The state of Oklahoma may appeal a federal court’s recent ruling, upholding an arbiter’s decision, that the state cannot force the Citizen Potawatomi Nation to collect sales tax from non-members at its retail operations. Assistant Attorney General Steven Barker told the Alcoholic Beverage Laws Enforcement Commission, “My understanding is the state will appeal to the 10th Circuit,”
The battle pitched tribal sovereignty against the state’s right to regulate tribes’ retail businesses, including alcohol sales. It began in 2014 when the Oklahoma Tax Commissions billed CPN for $27 million in unremitted sales tax collections from non-tribal members. The tribe did not respond so the OTC moved to revoke CPN’s alcoholic beverage permits. The CPN turned to the state Supreme Court after an administrative law judge ruled in favor of the OTC. The case was stayed during arbitration and tribal stores still sold alcohol.
The arbiter noted, the OTC’s notice to CPN was the first time it required tribes to collect state taxes from non-members. The state said the gaming compact, adopted in 2014, does not cover sales tax issues. However, in 2001, the OTC told the tribe it was exempt from collecting and remitting sales tax. And
CPN attorney Kirke Kickingbird said, “We’re not surprised by the state appealing. We’ve got a checkered history in Oklahoma of the state opposing tribal authority and jurisdiction. We thought we’d come to a good accommodation and a live-and-let-live arrangement. It’s always a disappointment when it ends up costing a lot of money to get the same answers we arrived at over a decade ago.”
Arbiter Michael McBride, representing CPN during arbitration, noted the ruling that the state cannot apply its tax law on tribal land for non-member transactions, “was a huge victory for the Citizen Potawatomi Nation. I think that’s probably the biggest decision to come out of arbitration and the federal court involving Oklahoma tribes in about 25 years.”
McBride added, “The grounds to challenge the confirmation of an arbitration are pretty limited. I think Oklahoma has a real uphill battle trying to set this aside.” Tribal Chairman John “Rocky” Barrett stated he’s confident the appeals court would uphold the arbitration award.
