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Debt & Equity

Landmark commercial rent tax ruling expected to reverberate around the US

Akerman LLP, a top 100 U.S. law firm serving clients across the Americas, successfully represented the Seminole Tribe of Florida in an action challenging the constitutionality of the Florida commercial rental tax, as it applies to rentals of Indian land.

The Eleventh Circuit affirmed  a district court’s conclusion that the rental tax violates federal law.

The opinion cited the U.S. Supreme Court’s 1973 decision in Mescalero Apache Tribe v. Jones, indicating the ability to lease property is a fundamental privilege of property ownership and the Indian Reorganization Act of 1934 prohibits taxes on tribal land or land rights. The court also found that the state tax is pre-empted by the Federal law regulating the leasing of Indian land.

This decision (which the Court called one of “first impression”) is certain to be cited many times throughout Indian Country in the years to come.

In addition, the fact that lessees will not have to pay rental tax on property they lease from the Seminole Tribe gives the Tribe a substantial competitive advantage in the rental market and will save the Tribe’s lessees many millions of dollars.

The Akerman team representing the Seminole Tribe was led by partner Glen Stankee, with the Tax Practice Group.  “This is a significant victory for our client and Native American tribes across the country,” said Stankee.

“In holding that federal law prohibits state taxation of rentals of Indian land, this decision helps define the limits of states’ taxing authority in Indian Country.

“While not all states tax rentals of commercial property, the court resolved a variety of legal issues and applied important principles that will significantly benefit tribes in all types of state tax cases in the years to come.”

Additional Akerman lawyers representing the Tribe included partners Kathi Giddings and Kristen Fiore, with the Appellate Practice.

The team also was successful in securing the initial decision by the Federal District Court for the Southern District of Florida.

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