Created by Congress in 1905, the Red Cross pays for its relief efforts primarily through private fund-raising activities.
Its Inland Northwest Chapter began sponsoring bingo games in Spokane in 1982 as one means of raising money.
The Washington Legislature authorizes certain types of gambling, including bingo, for charitable fund-raising, but also allows local governments to tax the proceeds of such activities.
After paying the 10 percent tax imposed on its bingo games proceeds for four years, the Red Cross chapter in 1986 sought a refund of all past taxes paid.
The request was denied, and the chapter continued paying bingo taxes until the federal government sued Spokane over the tax.
A federal judge ruled that the Red Cross chapter, as ''an instrumentality of the United States,'' was immune from having such proceeds taxed by any state or local government.
The judge, upheld by the 9th U.S. Circuit Court of Appeals last October, ordered the state to stop taxing the bingo proceeds and to refund all taxes collected.
The city refunded about $800,000, according to M. Laurie Flinn Connelly of the city attorney's staff.
Both lower courts relied heavily on a 1966 Supreme Court decision in which the Red Cross was deemed to be ''an instrumentality of the United States for purposes of immunity from taxation levied on its operations.''
In the appeal acted on today, lawyers for Spokane said that although a federal instrumentality, the Red Cross is not immune from taxation when it engages in bingo and similar gambling activities.
The 9th Circuit court rejected that contention.
Lawyers for the city also argued that the lower courts wrongly required the payment of tax refunds. ''The appropriate remedy (if the bingo proceeds are immune) is cessation of taxation, not refund,'' the appeal said.
Bush administration lawyers urged the justices to reject the city's appeal.
''The decision ... merely requires the city to disgorge the revenues it has unconstitutionally collected to the taxpayer who prevailed in ... challenging the tax,'' government lawyers said.
The Inland Northwest Chapter since has moved its bingo operations outside of the city to adjacent Spokane County.
The case is Spokane vs. U.S., 90-1247.