( – promoted by navajo)
A short time ago, as Veterans Affairs Correspondent for Native American Netroots, I was assigned to read an email from a Prairie Band Pottawatomi veteran from the reservation at Mayetta, Kansas. Twenty years on active duty in the U.S. Army, an artilleryman, a bearer of heavy combat arms. He’d served his country long and well, and, after his long years of service were done, he learned that he’d been the victim of an injustice for those whole twenty years.
You might even say he’d been robbed.
He’d learned a little about the law, and how what was done to him and his brothers and sisters was wrong, he called it illegal, and he was looking for help. To make a long story short, by virtue of Kansas law, Native Americans whose legal address, what the lawyers call their domicile, is on reservation land, even when they are away serving in the armed forces, had Kansas state personal income tax withheld from their military paychecks.
Unfortunately for Kansas, and more than a few other states, this is against longstanding federal law, The Soldiers and Sailors Relief Act.. For the entire twenty years of his service this soldier had Kansas state income tax, a tax he didn’t owe, deducted from his paycheck, wherever he was serving us, anywhere in the world. Kansas got a whole bunch of money from him they didn’t have coming. And now they won’t give it back. Wrongful as it might have been, they’ve got enough law on their side that they just don’t have to.
There’s a whole bunch of ways Kansas could put this veteran away in court. They’d start, of course, with their statute of limitations
(c) No claim shall be allowed for credit or refund of overpayment of any tax imposed by this act unless filed by the taxpayer within three years from the date the original return was due, including any extension allowed pursuant to law, or two years from the date the tax claimed to be refunded or against which the credit is claimed was paid, whichever of such periods expires later.
And should he argue that the statute of limitations is unfair, that he is entitled to his money back on equitable grounds, they’d be quick to raise the defense of laches
Laches (f. French, lâchesse, lâches)  is an equitable defense, or doctrine. The person invoking laches is asserting that an opposing party has “slept on its rights,” and that, as a result of this delay, that other party is no longer entitled to its original claim. Put another way, failure to assert one’s rights in a timely manner can result in a claim’s being barred by laches. Laches is a form of estoppel for delay.
which is a couple of different ways of saying that this soldier, and his brothers and sisters who’d served the United States, who’d put themselves in harm’s way, weren’t going to get their money back. Not unless the government of the State of Kansas, and all the other states that collected withholding they shouldn’t have, followed New Mexico’s model.
In the course of researching how common this Native American warrior’s sad story really is, I found that the personal income tax laws, and their exemptions for active duty and activated guard members vary widely, state by state.
And I learned of the neat little trick our states play on Native American servicemembers. How the G.W. Bush administration sort of tried to fix it, in their own inimitable way. How in July of 2002, more than sixty years after the Soldiers and Sailors Relief Act, the Department of Defense produced a form, DD 2058-2, which put the burden on the Native American servicemember to file for exemption from state income tax withholding.
And I learned how New Mexico set an example for every state with Native American reservations within their borders and a personal income tax.
But most of all I learned that our Native American brothers and sisters from the reservations who are serving us so well in uniform need to know about their rights, and how to claim them. Every eliglible, tribally enrolled, reservation dwelling man and woman in uniform needs to know about this, and why they should fill out that form DD 2058-2.
Although there are groups, or clusters if you’d like, of state approaches to this problem, I’m going to catalogue them here by state, in alphabetical order, to make each state easier to find for the reader. The list includes some veterans exemptions which apply to non-Natives and Natives who live outside the reservation. You can look at the state or two you’re interested in, then skip on down to after Wyoming, if you want, for what I believe is the only possible remedy.
And that means starting with
Alabama whose official state website makes no mention of the Native American Exemption (NAE), the servicemember must learn of and assert his rights via that DD2058-2.
Alaska has no state income tax, so withholding was never a problem for Alaskan servicemembers.
Arizona mentions that Native Americans may not have to file state income taxes, but provides no particular guidance as to which Native Americans are exempt, leaving the burden on the servicemember to discover her (remember Lori Piestewa?)rights and assert them. Eligible Natives are advised to file that DD 2058-2.
