State laws that tax tobacco sales by Native American vendors to non-Native Americans do not infringe on tribal sovereignty or other constitutional rights, a federal judge ruled.The Seneca and Cayuga tribes challenged amendments to state law that imposed taxes on wholesale purchases of tobacco products that were ultimately sold to non-Native Americans….
Western District Judge Michael Telesca ruled against the … tribes [holding] that the tax statute does not target tax-exempt Indian sales to other residents of tribal lands, only sales of tobacco "on an Indian reservation to non-members of the Indian nation or tribe."
Telesca rejected arguments from the Indian nations that the tax law amendments violate the Constitution's interstate commerce clause and the Internet Tax Freedom Act. On both counts, Telesca said state law sets up an alternative way for the Seneca and Cayuga vendors to report tax-exempt sales to Native Americans outside of New York.
Local governments have long been seeking to enforce the collection of sales taxes on non-Native Americans, citing lost revenue and unfair competition with other local businesses. In addition, as noted in the above article:
New York state estimated in 2010 it could capture about $110 million a year if sales of cigarettes and other tobacco products from Native American vendors to non-Native Americans were properly taxed. The tax does not apply to sales to qualified Native Americans for their own use on reservations.
The complete decision can be found here.
