PUBLISH
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
_______________________________
THE CHICKASAW NATION, )
)
Plaintiff - Appellant, )
) No. 92-7117
)
v. )
)
THE STATE OF OKLAHOMA, )
ex rel THE OKLAHOMA TAX COMMISSION, )
THE CHICKASAW NATION, )
)
Defendant - Appellees. )
________________________
Order
Filed August 31, 1995
________________________
Before McKAY, ANDERSON, EBEL, Circuit Judges.
_______________________
The Supreme Court granted certiorari to review our decision
in this case published at 31 F.3d 964. It's opinion and order
affirming in part and reversing in part is published at 115 S. Ct.
2214 (1995). Pursuant to the mandate of the Supreme Court, we
reaffirm our prior opinion and order except as it relates to the
issue of state taxation of the income of tribal member employees
earned from tribal enterprises in Indian Country but who do not
reside in Indian Country. As to that issue, we vacate our prior
opinion and order and affirm the trial court's order.
We remand for further proceedings consistent with our
original opinion and order as herein modified.
AFFIRMED in part, VACATED in part, REVERSED in part, and
REMANDED with instructions.
ENTERED FOR THE COURT
Monroe G. McKay
Circuit Judge
PUBLISH
FILED 7/29/94
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
______________________________
)
CHICKASAW NATION, )
)
Plaintiff-Appellant, )
)
v. ) No. 92-7117
)
STATE OF OKLAHOMA ex rel. OKLAHOMA )
TAX COMMISSION, ROBERT E. ANDERSON, )
CHAIRMAN OF THE TAX COMMISSION, )
ROBERT L. WADLEY, VICE-CHAIRMAN OF )
THE TAX COMMISSION, AND DON )
KILPATRICK, SECRETARY OF THE TAX )
COMMISSION, )
)
Defendants-Appellees. )
____________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
(D.C. No. CV-91-310-NJ)
______________________________
Bob Rabon of Rabon, Wolf & Rabon, Hugo, Oklahoma, for
Plaintiff-Appellant.
David Hudson, General Counsel (with David Allen Miley, Assistant
General Counsel, on the brief), Oklahoma Tax Commission, Oklahoma
City, Oklahoma, for Defendants-Appellees.
______________________________
Before ANDERSON, McKAY, and EBEL, Circuit Judges.
______________________________
McKAY, Circuit Judge.
______________________________
Appellant Chickasaw Nation ("Tribe" or "Chickasaw"), a
federally recognized Indian tribe, challenged the State of
Oklahoma's authority to impose certain taxes on sales, income,
motor fuel and 3.2% beer to transactions occurring in Chickasaw
Indian country. The case was submitted to the district court upon
stipulated facts on cross motions for summary judgment. The
Chickasaw appeal from the district court's grant of summary
judgment on each of the issues in favor of the State of Oklahoma
and from that court's denial of the Chickasaw's cross-motion for
summary judgment.
I. FACTS
In submitting the case to the district court for rulings on
the cross-motions for summary judgment, the parties stipulated,
inter alia, that
B. Plaintiff [the Tribe] owns and operates retail
sales outlets on lands held in trust for it by the
United States on which it sells tobacco products, motor
fuel, beer and other goods. It does not collect sales
taxes on its sales to tribal or non-tribal members but
is required to pay sales taxes on motor fuel products
and beer when it purchases them from its wholesale
vendors at said retail locations. Defendants [the
State] impose sales taxes on retail purchases of goods
made by plaintiff where defendants contend such goods
are used for "proprietary" as opposed to "governmental"
purposes and when defendant contends the goods are
purchased for resale to non-tribal members.
C. Plaintiff has approximately 275 tribal member and
non-tribal member employees who earn their wages on
tribal trust lands. Defendants are collecting state
income taxes on the earnings of said employees.
(Amended Pre-Trial Order at 2-3, Appellant's App. Doc. 11.)
We review the grant or denial of summary judgment de novo,
applying the same legal standard used by the district court. -
Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912
F.2d 1238, 1241 (10th Cir. 1990). We view the record in the light
most favorable to the party opposing the grant of summary
judgment, here, the Tribe, to determine whether there is any
genuine issue of material fact remaining for trial. Russillo v.-
Scarborough, 935 F.2d 1167, 1170 (10th Cir. 1991); Deepwater
Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th
Cir. 1991).
In their Amended Joint Pretrial Order, the parties stipulated
that the sole issues of "fact" remaining to be litigated were as
follows:
A. The Chickasaw Nation is beneficiary to treaties
with the United States which agree that no state may
pass laws for it. (Defendant contends that this is a
question of law and not an issue of fact.)
B. Defendants have attempted to and are imposing state
tax laws on the plaintiff tribal government and its
constitutents [sic] in violation of said treaties,
congressional enactments and federal policy. Such
conduct by the defendant is preempted by federal law
and infringes on plaintiff's right to self-government
and frustrates federal policy. (Defendant contends that
this is a question of law and not an issue of fact.)
(Amended Pre-Trial Order at 4). With respect to the first issue,
the Chickasaw point to treaty language stating that "no territory
or state shall ever have a right to pass laws for the government
of the [Chickasaw] or their descendants."1 The State responds
---------------
1 The treaty actually refers to the Choctaw Nation rather than
the Chickasaw. However, the treaty provisions were later applied
by Congress to the Chickasaw. See supra n.9.
that the treaties cited by the Chickasaw are not relevant because
they were later abrogated by acts of Congress. The district
court did not address the issue, finding that the taxes did not
abridge the Tribe's right of self-government and thus did not
violate the treaty language. We agree with the State that both
the continuing viability of the treaties cited by the Chickasaw
and the interpretations thereof are questions of law and not of
fact. Turning to the second stipulated issue remaining for
trial, we conclude that whether the taxes imposed by the State
contravene the aforementioned treaties and are violative of the
Chickasaws' right to self-government is also a question of law
rather than an issue of fact.
Accordingly, as the parties have stipulated to all of the
facts before us, there can be no genuine issue of material fact
remaining for litigation, and our review is limited to the
question whether the substantive law was correctly applied.
Franks v. Nimmo, 796 F.2d 1230, 1235 (10th Cir. 1986). We
therefore review de novo the district court's treatment of both
of these issues and their impact on the four taxes in dispute in
this case.
II. BEER TAX
The Chickasaw operate retail stores in which they sell 3.2%
beer. This beer is purchased from wholesale distributors.
