indian taxation

Scott Taylor on the Taxation of Tribal Bonds

Matthew L.M. Fletcher

Scott Taylor has posted “The Importance of Being Interest: Why a State Cannot Impose its Income Tax on Tribal Bonds” on SSRN. It is forthcoming in the Akron Tax Journal. Here’s the abstract:

The exercise of a state power in a way that adversely impacts the sovereignty of a federally recognized Indian tribe has been a matter of serious concern to the United States Supreme Court since the early 19th century. The limit of a state’s power to tax tribes is very often the subject of this judicial concern. In this article, I examine the reasons why states cannot impose their income taxes on interest that investors earn on tribal bonds.

Non-Indian Business Loses Reservation Tax Case to Arizona Dept. of Revenue

Matthew L.M. Fletcher

The case is Calpine Construction Finance Co. v. Arizona Dept. of Revenue (opinion), out of the Arizona Court of Appeals, Division 1. An excerpt:

Calpine Construction Finance Co. (“Calpine”) appeals from a grant of summary judgment holding that Calpine must pay the Arizona property tax on improvements and personal property located at the South Point Energy Center (“Plant”), which is located on the Fort Mojave Indian Reservation. We hold that Calpine owns the improvements and personal property based upon the language in the lease agreement, Calpine’s lack of rental obligations for the improvements, and its control over the removal or replacement of the improvements. Therefore, we affirm the judgment.

Here are the materials:

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Osage Nation v. Oklahoma Tax Commission — Reservation Diminishment

Matthew L.M. Fletcher1 Comment

The Northern District of Oklahoma recently rejected the claims of the Osage Nation that Osage County is Indian Country (news article, via Indianz) — osage-nation-v-otc-dct-order

osage-reservation-sign

Here are the materials:

otc-motion-to-dismiss

osage-opposition-to-motion-to-dismiss

otc-reply-brief-in-support-of-motion-to-dismiss

otc-supplemental-brief-motion-for-summary-judgment

osage-response-to-motion-for-summary-judgment

otc-reply-brief-in-support-of-motion-for-summary-judgment

Federal Court Rejects Michigan’s Laches Defenses in Saginaw Chippewa v. Graholm

Matthew L.M. Fletcher3 Comments

Here is the opinion.

An excerpt:

These principles persuade the Court that, as a matter of law, the time-based equitable defenses Defendants wish to advance are inapplicable to the issues here presented and may not otherwise be advanced against the United States’s enforcement of its treaties. Consequently, Defendants may not rely on the time-based equitable defenses of laches, estoppel, acquiescence, or impossibility. In addition, testimony and proofs offered in support of these affirmative defenses are irrelevant. Thus, the United States’s and the Saginaw Chippewa’s motions should be granted.

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NYTs on NYC v. Poospatuck Smokeshops

Matthew L.M. Fletcher

From the NYTs:

Bootleg cigarette traffic from Long Island’s tiny Poospatuck reservation to New York City is brisk, so much so that some cigarette dealers on the reservation don’t even bother to set up storefronts, according to a motion filed in federal court on Tuesday.

Instead, the dealers take telephone orders for bulk shipments of untaxed cigarettes. Millions of them are delivered to the city by van and distributed through an underground network that dramatically undercuts tax collection, the city alleged.

The Bloomberg administration asked a federal judge in Brooklyn to bar the reservation’s eight largest dealers from selling untaxed cigarettes to the public. Those dealers, named as defendants in a federal lawsuit filed by the city last month, control 95 percent of the sales on the reservation, the city said.

Officials estimate that untaxed cigarette sales by the eight dealers have cut city revenues by nearly $195 million a year, an amount the city can ill afford during a financial crisis. In addition, bootleg cigarette traffic undermines a Bloomberg administration anti-smoking campaign.

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County Taxation of Mixed-Ownership Tribal Enterprise

Matthew L.M. Fletcher1 Comment

The Western District of Washington denied a motion for a preliminary injunction brought by the Confederated Tribes of the Chehalis Reservation to prevent Thurston County, Washington from taxing a business (a Great Wolf Lodge) jointly owned by a non-native corporation and the tribes.

chehalis-tribes-motion-for-preliminary-injunction

thurston-county-response

chehalis-reply-brief

confederated-chehalis-tribes-v-thurston-county-dct-order

NYTs: New York Complains about Tribal Smokeshops

Matthew L.M. Fletcher

From the NYTs:

He emerged from the No. 2 subway at 125th Street wearing a bright orange shirt and aviator sunglasses, with a small backpack concealing his stock in trade — tax-free Newport cigarettes.

Like a Yankee Stadium hawker, but in voice closer to a stage whisper, he kept repeating his pitch: “Newports. Loosies. Shorts. Longs.”

His name is Paco, but on the streets of Harlem he is known simply as a “$5 man,” the nickname for a highly visible network of peddlers who sell bootleg cigarettes. His illegal traffic in Newports — $5 a pack or a single “loosie” cigarette for 50 cents — can bring him $100 or more a day.

Paco will not reveal his last name or the source of his Newports, the menthol brand widely popular in urban communities. But legal authorities say the trail of the $5 men leads to American Indian reservations in New York State, a path they contend is smoothed by the tacit cooperation of some cigarette makers and distributors.

Mashantucket Pequot Not Required to Disclose Financials to Conn. Town

Matthew L.M. Fletcher

In an ongoing case where the Mashantucket Pequot Nation is seeking relief from local taxation of slot machines leased by the tribe from non-Indians, the district court rejected the Town of Ledyard’s motion to compel discovery of the Nation’s entire financial records.

dct-order-on-motion-to-compel

Yakama v. Gregoire TRO Against State Tax Law Enforcement

Matthew L.M. Fletcher

The Eastern District of Washington issued a TRO at the behest of the Yakama Indian Nation preventing the State of Washington from enforcing its tobacco tax laws against the Nation on Sept. 12. Here are the materials:

yakama-complaint

yakama-brief

TRO

Collecting State Taxes in Indian Country

Matthew L.M. Fletcher

As usual, there is interest in New York in collecting taxes likely owed in accordance with the Milhelm Attea case (see article here). The St. Regis Mohawk leadership, however, suggests:

“This bill, like similar legislation proposed before it, will harm the Northern New York economy, not help it,” said Chief James W. Ransom, citing a 2003 study performed by Regional Economic Models Inc. “The economic impact could be greater than $2 million per year.”

“We already collect fees from tribal businesses that would be harmed by this legislation and that will hurt our ability to deliver essential governmental services,” said Chief Barbara A. Lazore. “It will also result in a loss of jobs that no one in the state is even considering.”

This is the problem that Supreme Court Indian tax cases have created. Indian tribes and Indian people try to develop their economies and tax base, and the state can — at any time it wishes — destroy that economy merely by imposing taxes.