Although the U.S. Supreme Court has held that the Muscogee (Creek) Nation’s reservation still exists in Oklahoma for purposes of a federal crime law, a subsequent decision by the U.S. Supreme Court also means most tribal members living in Oklahoma still have to pay state taxes, according to a new Oklahoma Tax Commission ruling.

Gov. Kevin Stitt, a Cherokee who has fought to maintain state sovereignty in the aftermath of the U.S. Supreme Court’s reservation decision, hailed the commission’s action.

“I am pleased to learn that today the Tax Commission released a decision reaffirming that every Oklahoma citizen is required to pay their fair share,” Stitt said. “This is a ruling in favor of certainty, fairness, and equality for all Oklahomans. We all drive on the same roads, send our kids to the same public schools, and benefit from the same state services, so it is only right that every citizen of the state of Oklahoma, regardless of race or heritage, should contribute their fair share.”

In McGirt v. Oklahoma, the U.S. Supreme Court held that the Muscogee (Creek) Nation reservation—an area that includes much of Tulsa—was never formally disestablished for purposes of the federal Major Crimes Act. That decision has since been expanded to include the reservations of the Choctaw, Chickasaw, Cherokee, Seminole, and Quapaw, covering nearly half of Oklahoma.

While the court held that the McGirt decision applied only to the federal major crimes law, some individuals have sought to expand it to include other areas, including taxation. Tribal members living on tribal reservations are generally exempt from paying state taxes.

According to Stitt’s office, 9,261 taxpayers have claimed an exemption from state taxation due to the tribal income exclusion and the McGirt decision, from the period of August 2020 to September 20, 2022. Of those who disagreed with the Tax Commission’s handling of the claimed exemption, 642 filed protests.

It’s estimated a McGirt tribal exclusion could result in the loss of $75 million in state revenue each year.

The Oklahoma Tax Commission’s order sprang from a protest filed by a member of the Muscogee (Creek) Nation who also worked for the Muscogee tribal government. The protest involved taxes owed the state for the 2017, 2018, and 2019 tax years.

Oklahoma law allows a tribal exemption for tribal members who live on tribal land and earn their income from tribal sources.

The commission noted the protestant met two of the three requirements but concluded the individual did not meet the third requirement regarding residency on tribal land.

Under Oklahoma law, the Oklahoma Tax Commission noted that the residency requirement is fulfilled if an individual lives on a formal reservation, which is defined as federally owned land “reserved from sale” and “validly set apart for use by the Indians, under the federal superintendence of the government.”

An exemption is also available for certain individuals living on an “informal reservation,” which the commission said is defined in state law as “lands held in trust for a tribe by the United States and those portions of a tribe’s original reservation which were neither allotted to individual Indians, nor ceded to the United States as surplus land, but were retained by the tribe for use as tribal lands.”

The commission concluded that the protestant’s home is located on property that does not meet the requirements for either of those categories. Instead, the protestant has personal ownership of that land.

And the commission pointed to the U.S. Supreme Court’s decision earlier this year in Oklahoma v. Victor Manuel Castro-Huerta, which narrowed the reach of the earlier McGirt decision.

In the Castro decision, the U.S. Supreme Court declared that “the Constitution allows a State to exercise jurisdiction in Indian country. Indian country is part of the State, not separate from the State. To be sure, under this Court’s precedents, federal law may preempt that state jurisdiction in certain circumstances. But otherwise, as a matter of state sovereignty, a State has jurisdiction over all of its territory, including Indian country.”

“The Castro-Huerta decision is important because it makes clear that the McGirt decision preempting state jurisdiction has very limited application, even in the scope of criminal matters, to a single federal law—the Major Crimes Act,” the Oklahoma Tax Commission order stated. “… And by its very language, the Major Crimes Act does not apply to taxation. … Under Castro-Huerta, Oklahoma clearly has concurrent jurisdiction, even under the McGirt boundaries, unless otherwise preempted. There is no preemption for taxation established under McGirt, or otherwise.”