Oklahoma law provides for a tax upon 3.2% beer, in the amount of
$11.25 per 31 gallons. 37 Okla. Stat. Ann. 163.3 (West 1990).
The district court concluded that the State of Oklahoma had a
strong interest in regulating 3.2% beer and that under our
holding in Citizen Band Potawatomi v. Oklahoma Tax Com'n, 975 F.2d
1459 (10th Cir. 1992), this regulatory authority encompassed the
power to tax the sale of such beer. The district court thus
assumed that the power to tax is encompassed within the power to
regulate. We first address this assumption.
In Rice v. Rehner, 463 U.S. 713 (1983), the Supreme Court
faced the issue whether California could require a member of an
Indian tribe who operated a general store on an Indian
reservation, in which she sold alcoholic beverages, to obtain a
state liquor license. The Court set out a two-part test to
determine when state regulation of activities in Indian country is
preempted. Id. at 718. Such preemption occurs when
application of state law: 1) "would interfere with reservation
self-government," or 2) "would impair a right granted or reserved
by federal law." Id. (quoting Mescalero Apache Tribe v. Jones,
411 U.S. 145, 148 (1973). In determining whether application of
state law would interfere with Indian self-government, the court
must consider the tradition of Indian sovereignty. If there is a
tradition of Indian sovereignty in the area concerned, then an
explicit statement from Congress providing that state law shall
apply is usually required. Id. at 719-20. The Rice Court
concluded that "tradition simply has not recognized a sovereign
immunity or inherent authority in favor of liquor regulation by
Indians." Id. at 722.
Turning to the second prong of the test, the Court considered
whether the state liquor licensing provisions were preempted by
federal law. The Court held that, in enacting 18 U.S.C. 1161,2
Congress intended to delegate both to the states and to the
tribes, its authority to regulate liquor transactions. Id. at
730-31. Accordingly, the Court held that section 1161 authorized
state regulation rather than preempting it, and the state could
properly require tribe members to obtain a state liquor license.
Id. at 734.
In Potawatomi, this court held that the Supreme Court's
reasoning in Rice was applicable to Oklahoma's licensing
requirements with respect to 3.2% beer, notwithstanding the
argument that such beer was not an "alcoholic beverage" within the
scope of 1161 because of the bifurcated Oklahoma regulatory
scheme classifying such beer as a "nonintoxicating beverage."
Potawatomi, 975 F.2d at 1462-64. We held that Congress in 1161
had delegated the authority to regulate liquor, including 3.2%
beer, and that Oklahoma had a "significant regulatory interest"
in 3.2% beer despite its classification as a "nonintoxicating
bever-age." Id. at 1464.
---------------
2 "The provisions of sections 1154, 1156, 3113, 3488, and 3669,
of this title [barring introduction of alcoholic beverages into
Indian country], shall not apply . . . to any act or transaction
within any area of Indian country provided such act or transaction
is in conformity both with the laws of the State in which such act
or transaction occurs and with an ordinance duly adopted by the
tribe having jurisdiction over such area of Indian country
. . . ." 18 U.S.C. 1161 (1988).
The Tribe argues that, notwithstanding the Court's statements
in Rice about the power to "regulate" liquor transactions, and
notwithstanding this court's statements on that matter in
Potawatomi, that power has nothing to do with the power to tax
those transactions. We agree that the power to regulate does not
automatically encompass the power to tax in all circumstances.
However, "[t]he mere fact a statute raises revenue does not
imprint upon it the characteristics of a law by which the taxing
power is exercised." American Petrofina Co. of Texas v. Nance,
859 F.2d 840, 841 (10th Cir. 1988) (quoting State ex rel. Tindal
v. Block, 717 F.2d 874, 887 (4th Cir. 1983), cert. denied, 465
U.S. 1080 (1984)). Likewise, we do not find the fact that the
beer taxes are deposited into the general treasury of the State of
Oklahoma, Okla. Stat. Ann. tit. 37, 163.6 (1992), determinative
of the issue. Where the taxation is an integral part of the
overall regulatory structure in a traditionally heavily regulated
area, as opposed to a simple revenue measure, the tax may properly
be considered to be regulatory and to fall within the regulatory
authority. See, e.g., Colville, 447 U.S. at 158 (noting that
taxes may be used for regulatory purposes as well as for raising
revenue). Such is the case here. Not only is the tax imposed on
transactions involving a heavily regulated commodity, but the tax
provisions themselves are contained within Title 37 of the
Oklahoma Statutes, the portion of the Oklahoma Code establishing
that regulation, rather than in the Revenue and Taxation Code
contained in Title 68. The beer tax is thus clearly
differentiated in the Oklahoma statutory structure from the sales,
gasoline, and income
taxes, which are included in Title 68. We therefore hold that the
beer taxes at issue in this case are encompassed in the
congressional delegation of authority to regulate the sale of
alcohol in Indian country contained in 18 U.S.C. 1161.
Moreover, even were we to conclude that the taxation of 3.2%
beer is not part of the State's regulatory authority, we would
conclude that the beer tax is valid because it is not a tax
imposed on the Indian retailer. The statute provides that the
following persons are liable for payment of the tax:
(a) Manufacturers. When the sale is made by a
manufacturer, located and doing business in this state,
to a wholesaler, located and doing business in this
state, the tax shall be paid by the wholesaler.
. . .
(b) Wholesalers. When the sale is made by a wholesaler,
located and doing business in this state, to a retail
dealer located and doing business in this state, the tax
shall be paid by the wholesaler. Such wholesalers may
sell only to licensed retail dealers nonintoxicating
beverages upon which the tax provided by this act has
first been paid by such wholesaler.
When the sale is made by a wholesaler, located and doing
business outside this state, and who has obtained an
Oklahoma wholesale beverage dealer's license, to a
retail dealer located and doing business in this state,
the wholesaler shall be liable for and must pay to the
Tax Commission the beverage tax due on such sales. In
the event of a retail dealer, doing business in this
state, purchases beverage from a wholesaler doing
business outside this state, and who does not have an
Oklahoma wholesale beverage dealer's license, the
retailer shall be liable for and must pay . . . the tax
due on such sales. . . .
For the purpose of collecting and remitting the tax
imposed under this act, the wholesaler collecting such
tax is hereby declared to be the agent of the state for
such purposes, and his failure to remit or pay such tax
to the state, when due, shall constitute embezzlement,
any any such wholesaler, upon conviction, shall be
punished as provided by law for the embezzlement of
public funds.