Arkansas exempts the first $6,000 of a servicemember’s income. No eligible reservations in the state
California specifically exempts all Native Americans who live on reservation land from their state income tax, but unless a California resident servicemember files that DD 2058-2 state income tax will probably be withheld and the individual will have to file a timely California tax return to receive his refund.
Colorado has their own set of rules, best summarized from their official FAQ page
A serviceperson who is a full-year Colorado resident who spends at least 305 days of the tax year outside of the 50 state boundary of the United States of America while stationed outside of the United States of America for active military duty may file as a nonresident on their Colorado income tax return. The serviceperson’s spouse may also file as a nonresident if they accompany the serviceperson outside of the country for at least 305 days of the tax year while they are stationed there on active military duty. A serviceperson or their spouse who meets the above criteria to file as a nonresident is not required to do so and may continue to file as a Colorado resident if they wish.
Again, eligible servicemembers are advised to fill out that DD 2852-2.
Connecticut does provide for refunds of wrongfully withheld state income taxes under a military service exemption, at the site linked search “military” where the information about the form CT-1040NR/PY will help get the refund. As always, eligible persons are best advised to fill out that DD 2058-2 once and be done.
Delaware‘s official state website makes no mention of either Native American or military service exemption. No eligible resevations in the state.
Florida does not have a state personal income tax, so there’s no problem there.
Georgia‘s website seems to indicate that they withhold servicemembers deductions and since there are no reservations in Georgia DD 2058-2 is not applicable.
Hawaii‘s website makes no mention of either NAE or military exemption, back to DD 2058-2.
Idaho has enacted several laws regarding military and spouse’s income tax, but the DD 2058-2, as always, is the eligible Native’s best option.
Illinois does not have an agreement with the Department of Defense to withhold state income taxes from servicemembers’ pay, so there is no problem here.
Indiana excludes neither military or Native persons from state income tax liability.No eligible reservations in the state. Ironic in view of the state’s name.
Iowa exempts active duty miltary personnel regardless of ethnicity from state income tax, but since there are no resevations in the state the tax may be withheld from your military pay and you must file for the refund.
Kansas, from their FAQ
If your military home of record is Kansas, you are required to file a Kansas income tax return, even if you were not stationed in Kansas last year.
. If you are entitled to the NAE you need that DD 2058-2.
Kentucky exempts all military pay from personal income taxes. If you are on active duty and have had any withheld you must file a return to claim the refund. Since there are no reservations DD 2058-2 does not apply.
Louisiana Military personnel whose domicile (home of record) is Louisiana and who are required to file a federal income tax return must file a return and report all of their income regardless of where they were stationed.
Maine seems to have no particular exemptions for Natives or servicemembers, but any reservation Natives are urged to fill out DD 2058-2.
If you are a legal resident of Maryland and serving in the military, you must file a resident Maryland tax return, regardless of where you are stationed. You must also report all of your taxable income from all sources, including military pay.
Since there are no reservations in Maryland DD 2058-2 does not apply.
Massachusetts‘ website does not seem to have any exemptions for Natives Americans or military personnel. Reservation Natives must rely on DD 2058-2.
Michigan exempts all military pay. If your miltary pay is being withheld for Michigan state tax you must file to collect your refund. Eligible reservation dwellers on active duty are urged to fill out the DD 2058-2.
Minnesota has a number of service related tax benefits on the linked page. Those with a reservation home address can take advantage of the DD 2058-2
Mississippi does not readily provide income tax information on line, but eligible reservation dwellers on active duty can opt out through DD 2058-2.
Missouri‘s linked page states
This application is only for individuals in the military who are stationed in Missouri or have a Missouri home of record and are not required to file a Missouri income tax return. By submitting this document, you are notifying the Missouri Department of Revenue (Department) that you are not required to file a Missouri income tax return.
As there are no reservations in the state DD 2058-2 does not apply.
Montana exempts all military pay for servicemembers who enlisted from Montana. You may have to file a return to get a refund on any state taxes withheld while on active duty. Reservation Natives should use DD 2058-2.
Nebraska Generally no Nebraska income tax is imposed on any Native American domiciled on a reservation. DD 2058-2 might keep you on the safe side.
