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(Cite as: 2007 WL 609532 (Minn.Tax Regular Div.))

Minnesota Tax Court, Regular Division.

County of Hennepin.

Gordon C. THAYER and Sheila A. Thayer, Appellants,



No. 7724 R.

Heard Oct. 25, 2006.

Feb. 26, 2007.

Larry B. Leventhal, Attorney at Law, represented the Appellants.

Patrick A. Shrake, Assistant Attorney General, represented the Appellee.



*1 The issue in this case is whether the State of Minnesota may impose individual income tax on a member of an American Indian Tribe whose primary residence is off the tribe's reservation but whose income is derived, in part, from tribal employment.

The process known as the Erie Shuffle, pursuant to Erie Mining Co. v. Commissioner of Revenue, [FN1] whereby the Tax Court gains jurisdiction over constitutional matters, was completed on November 29, 2006.

FN1. 343 N.W.2d 261 (Minn.1984).

The Court, having heard and considered the evidence adduced at the hearing, and upon all of the files, records and proceedings herein, now makes the following:


1. Appellants' Motion for Summary Judgment is hereby denied.

2. Appellee's Motion for Summary Judgment is hereby granted.



The issue in this individual income tax case is whether Gordon C. Thayer and Sheila A. Thayer ("Appellants"), husband and wife, are residents of the State of Minnesota and, therefore, may be taxed on Mr. Thayer's income received from the Lac Courte Oreilles Band of Lake Superior Chippewa Indians ("LCO"). The LCO is a federally recognized American Indian Tribe of which Mr. Thayer is an enrolled member. The parties submitted cross Motions for Summary Judgment and a Stipulation of Facts. These facts are summarized below.


Gordon Thayer held two jobs during 1996 and 1997 ("Tax Years"). During 1996 and the first half of 1997, he was employed full time as the LCO's Special Projects Coordinator. This work included creation of the LCO Community Development Corporation, which implements economic development initiatives. It also included the founding of the LCO Boys and Girls Club. Mr. Thayer was a regular employee, paid on a salary basis. His employment with the LCO ended in June 1997. During this same time period, Mr. Thayer served as Executive Director of the American Indian Housing Community Development Corporation ("AIHCDC") in Minneapolis. The AIHDC is dedicated to the development and provision of urban housing for Indian people in the Twin Cities.

Both of Mr. Thayer's jobs were full time. He was able to perform his duties for both entities at the same time by splitting the week between them. For his services to the LCO Tribe, Mr. Thayer was paid $28,537.32 in 1996 and $15,747.84 in 1997. Appellants have paid no state taxes on these sums. Appellants properly reported and paid State of Minnesota income tax on the wages received from AIHCDC.

The Commissioner of Revenue ("Commissioner") has assessed Appellants $2,288.00 plus interest for 1996 and $1,264.00 plus interest for 1997 based on the salary received from the LCO Tribe. Appellants appeal these assessments and contest the Minnesota tax on the income derived from the work Mr. Thayer performed on behalf of the LCO asserting that he was not domiciled in the State of Minnesota during the time he worked for the LCO.

*2 Appellants stipulated that their primary residence was located in Minneapolis, Minnesota ("Primary Residence") throughout the Tax Years. Mr. Thayer spent approximately 208 nights at the Primary Residence during 1996 and 274 nights during 1997. The Thayers received a homestead exemption for the Primary Residence during the Tax Years. Mrs. Thayer spent more nights at the Primary Residence than her husband during the Tax Years. Mr. Thayer performed maintenance and paid all bills for the Primary Residence. Mr. Thayer received some mail and Mrs. Thayer received almost all mail at the Primary Residence.

In addition, the Primary Residence was located outside the boundary of the LCO Reservation in Hayward, Wisconsin. The LCO Reservation is approximately 140 miles from the Twin Cities.