(c) Retail Dealers. Retail dealers, where the
out-of-state manufacturer or wholesaler has paid the tax
under the provisions of this act, shall not be required
to pay the tax. However, nothing in this act shall
operate to relieve any retail dealer from payment of the
tax where such retail dealer has at any time in his
possession . . . nonintoxicating beverages upon which
the tax has not been paid.
37 Okla. Stat. Ann. 163.4 (West 1990 & Supp. 1994) (emphases
added).
The Tribe argues that, since the statute does not explicitly
provide that the legal incidence of the tax is on the consumer, as
was the case in the cigarette tax considered in Washington v.-
Confederated Tribes of Colville, 447 U.S. 139 (1980), or on the
wholesaler, the cases such as Colville upholding cigarette taxes
are inapplicable, and the tax must properly be seen as legally
falling on the Indian retailers.
First, we observe that the Supreme Court has squarely
rejected the idea that an explicit statutory mandate that the tax
be "passed on and collected" is required in order to determine
that the legal incidence of a tax does not fall on the Tribe.
California Bd. of Equalization v. Chemehuevi Tribe, 474 U.S. 9, 11
(1986) (per curiam). Rather, the test to be derived from
Coleville and analogous cases "is nothing more than a fair interpretation
of the taxing statute as written and applied, without any
requirement that pass-through provisions or collection
requirements be 'explicitly stated.'" Id.; see also, Colville,
447. U.S. at 141-42 and n.9 (accepting conclusion that cigarette
tax fell upon first event upon which tax can constitutionally be
imposed, i.e. the sale to the consumer, despite lack of explicit
statutory language imposing legal incidence of tax on consumer);
Indian Country, U.S.A. v. Oklahoma Tax Comm'n, 829 F.2d 967, 984
(10th Cir. 1987) (accepting district court's conclusion that legal
incidence of Oklahoma sales tax fell on consumer despite lack of
explicit provision so providing), cert. denied, 487 U.S. 1218
(1988).
A fair interpretation of the beer tax at issue here
establishes that the legal incidence of the tax is on the beer
wholesaler, and not on the Indian retailer. As set forth above,
the statute specifically provides that the wholesaler must pay the
tax. The wholesaler is liable for the tax when it first purchases
the beer from the manufacturer and when it sells the beer to the
retailer. In addition, the statute provides that the wholesaler
may only sell beer upon which the tax has first been paid. The
triggering event for the payment of the tax thus occurs before the
sale to the retailer.
The Tribe argues that the triggering event for the imposition
of the tax is the actual sale of the beer by the wholesaler to the
tribal retailer. This argument is based on the statutory language
stating that "[w]hen the sale is made by the wholesaler, . . . the
tax shall be paid by the wholesaler. 37 Okla. Stat. Ann.
163.4(b) (emphasis added). According to the Tribe, since the
trigger for the imposition of the tax is an event, i.e. the sale
transaction itself, that occurs wholly in Indian country, the
State has no jurisdiction to tax. This argument is dependent on
an erroneous conception of the function of the word "when" in the
statute. Contrary to the Tribe's characterization, we believe the
word does not carry a temporal connotation, but instead serves as
a substitute for the phrase "in the event that." Thus, the proper
reading of the above-quoted language is "in the event that the
sale is made by the wholesaler, . . . the tax shall be paid by the
wholesaler." This construction is consonant with the structure of
163.4, which sets forth a series of potential transactions,
indicating which entity is responsible for paying the tax in each
example, and is the only construction that is compatible with the
requirement that a wholesaler only sell beer upon which the tax
has first been paid.3
---------------
3 We are aware that the statute does make retailers responsible
for paying the tax in two circumstances--when the retailer
purchases beverage from a wholesaler located outside the state
who does not have an Oklahoma wholesaler's license and who has not
paid the tax, and in any other case where the retailer possesses
beer upon which the wholesaler has not paid the tax. Okla. Stat.
Ann. tit. 37, 163.4(b)-(c). Neither situation is before us
today. However, we note that the provisions of the statute making
the retailer liable for the tax are evidently designed to give the
retailer an incentive to ensure that the wholesaler has paid the
tax, rather than to make the retailer primarily liable. Of
course, in the event that the Tribe were to possess beer upon
which the tax had not been paid, the Tribe's sovereign immunity
would prevent the state from suing the Tribe to recover the tax.
See Oklahoma State Tax Com'n v. Potawatomi Indian Tribe, 111 S.
Ct. 905, 912 (1991). Thus, inasmuch as the statute provides for
the Tribe's potential secondary liability, it is unenforceable.
However, in light of the fact that the Tribe is required to have a
valid state license to sell beer and those licenses are
conditioned on compliance with the relevant laws, we believe that
the statutory prohibition on retailers having in their possession
beer on which the tax has not been paid provides the state
adequate power to enforce the tax provisions without being
required to sue the Tribe to recover the tax. If the Tribe were
to possess beer on which the wholesaler had not paid the tax, the
Tribe's liquor license could be revoked. See Oklahoma Stat. Ann.
tit. 37, 163.8; id. 163.11(I)(5).
The Tribe also points to the fact that the statute makes the
wholesaler the agent of the state for purposes of "collecting" the
tax as proof that the statute imposes the tax upon the retailer,
i.e., the Tribe, rather than upon the wholesaler. 37 Okla. Stat.
Ann. 163.4(b). After all, the Tribe argues, if the tax is
"collected," it must be collected from someone, and that someone
must be the retailer. We find this argument unpersuasive in light
of the clear statutory language making the wholesaler liable for
"paying" the tax. Rather, we conclude that the language making
the wholesaler the state's agent for "collecting" the tax is
intended to provide the theoretical basis for the remainder of
that paragraph making the wholesaler liable for embezzlement of
state funds in the event of a failure to remit the appropriate
sums to the state.
Even if it were true that the economic burden of the tax
falls on the Tribe because the wholesalers simply incorporate the
tax into the wholesale cost, this would not be determinative of
the question of the legal incidence of the tax. Just as a
nondiscriminatory tax imposed on a private entity that does
business with the United States and that passes the cost of that
tax on to the United States does not violate federal sovereign
immunity, see South Carolina v. Baker, 485 U.S. 505, 521 (1988)
(quoting Alabama v. King & Boozer, 314 U.S. 1, 8-9 (1941)); id. at
523; Memphis
Bank & Trust Co. v. Garner, 459 U.S. 392, 397 (1983), so a
nondiscriminatory tax imposed on non-exempt private entities that
do business with Indian tribes and that pass the cost of those
taxes on to the tribes does not violate tribal sovereign immunity.
