Supreme Court turns down tribe's appeal in tax fight

Seminole Tribe of Florida disputed paying state utility taxes


TALLAHASSEE, Fla. – In a case that raised questions about tribal sovereignty, the U.S. Supreme Court on Monday turned down an appeal from the Seminole Tribe of Florida in a dispute about paying state utility taxes.

The decision effectively let stand a ruling by the 11th U.S. Circuit Court of Appeals that upheld collection of a state tax for electricity used on tribal lands. The Seminoles argued the tax violated tribal sovereignty, but the appeals court last year ruled that the tax is imposed on utility companies, which then pass it along to customers.

The Supreme Court, as is common, did not explain its reasons for turning down the Seminoles' request to hear the case.

In a petition filed in February with the Supreme Court, attorneys for the tribe argued that the issue in the case "is important to Indian tribes, states, and the federal government." The petition also contended that allowing the tax to be collected would violate the tribe's sovereignty, which helps shield it from state taxes.

"The court of appeals' decision permits Florida to tax activities on a federally recognized Indian tribe's reservations," the petition, posted on the website SCOTUSblog, said. "That represents a grave encroachment on tribal sovereignty."

But attorneys for the Florida Department of Revenue, in a brief filed last month, disputed that the case had such broad implications and asked the Supreme Court to turn down the Seminoles' appeal.

"(Even) if the 11th Circuit erred, a decision in this case would have a vanishingly small impact," the brief said. "It is well established that Florida could remedy any defect through a simple statutory revision declaring the legal incidence to lie with the utility provider, not the customer, and any other state concerned with the implications of a reversal in this case could enact a similar statutory fix while doing nothing to change the actual operation of the tax. Such insignificant error correction would hardly merit this (Supreme) Court's time."

The case stemmed from what is known as a "gross receipts" tax that the state imposes on utility services. While the state collects the tax from utility companies, the tribe argued that the tax is itemized on bills sent to customers, who are required to pay it.

"Virtually every utility provider in Florida exercises its right to expressly pass the tax along to customers," the tribe's attorneys wrote in the February petition. "Indeed, a state tax official testified that he knows of no utility provider that does not separately charge the utility tax on its customers' bills. The tribe's utility providers are no different; they have always passed the utility tax on to the tribe, making the tribe legally obligated to pay it."

But in siding with the state in August, the 11th U.S. Circuit Court of Appeals agreed with the Department of Revenue that the tax is imposed on utility companies and not directly on customers.

"Although an itemized amount of the utility tax becomes a component of the consumer's bill that is, in a sense, transmitted by the utility to the state once collected, it is key in our view that nothing about this section (of state law) requires a utility provider ever to itemize the tax,'' the ruling said. "Ultimately, then, there is no requirement from the Legislature to pass the tax through to the consumer, and it is the requirement that matters."