Appellants had a secondary residence on the LCO Reservation near Hayward Wisconsin, which was the permanent and primary residence for Mr. Thayer's mother ("Secondary Residence"). The Secondary Residence was located on reservation trust land held in Mr. Thayer's name. The house was built in 1975. No information was provided to the Court that establishes that Appellants ever resided in the Secondary Residence on a primary or permanent basis. Mr. Thayer, and sometimes Appellants together, resided periodically at the Secondary Residence when Mr. Thayer was working on assignments for the LCO Tribe, on vacations and on some weekends. Mr. Thayer spent approximately 136 nights in 1996 and 80 nights in 1997 at the Secondary Residence. He performed upkeep, received some mail, and sometimes paid the bills for the Secondary Residence.

Mr. Thayer has a State of Wisconsin driver's license and had at least one vehicle registered and insured in Wisconsin. No information was submitted about a driver's license for Mrs. Thayer. No evidence was submitted regarding insurance, ownership of the Primary Residence, Minnesota drivers' licenses, voting, or banking.

Summary Judgment

Summary judgment is appropriate where it is determined that there are no genuine issues of material fact and that either party is entitled to judgment as a matter of law. Minn. R. Civ. Proc. 56.03. Accord DLH Inc. v. Russ, 566 N.W.2d 60, 69 (Minn.1997) (summary judgment permits the court to dispose of an action on the merits if there is no genuine issue as to any material fact). Here, because there are no genuine issues of material fact, the issues are properly presented for summary judgment.


Appellants argue that the Minnesota Commissioner of Revenue lacks jurisdiction to impose Minnesota state income tax upon the reservation-based earnings of Mr. Thayer. Further, they argue that the state's taxation of this income directly impacts Tribal self-government, economic development and self sufficiency. Finally, Appellants argue that the Tribe's right to tax is reserved and not a power granted by the federal government; an imposition of the tax would impact the setting of competitive salaries for Tribal employment, and, "if the Tribe keeps its members free from Tribal taxation the purpose is not to accommodate State taxation by outside States." Appellant's Memorandum, p. 17.

*3 The Commissioner argues that Appellants are residents of the State of Minnesota and, therefore, Minnesota may properly tax their world wide income, including the amounts paid by the LCO. Further, the Commissioner argues that the tax is not being imposed on the Tribe nor is the tax infringing on Tribal governance. Rather, Minnesota is lawfully taxing its own resident, Mr. Thayer, for all his income received during the Tax Years.


Minnesota law provides that "all net income of a resident individual is subject to tax ..." Minn.Stat. § 290.014, subd. 1 (1996). In Jefferson v. Commissioner of Revenue, 631 N.W.2d 391 (Minn.2001), the Minnesota Supreme Court recognized the clear authority of the Minnesota state government to impose an income tax on its residents including those members of Indian tribes who do not live on a reservation. Minnesota's "right to impose an income tax on its residents is justified by the advantages, rights, and protections it bestows in return." Jefferson, 631 N.W.2d at 395, citing Luther v. Commissioner of Revenue, 588 N.W.2d 502, 509 (Minn.1999). When the income of a member of an American Indian Tribe is at issue, the U.S. Supreme Court and Minnesota Supreme Court have held that, as a general rule, a state may impose an income tax for income earned on or off a reservation if the person resides off the reservation. In Oklahoma Tax Commission v. Chickasaw Nation, 515 U.S. 450 (1995), the U.S. Supreme Court held that Oklahoma may tax the income of Indian tribal members who work for the tribe, but reside in the state outside of tribal land and land held in trust for the tribe. Stated another way, tribal members "going beyond reservation boundaries have generally been held subject to nondiscriminatory state law otherwise applicable to all citizens of the State." Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148- 49 (1973).

In determining whether the State of Minnesota may tax a tribal member's income, the Minnesota Supreme Court stated in Jefferson that the location of employment, location of residency, and whether the tax infringed on tribal self-governance are important factors, although the main focus is on residency. Id. at 395. Here, there is no dispute that the location of employment is based at the LCO Reservation in Wisconsin. There is a dispute, however, about residency and infringement on tribal self-sufficiency. We will examine each in turn.


