Opinion ID: 1118569
Heading Depth: 1
Heading Rank: 4

Heading: The Tax Commission Has Cognizance Of Federal-Law Issues

Text: State courts have the constitutionally invested authority over any federal-law claim or issue not expressly withheld from their jurisdiction by an act of Congress. [19] Tribal sovereign immunity claims or defenses sought to be based on federal law must yield to this nation's dual sovereignty scheme and its dual court system. Oklahoma Tax Commission v. Graham; [20] Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma. [21] In Graham the Court held that a tribal sovereign immunity counterclaim, pressed in a state-court suit to enforce a tax assessment against an Indian tribe for cigarette sales and bingo receipts, is not removable to a federal court. It stands cognizable in a state court. Citizen Band teaches that tribal immunity deprives neither state administrative institutions of their power to tax tribal sales of goods (cigarettes) to nontribal members nor state courts of their authority to enforce the tax through equitable remedies. There, the Court notes that while the Tribe's sovereign immunity bars the state from pursuing its most effective direct remedy to collect the taxes (a lawsuit against the Tribe), alternative procedural avenues avail. Individual tribal members employed in the Indian smokeshops may not claim tribal immunity. States are hence free to collect from the wholesalers taxes on unstamped cigarettes supplied to tribal stores. [22] Oklahoma's own decisional law foreshadowed Citizen Band. It had held a Tribe's immunity from taxes not to extend to tribal activities or transactions affecting nontribal members. [23] While the federal government shares its tax immunity [24] with the Indian tribes (for whose benefit the government holds reservation lands in trust), [25] this immunity does not ipso facto extend to private entities doing business with the government. [26] Under the now repudiated intergovernmental tax immunity doctrine, [27] state government could not tax income that an individual directly derived from any contract with the federal government. Today, unless Congress has expressly or impliedly acted to preempt state taxation, a State can impose a nondiscriminatory tax on private parties with whom the United States or an Indian tribe does business, even though the financial burden of the tax may fall on the United States or tribe. [28] Unless federal legislation were to preempt the levy, the rise of the new doctrine would make a lessee's oil production from Indian land amenable to state taxation. [29] Had City Vending pressed the Commission with its quest to reduce the assessment to exclude exempt sales and interposed  for reduction of the levy  sales in intratribal transactions to the ultimate consumer, the Commission not only would have had cognizance to entertain that federal-law defense, it would have been its duty to so do.