Oklahoma Tax Commission and State Income Taxes

There has been much discussion about whether tribal members have to pay state income taxes due to the recent McGirt decision that the Choctaw Nation’s reservation was never disestablished. The Oklahoma Tax Commission (OTC) has previously released a report indicating that tribal members who live and work within the reservation boundaries would be exempt from paying state income taxes. In accordance with this statement, it has come to our attention that the OTC has issued tax refunds due to amended tax returns from tribal members. Unfortunately, we have also received information that the OTC has now reversed its position and is stating tribal members are not entitled to this relief and that it will seek repayment of any refunds issued under its previous policy.

While we agree with the initial OTC interpretation that tribal members who live and work within their reservation boundaries should be exempt from paying state income taxes, the recent reversal by the OTC means that litigation may be necessary in order to clarify the administrative and legal issues involved in this matter. We are looking into what action we are able to take on behalf of our tribal members. If we decide to take action and we are successful, it could take months before a final decision is reached.

The Choctaw Nation is not giving legal, tax or financial advice. However, if you believe you may be entitled to tax relief due to the McGirt decision, we would advise that you act as soon as possible in order to meet any applicable deadlines for filing an amended state tax return. Tribal members who have questions about exemptions, amended returns, or other personal tax matters should contact a professional tax preparer or seek further information from the Oklahoma Tax Commission at ok.gov/tax or the Taxpayer Service Center at 405-521-3160 or by email at [email protected].