Nevada has no state income tax.
New Hampshire has no state income tax.
Military Income: Fully taxable. However,
If stationed outside New Jersey and:
they reside in housing or on the local economy, (Exemption is not allowed for those who live in government dormitory)
the service member and/or dependents do not maintain a place of abode in the state during the tax year,
they spend no more than 30 days in the state during the taxable year.
Then the military member is a “nonresident” for tax status purposes and military pay, interest, and dividends are not taxable
Military personnel remain residents of New Jersey for income tax purposes. New Jersey taxes residents on income from all sources. (See note below.) If military member has any New Jersey income at all, they must file as a New Jersey resident and their military pay will be taxable to New Jersey.
Nonresident military personnel stationed in New Jersey will not have their military pay taxed. However, if the military member works in New Jersey, that pay is taxable to New Jersey.
Military Filing Requirement: No, if no tax withheld a return does not have to be filed to maintain residency.
There are no reservations in New Jersey.
New Mexico is the model every state with Native American reservations should strive to follow.
On December 1, 2009, the state of New Mexico started the process of refunding any state income tax which may have been withheld from the paychecks of Native American military personnel who were legally domiciled on tribal land in New Mexico while serving in the U.S. Armed Forces.
Governor Bill Richardson signed into law the Native American Veterans’ Income Tax Settlement Fund to pay for any refunds to eligible Native American soldiers or veterans. These refunds will be made on a “first come, first served” basis and will continue until the Fund is exhausted, until no further claims are received, or until the Fund expiration date of January 1, 2013 (December 31, 2012 is the last day to file a claim.)
New York has a complicated set of exemptions for servicemembers of any ethnicity or residence at the linked site. Reservation dwellers are best served by the DD 2058-2.
North Carolina explicitly has no exemption for military servicemembers and there are no reservations within the state.
North Dakota explicitly exempts all enrolled reservation dwellers fom personal income tax. If the military is withholding North Dakota tax file form DD 2058-2.
Deduction for military stationed outside Ohio – Military pay earned while on active duty and stationed outside of Ohio is exempt from the Ohio income tax and may be deducted to the extent it is included in federal adjusted gross income. Details on how to take this deduction are found here.
There are no reservations in Ohio.
The income of an enrolled member of a federally recognized Indian Tribe is exempt from Oklahoma Individual Tax when the income is compensation paid to an active member of the Armed Forces of the United States. The income is considered exempt if the member was residing within his tribe’s “Indian Country” at the time of entering the Armed Forces of the United States, and the member has not elected to abandon such residence.
When preparing a resident income tax return deduct the exempt income on the exempt tribal income line (Form 511, Schedule A).
in other words exempt Natives are supposed to fill out the Oklahoma form and take the deduction. DD 2085-2 will prevent any withholding.
Oregon has an exemption for all active duty personnel who meet the requirements on the linked page. Once again, DD 2085-2 will prevent withholding and going through a refund process.
Pennsylvania exempts all active duty pay earned out of state. Eligible NAE members should file a form DD 2058-2.
Rhode Island has no military exemption listed on their web page and no reservations within the state.
South Carolina has no military exemptions but enrolled Cherokees domiciled on the reservation are exempt by filling out DD 2058-2.
South Dakota has no personal income tax.
Tennessee does not have an agreement with the Treasury Department to withhold from active duty pay. There are no reservations in Tennessee.
Texas has no personal income tax.
Utah exempts certain Natives without regard to military service, and withholding can be prevented by the DD 2058-2.
Vermont exempts all active duty military pay.
Virginia offers only some relief for combat zone active duty but has a couple of reservations whose residents need to file the DD 2058-2.
Washington has no state personal income tax.
West Virginia exempts active-duty military pay received during “Operation Enduring Freedom”; or other domestic security operations being performed pursuant to presidential order. There are no reservations in West Virginia.
Wisconsin exempts active duty military pay but reservation residents can stop withholding with the DD 2058-2.
Wyoming has no state personal income tax.
