MN Principal Chief issues statement
Stroble v. Oklahoma Tax Commission, involves an ongoing legal dispute between the plaintiff, Alicia Stroble, a Muscogee (Creek) citizen, and the Oklahoma Tax Commission regarding the issue of state income tax exemption for Tribal citizens residing and working within their Indian Country.
Oral arguments in a case concerning exemption for tribal citizens from state income taxes began this week at the Oklahoma Supreme Court.
Attorneys for Muscogee (Creek) Nation citizen Alicia Stroble presented arguments to the court that she should be exempt from paying state income taxes. Stroble lives and works within the Muscogee Nation tribal reservation.
After the McGirt ruling in 2022, hundreds of tribal citizens filed tax protests with the Oklahoma Tax Commission.Tribal citizens who live and work within their tribe’s reservation have long been exempt from state income taxes. But the McGirt ruling affirmed the expanded boundaries of at least eight tribes, potentially allowing more tribal citizens to claim tax exemptions.
Stroble filed for a refund of several years worth of state income taxes she’d paid, from 2017-2019.
In 1973, the U.S. Supreme Court ruled the State Tax Commission of Arizona illegally collected income taxes from Rosalind McClanahan, a Navajo, who lived on the Navajo reservation and worked for the Navajo Nation.
This case is of importance and could set a precedent how the State of Oklahoma handles those protests. The court’s ruling could also determine whether the McGirt decision applies to civil issues or remains limited to tribal jurisdiction over major crimes.
In 2022, an administrative law judge found that Stroble lived within the Muscogee reservation during the years in question and qualified for a tribal exemption to state income taxes. The Oklahoma Tax Commission later reversed that decision, which led to Stroble’s appeal before the Oklahoma Supreme Court.
The Oklahoma Tax Commission argued the McGirt decision does not apply to civil matters.
During the trial, attorneys talked about the potential financial impact to the state if the court ruled in Stroble’s favor. The Oklahoma Tax Commission estimates if the McGirt ruling were applied to income taxes, the state would lose about $22 million in annual tax collections from the Muscogee Nation and $75 million a year total from Oklahoma’s Five Tribes, which includes the Muscogee, Cherokee, Chickasaw, Choctaw and Seminole Nations.
Justices noted the court is tasked with addressing legal questions, not delving into policy matters that could impact state finances.
After the hearing, Muscogee Nation Principal Chief David Hill said laws relating to the taxation of tribal citizens living and working on their tribal land has been settled law for decades.
“Laws related to taxation of income earned by Tribal citizens who both reside and earn that income on a reservation have been settled for decades, but the State of Oklahoma has chosen to ignore those laws. It should concern every resident of Oklahoma that the state feels like it can pick and choose when to follow the law. Today, it’s Alicia Stroble, tomorrow it will be someone else if the state is not held accountable.
The State is not above the law, and it is our hope that this case will ensure the Oklahoma Tax Commission recognizes that.” There is no timeline on when the Supreme Court could rule in the case.