GPNA Tip of The Week: Tax Laws & Tribal Lands

GPNA Tip of The Week: Tax Laws & Tribal Lands

Written on January 26th, 2021

Before you purchase or rent property in a transaction that involves tribal land, you should explore the tax laws that may be implicated.  Many variables unique to tribal lands are likely to affect how real property and other taxes may be assessed by the state, county, and tribes.

The South Dakota Supreme Court recently considered a case involving an Association comprised of non-Indian individuals who owned cabins on land held in trust for the Sisseton-Wahpeton Oyate Tribe and certain tribal members.  The cabins owned by the plaintiffs had been subject to both tribal and county property taxes.  The Association and its members challenged the County’s assessment of the taxes, claiming that federal law and the South Dakota Constitution prevented the County from imposing its tax on the cabins.  

The South Dakota Supreme Court disagreed and upheld the County’s ability to tax the cabins owned by the non-Indian individuals.  The Court declined to interpret and apply the federal law relied upon by the cabin owners because that federal law only exempts tribal trust land from local taxes when the land had been acquired under the Indian Reorganization Act, which the cabin owners had failed to show.  In addition, the Court determined that the South Dakota Constitution did not prohibit the County tax on the cabins owned by non-Indian individuals because the Constitution only addresses taxation on tribal land and does not address taxation of structures owned by non-Indian individuals.  The Court looked at the issue even more broadly and determined that the County’s taxation of the cabins owned by non-Indian individuals would not frustrate any Congressional objective relating to the field of leasing tribal trust land.

This GPNA tip of the week is brought to you by Pickerel Lake Outlet Association et al v. Day County, 2020 S.D. 72.