Illegal Taxation of Native American Service Members
Petition: Illegal Taxation of Native American Service Members
Issue Update: Senator Tom Udall of New Mexico has informed United Native America that he will not be reintroducing legislation at the federal level concerning "Illegal Taxation of Native American Service Members." Taxing of Native American service members has been stopped at the federal leval under the Department of Defense policy instituted in 2001, and most recently in Public Law 108-189, a law that pass the House unanimously.
Any Native American Service Members at this time (2010) should work through their state representatives and tribal nation government in how best to regain taxes withheld during their time in service. Please use all information on this page to assist you in your preparation.
“This story concerns all Native Americans who ever served in the U.S. Armed Forces. We were unjustly and illegally taxed by our individual states while serving in uniform,” Richard Adame, shown here in his military portrait, said.
While browsing the Internet, Prairie Band Potawatomi tribal citizen and U.S. Army veteran Richard Adame was surprised to find a news article about New Mexico legislation and subsequent negotiations with American Indian veterans in that state to restore state taxes wrongly deducted from their pay by the Department of Defense.
“Two years after I retired, I found out that I and every other Native American who claimed the reservation as our homes were illegally taxed. But, no one seems to know. . . I contacted a few vet reps and they never heard of this. This injustice was not even known to us ground pounders. We were just doing our jobs. How were we supposed to know that we were being illegally taxed?” he said. “I grew up in Kansas on the reservation and joined the Army out of a sense of patriotism and pride in my country. Most of the men and women in my family served in the Armed Forces.
Deduction of state income taxes from the pay of American Indian veterans living on reservation land at the time of their entrance into active duty service was first prohibited by federal law under the Soldiers and Sailors Civil Relief Act of 1940, Section 514, and continued under the newer version of the law, the Service members Civil Relief Act of 2006, section 511e. Other laws and legal opinions uphold the protection of that pay.
But according to language in HR 5275 introduced to the United States 108th Congress in October 2004 by New Mexico Democratic Senator Tom Udall, the DoD withheld state income taxes anyway. HR 5275 intended to restore the pay of all American Indian veterans across the country from whose pay state taxes were wrongly deducted.
“The law is now well established that this policy was wrong and, in keeping with tribal sovereignty, the policy of withholding state taxes on these soldiers’ pay was changed. This position is reflected in administrative opinions, Fatt v. Utah, 884P2d 1233 (Utah 1994), a 2000 Department of Justice opinion, a Department of Defense policy instituted in 2001, and most recently, in Public Law 108-189, a law that passed this House unanimously,” Udall said in his introduction of HR 5275 to the House Armed Services Committee.
While the DoD stopped the improper taxation of those veterans in 2001, the changes did not apply retroactively for veterans whose pay was taxed prior to that year. A statute of limitations could present obstacles as well.
“The result is that hundreds, perhaps thousands, of tribal members whose state taxes were improperly withheld during their service to our country are unable to recover the money that is owed to them,” Udall stated.
Sadly, HR 5275 faced immediate death in the 108th HASC for lack of support. Since then, no action has been taken to restore the pay of reservation-based American Indian veterans outside of New Mexico.
Adame has questioned whether restoration of the veterans’ pay might be settled legally with a class action lawsuit but would rather see Congress step up to reintroduce legislation like HR 5275 and bring justice to all American Indian veterans.
“This story concerns all Native Americans who ever served in the U.S. Armed Forces,” he said. “We were unjustly and illegally taxed by our individual states while serving in uniform.”
In Oklahoma, the topic of taxation of American Indians has always been controversial but was settled unanimously by the U.S Supreme Court in the 1993 case, “Oklahoma Tax Commission v. Sac and Fox,” filed by attorney William Rice, associate professor of law and co-director of the Native American Law Center, University of Tulsa College of Law.
“The state lost,” Rice said. “How the veterans’ case would play out is arguable. But obviously Oklahoma has no authority to levy the tax in the first place and the SSCRA should protect them in the second.”
Rice said the Court generally has ruled that the Constitution and federal law place the tribal relationship with the federal government and not states, at least in areas defined as Indian Country, a legal term applying to allotments, tribal lands, reservations and other categories of Indian-owned properties.
Oklahoma Tax Commission law now states active duty pay is exempt when:
“The income is compensation paid to an active member of the Armed Forces of the United States, if the member was residing within his tribe’s “Indian Country” at the time of entering the Armed Forces of the United States, and the member has not elected to abandon such residence.” Rice thinks there would be even more affected veterans in Oklahoma than in New Mexico.
“I suggest many of them would be residents of Indian Country when they joined up,” he said.
Adame wants his pay and that of all other American Indian veterans restored and is hoping affected veterans will contact tribal, regional and national veterans’ organizations to make them aware of the law. He said veterans should also contact their Congressional representatives to request they reintroduce and support legislation like HR 5275. He also posted online a petition to restore the veterans’ pay..
Adame hopes the new Obama administration will walk its talk as it promised to respect Indian sovereignty and honor tribal nations’ government-to-government relationship.
First Lady Michelle Obama told employees at the Interior Department in February that American Indians have a “wonderful partner in the White House right now,” and her husband plans to improve that relationship even more, according to an Associated Press story.
Adame wants American Indians in political office to help rectify the wrongs against him and other veterans.
“These newly appointed government Native American politicians and advocates must also stand up for us, the cheated veterans.”
Tell Obama to Adopt the United Nations Declaration on the Rights of Indigenous Peoples. Go to: www.change.gov
"Serving those who served"
On December 1, 2009, the state of New Mexico started the process of refunding any state income tax which may have been withheld from the paychecks of Native American military personnel who were legally domiciled on tribal land in New Mexico while serving in the U.S. Armed Forces.
Governor Bill Richardson signed into law the Native American Veterans’ Income Tax Settlement Fund to pay for any refunds to eligible Native American soldiers or veterans. These refunds will be made on a “first come, first served” basis and will continue until the Fund is exhausted, until no further claims are received, or until the Fund expiration date of January 1, 2013 (December 31, 2012 is the last day to file a claim.)
Any Native American veteran or soldier, their widow, or the legally recognized executor/administrator of a deceased Native American veteran’s estate who believes they qualify for a Native American Veterans’ Income Tax settlement may file a claim with the state of New Mexico.
The process starts by filling out a claim form with the New Mexico Department of Veterans’ Services. This claim form can be found here or down below. Each form must be completed, signed, and accompanied by a copy of a Veteran’s DD-214 form or other official Department of Defense form proving an applicant’s veteran status.
For further questions, call the NMDVS at 1-(866) 433-8387 toll-free
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