Law & Principles
Ray Carter | May 22, 2023
Oklahoma Supreme Court to decide if ‘reservation’ Indians pay income tax
The U.S. Supreme Court’s 2020 ruling in McGirt v. Oklahoma, which declared that the Muscogee (Creek) Nation’s Oklahoma reservation was never formally disestablished for purposes of federal major-crimes law, has now led to a state court case that will determine if all American Indians in the affected areas are now exempt from paying Oklahoma state income tax.
The ripple effects of the McGirt ruling have led courts to declare that several reservations that cover most of eastern Oklahoma were never formally disestablished, despite a century of history in which both state and tribal officials operated to the contrary.
A case now before the Oklahoma Supreme Court, filed by Alicia Stroble, argues that all American Indians living on the affected McGirt reservation areas are now exempt from paying state income tax—even if they live on privately owned land purchased from non-Indian owners.
Stroble was employed by the Muscogee (Creek) Nation in tax years 2017 to 2019 and worked on land within the boundaries of the historic Muscogee reservation.
However, the Oklahoma Tax Commission declined Stroble’s request for an exemption from state income tax during those years. Although Stroble was employed by a tribe and working on tribal property, the commission concluded she did not meet the third requirement for an exemption because Stroble does not live on either restricted or trust land.
Instead, Stroble lives on “fee” land. The Congressional Research Service notes that “fee lands” are “lands owned by a person who can freely alienate or encumber land without federal approval”—in this case, privately owned property.
“The federal government typically does not have a role in land management activities that include fee interests,” the Congressional Research Service notes.
In contrast, reservation property typically consists of either “trust lands” that are owned by the federal government and held in trust for the benefit of the tribe communally or tribal members individually, or “restricted fee lands” that are owned by a tribe or tribal member but are subject to a restriction against sale or transfer.
But in legal filings, Stroble and her attorneys argue that “all lands within the Muscogee (Creek) Reservation are ‘Indian country’ regardless of their fee status” and that it is “irrelevant” if property is privately owned rather than trust lands or restricted land.
Several tribes whose historic reservations were declared to have never been disestablished under the McGirt ruling are backing Stroble’s effort, arguing that their historic reservations should be treated like reservations in other states that remain mostly owned by either the federal government as trust lands or as restricted fee lands.
A joint motion of amici curiae filed by the Muscogee (Creek) Nation and the Seminole Nation of Oklahoma argues that the case will determine “whether the State may tax tribal citizens on Indian reservations in contravention of bedrock principles of federal Indian law.”
An amicus curiae brief filed by the Cherokee Nation, Chickasaw Nation, and Choctaw Nation of Oklahoma declares that tribal “exercise of sovereignty on their Reservations is good for Oklahoma.”
The tribes acknowledge that Stroble obtained her home property through a private sale from a non-tribal seller.
But in its brief, the Oklahoma Tax Commission notes that the U.S. Supreme Court ruled in City of Sherrill v. Oneida Indian Nation of New York that a tribe cannot effectively re-establish tribal sovereignty over lands that had long since been handed over to non-tribal individuals, and notes that “generations have passed since the Creek Nation ceased to exercise sovereign authority over the land in question” in Oklahoma.
The state brief notes that Stroble lived in Okmulgee on land bought from a non-Indian and states that her “purchase from a non-tribal grantor shows that, although the parcel may once have been conveyed to the Creek Nation, it was long ago allotted and sold.”
“The State’s interest in imposing a non-discriminatory individual income tax on its citizens living on unrestricted fee land outweighs the minimal tribal interest in avoiding such a tax,” the state’s brief argues. “No federal interest compels a contrary result.”
In its brief, the Oklahoma state government notes that more than 90 percent of residents of the historic Muscogee (Creek) reservations are not members of the Creek Nation and 95 percent of property in the historic reservation areas is fee land.
“The State had a responsibility to provide governmental services to all of those residents—tribal members and nonmembers alike—that the Creek Nation could not possibly discharge, and the tribe generally lacks ‘civil authority over nonmembers on non-Indian fee land,’ even if the land is ‘Indian country.’ Atchison Trading Co. v. Shirley … (2001),” the state brief declares (emphasis in original). “Tribal members, too, are ‘full fledged citizens of the State of Oklahoma,’ and the State uses tax revenue to provide them with ‘schools, roads, courts, police protection and all the other benefits of an ordered society.’”
The state also notes that “there is no dispute that the State has exercised sovereign control over fee land for more than a century and that it has consistently provided services within the area.”
Elsewhere, the state notes that, similar to the situation that resulted in the U.S. Supreme Court’s Sherill ruling, “The Creek Nation has not exercised sovereign authority over fee land for over a century, during which ‘[g]enerations have passed,’ ‘non-Indians have owned and developed the area,’ and the State has ‘continuously governed the territory.’”
“Appellant and the Creek Nation contend that the tribe ‘continually governed its [r]eservation lands … for the past 200 years,’” the Oklahoma Tax Commission’s brief notes. “… But appellant identifies examples of tribal ‘governance’ only after 1979 …”
While Stroble and her attorneys cite some cases to show that American Indians living on reservation land are not subject to state taxation, the Oklahoma Tax Commission’s brief points out those situations look nothing like the on-the-ground reality in Oklahoma.
“Appellant cities several cases involving the State’s authority to tax tribal members in ‘Indian country,’” the state’s brief notes, “but none of them involved ‘Indian country’ with any resemblance to eastern Oklahoma: where the vast majority of land is non-tribal fee land.”
Director, Center for Independent Journalism
Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.