Can Oklahoma tax tribal citizens on reservations? Judge dismisses case before deciding

A U.S. district court judge dismissed a lawsuit this week that challenged Oklahoma’s right to tax tribal citizens on tribal reservations.

Federal courts can’t hear tax appeals that can be addressed through a state court system, Judge Eric Melgren ruled.

With his decision, all eyes turn now to a similar case pending before the Oklahoma Supreme Court. Both legal fights centered on a pivotal question that could affect thousands of taxpayers, as well as state coffers: Can Oklahoma collect income taxes from tribal citizens who live and work on reservations recognized after a transformational 2020 Supreme Court ruling?

Melgren didn’t provide an answer. He determined that under the federal Tax Injunction Act, the U.S. District Court in Muskogee did not have jurisdiction to consider the questions raised in the case. He granted the state’s motion to dismiss. 

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Harold and Nellie Meashintubby had sued Oklahoma’s three tax commissioners in February 2022 after the commission denied their requests for income tax waivers. The couple contended Oklahoma was wrong. They are Choctaw Nation citizens who live and work on the Choctaw reservation. 

States generally don’t have the power to tax tribal citizens who live and work within their tribe’s territory. 

But no court has yet ruled whether the six tribal reservations recognized since McGirt v. Oklahoma — including the Choctaw reservation in the southeast corner of the state — count as tribal lands under tax law. The landmark ruling looked at criminal law. 

Oklahoma officials have insisted the ruling doesn’t extend to civil powers such as collecting taxes. But experts in Native American law have pointed out the state’s tax code uses the same definition for “Indian Country” as the one ruled on by the Supreme Court.

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Without a court ruling, the outcomes of thousands of tax waiver requests remain uncertain. The state Tax Commission estimated in 2020 that Oklahoma stands to lose about $73 million in annual income taxes. The state reported that it net more than $4.1 billion in individual income taxes last fiscal year.

Joseph Williams, an attorney who filed the federal lawsuit on behalf of the Meashintubbys, said they are considering their next steps, which could include an appeal to the 10th Circuit Court of Appeals.

Emily Haxton, a spokesperson for the Oklahoma Tax Commission, declined to comment on the ruling. She said it spoke for itself.

Carly Atchison, a spokesperson for Oklahoma Gov. Kevin Stitt who appointed Oklahoma’s tax commissioners, said the governor agreed with the court’s decision. 

“The federal judge rightly found that the federal court does not have jurisdiction to resolve an Oklahoman’s state income tax protest,” she said in a written statement. “All such protests are subject to the same process with the Oklahoma Tax Commission as provided by Oklahoma law.” 

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The Tax Commission ruled on a separate, but similar, tax appeal in October, determining the state could tax a Muscogee Nation citizen and employee. That taxpayer, Alicia Stroble, appealed to the Oklahoma Supreme Court. 

Her attorney Michael Parks said he would file his main arguments in the case later this month.

Other tax protests have been placed on hold until the state’s highest court weighs in, both Parks and Williams said.

Molly Young covers Indigenous affairs for the USA Today Network's Sunbelt Region. Reach her at mollyyoung@gannett.com or 405-347-3534.