See Seneca-Cayuga Tribe v. State ex rel. Thompson, 874 F.2d 709,
715 (10th Cir. 1989) ("It has long been settled law that retained
tribal sovereign immunity is co-extensive with that of the United
States.").
The Supreme Court has validated the states' authority to
collect sales taxes from wholesalers where an Indian tribe
refuses to collect those valid taxes from its sales to
non-members, see Oklahoma Tax Com'n v. Potawatomi Indian Tribe,
498 U.S. 505, 514 (1991), despite the fact that such sales taxes
are likely to be passed on to the retailer as part of the
wholesale price. We conclude that the state may similarly impose
a beverage tax upon wholesalers as an integral part of the
overall regulatory scheme, despite the possibility that such tax
might be included as part of the wholesale price of the beer.
Accordingly, since we hold as a matter of law that the
Oklahoma tax on 3.2% beer is authorized as part of the regulatory
authority granted by Congress to the states and because we hold
that the tax is a tax upon the wholesaler rather than upon the
retailer, there can be no conflict with the Tribe's right to
self-government, and the district court properly granted summary
judgment in favor of the state on this issue.
III. MOTOR FUEL TAX
Oklahoma law imposes several taxes on motor vehicle fuel,
totaling sixteen cents per gallon. Okla. Stat. Ann. tit. 68,
502, 502.2, 502.4, 502.6, 516, 520 & 522 (1992). Corresponding
taxes are imposed on diesel fuel. Id. 502.1, 502.3, 502.5,
502.7 & 522.1. The State exempts from these taxes fuel purchased
by the tribe for use in tribally owned vehicles for tribal
purposes. (Appellees' Br. at 10.) However, the State contends
that when the Tribe purchases fuel for resale at tribally owned
gas stations, the tax must be paid. The Tribe argues that these
taxes are imposed on the retailer, and consequently are void as
direct taxes on the Tribe. The State responds that the taxes are
passed on to the consumer in the retail price. The district court
accepted the State's analysis as to the incidence of the taxes.
The court then concluded that the taxes are not preempted by
federal law, and passing to the second step of the analysis,
concluded that the fuel taxes did not infringe on tribal
sovereignty.
We believe that a fair reading of the statutes involved
indicates that the district court erred in two respects. First,
in concluding that the taxes were passed on through the retail
price to the consumer, the district court substituted economic
assumptions for the language of the statutes. The statutes
nowhere require the amount of the tax to be included in the retail
price at the pump, a requirement which we could interpret as
imposing
the tax on the consumer. Cf. Okla. Stat. Ann. tit. 68, 302
(cigarette tax to be included in price to consumer). While the
statutes do not expressly declare the legal incidence of the
taxes to be on the retailer either, we believe that is the clear
import of the statutory language.
The statutes imposing the fuel taxes provide that "[t]here is
hereby levied an excise tax of [varying amounts] per gallon upon
the sale of each and every gallon of gasoline sold, or stored and
distributed, or withdrawn from storage, within the state, for sale
or use, to be reported and collected as provided by law . . . ."
See, e.g., id. 502. The tax remittance procedure indicates that
the incidence of the tax is on the retailer. The statute requires
the distributors to make monthly reports indicating the amount of
fuel received and sold by the distributor, and to remit to the Tax
Commission the amount of tax due. Id. 505(B)-(C). The statute
goes on to provide that "[m]otor fuel taxes remitted by a
distributor on behalf of a licensed retailer . . . that are
subsequently determined to be uncollectible by the distributor
may be credited against subsequent motor fuel tax liability
imposed by law upon such distributor." Id. 505(C) (emphasis
added). Thus, unlike the beer taxes at issue above, the statutes
imposing the motor fuel taxes explicitly state that the
distributor must remit the tax on behalf of the retailer.
Similarly, the statute pro-vides that if the distributor pays the
taxes and is subsequently unable to collect the money from the
retailer, the distributor may
deduct the uncollected amount from its future payments. The
statute thus ensures that the distributor is not burdened with
the tax. In the fuel tax scheme, the distributor is no more than
a transmittal agent for the taxes imposed on the retailer.
Moreover, the exemptions provided in the fuel tax statutes
also indicate that the tax is not imposed on the distributor. For
example, the exemption for fuel purchased for agricultural use
provides that "[e]very person actually engaged in farming . . .
may purchase such motor fuel without paying the tax." Id.
509(b) (emphasis added). The same section provides that the
person involved in agriculture and claiming the exemption must
apply for an exemption permit, which he must show to the
distributor. Id. 509(d)-(e). Similarly, 505 of Title 68
gives the retailer the option of paying the tax due on all diesel
fuel, or meeting the requirements to be considered a distributor.
Id. 505(E). Section 505 thus also indicates that the retailer
is responsible for paying the tax.
We think it evident that the import of the language and the
structure of the fuel tax statutes is that the distributor
collects the tax from the retail purchaser of the fuel. While it
may well be that the tax is ultimately passed on to the consumer
at the pump, the question is whether the statutes in question
legally impose the taxes on the Tribe. The question of who bears
the ultimate economic burden of the tax is distinct from the
question of on whom the tax has been imposed. See White Mountain
Apache, 448 U.S. at 151 n.15; Memphis Bank & Trust Co. v. Garner,
459 U.S. 392, 397 (1983).
Having determined that the motor fuel taxes are legally -
imposed on the retailer rather than on the distributor or the
consumer, we next confront the second error committed by the
district court. The district court concluded that the motor fuel
taxes were not federally preempted. This conclusion may have been
based on the assumption that the statutes imposed the taxes on the
consumer. However, since we conclude that the taxes are imposed
on the retailer, we must consider the issue of preemption.
State activity is preempted by federal law when either of two
independent barriers is present: if application of state law
"would interfere with reservation self-government," or "would
impair a right granted or reserved by federal law." Rice, 463
U.S. at 718 (quoting Mescalero Apache Tribe v. Jones, 411 U.S.
145, 148 (1973). When determining whether application of state
law would interfere with Indian self-government, the court must
consider the tradition of Indian sovereignty. If there is a
tradition of Indian sovereignty in the area concerned, then
preemption is presumed absent an explicit statement from
Congress that state law shall apply. Id. at 719-20.