Minnesota Statute Section 290.01, subd. 7 (1996) defines "resident" to mean "(1) any individual domiciled in Minnesota and (2) any individual domiciled outside the state who maintains a place of abode in the state and spends in the aggregate more than one-half of the tax year in Minnesota, ..."

Here, it is undisputed that, at all relevant times, Mr. Thayer was an enrolled member of the LCO Tribe and that Appellants' primary residence was within the State of Minnesota and off the LCO Reservation. Appellants also do not dispute that they met the definitions of Minn.Stat. § 290.01, subd. 7. The dispute centers on whether Mr. Thayer was domiciled in Minnesota when he was working for the LCO Tribe and staying on the reservation.

*4 In determining domicile, we look to Minn.Stat. § 290.01, subd. 7 and its corresponding rule, Minn. R. 8001.0300 (1995). Under the rule a domicile:

means the bodily presence of an individual person in a place coupled with an intent to make such place one's home. The domicile of any person shall be that place in which that person's habitation is fixed, without any present intentions of removal therefrom, and to which, whenever absent, that person intends to return. A person who leaves home to go into another jurisdiction for temporary purposes only is not considered to have lost that person's domicile. But if a person moves to another jurisdiction with the intention of remaining there permanently or for an indefinite time as a home, that person has lot that person's domicile in this state.

The presumption is that the place where a person's family is domiciled is that person's domicile. The domicile of a spouse shall be the same as the other spouse unless there is affirmative evidence to the contrary ... The mere intention to acquire a new domicile, without the fact of physical removal, does not change the status of the taxpayer, nor does the fact of physical removal, without the intention to remain, change the person's status. The presumption is that one's domicile is the place where one lives. An individual can have only one domicile at any particular time ... An absence of intention to abandon a domicile is equivalent to an intention to retain the existing one ...

Minn. R. 8001.0300, subpt. 2 (1995).

"Domicile" means bodily presence in a place coupled with an intent to make that place one's home. Dreyling v. Commissioner of Revenue, 711 N.W.2d 491 (Minn.2006) citing Miller's Estate v. Commissioner of Taxation, 240 Minn. 18, 19, 59 N.W.2d 925, 926 (1953). Once established, a domicile is presumed to continue until the contrary is shown. Minn. R. 8001.0300, subpt. 2. As a result, one may live in another state for a period of time without affecting one's Minnesota domicile. See Commissioner of Revenue v. Stamp, 296 N.W.2d 867, 870 (Minn.1980). Rules promulgated by the Commissioner establish 26 nonexclusive factors to aid in the determination of domicile. Minn. R. 8001.0300, subpt. 3 (2005). [FN2]

FN2. Considerations. The following items listed will be considered in determining whether or not a person is domiciled in this state: A. location of domicile for prior years: B. where the person votes or is registered to vote, but casting an illegal vote doest not establish domicile for income tax purposes; C. status as a student: D. classification of employment as temporary or permanent; E. location of employment; F. location of newly acquired living quarters whether owned or rented; G. present status of the former living quarters, i.e., whether it was sold, offered for sale, rented or available for rent to another; H. whether homestead status has been requested and/or obtained for property tax purposes on newly purchased living quarters and whether the homestead status of the former living quarters has not been renewed; I. ownership of other real property; J. jurisdiction in which a valid driver's license was issued; K. jurisdiction from which any professional licenses were issued; L. location of the person's union membership; M. jurisdiction from which any motor vehicle license was issued and the actual physical location of the vehicles; N. whether resident or nonresident fishing or hunting licenses purchased; O. whether an income tax return has been filed as a resident or nonresident; P. whether the person has fulfilled the tax obligations required of a resident; Q. location of any bank accounts, especially the location of the most active checking account; R. location of other transactions with financial institutions; S. location of the place of worship at which the person is a member; T. location of business relationships and the place where business is transacted; U. location of social, fraternal, or athletic organizations or clubs or in a lodge or country club, in which the person is a member; V. address where mail is received; W. percentage of time (not counting hours of employment)that the person is physically present in Minnesota and the percentage of time (not counting hours of employment)that the person is physically present in each jurisdiction other than Minnesota; X. location of jurisdiction from which unemployment compensation benefits are received; Y. location of schools at which the person or the person's spouse or children attend, and whether the resident or nonresident tuition was charged; Z. statements made to an insurance company, concerning the person's resident, and on which the insurance is based. Any one of the items listed above will not, by itself, determine domicile. (Minn. R. 8001 .0300, subpt. 3 (2005)).

