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US Court of Appeals Upholds Tax Exemption for Tribal Member Property Owners

Updated: Feb 23, 2023

By Joe Morey

News Editor

The Lac Courte Oreilles Tribal Governing Board (TGB) at their January 30 meeting approved 5-0-0 to have Dave Bisonette, LCO Enrollment Director, issue a letter to both Town of Bass Lake and Town of Hayward, informing them of LCO tribal member fee simple property owners who are tax exempt from any property taxes. The action is the result of a recent court case affirming the tax exempt status of tribal members.

The U.S. Circuit Court of Appeals ruled on August 15, 2022, that the state of Wisconsin can’t impose property taxes on tribal lands, reversing an earlier decision by the U.S. District Court that favored the state, so long as the land is currently owned by the tribes in the lawsuit or their members.

The four tribes that sued the state are LCO, Bad River, Lac du Flambeau and Red Cliff.

The state had 90 days to appeal the decision to the United States Supreme Court, but that date passed on Nov. 15, making it official.

Bisonette told the TGB that the taxes are due in both townships for fee landowners from Lac Courte Oreilles, but they are now tax exempt. He said he had a letter prepared for the township boards.

Bisonette said there are 42 tribal members in Bass Lake. The letter would inform the townships of which tribal member fee simple landowners they are. In Bass Lake, these tribal members own a combined 77 parcels (comprising 122.71 acres) with an estimated value of $2,452,700.00 and a 2022 assessed combined property tax of $23,958.59.

“In 2006, they were declared exempt but Bass Lake and Hayward after a year in a half, said they were not going to follow this and it went to court. This is the court case’s final decision and tax exemption was upheld,” Bisonette said. “LCO needs its own Register of Deeds.”

He also said the Tribe needs to make a probate code. “Tribal members may pass away, and the spouse still lives on the land and they are not tax exempt.”

Bisonette explained “From the information obtained by reviewing the Bass Lake property list, it is clear that Lac Courte Oreilles needs the property lists from the other towns which cover the reservation in order to identify other tribal members who can claim the exemption. In addition, the information points to other issues that need to be addressed with tribal members and between the other 1854 litigant bands, Wisconsin, the counties, and the towns.”

The property tax case

The tribes in the suit asserted that an 1854 treaty guaranteed they would never be removed from their reservations, and they claimed that this treaty provision must be interpreted to preclude the state from imposing property taxes (and foreclosing on property for failure to pay such taxes), on the tribes’ lands.

According to a Hamline University article, in the state’s argument, they claimed the treaty did not foreclose state taxation of the land, and that at least some of the reservation lands became eligible for taxation because they had been subsequently transferred to non-Native people, even though they are currently owned by the tribes or their members.

The 7th Circuit ruling rejected the state’s argument and affirmed that reservation land currently held by the tribe or its members is not taxable without congressional approval.

“This is an important victory for the tribes and their members who have long been subjected to unauthorized taxes—and in some instances, threatened with the loss of their homes,” said co-counsel Vanya Hogen of Hogen Adams, who argued the case in the 7th Circuit last year.

“This is welcome news to Native people across the country,” added Anton Treuer, an Ojibwe professor and Ojibwe history author who provided expert testimony for the case. “This ruling stops the taking. We look forward to remedies for the previous damage done, be those litigated or politically prescribed.”

The summary of the opinion from the Court of Appeals reads, “Wisconsin assessed property taxes on lands within four Ojibwe Indian reservations. The tribal landowners have tax immunity under an 1854 Treaty, still in effect, that created the reservations on which they live. Supreme Court cases recognize a categorical presumption against Wisconsin’s ability to levy its taxes absent Congressional approval. The parcels in question are fully alienable; their current owners can sell them at will because the parcels were sold by past tribal owners to non-Indians before coming back into tribal ownership. Wisconsin argued that the act of alienating reservation property to a non-Indian surrendered the parcel’s tax immunity. No circuit court has considered whether the sale of tax-exempt tribal land to a non-Indian ends the land’s tax immunity as against all subsequent tribal owners, nor does Supreme Court precedent supply an answer.

“The district court ruled in favor of the state. The Seventh Circuit reversed. Once Congress has demonstrated a clear intent to subject land to taxation by making it alienable, Congress must make an unmistakably clear statement to render it nontaxable again but these Ojibwe lands have never become alienable at Congress’s behest. Congress never extinguished their tax immunity. The relevant inquiry is: who bears the legal incidence of the tax today--all the relevant parcels are presently held by Ojibwe tribal members.”

To view the PDF of the Appeals Court Ruling, click below

Download PDF • 309KB

To view a document on Frequently Asked Questions on the Court Ruling, click below

Download PDF • 252KB


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