The activity with which we are here concerned is the taxation
of motor fuel. Motor fuel, unlike alcoholic beverages, is not a
traditionally heavily regulated commodity and the fuel taxes are
not part of a comprehensive regulatory scheme. The fuel tax is a
simple revenue raising measure of the sort commonly imposed by
sovereign governments to fund their activities. Unlike the beer
tax, the motor fuel taxes are contained in Title 68 of the
Oklahoma statutes, the Revenue and Taxation Code. Here, the
proceeds of the fuel tax go almost exclusively to the building
and maintaining of highways in the state of Oklahoma, both within
Indian country and without. This fact does not alter the nature
of the fuel taxes as simple revenue measures. Because they are
directed toward funding traditional government activities, the
taxes fall within the ambit of the sovereignty of the tribal
government. Accordingly, the district court erred in concluding
that imposition of the fuel tax on the tribal retailer was not
preempted by federal law. Where the state action conflicts with
a power within the traditional scope of Indian sovereign
authority, preemption is presumed in the absence of an explicit
statement of congressional intent to the contrary. Rice, 463 U.S.
at 719-20. The state has directed our attention to no such
explicit grant of congressional approval of the taxation scheme
here at issue and we know of none.4 Because the presumption of
preemption is an independent barrier to the exercise of state
authority in Indian country, the district court erred in requiring
the Tribe to show
---------------
4 In White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 151
n.16 (1980), the Supreme Court declined to reach the question
whether Indian reservations might be encompassed by the
Hayden-Cartwright Act, 4 U.S.C. 104, which provides for the
imposition of state fuel taxes "on United States military or other
reservations." This issue was not raised before this court, and
we express no opinion on it.
that the fuel taxes infringed on the right of tribal
self-government. Consequently, the district court's balancing of
the respective tribal and state interests at stake was not
relevant to the determination of the propriety of the fuel taxes.
We therefore hold as a matter of law that the district court
erred in granting summary judgment in favor of the State on this
issue. We reverse the grant of summary judgment in favor of the
state and the district court's denial of the Tribe's motion for
summary judgment. We direct the trial court to grant summary
judgment in favor of the Tribe on the question of the imposition
of the state motor fuel taxes on Indian retailers.
IV. SALES TAXES
The third tax contested by the Tribe in the district court
was the 4.5% Oklahoma sales tax codified at Okla. Stat. Ann. tit.
68, 1354 (Supp. 1994). The Tribe objected that the State was
requiring retail dealers selling to the Tribe at retail to collect
the sales tax from the Tribe. The district court granted summary
judgment to the State. At oral argument, it became apparent that
the sales tax dispute centered on a misconception engendered by a
previous position of the Oklahoma State Tax Commission, which
position has since been clarified. The State had furnished a
letter clarifying its policy on this issue to the Oklahoma Gas
and Electric Company in January, 1993. During oral argument
counsel for the State indicated that the contents of that letter
represented the current State position on the sales tax. The
Tribe
stated that it did not object to the current State policy, but
argued that the State should be required to let retailers in the
area know of the new sales tax policy. In light of this
development at oral argument, we vacate the district court's
grant of summary judgment in favor of the State on the question of
the imposition of the sales tax, and we reprint in haec verba the
contents of the letter explaining the current State position on
the sales tax:
[I]t is the position of the Business Tax Division
that sales to an Indian tribe are exempt from state and
local sales taxes as outlined in the Division's
exemption letter of January 21, 1988, which was
provided to all federally-recognized Indian tribes in
Oklahoma.
However, the 1988 letter indicates that the
exemption is limited to purchases made by the Tribe for
governmental use as opposed to business use. In order
to clarify the Division's position, I will further
outline the proper limits of the exemption as the
Division understands them.
A tribe may purchase taxable goods and services
exempt from sales taxes if the tribe purchases the item
directly, makes payment for the purchase directly and if
the tribe is the consumer/user of the item, whether the
item is used in tribal governmental offices or in a
tribally-owned and operated business place.
Therefore, in order to be entitled to the
exemption, the sale must satisfy the following
requirements:
1. The sale must be made directly to the
federally recognized Indian tribe.
2. Payment must be received directly from
the tribe.
3. The tribe must be the consumer or user of
the purchased good which is consumed or
used within Indian Country.
In order to document these requirements your
company should maintain the following records:
1. Invoices or statements of account should be
billed to the tribe in its officially
recognized name and mailed to the tribe.
2. Payment in the form of a bank draft should be
drawn on an account owned by the tribe in its
name.
3. The location at which the service is
established should be owned and operated by
the tribe on its Indian Country.
This exemption does not extend to individuals,
corporations, partnerships, or other business or
legal entities who are purchasing items which may
be used on Indian Country and which are purchased
ostensibly "for the Tribe" or for business ventures
under tribal license or contract with private
parties. The exemption only applies to
trans-actions with a federally-recognized Indian
tribe itself.
The exemption also does not extend to
pur-chases of items which a tribe does not use
itself, but which it intends to resell to the
general public from a business place on Indian
Country for the purpose of marketing a tax
exemption to those who would otherwise be required
to pay sales taxes elsewhere.
(Appellant's Reply Br. Exh. A.) As the Tribe has no objection to
the sales tax policy as expressed in the letter, we need not
examine the matter further.5
IV. INCOME TAX
---------------
5 Much of the State's Brief on appeal treated the sales tax
dispute as though it were based on the Tribe's objections to the
State's decision to collect sales taxes from wholesalers selling
to the Tribe for resale. The Tribe insisted in its Brief and in
its Reply Brief that this was a misstatement of the issue. The
Tribe explicitly denied any objection to the current State
practice of collecting the sales tax from wholesalers selling to
the Tribe for resale, reiterating that its sole objection was to
the collection of sales taxes on retail purchases made by the
Tribe. In light of the Tribe's characterization of the issue, we
need not address the question of the State's requirement that
wholesalers selling to the Tribe for resale pay the sales tax.
The final issue contested by the Tribe is the imposition of
the Oklahoma state income tax on wages paid by the Tribe to
persons employed by the Chickasaw Nation on tribal trust lands.