In the most recent Minnesota Supreme Court case on domicile for income tax purposes, the Minnesota Supreme Court found that a taxpayer had not changed his domicile from Minnesota to Alaska because, among other facts, his family was located in Minnesota, he worked and stayed out of state on a strictly temporary basis, and he owned real estate in Minnesota. Dreyling.

In one of the more recent tax cases regarding taxation of tribal members, Brun v. Commissioner of Revenue, 549 N.W.2d 91 (Minn.1996), the Minnesota Supreme Court found that the tribal members failed to establish that they were not residents in the State of Minnesota in a fact pattern similar to this case. In Brun, the appellants lived in a house located outside of the reservation off and on during the period in question, they received mail at the home off the reservation, and they applied for and received homestead status for the home off the reservation, claiming that the home off the reservation was their "permanent residence." Id.

*5 Here, as in Dreyling and Brun, Mr. Thayer worked and stayed out of Minnesota on a temporary basis, while his family stayed in Minnesota. He worked two jobs simultaneously, one in Minnesota and one on the LCO Reservation. He worked part of the week on the LCO Reservation and part of the week in Minneapolis, where his wife was located. Appellants spent significantly more time at their home in Minneapolis than at the LCO Reservation. (Mr. Thayer spent approximately 208 nights at the Primary Residence during 1996 and 274 nights during 1997. Mrs. Thayer spent more nights at the Primary Residence during the Tax Years than Mr. Thayer .) While Mr. Thayer did perform some maintenance and paid some bills for the Secondary Residence, he performed maintenance and paid all bills for the Primary Residence. The Primary Homestead received a homestead exemption from real property taxes during the Tax Years. [FN3]

FN3. According to the Joint Stipulation of Facts filed at the Court's request on February 23, 2007, Sheila Thayer alone signed the 1996 Homestead Application for the Primary Residence. The Application states that all owners who occupied the property must sign the Application. Even though Mr. Thayer did not sign the Application, a homestead exemption was granted for the Tax Years.

Appellants list the Minneapolis address on all tax forms they submitted to the State of Minnesota and to the Internal Revenue Service. Mr. Thayer's W-2 forms from the LCO Tribe also list the Primary Residence address as his address. Mr. Thayer receives mail at both places; he pays all the bills at the Primary Residence and some of the Secondary Residence.

Militating against residency in Minnesota are the facts that Mr. Thayer has a Wisconsin driver's license, has at least one vehicle registered and insured in Wisconsin, is employed on the Reservation and the property on the Reservation is leased in his name.

While there are facts supporting and negating an intent to reside permanently in Minnesota, we put more weight on the following facts: the amount of time spent in Minnesota, the return to Minnesota each week to work for the AIHCDC, Mrs. Thayer's continuous residency at the Primary Residence, the listing of the Primary Residence address in his employment and tax forms, receipt of homestead exemption for the Primary Residence, location of the Primary Residence, and his employment in Minnesota. We are persuaded that the Thayers' intent was to permanently reside in Minnesota. Appellants have failed, therefore, to establish that they were residents of the LCO Reservation and not residents of the State of Minnesota.

