In a 22-page filing calling the McGirt v. Oklahoma decision “incorrectly decided,” attorneys for the Oklahoma Tax Commission asked the U.S. Supreme Court to decline to review an Oklahoma Supreme Court decision which held that Muscogee Nation citizen and employee Alicia Stroble is subject to state income tax. Stroble filed a petition for certiorari in September asking the nation’s highest court to review her case.
While the OTC focused its argument on why certiorari should be denied, it also asked the court to “revisit McGirt” if it does take the case.
“Should the court grant review, it need not resolve the exact scope of McGirt in order to affirm the decision below,” attorneys for the OTC wrote. “But to the extent any ambiguity remains about the scope of McGirt, the court may wish to clarify that the decision is limited to ‘the narrow issues of criminal jurisdiction under the Major Crimes Act’ — as the court below correctly recognized. In the alternative, although it is not necessary for the court to do so in order to affirm the decision below, the court may wish to revisit McGirt itself, both because it was incorrectly decided and because the predicted problems with the decision have been borne out in practice.”
Generally, state governments have lacked the authority to tax tribal citizens who live in their tribe’s Indian Country and derive their income from tribal sources under the U.S. Supreme Court’s 1972 case McClanahan v. Arizona State Tax Commission. Stroble, the Muscogee National Council secretary, argued the McGirt decision’s recognition of the Muscogee Reservation allowed her to qualify for the exemption since she was a tribal citizen, worked for the tribe and lived within the Muscogee Reservation affirmed by the McGirt decision.
In a July per curiam opinion with no specific justice designated as its author, the Oklahoma Supreme Court disagreed without citing prior Indian law tax cases like McClanahan. Instead, the six-justice majority emphasized that it was declining to extend the McGirt decision’s affirmation of the Muscogee Reservation to issues of civil jurisdiction.
“To date, the United States Supreme Court has not extended its ruling in McGirt to the state’s civil or taxing jurisdiction,” the Oklahoma Supreme Court’s majority opinion stated. “And it is not this court’s place to do so.”
OTC argues McClanahan does not apply in Oklahoma
The OTC spent much of its new brief arguing the McClanahan decision does not apply in the state of Oklahoma, citing the 1943 U.S. Supreme Court case Oklahoma Tax Commission v. United States.
“Petitioner traces her proposed rule to two of this court’s decisions from the mid-19th century. But the court considered both [In re New York Indians and In re Kansas Indians] in Oklahoma Tax Commission v. United States, and Justice (Hugo) Black explained that their ‘underlying principles’ ‘do not fit the situation of the Oklahoma Indians,” the OTC’s attorneys wrote. “But in reaching that conclusion (in McClanahan) under the treaties and statutes applicable to the Navajo Nation, the court twice invoked the decision in Oklahoma Tax Commission v. United States in order to clarify what the case before it did not involve.”
In the 1943 OTC case, the U.S. Supreme Court found the state could levy an estate tax on property not explicitly exempted from taxation by an act of Congress. Based on the 1943 case, the OTC is arguing the status of Indians in Oklahoma is fundamentally different from those living within the Navajo Nation Reservation in Arizona.
“As the court explained, it was not ‘dealing with Indians who have left or never inhabited reservations set aside for their exclusive use or who do not possess the usual accoutrements of tribal self government,'” the OTC’s attorney’s wrote. “And the court emphasized that it had not ‘rigidly applied’ doctrines related to tribal sovereignty ‘in cases where Indians have left the reservation and become assimilated into the general community.'”
5 Tribes, national Indian organizations file amicus briefs
Before the OTC responded to Stroble’s lawsuit, the Five Tribes of Oklahoma all submitted amicus briefs supporting Stroble. The Muscogee Nation and Seminole Nation of Oklahoma each submitted their own amicus brief, while the Cherokee, Chickasaw and Choctaw nations submitted a joint brief.
The three “friend of the court” briefs all focused on another OTC case decided by the U.S. Supreme Court in 1993, Oklahoma Tax Commission v. Sac & Fox Nation, which held that “absent explicit congressional direction to the contrary, it must be presumed that a state does not have jurisdiction to tax tribal members who live and work in Indian Country.”
The Muscogee Nation’s brief summarized the argument, which the Oklahoma Supreme Court’s majority opinion this summer did not address.
“This court’s unanimous decision in Oklahoma Tax Commission v. Sac and Fox Nation, applies the per se rule in the precise context of this case: state taxation of the income of tribal members living and working in their tribe’s Indian Country,” Muscogee Nation attorneys wrote. “Sac and Fox explains that such taxation is barred unless Congress has ‘clearly expressed’ its assent.”
Several Native American organizations also joined together to submit an amicus brief to the court. Those organizations include the National Congress of American Indians, United South and Eastern Tribes Sovereignty Protection Fund, Native American Finance Officers Association, and the National Intertribal Tax Alliance.
The national organizations warned the court that allowing the Oklahoma Supreme Court decision to stand could upset tribal compacts across the nation.
“In addition, the categorical rule is the foundation for hundreds of tribal-state tax compacts. These agreements, while imperfect, are a critical tool for resolving disputes and simplifying tax administration in Indian Country. Many compacts expressly rely on the categorical rule by recognizing that the state cannot tax tribal citizens’ purchases or other activities in Indian Country,” the groups’ attorneys wrote. “Any erosion of this categorical rule would risk unsettling these compacts, which are often the product of years of negotiations.”
