Moe v. Confederated Salish & Kootenai Tribes of the Flathead Reservation

Majority - William Rehnquist

Yes, 28 U.S.C. § 1341 (the Tax Injunction Act) does not bar federal district courts from hearing suits brought by Indian tribes under 28 U.S.C. § 1362, and the State of Montana cannot impose its cigarette sales tax, vendor licensing fee, or personal property tax on reservation Indians or on sales between Indians on the Flathead Reservation. However, the State of Montana may require an Indian retailer on a reservation to collect a state cigarette sales tax from non-Indian purchasers. The Court first addressed the jurisdictional question under 28 U.S.C. § 1341, which generally prohibits federal courts from enjoining state tax collections where a plain, speedy, and efficient remedy exists in state courts. However, this barrier has been held inapplicable to suits brought by the United States to protect itself and its instrumentalities, as established in Department of Employment v. United States. The Court then analyzed 28 U.S.C. § 1362, a jurisdictional statute for Indian tribes. Looking to its legislative history, the Court found that Congress intended for tribes suing under § 1362 to have similar access to federal courts as the United States suing as their trustee. Since the United States could have brought these actions to challenge state taxation on behalf of the Tribe without being barred by § 1341 (citing Heckman v. United States and United States v. Rickert), the Tribe itself is also not barred from doing so. On the merits, the Court reaffirmed its holding in McClanahan v. Arizona State Tax Comm'n, which established that absent cession of jurisdiction or explicit federal statutes permitting it, state taxation of Indian reservation lands or Indian income from activities within the reservation is not permissible without congressional consent. Montana's arguments that the Flathead Reservation's developed nature distinguished it from Navajo, or that the General Allotment Act of 1887 permitted state taxation, were rejected. The Court found no basis to distinguish McClanahan, noting the Tribe had not abandoned its tribal organization and that Congress had provided substantial support. It also rejected the 'impractical pattern of checkerboard jurisdiction' that would arise from applying the General Allotment Act to allow state jurisdiction only over 'fee patented' lands, consistent with Seymour v. Superintendent and the repudiation of allotment policy by the Indian Reorganization Act. The Court also dismissed Montana's claim that tax immunity for Indians constituted invidious racial discrimination, citing Morton v. Mancari which held that special treatment for Indians is constitutional if rationally tied to Congress’ unique obligation toward them. Therefore, the personal property tax on reservation property, the vendor license fee for Indian-operated smoke shops on reservation land, and the cigarette sales tax on Indian-to-Indian sales conflict with federal statutes and treaties. Regarding the State's ability to require Indian retailers to collect cigarette taxes from non-Indian purchasers, the Court distinguished this from taxing the Indian seller directly. It noted that the Montana statute explicitly states the tax is 'conclusively presumed to be a direct tax on the retail consumer'. Since non-payment is a misdemeanor for the purchaser, and the non-Indian consumer reaps the benefit of avoiding the tax, requiring the Indian retailer to collect this tax from non-Indian purchasers is a minimal burden. This collection requirement is not a tax on the Indian seller or Tribe, does not frustrate tribal self-government (Williams v. Lee), and does not conflict with federal enactments protecting reservation Indians.