## Facts

- The Chickasaw Nation sued to prevent Oklahoma from enforcing certain state taxes against the Tribe and its members.
- Oklahoma imposed a motor fuels excise tax on fuel distributed or sold within the State.
- The Tribe operated two retail convenience stores selling fuel on tribal trust land (Indian country) to tribal members and nonmembers.
- Oklahoma sought to apply its fuels tax to the Tribe’s on-reservation retail fuel sales.
- Oklahoma also imposed a state income tax on wages of Chickasaw members employed by the Tribe who resided outside Indian country within Oklahoma.
- The Tribe relied in part on treaty language stating that no Territory or State would have the right to pass laws “for the government of” the Chickasaw Nation.
- The district court upheld the fuels tax but largely ruled for the Tribe on the income-tax issue.
- The court of appeals ruled for the Tribe on both issues, concluding the fuels tax’s legal incidence fell on the tribal retailer and that Oklahoma could not tax the wages of tribal members working for the Tribe even if they lived outside Indian country.

## Issues

1. May Oklahoma impose its motor fuels excise tax on fuel sold by Chickasaw Nation retail stores on tribal trust land (Indian country)?
2. May Oklahoma impose its income tax on wages of Chickasaw Nation members employed by the Tribe who reside in Oklahoma outside Indian country?

## Decision

- The Supreme Court reversed and remanded.
- Oklahoma could not enforce its motor fuels excise tax, as designed, on fuel sold by the Tribe in Indian country because the tax’s legal incidence fell on the tribal retailer.
- Oklahoma could tax the income, including wages from tribal employment, of tribal members who reside in the State outside Indian country.
- The Court declined to consider Oklahoma’s claim that a federal statute authorized state taxation of reservation fuel sales because the argument was not properly preserved.

## Legal Principles

- In state taxation disputes involving tribes and transactions in Indian country, the threshold question is who bears the legal incidence of the tax; if it falls on a tribe or tribal members in Indian country, the tax is unenforceable absent clear congressional authorization.
- Courts generally apply a categorical rule, not interest-balancing, when a State seeks to tax tribes or tribal members inside Indian country.
- Where a taxing statute does not expressly identify the taxpayer and does not require the tax to be passed to consumers, legal incidence is determined by fair interpretation of how the statute operates.
- A State may tax the entire income of its residents; tribal membership and tribal employment do not exempt residents who live outside Indian country from state income taxation absent controlling federal law.
- Treaty language limiting state authority over tribal self-government does not, without more, bar state income taxation of tribal members who reside off-reservation.

## Conclusion

The Court held that Oklahoma could not apply its motor fuels excise tax to the Tribe’s on-reservation fuel sales because the tax’s legal incidence fell on the Tribe, but Oklahoma could tax the income of Chickasaw members who lived outside Indian country, including wages earned from tribal employment.


Okla. Tax Comm'n v. Chickasaw Nation, 515 U.S. 450 (1995)