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Volume 1 - Opinions of Counsel SBEA No. 84

Opinions of Counsel index

Indians (taxable status of property) - Real Property Tax Law, § 454; Indian Law, §§ 6, 71:

A leasehold acquired by an Indian in the Allegany Indian Reservation is immune from taxation and would be immune even if the Indian were to sublet to a non-Indian. The property would be taxable, however, if an Indian were to “sublet” from a non-Indian who continues to hold the lease with the Indian Nation.

We have received an inquiry in regard to the taxation of parcels in the City of Salamanca which are “owned” by Indians.

In view of the peculiar situation created by the fact that the City of Salamanca is located in the Allegany Indian Reservation of the Seneca Nation of Indians, the questions presented are more complex than the usual question concerning taxable status. Lands in the Allegany Indian Reservation are immune from any taxation which would interfere with the rights of the Indian Nation therein (25 U.S.C.A. 333 as enacted by U.S. Stats. of 1950, c. 845, 64 Stat. 845; Buffalo Creek Seneca Treaty of 1842, 7 U.S. Stat. at Large 586). These rights are the rights to occupancy and to use the land as though the owner thereof (U.S. v. City of Salamanca, 27 F.Supp. 541, 545, (W.D.N.Y. 1939). The provisions of section 454 of the Real Property Tax Law and section 6 of the Indian Law are restatements of this principle.

The lands within the city are held by the Seneca Nation under long term leases (with the Seneca Nation) authorized by various acts of Congress (Act of Feb. 19, 1875, 18 Stat. 330; Act of Sept. 30, 1890, 26 Stat. 558). The first statute cited above also provided that “all municipal laws and regulations of said state may extend” within the City of Salamanca, with the further proviso that this provision shall not be “construed to authorize the taxation of any Indian or the property of any Indian not a citizen of the United States.”

In conformance with the authorizations contained in these federal statutes, New York State subsequently enacted section 71 of the Indian Law. This section provides that the general laws of the State shall apply to various municipalities, including the City of Salamanca, but that the section “shall not authorize the taxation of any Indian or the property of any Indian, not a citizen of the United States.” It further provides that lands in the city held under lease from the Seneca Nation are to be considered freehold estates.

Ever since the enactment of section 71, real property in the city has been treated under the general laws of the State as though it were owned by the lessees rather than by the Seneca Nation. Insofar as taxation is concerned, the taxes levied by the City of Salamanca are considered to be levied against the leasehold estate and a conveyance under a tax sale conveys only the leasehold estate. For this reason, a Federal Court held in United States v. Erie County, New York, 31 F.Supp 57 (W.D.N.Y. 1939), that taxes could be levied against property leased for a long term to a preserving company, a non-Indian. In other words, the rights of the Indians were not affected. Also, in this case, the property had been subleased by the preserving company to one Jamison, a Seneca Indian. The Court held that in the absence of a showing that the long term lease had been cancelled and that Jamison held the land by virtue of tribal rights, it would be assumed he was merely a sublessee of the preserving company.

To be contrasted with this case, however, is a case decided by the same judge in the same year, United States v. City of Salamanca, 31 F.Supp. 60 (W.D.N.Y. 1939). There it was held that when the entire leasehold is in the hands of a Seneca Indian, it is “Indian property” which cannot be taxed under the tax exemption provision of the Act of 1875 quoted above. In this regard, the Court said (at p. 61):

“Assuming, without deciding, that Leona Kenjockety holds the property solely by virtue of a lease, I find no reason for holding such a leasehold taxable. The act of 1875 specifically exempts the Indian and Indian property from taxation. When such a leasehold is in the hands of an Indian, it is Indian property just as is a title descendible under tribal custom. To allow taxation merely because the Indian holds by lease from the tribe rather than by tribal custom would be an evasion of the protection intended to be thrown around the Indian and an invasion of his treaty and statutory rights.”

Having set forth the general law found on this subject, we will answer the specific question raised in this inquiry.

The question concerns the taxable status of a parcel “owned” by an individual Indian. If “owned” means that the Indian has acquired the entire leasehold, then under the holding in the City of Salamanca case, supra, the property is immune from taxation. It is also our opinion that the property is immune even should the Indian sublet the property to a non-Indian.

However, when an Indian “sublets” property from a non-Indian, who continues to hold the lease with the Indian Nation, it is taxable.

March 29, 1972