The district court ruled this question moot in light of this
court's holding in Sac and Fox Nation v. Oklahoma Tax Comm'n, 967
F.2d 1425 (10th Cir. 1992). In Sac and Fox, we held that, absent
explicit congressional authorization, the state lacked
jurisdiction to tax the income of tribal members earned on tribal
reservations. In so holding, we relied on the Supreme Court's
decision in McClanahan v. Arizona State Tax Comm'n, 411 U.S. 164
(1973), to conclude that the residency of the tribal
member-employee was irrelevant to the question of immunity from
the state income tax. Sac and Fox, 967 F.2d at 1428 n.3. The
State filed a petition for certiorari before the Supreme Court on
the issue of the applicability of the income tax to employees
who are enrolled members of the Tribe. The Sac and Fox also
filed a petition for certiorari on the issue of the applicability
of the income tax to non-member employees. The Supreme Court
denied the petition of the Sac and Fox, 113 S. Ct. 466 (1992), and
granted the State's petition. 113 S. Ct. 459 (1992). After the
district court dismissed this final issue as moot, the Supreme
Court vacated our decision in Sac and Fox as to the tribal member
employees and remanded the case. 113 S. Ct. 1985 (1993). The
Supreme Court held that while residency in Indian country was
sufficient to invoke the McClanahan presumption against state
jurisdiction to impose an income tax on the income of tribal
members earned on tribal reservations, this
court had erred in concluding that residency was irrelevant to the
McClanahan analysis. Id. at 1991. The Court concluded that
because all of the Indians in question might live in Indian
country, there was no need to consider the question whether
Indians not living in Indian country might also be outside the
taxing jurisdiction of the state. Id. at 1992. The Court
remanded the case for a determination of the residency of the
Indians concerned. We further remanded the case to the district
court for a residency determination. 7 F.3d 925 (10th Cir. 1993).
The Tribe conceded in its brief on appeal that, with respect
to tribal member employees, this issue would be controlled by the
Supreme Court's ultimate resolution in Sac and Fox, which had not
been decided at the time the briefs were filed. At oral argument,
the Tribe contended that despite the Supreme Court's holding in
Sac and Fox, the specific treaties between the Chickasaw and the
government of the United States barred the imposition of the state
income tax on the wages of tribal members employed by tribal
businesses, regardless of the residence of those members. The
Tribe also asserted at oral argument that, notwithstanding the
Supreme Court's decision in Sac and Fox, the State is barred by
the relevant treaties from applying its income tax to the income
of non-members earned from their employment by tribal businesses
on tribal lands.
We first address the validity of the income tax as applied to
non-member employees. We hold that the question of the
applicability of the Oklahoma income tax to the wages of
non-members earned from employment on tribal lands is controlled
by this court's decision in Sac and Fox. As we noted there, the
Supreme Court has generally approved nondiscriminatory taxation of
non-member activities, "so long as such taxation does not conflict
with relevant statutes or treaties or impermissibly interfere with
a tribe's ability to govern itself." Sac and Fox, 967 F.2d at
1429. The Tribe does not contend that the income tax imposed on
non-members in any way interferes with the Tribe's ability to
self-govern. Instead, the Tribe relies on the treaty language
that "no territory or state shall ever have a right to pass laws
for the government of the [Chickasaw Nation] or their descendants"
for the proposition that such taxation is barred. (Appellant's
Br. at 11). We find this argument unpersuasive on two accounts.
First, on its face, the treaty language prohibits the states only
from passing laws governing the Tribe and its descendants, not
non-members. It is settled that the income tax is imposed on the
employee, not the employer: "The theory, which once won a
qualified approval, that a tax on income is legally or
economically a tax on its source, is no longer tenable." United
States v. County of Fresno, 429 U.S. 452, 461 n.9 (1977) (quoting
Graves v. New York ex rel. O'Keefe, 306 U.S. 466, 480 (1939)).
Therefore, to the extent that the income tax is imposed on
non-member employees
who have no established claim to tribal ancestry, the tax does not
infringe upon the treaty prohibition.6
Second, the Supreme Court has rejected the proposition that
the economic burden of the income tax is passed on through the
employee to the employer in such a way as to interfere with the
Tribe's right to govern itself so as to mandate holding the
employees immune from the state income tax. Id. The purpose of
tax immunity
was not to confer benefits on the employees by relieving
them from contributing their share of the financial
support of the other government, whose benefits they
enjoy, or to give an advantage to a government by
enabling it to engage employees at salaries lower than
those paid for like services by other employers, public
or private, but to prevent undue interference with the
one government by imposing on it the tax burdens of the
other.
Id. Since the income tax is not a tax on the source of the
income, it does not impose any burden on the tribal government.
While the Court in County of Fresno and in Graves was discussing
the tax immunity of federal rather than tribal employees, this
difference is not determinative, as "it has long been settled law
that retained tribal sovereign immunity is co-extensive with that
of the United States." Seneca-Cayuga Tribe, 874 F.2d at 715; see
Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 175 (1989).
---------------
6 The fact that the Tribe might be required to withhold and
submit the tax does not constitute an unreasonable burden on the
Tribe's ability to govern itself. Colville, 447 U.S. at 159-60;
Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 483
(1976).
We accordingly hold that the Oklahoma income tax is valid as
imposed on non-member employees of Chickasaw businesses on tribal
land.7
We now consider the question of the validity of the Oklahoma
income tax as applied to tribal members earning income from tribal
employment in Indian country. In Sac and Fox, the State of
Oklahoma argued that the McClanahan presumption against state tax
jurisdiction over Indians was limited to Indians living on the Sac
and Fox reservation, and was not applicable to Indians living in
Indian country. As noted above, this court in Sac and Fox
disagreed and concluded that, under the rule of McClanahan,
imposition of a state income tax on the income of tribal members
earned from tribal employment in Indian country was presumptively
barred regardless of the residence of the members, in the absence
of express congressional authorization. The Supreme Court
reversed and remanded, ruling that the residency of the tribal
member was "a significant component of the McClanahan presumption
against state tax jurisdiction," and that to the extent that this
court had ruled without such a reference to residency, this court
had erred. Sac and Fox, 113 S. Ct. at 1991. The Court held,
however, that McClanahan was not limited to Indians living on a
---------------
7 We need not decide whether, in the event that the Tribe were
to impose its own income tax upon the salary of non-members
employed in tribal businesses, such a tax would be entitled to
the same treatment as the federal income tax under Okla. Stat.
