Grocer sues state over sales taxes on store in Indian Country



  • Tulsa grocer sues over state tax laws.

OKLAHOMA CITY – A grocery chain and the Oklahoma Tax Commission have been locked in a dispute for two years over collection of state sales taxes on a store operating in Indian Country.

Warehouse Market Inc., based in Tulsa, believes it has no obligation to pay state sales taxes on a Cox Cash Saver Cost Plus store it operates in a shopping center in Okmulgee that is located on restricted Indian land within the jurisdiction of the Muscogee (Creek) Nation.

Warehouse Market rents the building in Okmulgee from a company that leases the property through a master lease with the U.S. Bureau of Indian Affairs (BIA).

The litigation started 22 months before the U.S. Supreme Court ruled in the McGirt case from Oklahoma’s Eastern District federal court in Muskogee that the Creek Nation Reservation was never dissolved by Congress.


Warehouse Market has paid to the Oklahoma Tax Commission (OTC) city, county and state sales taxes, at a combined rate of 10.083%, collected on purchases of items at its Okmulgee store.

The Tulsa grocer received a letter from the Creek Nation in September 2018 which stated that under the BIA master lease, any retail sales on the property it rents in Okmulgee are subject to a 6% tribal sales tax.

In October 2018 Warehouse Market paid the Creek Nation its 6% in tribal sales tax receipts and paid the OTC 10.083%, but notified the Tax Commission that pursuant to the tribal notice the company would stop remitting state and local taxes to the OTC.

The Tax Commission responded with a letter dated November 21, 2018, informing Warehouse Market that sales on restricted Indian land are subject to state and local taxes; that Warehouse Market was not relieved from requirements of the Oklahoma Tax Code; and that failure to remit state and local sales taxes to the state would result in closure of the business and/or revocation of the business’s sales tax permit.

Warehouse Market filed an action in Okmulgee County District Court, naming the Tax Commission and the Muscogee (Creek) Nation as defendants.

Subsequently the Creek Nation was dismissed as a party because of tribal sovereign immunity. Okmulgee County District Judge Ken Adair issued a summary judgment in favor of Warehouse Market on November 21, 2019. The OTC “is not currently entitled to retail tax proceeds” at the Okmulgee grocery “unless and until the legitimate dispute” between the Creek Nation and the Tax Commission “is resolved in another forum or tribunal,” Judge Adair ruled.


The Tax Commission appealed Adair’s decision to the Oklahoma Supreme Court on June 9 and continues to insist it is entitled to tax sales at the Okmulgee store. Warehouse Market says it still collects the 10.083% sales tax from its customers “pending a final decision” on whether the State of Oklahoma is entitled to tax sales on restricted Indian land.

Warehouse Market filed suit in Tulsa’s federal court on November 10, seeking a judgment that the Tax Commission “is not entitled to tax retail sales at Warehouse Market’s grocery store, which is located on restricted Indian land” in Okmulgee.

The OTC’s attempt to tax “is contrary to the general, long- time Federal policy of encouraging tribal self-sufficiency and economic development,” Warehouse Market’s attorneys assert. The Tax Commission’s attempt to tax sales on Indian land “frustrates that goal, because no business would agree to open a retail store on restricted Indian land that was required to collect double taxes from its customers – 6% for the Nation and 10.083% for the State.” 

Warehouse Market also argues that the OTC’s attempt to tax is contrary to a BIA regulation which states that sales under a lease on Indian land are “subject to taxation by the Indian tribe with jurisdiction” and are not subject to any ... tax ... imposed by any state or political subdivision of a State.”


“Just as state income tax and federal income tax are separate obligations, state sales tax and tribal sales tax are separate obligations,” Assistant Solicitor General Randall J. Yates of the Oklahoma Attorney General’s office argued in Okmulgee’s district court.

In its appeal to the Supreme Court, the Tax Commission noted that the Creek Nation’s own Attorney General wrote that “[s]ales on restricted Indian land, such as sales at the [Warehouse Market] grocery store, may ... be subject to state and local taxes.” The Nation “made clear that the State ‘may ... collect taxes on sales to non-members of the tribe’” and Warehouse Market’s grocery store “may therefore owe a 10.083% sales tax to the Oklahoma Tax Commission.”

The U.S. Supreme Court ruled in 1991 that the Oklahoma Tax Commission could collect sales tax on non-Indian purchases of goods at a convenience store situated on land in Oklahoma that the federal government held in trust for the Citizen Band Potawatomi Tribe.

Also in 1991 the Oklahoma Supreme Court upheld a ruling that the Tax Commission could “properly require Indian smoke shop retailers to add and collect sales tax” on cigarette sales made to non-members of the Muscogee (Creek) Nation.

The Tax Commission contends that “the legal incidence” of the sales tax “falls on” the customers of the Warehouse Market grocery in Okmulgee, not on the Muscogee (Creek) Nation.

The Tax Commission’s appeal of the ruling in the Okmulgee County case is pending in the state Supreme Court, according to Oklahoma State Courts Network records. The Tax Commission has until the first week of December to respond to Warehouse Market’s federal lawsuit.