Law | Opinion | Trust

Opinion: Decision signals shift on state taxation in Indian Country






The flag of the Seminole Tribe. Image from Florida Heritage

Attorneys Del Laverdure and Bryan Newland discuss a recent federal court decision blocking the state of Florida from imposing taxes on lands held in trust for the Seminole Tribe:
Last week’s decision out of the U.S. District Court in Southern Florida in Seminole Tribe of Florida v. Florida could signal a potential shift in Indian tax law.

For many tribal leaders and Indian law practitioners, tax law in Indian country is an intimidating jurisdictional maze – often times allowing state and local taxes to apply in Indian country in spite of tribal territorial sovereignty. The outcome of an Indian tax case depends upon a combination of the type of tax or government fee imposed, the government doing the taxing, the individual or entity being taxed, and the location of the activity, individual, or property being taxed.

Many states have levied taxes on non-Indians and non-Indian businesses working in Indian country; and, in recent years, these efforts have been upheld under the Supreme Court’s decision in White Mountain Apache Tribe v. Bracker. Under that case, a reviewing court must balance the interest of the tribe, the state, and the federal government when deciding whether state taxes in Indian country are preempted by federal law. In many losing cases, tribal litigants have tried to invalidate state taxation without a clear statement of the federal government’s interest.

In the Seminole case, the State of Florida was attempting to impose two different taxes on tribal lands: a “rental tax” on businesses leasing property from the Tribe; and, a “utility tax” on electricity delivered to the Tribe’s lands. The Court held that Florida’s rental tax was preempted by federal laws governing leasing on Indian lands (it also invalidated the utility tax because the legal incidence of the tax fell on the Tribe).

Get the Story:
Del Laverdure and Bryan Newland: Recent Decision Applying BIA Leasing Regulations Signals a Shift in Indian Tax Law (Turtle Talk 9/10)

Federal Register Notice:
Residential, Business, and Wind and Solar Resource Leases on Indian Land (December 5, 2012)

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Washington counties owe millions for illegal tax on reservations (07/07)
Agua Caliente Band leaseholders seek $7M in tax refunds (04/18)
Agua Caliente Band sues county to block tax on Indian lands (1/7)
9th Circuit sides with Chehalis Tribe in county taxation dispute (07/30)