Tribal Residency

Appellants assert that if the Court finds Appellants to be Minnesota residents, the LCO Tribe rule that a member is at home whenever on the reservation, should take precedence over Minnesota's rule. We disagree. First, as discussed above, Minnesota has the right to determine rules regarding taxation of its own resident. Second, while Appellants argue that the tribe considers him a resident, this is belied by the Tribe's listing the Minneapolis address on Mr. Thayer's W-2 tax forms. Nothing cited establishes the rights of the LCO Tribe to take precedence over the State of Minnesota's right to tax its own resident.

Interference with the LCO Tribe's Right to Self Governance

*6 The last factor we consider regarding Minnesota taxation of a tribal member is whether the imposition of the income tax interferes with the LCO Tribe's right to self government.

Appellants argue that the Tribe's right to self-governance is infringed because the Tribe would have to pay more to hire employees, that the work Mr. Thayer did was on behalf of and economically necessary for the Tribe, and that federal regulations reveal an "intent to preempt" any state taxation.

In Jefferson, the Minnesota Supreme Court held that absent evidence to the contrary, imposition of income tax on tribal members residing off the tribe's reservation and working on the reservation does not infringe on the right of reservation Indians to make their own laws and be ruled by them. Jefferson, citing New Mexico v. Mescalero Apache Tribe, 462 U.S. 324, 334 n. 16 (1983).

With regard to increased salaries, the Commissioner argues that there is no evidence in the record to support the conclusion that the Tribe will have to increase salaries. We agree. Appellants make an argument, but submit nothing to support it.

Appellants also argue that the work done by Mr. Thayer was critical to the LCO Tribe and taxing wages for that work will interfere with the Tribe's economic development. While we agree that Mr. Thayer's work on behalf of the Tribe was important, that alone does not support a finding of interference with the Tribe's ability to govern itself or develop economically.

A Wisconsin case, which is very similar to this case, is instructive on this issue. In Anderson v. Wisconsin. Dept. of Revenue, 484 N.W.2d 914 (Wis.1992), the Wisconsin Supreme Court held that on-reservation income of a member of the LCO Tribe who resided off the LCO Reservation was subject to state income tax, even when the income was earned from various educational positions conducted on the reservation. These positions included guidance counselor, director of education, president of the community college and public information officer for the LCO Tribe's elementary and high schools. The Wisconsin Supreme Court held that the state's taxation did not place impermissible burden on tribal sovereignty. Id. at 921. The state was simply seeking to tax the tribal member as reimbursement for the services rendered to him as a resident of the state. Id. at 916. It was the individual's choice of residence that gave rise to his tax liability, not the nature of his employment. We agree with this reasoning. It mirrors the Minnesota Supreme Court's statements in Jefferson that Minnesota has the right to seek reimbursement for services rendered to its residents.

Next, Appellants argue that the "comprehensive federal regulation surrounding Tribal self-government reveals an intent preempting any state taxation." We disagree. The Minnesota Supreme Court has held that unless expressly prohibited by federal law, the State of Minnesota may tax its residents, including tribal members residing off a reservation. Jefferson, 631 N.W.2d at 396. Appellants cite no statute or law that expressly prohibits the State of Minnesota from taxing its residents.

*7 We find, therefore, that the imposition of income tax on Appellants does not infringe on the right of the LCO Tribe to govern itself.


Appellants argue that Mr. Thayer's income should be apportioned for the time he spent on the reservation working. We disagree. There is no statutory or case law that supports apportionment because Mr. Thayer and Mrs. Thayer were residents of Minnesota during the entire time frame at issue. Because Mrs. Thayer was actually staying in Minnesota and receiving services from the State of Minnesota during the time that Mr. Thayer was out of the state, Minnesota is entitled to seek reimbursement for services rendered to its residents.

Finally, because Appellants appear to argue that Appellants may be subject to double taxation, we note that the LCO Tribe does not have an income tax so there would be no double taxation.


We find that Appellants are Minnesota residents and that the State of Minnesota may impose an income tax upon them for all income earned during the Tax Years. We, therefore, grant the Commissioner's Motion for Summary Judgment and deny Appellants' Motion for Summary Judgment.