"Perhaps the most innovative and aggressive means of taxing tribes also comes from California. It is established law that Indian tribes are free from state taxation unauthorized by Congress. In Oklahoma Tax Commission v. Chickasaw Nation, 515 U.S. 450 (1995), the United States Supreme Court held that a state could not tax a tribe’s sales of motor fuel. However, the Court did permit the state of Oklahoma to tax a non-tribal fuel supplier. In a recent California Board of Equalization (BOE) legal opinion, the Board’s legal counsel reasons that it is perfectly legal to tax an out of state tribal fuel supplier, supplying fuel to instate tribes selling fuel on reservation lands. The Board reasons that because the fuel did not enter the state, via reservation lands, and entered via a state highway, the fuel is subject to tax.

Further, says the BOE, tribal suppliers, who also happen to be retailers, operating fuel stations on reservation lands, are not exempt from fuel excise taxes because they are designated as “enterers” subject to tax under California’s tax scheme. The Board’s reasoning is illogical because irrespective of a tribe’s position as retailer or supplier, or both – the fact still remains it is tribal taxation of motor fuel sales that occur on Indian lands. Moreover, the state fuel tax is unauthorized by Congress as held in established Supreme Court precedent. The Board’s motor fuel tax opinion, No. 10-475, has yet to pass legal muster. Stay tuned as this issue awaits further development."

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Jack Duran : Taxation of Indian Tribes: A Modern-Day Shakedown (Indian Country Today 4/25)