Monday, March 8, 2010
Court of Appeal Upholds Ruling in Indian Tribe Tax Case
By KENNETH OFGANG, Staff Writer
The state may collect taxes on income derived from a tribal gaming operation by a member who resides on another tribe’s reservation, the Fourth District Court of Appeal ruled Friday.
Div. One affirmed a San Diego Superior Court judge’s ruling in favor of the Franchise Tax Board, which held that Angelina Mike—a member of the Twenty-Nine Palms Band of Mission Indians—must pay state income taxes on a distribution of tribal gaming revenue for the year 2000.
The Twenty-Nine Palms Band consists of only about a dozen adult members and has a reservation consisting of 240 acres near Coachella and about 160 acres near Twenty-Nine Palms. The former section houses a casino and parking lot, while the latter is many miles away and consists of undeveloped desert land with no infrastructure.
Mike received more than $385,000 as her per capita share of the tribe’s gaming revenue in 2000. At the time, she was living on the Agua Caliente Band of Cahuilla Indians reservation about 18 miles from her tribe’s reservation.
After losing administrative challenges to the taxation of that income, Mike paid the taxes and sued for a refund in San Diego Superior Court. Judge Richard E. Strauss, however, ruled that because Mike did not live on the Twenty-Nine Palms Band reservation, the income was not exempt from taxation under McClanahan v. State Tax Commission of Arizona (1973) 411 U.S. 164.
That case held that Arizona could not tax income received by a Navajo from a tribal source, where the member lived on that tribe’s reservation. The justices said “it cannot be doubted that the reservation of certain lands for the exclusive use and occupancy of the Navajos and the exclusion of non-Navajos from the prescribed area was meant to establish the lands as within the exclusive sovereignty of the Navajos under general federal supervision.”
The court also cited statutory language which it said implied that income of a Navajo living on and derived from the reservation could not be taxed by the state.
But Justice Alex McDonald, writing Friday for the Court of Appeal, said the trial judge correctly ruled for the state because a later case, Washington v. Confederated Tribes of Colville Indian Reservation (1980) 447 U.S. 134, distinguished between Indians living on the reservations of their own tribes and those living on other tribes’ reservations, whom the court said could be treated the same as non-Indians.
A later Supreme Court decision, Duro v. Reina (1990) 495 U.S. 676, McDonald noted, cited Colville in holding that an Indian could not be tried in another tribe’s court for a crime allegedly committed on that tribe’s reservation.
While Congress later passed the so-called “Duro fix,” specifying that a tribe had criminal jurisdiction over nonmember Indians for a crime occurring on tribal lands, the Colville rule survives because Congress has not superseded it by legislation, McDonald said.
The justice went on to reject the argument that the distinction between the Twenty-Nine Palms and Agua Caliente bands should be disregarded because there are close familial, historic, and economic links between them, even though they are regarded as separate tribes under federal law.
“Mike’s argument appears to constitute a sub silencio invitation for this court to disregard that she is an enrolled member of the Twenty-Nine Palms Band, and to also make her a de facto member of the Agua Caliente Band,” McDonald wrote. “That determination is beyond this court’s power.”
Nor does the small size of the tribe’s reservation lands, and the resulting impact on availability of housing, create an equal protection problem, the justice said, because the distinction between tribal members living on the reservation and those living on non-Indian or another tribe’s lands is a rational one under Colville.
The case is Mike v. Franchise Tax Board, 10 S.O.S. 1192.
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