indian taxation

NYT’s Article on New York State’s Tobacco Fight with Indian Tribes

Matthew L.M. Fletcher1 Comment

From the NYTs:

A federal judge ruled on Tuesday that a group of tobacco vendors on an Indian reservation on Long Island cannot sell tax-free cigarettes to the general public until a court rules in a closely watched legal battle between the reservation and New York City.

A temporary injunction issued by Judge Carol B. Amon of Federal District Court in Brooklyn gave the city at least a temporary victory in its efforts to collect hundreds of millions of dollars in tax revenue.

“The city will go after every dollar that is owed to city taxpayers,” Mayor Michael R. Bloomberg said in a statement on Wednesday. Under Judge Amon’s ruling, a group of cigarette businesses on the Poospatuck Indian Reservation near Mastic can sell tax-free cigarettes only to tribe members, for personal use, until a verdict is reached in a federal lawsuit the city filed in September.

The judge stayed the ruling for 30 days to give the vendors time to appeal.

“The judge’s ruling is completely wrong,” said Harry Wallace, a lawyer and the chief of the Unkechaug Indian Nation, which is on the Poospatuck reservation, adding that it ignored the Indian nation’s sovereignty.

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Idaho Federal Court Refuses to Dismiss Smokeshop Case

Matthew L.M. Fletcher

Here is the opinion in Lil’ Brown Smoke Shop v. Wasden (D. Idaho) in which the court rejected a motion to dismiss on Eleventh Amendment and Young absention grounds. An excerpt:

Based on the aforementioned cases and standards, and the arguments of the parties with respect to whether the Act regulates on or off reservation activity, the Court disagrees with Defendants and finds that the issue of the state’s jurisdiction is not conclusive. Here, like in Fort Belnap, Sycuan, and Seneca-Cayuga, the question of whether the state law is enforceable against Plaintiff is a federal question in an area, tribal law, where federal interests predominate. Thus, the Court finds that the State of Idaho’s interest in this litigation is not sufficiently important to warrant Younger abstention in light of the predominant federal question regarding the State of Idaho’s jurisdiction to enforce the Act. Thus, as Defendants have failed to prove all requirements for Younger abstention, the Court will deny Defendants Motion to Dismiss (Docket No. 8 ) with respect to Defendants Wasden and Armstrong.

Lil Brown Smoke Shack DCT Order

Idaho Motion to Dismiss

Smoke Shack Opposition

Idaho Reply Brief

Cayuga Indian Nation Wins Important Tax Case

Matthew L.M. Fletcher1 Comment

The New York Appellate Division has reversed a N.Y. Supreme Court decision denying a request for a declaratory judgment against county impoundment of tobacco products intended for sale on-reservation to tribal members. The case is Cayuga Indian Nation v. Gould.

NY Supreme Court Slip Opinion

NY Appellate Division Opinion

News coverage here.

Summary Judgment Denied in Chehalis Great Wolf Lodge Tax Dispute

Matthew L.M. Fletcher1 Comment

Here is the opinion in Confederated Chehalis Tribes v. Thurston County (W.D. Wash.) — DCT Order Denying Chehalis Motion for Summary Judgment (briefs are here, and an earlier opinion is here).

An excerpt:

n this case, the Court is not persuaded that the rule of Rickert applies to bar the taxation in question because this case involves a significantly different factual scenario. Although the site in Grand Mound is held in trust by the United States for the benefit of the Tribe, the Lessee, CTGW, owns the improvements in fee during the terms of the Lease. Moreover, it cannot be said that the improvements are “occupied” by the Tribe as CTGW currently uses the improvements to operate a hotel, conference center, and indoor water park. Therefore, the Rickert rule that was implemented to protect a homestead and associated livestock is, in this Court’s opinion, inapplicable to privately owned commercial business ventures even though the improvements are on land held in trust by the United States.

Keweenaw Bay Challenge to State Sales and Use Taxes Reaches Sixth Circuit

Matthew L.M. Fletcher1 Comment

Here are the appellate materials:

KBIC Opening Brief

Michigan Appellee Brief

KBIC Reply Brief

And here is our earlier posting on the district court case, along with all of the extensive exhibits, etc.

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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