Dear U. S. Legislators,



During the 108th Congress, Representative Udall of New Mexico introduced H. R. 5275 The American Indian Veterans Pay Restoration Act of 2004. This bill was introduced to rectify a mistake by the Department of Defense in the collection and distribution of state income taxes for Native American Service Members on active duty prior to 2001 and who were domiciled on Indian Lands.



This bill was introduced to the House of Representatives on October 7, 2004, and was immediately referred to the House Committee on Armed Services with introductory remarks made by Representative Udall. Since that day, no action has been taken on this important piece of Legislation.



Mr. Udall stated Prior to 2001, Native Americans who served their country in the armed forces had their active duty pay taxed by the state, despite claiming the reservation as their home. The law is now well established that this policy was wrong and, in keeping with tribal sovereignty, the policy of withholding states taxes on these soldiers' pay was changed. This position is reflected in administrative opinions, Fatt v. Utah, 884 P2d 1233 (Utah 1994), a 2000 Department of Justice (DOJ) opinion, a Department of Defense (DOD) policy instituted in 2001, and most recently, in Public Law 108-189, a law that passed this House unanimously.

However, while these changes stopped the improper practice of withholding taxes, the changes do not apply retroactively. Current federal law provides that statutes of limitations toll during a member's service, but the ability to recover withheld taxes is still limited by state statute of limitations on filing for refunds. The result is that hundreds, or perhaps thousands, of tribal members whose state taxes were improperly withheld during their service to our country are unable to recover the money that is owed to them.

We hereby Petition the Congress of the United States to rectify this situation by reintroduction and swift passage of a bill that would refund the state tax monies due to those Native American Service Members who were illegally taxed.