August 1, 2011

State Taxation of Gasoline Sales Outside of Indian Lands Does Not Violate Indian Commerce Clause of U.S. Constitution

Florida Dep’t of Revenue v. Seminole Tribe of Florida, 4D10-456
June 22, 2011

The issue of the taxability of gasoline sales to the Seminole Tribe made off the reservation was presented to the Fourth District Court of Appeal.  The trial court granted the Seminole Tribe’s motion for summary judgment while denying the Department of Revenue’s (“DOR”) motion for summary judgment.  The trial court held that the Indian Commerce Clause of the United States Constitution prohibited the State of Florida from taxing any fuel consumed by the tribe on the reservation.
The Fourth DCA performed a de novo review of the matter and held that the Seminole Tribe was not entitled to a refund for taxes on gasoline purchased off the reservation, regardless of where or how it was used. The Court relied on Wagnon v. Prairie Band Potawatomi Nation, 546 U.S. 95 (2005), where the Supreme Court upheld a motor-fuel tax imposed on non-Indian distributers who purchased the fuel off the reservation but ultimately delivered it to gas stations owned by the tribe and located on tribal lands.  In contrast, this case dealt with the purchase of gasoline outside of tribal lands by members of the Seminole Tribe. The Fourth DCA noted that it would be impossible to track the usage of the fuel.  Also, the Court acknowledged that because the tribe reaps the benefit of untaxed gasoline purchased on the reservation regardless of where it is used, common sense would suggest that fuel purchased off the reservation should be subject to the fuel tax, regardless of where it is used.  As a result, the Court reversed the trial court’s grant of summary judgment in favor of the Seminole Tribe and held that “off-reservation transactions, even by tribal members, are susceptible of taxation without running afoul of the Indian Commerce Clause.”