What follows, rewritten extensively, is my email back to that long suffering veteran
(name redacted), the more I see into this the more I see how you guys got cheated; you didn’t have to pay the state income tax in the first place but the Army withheld it and sent it on to the State of Kansas. And the State of Kansas won’t give it back.
Not now, not ever, unless and until you guys can put together a political movement that can get a retroactive refund law passed by the Kansas State government. Like they did in New Mexico. Si se puede.
Sounds like your Legion post is one heck of a good place to start. I strongly supect you are not the only victim of this injustice at your post.
Start reaching out to the other Legion posts in the state, Native or better non-Native, go in, make some friends, and maybe along the way you might mention how a group of vets got cheated. Just plant seeds.
Make sure your delegates to the district and state levels bring it up every time those guys get together, that this a real issue at your post, and make sure you guys have delegates, to the District meetings, the Department meetings, always be there, reminding all those guys that you’re a vet too. Go get to know those guys. Be a vet first, and a guy who got cheated second. A lot of guys who belong to the Legion belong to the VFW. Get those guys talking about it, how a bunch of their brothers in arms got done wrong, get your State Commander, and the VFW State Commander convinced that this is a bunch of vets that got cheated, that this cause is a righteous veterans’ organization thing to do.
Pretty soon the AMVETS, the VVA, the IAVA,the DAV and the alphabet soup of every organized veteran in Kansas will be behind you. You might even call it a movement.
There is great political power in a state when all the veterans groups get united around a cause.
I won’t lie, they’ll be a bunch of folks against it, not only because it’s going to cost them a chunk of change but because it only benefits the red man, so how do you get the white man, whose votes you need, to do what New Mexico did and pay you what you’ve got coming?
Anybody who tells you that it will be easy is not telling you the truth.
You have to build that veterans coalition first, one Legionnaire at a time, walking into another’s post, show your membership cards if you have to, whether you really feel welcome or not, and make those Legionnaires know you as people, face to face, bound in the same brotherhood. You be about being veterans, Legionnaires, and not Indians, except that, of course, you do tell a short version of the story of how you guys got cheated, and ain’t that a shabby way to treat a vet?
And then go back to what binds you together, your common service, your uncommon sacrifice. And pretty soon you’ll have your coalition. Get a speechifying guy to get himself invited to address the regular meetings of other posts and even District meetings, telling the story of how a group of vets got robbed. The higher you go in veterans organization circles the greater commitment to veterans causes, far more than at any one post. Have your Post Commander or other delegates to the State convention get it on the agenda, perhaps even get a speaker to share your plight with all of Kansas’ leading Legionaires. Try it, what’ve you got to lose?
Because trust me, if you guys had a winnable case in court some tribe would have already been on it.
I’m suggesting you work on the veterans organization network rather than the Native American one; I’m suggesting that if you guys really want this what you’ll do is make it happen, by whatever means necessary, and along the way you might make some progress with your lighter skinned Legion brothers. The color that matters isn’t red or white, the color that matters is the green or blue of the uniform you wore in service together. But you’ve got to get out of your clubhouse and go visit theirs. Get your best spokesman, the speechifier, to go to other Legion posts, show his Legion membersip card, and ask the Sgt-At-Arms to be admitted to their regular monthly meeting to report to the assembled Legionnaires this abuse of veterans. If she uses a written speech, ask that it be admitted to the minutes. Get them to post it in their newsletter. Make a trail, get the other posts on their own records about how the state continues to mistreat some vets. Write articles for the post newsletter and the state magazine, send them by email to every other post in the state, to their membership list if they’ll let you. You’ve gotta go out there and sell this as a veterans issue.
Not you and me but us .
They’re not going to be coming to you over this.
This didn’t just happen in Kansas, folks, but in about every state with reservations and a personal income tax. This affects thousands of Native Americans in every state where it applies. Tribes and veterans organizations should be working together to right this wrong. If you are a tribal member you need to be sure this information gets to your members in uniform, perhaps your tribe already has a notification process, perhaps you need to start one. And to the vets among you, especially the Native American vets, the strategy laid out in that email is a proven one. This is politics 101, how we become the change we seek.
Cross Posted at Daily Kos
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