Legal Definitions - McClanahan presumption

The McClanahan presumption is a legal principle that generally assumes states do not have the authority to impose taxes on members of a Native American tribe who live or work on tribal land.

This presumption is not limited to formal, federally recognized reservations. Instead, it broadly applies to various types of tribal lands, including:

• Formal reservations
• Informal reservations
• Dependent tribal communities
• Individual tribal allotments

Essentially, if a tribal member is living or earning income within these designated tribal areas, it is presumed that the state lacks the jurisdiction to tax them, unless Congress has explicitly granted such authority.

Examples:

• Example 1: Income Tax on Reservation Earnings

  Imagine Sarah, a member of the Blackwood Tribe, who lives and works as a healthcare administrator within the boundaries of her tribe's federally recognized reservation. The state where the reservation is located attempts to impose its state income tax on Sarah's earnings from her job on the reservation.

  How it illustrates the term: Under the McClanahan presumption, the state would generally lack the authority to collect this income tax from Sarah. As a tribal member living and working on a formal reservation, she is presumed to be outside the state's taxing jurisdiction for income earned in that context.

• Example 2: Business Tax on Allotted Land

  Consider David, a member of the Riverbend Nation, who lives on an individual tribal allotment that was granted to his family generations ago. He operates a small landscaping business from his home on this allotment, primarily serving other tribal members within a nearby dependent tribal community recognized by the federal government. The state seeks to levy its business income tax on David's profits from his landscaping work.

  How it illustrates the term: The McClanahan presumption would likely apply here, preventing the state from taxing David's business income. His residence on an allotment and his work within a dependent tribal community fall under the broad definition of "tribal land" for the purposes of this presumption, thus limiting the state's taxing power.

• Example 3: Sales Tax on a Business in an Informal Reservation

  Suppose Maria, a member of the Mountain Clan, lives on a parcel of land held in trust by the federal government for her tribe, which functions as an informal reservation. She runs a successful pottery studio on this land, selling traditional tribal crafts to customers. The state tax authority sends her a notice demanding payment of state sales tax on her studio's revenue.

  How it illustrates the term: The McClanahan presumption would likely protect Maria from this state sales tax. Her studio is located on land considered an informal reservation, and as a tribal member operating her business there, the state's jurisdiction to impose sales tax is presumed to be absent.