Researcher: HP Page 1 4/25/22
OLR Bill Analysis
HB 5474
AN ACT ESTABLISHING A PROPERTY TAX EXEMPTION FOR
PROPERTY LOCATED ON CERTAIN INDIAN LANDS.
SUMMARY
This bill establishes a property tax exemption for real property and
personal property located on reservation land that is held in trust for a
federally recognized Indian tribe. The exemption applies regardless of
ownership (i.e., it applies to Indian and non-Indian owned property).
With exceptions, federal law precludes taxing federally recognized
tribes for real or personal property they own, and in some cases lease,
on their reservations (see BACKGROUND). Additionally, existing state
law specifically exempts from property tax (1) reservation land held in
trust by the state and (2) motor vehicles garaged on a reservation that
are owned by tribal members or their spouses (CGS § 12-81(2) & (71)).
EFFECTIVE DATE: October 1, 2022, and applicable to assessment
years beginning on or after that date.
BACKGROUND
Related Case Law
The U.S. Supreme Court has ruled that under the U.S. Constitution
states may not tax federally recognized Indian reservations and the
Indians on them without clear congressional authorization to do so
(Oklahoma Tax Commission v. Chickasaw Nation, 515 U.S. 450
(1995)). Local governments, as political subdivisions of the states, are
generally subject to the same limitation.
Federal law does not necessarily preempt taxing non-Indian
businesses or non-Indian property on reservations. In Mashantucket
Pequot Tribe v. Town of Ledyard, 722 F.3d 457 (2d Cir. 2013), the Second
Circuit Court of Appeals held that the town could levy personal 2022HB-05474-R000602-BA.DOCX
Researcher: HP Page 2 4/25/22
property taxes on slot machines owned by a non-Indian lessor and
leased to the tribe for its exclusive use for on-reservation gaming. In
doing so, it overturned a decision by the district court that found the
property tax to be preempted by federal law.
Related Bill
sHB 5424 (File 412), favorably reported by the Planning and
Development Committee, expands the properties eligible for
reimbursement under the payment in lieu of taxes program to include
all real property that is exempt from property tax under CGS § 12-81,
except houses of worship.
COMMITTEE ACTION
Finance, Revenue and Bonding Committee
Joint Favorable
Yea 36 Nay 15 (04/06/2022)