Oklahoma Tax Commission v. Chickasaw Nation

The Oklahoma Tax Commission (the commission) (defendant) imposed a sales tax on motor fuel sold by retail stores owned by the Chickasaw Nation Indian tribe (the tribe) (plaintiff) and located within Indian country. The sales-tax statute required fuel distributors to send tax payments to the commission on behalf of the retailers. Furthermore, the statute did not impose a tax on sales between distributors and did not mention any pass-through of the sales tax onto the consumers or exemption for the retailers if the consumers failed to pay the tax. Separately from the sales-tax statute, the commission also imposed an income tax on members of the tribe who worked for the tribe within Indian country but resided in Oklahoma outside of Indian country. The tribe brought suit before a US district court to enjoin Oklahoma from imposing the sales tax and income tax. The district court upheld the sales tax but held in the tribe’s favor regarding the income tax. On appeal, the tribe argued that imposition of an income tax on tribe members, regardless of where they resided, infringed on the tribe’s sovereignty pursuant to the Treaty of Dancing Rabbit Creek (the treaty), which granted the tribe the right to pass its own laws within the tribe’s limits and prohibited any state from passing laws for the tribe. The Tenth Circuit agreed and found in the tribe’s favor regarding both taxes. The United States Supreme Court granted certiorari.