Warehouse Market Inc., based in Tulsa, contended it had 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 feud started 21 months before the U.S. Supreme Court ruled in the McGirt case.
Warehouse Market 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 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 suit in Okmulgee County District Court in December 2018, 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 in November 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,” the jurist ruled.
The Tax Commission appealed Adair’s decision to the Oklahoma Supreme Court and continued to insist it is entitled to tax sales at the Okmulgee store. Warehouse Market said it still collected 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 Northern District federal court in November 2020, 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 Oklahoma Supreme Court reversed Judge Adair’s ruling on Feb. 2, 2021. “Once the trial court dismissed the Muscogee (Creek) Nation because of its sovereign immunity, Warehouse Market’s district court action became a tax protest,” the justices ruled. Consequently, the grocer must exhaust “administrative remedies” before it can seek relief in the trial court.”
The federal lawsuit was dismissed on Feb. 4, 2021, because the federal court, too, “lacks jurisdiction” to consider Warehouse Market’s claim, U.S. District Judge Claire Eagan ruled.
The Oklahoma Tax Commission declined to report whether the squabble has been resolved, because tax issues are confidential information.