Business | Law | National | Politics

Tribes urge Obama administration to take a stand on taxation

Assistant Secretary Kevin Washburn discusses taxation during a breakout session at the National Congress of American Indians annual convention in San Diego, California, on October 20, 2015. Photo by Indianz.Com

Tribal leaders and their advocates are asking the Obama administration to take a stronger stand against taxation of their homelands.

Since President Barack Obama took office in January 2009, the Bureau of Indian Affairs has slowly been addressing a dual system of taxation that hinders economic development. A December 2012 regulation reaffirmed that Indian lands cannot be taxed by local and state governments, a move that has helped tribes fend off some encroachments.

And as a growing number of tribes are taking advantage of the Helping Expedite and Advance Responsible Tribal Homeownership (HEARTH) Act, the BIA has utilized the law in a novel way. A string of approval documents published in the Federal Register emphasize the federal government's interest in protecting Indian lands from taxation.

Tribes are now asking the Obama administration to go even further. They are getting behind at draft resolution at the National Congress of American Indians that calls on the BIA to expand existing regulations that would prevent states and local governments from taxing businesses, developments and other economic opportunities on their lands.

The Home Depot at Quil Ceda Village on the Tulalip Reservation in Washington. Photo from QCV

"The United States should be protecting us from the economic depredation that the states are inflicting on us," said Mark Van Norman, an attorney and member of the Cheyenne River Sioux Tribe. "This is protecting self-determination."

Tribes have already cheered the Department of Justice for intervening in a lawsuit filed by the Tulalip Tribes. The state of Washington and Snohomish County impose about $40 million in taxes on the reservation every year but those revenues bypass the tribal community.

"That's huge," Assistant Secretary Kevin Washburn, the head of the BIA, said at NCAI on Tuesday. "Imagine $40 million. Any one of you can imagine tremendous uses for an amount of money like that going to to you instead of the state."

Mark Fox, the chairman of the Mandan, Hidatsa and Arikara Nation, brought some even bigger figures to the debate. A dual system of taxation on energy development has poured $1 billion into the state of North Dakota's coffers in less than two years, he said.

A fracking well on the Mandan, Hidatsa and Arikara Nation in North Dakota. Photo by Talli Nauman / Native Sun News

"We wish the numbers were only $40 million," Fox said. "A billion dollars. Not $40 million. A billion dollars."

If the tribe were the sole government imposing taxes on energy development, the revenues would fund essential programs and services on the Fort Berthold Reservation, Fox said. Fixing all of the roads that have taken a heavy hit from oil traffic is expected to cost at least $500 million.

"Trust land is set up for a purpose, for a reason," Fox said. "It's to benefit Indian people."

To address the situation, tribes and their advocates want the BIA to amend the Indian Trader Regulations. They believe changes could clarify the taxing authority of their governments and modernize a system that hasn't been updated in decades. They also point out that states, through an effort known as the Streamlined Sales Tax and Use Agreement, are already addressing dual and sometimes conflicting systems of taxation in an age where the Internet has changed business practices.

The Cabela's at Quil Ceda Village on the Tulalip Reservation in Washington. Photo from Cabela's

"We need to get the state and local governments out of our pockets," said Robert Odawi Porter, an attorney and former president of the Seneca Nation in New York.

Washburn was receptive to the ideas expressed by the tribes but he expressed some skepticism if only to encourage them to come up with a strong justification for amending the regulations, a process that could take some time with just 15 months left in Obama's term. He also emphasized the slow-moving nature of the federal bureaucracy.

“We are a ship that's slow to turn," Washburn said yesterday. A day earlier, he told tribal leaders that he plans to stay at the BIA for as long as possible but not likely to the very end of the Obama administration in January 2007.

The Tulalip Tribes, meanwhile, are in the very early stages of their taxation case. At issue are property, business and occupation and sales taxes imposed on business at the Quil Ceda Village, a commercial district that is home to over 150 shops, restaurants, entertainment venues and national outlets including Walmart, Home Depot and Cabela's.

“This truly is an Indian economy," said tribal attorney Lisa Koop.

Snohomish County objected when DOJ intervened on the tribe's behalf. But the federal judge handling the case allowed the government in the case due to the interests at stake.

“To have the feds file affirmative litigation is not insignificant," Koop said. "This really took a lot of work."

Other tribes have been slowly winning taxation lawsuits even without DOJ's direct involvement. The Chehalis Tribe in Washington, the Seminole Tribe of Florida and the Poarch Band of Creek Indians in Alabama have emerged victorious recently.

Federal Register Notices:
HEARTH Act Approval of Seminole Tribe of Florida Regulations (August 12, 2015)
Residential, Business, and Wind and Solar Resource Leases on Indian Land (December 5, 2012

Join the Conversation
Related Stories:
Brian Pierson: Big decision in Seminole Tribe's taxation case (09/01)
Seminole Tribe wins major ruling in taxation dispute in Florida (8/26)
Official in Oklahoma makes bizarre claim about HEARTH Act (08/07)
DOJ sides with Tulalip Tribes in taxation dispute in Washington (08/04)
Agua Caliente Band won't pursue certain taxation claims in lawsuit (06/15)
11th Circuit hears arguments in Seminole Tribe taxation case (05/13)
Supreme Court won't take up Seminole Tribe's taxation case (01/13)
Glen Stankee: Seminole Tribe wins ruling in state taxation case (09/23)
Seminole Tribe wins ruling over state taxation at gaming facilities (09/11)
Opinion: Decision signals shift on state taxation in Indian Country (09/10)