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Glen Stankee: Seminole Tribe wins ruling in state taxation case

The flag of the Seminole Tribe. Image from Florida Heritage

A federal judge sided with the Seminole Tribe of Florida in a dispute with the Director of the Florida Department of Revenue regarding utility and rental taxes on tribal land. The decision will likely have an impact on Native American tribes across the U.S.

A team of lawyers from Akerman represented the tribe in the federal district court for the Southern District of Florida in challenging the constitutionality of the Florida commercial rental tax as applied to rentals of Indian land and the Florida gross receipts tax as applied to public utility services (specifically electricity) that tribes use on their reservations. The court agreed that each of these taxes, as applied in this manner, violates federal law.

The court rejected each of the state's arguments that the provisions of the federal leasing regulations, which expressly prohibit state taxation of leasehold or possessory interests in tribal land, are invalid or inapplicable. While very few states impose a commercial rental tax, all states tax public utility services. As applied to public utility services that tribes use on their reservations, this tax is categorically barred by the Indian Commerce Clause if the legal incidence of the tax rests with the consumer.

In this case, the court found that the legal incidence of the Florida utilities tax rests with the consumer (i.e., the tribe) because Florida law is silent on the subject of legal incidence and provides for the collection of the tax from the consumer as an addition to the cost of the services. Accordingly, the court held that the Florida utilities tax, as applied to utility services that tribes use on their reservations, is unconstitutional. That is likely to be the case in the vast majority of states.

However, even if state law places the legal incidence of the utilities tax on the utility services provider, the tax is barred to the extent that the utility services are used in an on-reservation activity whose regulation is preempted by federal law. Where such a tax is incompatible with the policies underlying the federal regulation of that activity, under White Mountain Apache Tribe v. Bracker, it is valid only if it is narrowly tailored to compensate the state for services it specifically provides in connection with that particular activity.

Public utility taxes are not narrowly tailored. They are taxes of general application that fund off-reservation services, such as law enforcement, that are provided by the states to their residents in general.

Glen Stankee, a Florida Bar Board Certified Tax Attorney, led the Akerman team in representing the Seminole Tribe. He has significant experience challenging the constitutionality of state tax schemes as applied in Indian country, including state fuel tax schemes. He represents taxpayers at all stages of federal and state tax litigation, including trials and appeals. He has argued appeals in various Federal Circuit Courts of Appeals. Glen also has extensive experience in litigating tax cases in various state trial and appellate courts. He can be reached via email at

Relevant Documents:
Opinion: Seminole Tribe v. Florida | Judgment: Seminole Tribe v. Florida

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

Related Stories:
Seminole Tribe wins ruling over state taxation at gaming facilities (09/11)
Opinion: Decision signals shift on state taxation in Indian Country (9/10)

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