Ann. tit. 68, 2358(D)(8), which provides for the deduction of
the amount of such tax from the Oklahoma adjusted gross income for
purposes of calculating the Oklahoma income tax, or under any
analogous provisions of state law.
formal reservation, and that residency in Indian country was
sufficient to invoke the McClanahan presumption against tax
jurisdiction. Id. With respect to tribal members residing either
on the formal reservation or in Indian country and earning income
from tribal employment in Indian country, we think it clear that
pursuant to Sac and Fox the rule of McClanahan continues to bar
imposition of the state income tax.8
We next turn to the somewhat more difficult question of the
validity of the state income tax as applied to the income of
tribal members employed by tribal businesses in Indian country,
but who do not reside either on the formal reservation or in
Indian country. The State contends that this issue is controlled
---------------
8 We give no credence whatsoever to the State's argument that
the "disestablishment" of the reservation allegedly incurred as a
result of the Dawes Act of 1891 removed any bar to state taxing
jurisdiction. The Supreme Court has thrice rejected this notion,
twice when presented by the same litigant. See Sac and Fox, 113
S. Ct. at 1991; Oklahoma Tax Comm'n v. Citizen Band Potawatomi
Indian Tribe of Okla., 498 U.S. 505, 511 (1991); Moe v.-
Confederated Salish & Kootenai Tribes, 425 U.S. 463, 477-479
(1976). We assume, with all the dangers inherent in assumptions,
that, sooner or later, the State will tire of presenting this
argument. See Sac and Fox, 967 F.2d at 1428 n.2 ("It appears as
though the State of Oklahoma persists in fighting a battle it has
already lost."). See also Indian Country, U.S.A. v. Oklahoma Tax
Comm'n, 829 F.2d 967, 975 n.3 (10th Cir. 1987), cert. denied sub
nom Oklahoma Tax Comm'n v. Muskogee Creek Nation, 487 U.S. 1218
(1988) ("The State seems to believe that the Indian country status
of the [reservation] rests on whether the exterior boundaries have
been disestablished. It does not. . . . Tribal lands, trust
lands, and certain allotted lands generally remain Indian country
despite disestablishment."). Cf. Hagen v. Utah, 1994 U.S. LEXIS
1869 (Feb. 23, 1994). In Hagen, the Court concluded that the
Uintah reservation had been "diminished" by various acts of
Congress, and that therefore a town originally within the
reservation was now outside the reservation and subject to state
criminal jurisdiction. Notwithstanding the diminishment of the
Uintah reservation in Hagen, there was no question but that the
land within the diminished reservation retained its status as
Indian country.
by the Supreme Court's decision in Sac and Fox. Accordingly, the
State argues that the bar to state tax jurisdiction is limited to
Indians living on the reservation or in Indian country.
The State's position fundamentally misreads the Court's
holding in Sac and Fox. In construing Sac and Fox, it is
important to view the opinion in context. The Court in that case
decided a limited question, namely, whether an Indian living in
Indian country but not on the formal reservation was encompassed
within the McClanahan presumption against state tax jurisdiction.
As previously discussed, the Court rejected the State's
contentions in Sac and Fox and held that such Indians were within
the scope of McClanahan. The Sac and Fox Court did not address
the question with which we are faced in this case. The Court did,
however, indicate that Indians living outside Indian country but
earning their salary from tribal employment in Indian country
might nevertheless be outside the taxing jurisdiction of the
state.9 Id. at 1992. Thus, the Court recognized that the issue in both
McClanahan and Sac and Fox was the applicability of the
presumption against state tax jurisdiction, rather than the ultimate
determination of whether such jurisdiction existed. This
---------------
9 While the Court made this statement with respect to the
tribe's right to self-government rather than preemption by federal
law, the latter argument was not raised in Sac and Fox. As the
right to self-government and preemption by federal law are each
independently sufficient bars to the application of state law, we
do not believe that the Court's reference to the right to
self-government in any way implies that federal preemption would
not suffice.
question, which the Court left unresolved, is the issue before us
today.
Consonant with the distinction between the presumption
against tax jurisdiction and the ultimate question of the
existence of such jurisdiction, the Supreme Court in Sac and Fox
did not rule that the residency of the tribal members on the
reservation or in Indian country was the controlling factor in the
ultimate determination whether an income tax could validly be-
applied to the income of tribal members employed in Indian
country. Rather, such residency is a "significant component"
merely of the presumption against state tax jurisdiction, and
residency in Indian country is sufficient to invoke the benefit of
that presumption. Sac and Fox, 113 S. Ct. at 1991. To read the
Court's decision in Sac and Fox as holding categorically that an
Indian must live on the formal reservation or in Indian country in
order for taxation to be barred, one would have to ignore the
plain meaning of the term "presumption," as well as the fact that
the Court expressly acknowledged the possibility that such
taxation might be barred even as applied to Indians not living on
the formal reservation or in Indian country. See id. at 1992
(declining to decide whether taxation might be barred by tribe's
right to self-government, independently of its territorial
jurisdiction over Indian country); cf. Mescalero Apache Tribe v.
Jones, 411 U.S. 145, 148 (1973) (distinguishing between state's
lack of authority to tax income arising from activities occurring
on the reservation and the power to tax income arising from
activities off the reservation). Under such a view, rather than
being a "significant component" of the presumption, residency on
the reservation or in Indian country would be dispositive of the
entire preemption determination. We do not believe such was the
Supreme Court's intent. We therefore conclude that the proper
interpretation of the Court's decisions in Sac and Fox and in
McClanahan is that they merely establish a presumption in favor of
Indians and against state tax jurisdiction over Indians living in
Indian country and earning income from activities in Indian
country. With respect to Indians living outside Indian country
but earning income from activities within Indian country, that
presumption does not exist. A lack of a presumption, however, is
not equivalent to a determination that the state may impose its
tax. Rather, the absence of the presumption merely affects the
burden-shifting engendered by the presumption. In the absence of
the presumption against state tax jurisdiction, the initial burden
is no longer on the state to show that there has been an explicit
congressional grant of authority to tax in order to overcome the
presumption. Instead, where Indians living outside Indian country
are concerned, the initial burden remains on the tribe to show
that the tax is barred by one of the two independent barriers to
the exercise of state jurisdiction over Indians, i.e. interference
with reservation self-government or impairment of rights granted
or reserved by federal law.
While in Sac and Fox the tribe argued--and the Court refused
to decide--that the tribe's right to self-government barred the
tax, in this case the Chickasaw argue that the taxation is barred
by the relevant treaties between the Tribe and the United States,
which are, of course, federal law. Applying the rule set forth
above, we now turn to the question whether, in the absence of the
McClanahan presumption, the Tribe has met its burden of showing
that the state income tax is preempted as applied to tribal member
employees not residing in Indian country but earning their income
from tribal employment in Indian country.
