Opinion ID: 1190432
Heading Depth: 1
Heading Rank: 2

Heading: taxation of sales

Text: The trial court granted a permanent injunction against Thlopthlocco Tribal Town, a federal corporation for the nonpayment of assessed taxes and failure to file records with the OTC. The Court of Appeals agreed with the trial court on the taxation question. Its opinion, however, was without benefit of the Tenth Circuit opinion in Citizen Band Potawatomi Indian Tribe v. Oklahoma Tax Commission, 888 F.2d 1303 (19th Cir.1990). After the rendering of the Court of Appeals' opinion, the 10th Circuit Citizen Band Potawatomi opinion was itself reversed by the United States Supreme Court on certiorari. The Supreme Court held that under the doctrine of tribal sovereign immunity, the State may not tax such sales to Indians, but remains free to collect taxes on sales to non-tribal members. Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe, 498 U.S. 505, ___, 111 S.Ct. 905, 908, 112 L.Ed.2d 1112 (1991). [3] Thus, the District Court and the Court of Appeals were incorrect in holding that all smoke shop sales were subject to state tax. As conceded by the OTC in its filing of Additional Authority, the remaining issues are resolved by Citizen Band Potawatomi. First, the OTC had questioned whether the smoke shop land was Indian Country. Citizen Band Potawatomi directly addressed the question of whether land held by the federal government in trust for a tribe is Indian country within the meaning of 18 U.S.C. § 1151. The High Court held that it was. Second, Citizen Band Potawatomi specifically states that the doctrine of sovereign immunity has not been abandoned. Congress might have dispensed with it, but has not seen fit to do so. Id. With this in mind, the Supreme Court declined to modify the long-standing doctrine. Tribal sovereign immunity prevents the state from taxing sales of cigarettes to tribal members. However, the Court held that sovereign immunity does not excuse the tribe from its obligations to assist in the collection of validly-imposed taxes. Id., 498 U.S. at ___, 111 S.Ct. at 911. Tribal sellers are obligated to collect and remit state taxes on sales by tribal smoke shops to non-tribal members. Id.