A Joint Tax Committee document says the Service could change this result itself – as a technical matter, leaving aside politics:
No specific Code provision governs the U.S. income tax liability of Indian tribes. However, the Internal Revenue Service (“IRS”) has long taken the position that Indian tribes and wholly owned tribal corporations chartered under Federal law or the Oklahoma Indian Welfare Act are not taxable entities for U.S. income tax purposes and are immune from U.S. income taxes, regardless of whether the activities that produced the income are commercial or noncommercial in nature or are conducted on or off the tribe’s reservation.
Wouldn’t a change be the right answer? Wood’s article concludes: “As with many other tax rules, these rules are becoming more controversial. Expect renewed discussion of these rules and their limits in the future.”