"The beginning of our analysis must be with the treaty which
the United States Government entered with the [Chickasaw
Nation]." McClanahan, 411 U.S. at 173-74. This analysis requires
a particularized examination of the specific treaties involved in
this case. In McClanahan, the Supreme Court construed the treaty
between the United States and the Navajo Nation in 1868. That
treaty provided for the setting aside of land "for the use and
occupation of the Navajo tribe of Indians," and stated that
no persons except those herein so authorized to do,
and except such officers, soldiers, agents, and
employ[ee]s of the government, or of the Indians,
as may be authorized to enter upon Indian
reservations in discharge of duties imposed by law,
or the orders of the President, shall ever be
permitted to pass over, settle upon, or reside in,
the territory described in this article.
Id. at 174. The Court noted that this language did not constitute
an explicit statement that the Navajos were to be exempt from
state law or state taxes. Nevertheless, applying the general rule
that "[d]oubtful expressions are to be resolved in favor of" the
Indians, id. (alteration in original) (citation omitted), the
Court concluded that the state was barred from imposing its income
tax upon the Navajo members on income derived from employment on
tribal lands. In so doing, the Court emphasized that the question
before it was a narrow one: "whether the State may tax a
reservation Indian for income earned exclusively on the
reservation." Id. at 168 (emphasis added).
In light of the ambiguous language of the Navajo treaty and
the narrow question before the Court in McClanahan, it is not
unduly surprising that the Court in Sac and Fox declined to
fashion from McClanahan a blanket exemption from state income
taxation for all tribal members. This is especially true when
one considers that the Sac and Fox Court was faced with treaty
language even more ambiguous than that in McClanahan. The treaty
between the United States and the Sac and Fox Tribe provided no
more than that the land that the United States ceded to the Sac
and Fox "shall remain the property of said Sac and Fox Nation, to
the full extent that it is now the property of said
Nation--subject only to the rights of the United States therein .
. . and subject to the rights, legal and equitable, of those
persons that are now legally located thereon. . . ." Sac and Fox,
113 S. Ct. at 1988.
In stark contrast to the language in the treaties between the
United States and the Navajo and the Sac and Fox, respectively,
the language in the treaty between the Chickasaw and the United
States is abundantly clear. Article IV of that treaty provides as
follows:
The Government and the people of the United States
are hereby obliged to secure to the said
[Chickasaw] Nation of Red People the jurisdiction
and government of all the persons and property that
may be within their limits west, so that no
Territory or State shall ever have right to pass
laws for the government of the [Chickasaw] Nation
of Red People and their descendants; and that no
part of the land granted them shall ever be
embraced in any Territory or State; but the U.S.
shall forever secure said [Chickasaw] Nation from,
and against, all laws except such as from time to
time may be enacted in their own National Councils,
not inconsistent with the Constitution, Treaties,
and Laws of the United States; and except such as
may, and which have been enacted by Congress, to
the extent that Congress under the Constitution
are required to exercise a legislation over Indian
Affairs.
7 Stat. 333 (emphasis added).10 In 1866, the United States
reaffirmed the above obligations, stating that
[a]ll the rights, privileges, and immunities heretofore
possessed by said nations or individuals thereof, or to
which they were entitled under the treaties and
legislation heretofore made and had in connection with
them, shall be, and are hereby declared to be, in full
force, so far as they are consistent with the provisions
of this treaty.
Treaty of April 28, 1866, 14 Stat. 769, Art. XLV; id. Art. X.
These obligations were again reaffirmed in 1871, which
reaffirmation stands to this day. See 25 U.S.C.A. 71 (West
Supp. 1994). See also Oklahoma Enabling Act, 1, 34 Stat. 267,
267-68) (1906) ("[N]othing contained in [the Oklahoma
Constitution] shall be construed to limit or impair the rights of
person or property pertaining to the Indians of said Territories
. . . .").
---------------
10 The treaty actually refers to the Choctaw, rather than the
Chickasaw. However, in 1837, the Choctaw consented to the
formation of a district within their reservation for the
Chickasaw, "to be held on the same terms that the Choctaws now
hold it." Treaty of January 17, 1837, 11 Stat. 573, Art. I.
Thus, the Chickasaw became the beneficiaries of the above language
referring to the Choctaw.
In comparison to the treaty at issue in the Sac and Fox case,
the Chickasaw treaty explicitly provides that no state would ever
be permitted to pass laws for the government of the Chickasaw or
their descendants. The crucial question in determining the
validity of the income tax under the relevant treaty language is
therefore whether the law is one imposed on the Chickasaw Nation
or its descendants. Residency is simply not relevant to this
determination. We believe that, reading the treaty as the
Indians would have understood it, and construing any ambiguities
in the treaty language in favor of the Indians as we must, see
McClanahan, 411 U.S. at 174, the specific treaty involved in this
case preempts the imposition of the state income tax on the wages
of Chickasaw members, earned on the reservation or in Indian
country, regardless of the residence of those members.
Accordingly, we hold that, consistent with the Supreme Court's
decision in Sac and Fox, the Oklahoma income tax may not be
imposed on the income of Chickasaw tribal members, earned from
tribal enterprises on the reservation or in Indian country,
regardless of whether the tribal member actually lives on the
reservation or in Indian country.11 We therefore vacate the
district court's dismissal of this issue as moot, reinstate the
claim, and direct the district court to grant summary judgment in
favor of the Tribe on this issue.
V. CONCLUSION
---------------
11 In so holding, we do not suggest that the state may not
impose its income tax on the income of tribal member employees
earned outside Indian country. This issue is not before us.
To summarize, we AFFIRM the district court's grant of summary
judgment in favor of the State on the issue of the imposition of
the tax on 3.2% beer. We REVERSE the grant of summary judgment in
favor of the State on the issue of the imposition of the state
motor fuel taxes, and we direct the district court to GRANT
summary judgment in favor of the Tribe on this issue. We VACATE
the district court's grant of summary judgment in favor of the
State on the issue of the sales taxes. With respect to the income
taxes, we AFFIRM the district court's grant of summary judgment in
favor of the State on the question of the imposition of the state
income taxes on non-member employees of tribal businesses on
Chickasaw Indian country. We VACATE the district court's
dismissal as moot on the question of the imposition of the state
income tax on the wages of tribal member employees earned from
tribal employment in Indian country, and who live in Indian
country, we REINSTATE the Tribe's claim on this issue, and we
direct the district court to GRANT summary judgment in favor of
the Tribe on this issue. We similarly VACATE the district court's
dismissal as moot on the question of the taxation of the income of
tribal member employees earned from tribal enterprises in Indian
country, but who do not reside in Indian country. We also
REINSTATE that claim, and we direct the district court to GRANT
summary judgment in favor of the Tribe on that issue.
AFFIRMED in part, VACATED in part, REVERSED in part, and
REMANDED with instructions.
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