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The Issue:
PMAA
is a member of the Coalition Against State Excise Tax Evasion (CASETE),
a coalition of industry and interest groups that are concerned
about the existing problem of tax evasion. Native American tribes
are exempt under Federal law from charging state excise taxes on
sales of tobacco and motor fuels to members of their own tribes.
This tax exemption is justified and not in dispute. But some Native
American tribes and tribal retailers are abusing this special tax
exemption by expanding it to sales of tobacco products and motor
fuels to non-Native Americans. These tribal retail enterprises have
refused to collect lawful state excise and sales taxes when they
sell these products to non-Native Americans.
In a series of decisions, the U.S. Supreme Court has held that when
tribal retailers sell tobacco or motor fuels to non-Native
Americans, they have a legal obligation to act as an agent of the
state in collecting and remitting the appropriate state excise and
sales taxes. However, at the same time, the Court has held that a
state may not sue a tribal retail enterprise that fails to carry out
this legal obligation because of the doctrine of tribal sovereign
immunity. The Court realized that these decisions were in effect
giving the states a right (to the tax receipts) without a remedy
(barring lawsuits because of sovereign immunity). As a result, the
Court invited Congress to intervene with legislation to correct this
situation.
The Solution:
CASETE is seeking legislation that
would give governors an option in dealing with the existing tax
evasion problem. Our approach does not infringe on tribal sovereign
immunity or impact on a tribe's right to take lands into trust --
objections that have been raised by tribes in response to past
federal legislative attempts to address this issue. Instead, this
legislation directs the federal government to respond to a state
petition from a governor requesting excise and sales tax
enforcement assistance. If a governor requests such assistance,
then under this bill the federal government will collect from
tribal retailers the state taxes due from tribal sales to
non-Native Americans, deduct an administrative fee, and return the
balance of the funds to the appropriate state. Simply stated, the
legislation responds to the Supreme Court's invitation for
congressional action by providing states with a mechanism to
enforce the law without infringing on tribal sovereign immunity or
placing restrictions on trust land acquisitions or status.
What This Legislation Will
Do:
A.
This legislation will stop the erosion of state tax bases
caused by the non-collection of state taxes by some tribal retail
enterprises -- an erosion that decreases the ability of the state
to build important infrastructure and provide services to its
citizens and increases the tax burden on other, law-abiding
citizens.
B. This legislation will enable
state governors to enforce their states' motor fuels and tobacco
excise and sales tax laws in a manner consistent with U.S. Supreme
Court decisions.
C. This legislation will stop Native
American tribes from abusing their exemption from state excise and
sales taxes by expanding it to cover sales to non-Native Americans.
D.
This legislation will respect existing
state/tribal compacts, or agreements, and existing state statutes
by limiting the authority granted to the federal government to
respond to petitions filed by states that have compacted with their
Native American tribes or have specific statutes addressing this
issue.
E.
This legislation will alter the behavior of a
relatively small number of tribal retail enterprises that have
ignored the Supreme Court's decisions and continue to refuse to
collect and remit state taxes on their sales to non-Native
Americans.
F. This legislation will
encourage more tribes and states to enter into tribal/state
agreements, or compacts, by providing an incentive for all parties
to enter into such agreements.
G.
This legislation will prevent tribes and
their members from competing unfairly against non-tribal retailers
based upon the unlawful expansion of their tax status.
What This Legislation Will Not Do
-
The legislation will not
impact on tribal sovereign immunity.
-
This legislation will not impact on the ability of a tribe
to take land into trust.
This legislation will not
impact all tribes because not all tribes are ignoring the Supreme
Court's decisions on this issue.
This legislation will not
effect existing tribal/state agreements or existing state laws
governing this issue -- the draft bill explicitly preserves these
compacts and encourages future compacts.
This legislation will not result in state taxation of
Native Americans or tribes -- the Supreme Court has held that
such taxes are unlawful and this bill will not change this
federal law. This bill focuses on taxes imposed on non-Native
Americans when they purchase tobacco and motor fuels from tribal
retailers -- the tribes simply act as a collection agent for the
state, as do all non-tribal retailers.
PMAA Staff Contact(s):
Sarah Dodge, Director
of Legislative Affairs, PMAA
Holly Tuminello, Vice President, PMAA
PMAA & CASETE STRONGLY URGES YOU
TO SUPPORT THIS IMPORTANT LEGISLATION |
