New York Law Review

Tag: Matter of Jacobs

  • Matter of Jacobs v. New York State Tax Appeals Tribunal, 89 N.Y.2d 695 (1997): State Authority to Tax Sales to Non-Indians on Reservations

    89 N.Y.2d 695 (1997)

    A state may require Indian retailers to collect and remit sales, use, and excise taxes on sales of cigarettes and motor fuel to non-Indian consumers at the retailer’s business on the reservation, and to keep the records necessary to ensure compliance, without violating the Commerce Clause or constitutional proscription against direct taxation of Indians absent explicit congressional consent.

    Summary

    The New York Court of Appeals addressed whether the State Department of Taxation and Finance could require the plaintiff, an enrolled member of the Seneca Nation, to collect and remit sales, use, and excise taxes on sales of cigarettes and motor fuel to non-Indian consumers at the plaintiff’s retail business on the Cattaraugus Reservation. The Court of Appeals held that based on established Supreme Court precedent, the state could require the collection and remittance of taxes on sales to non-Indians. The plaintiff’s additional arguments regarding the Supremacy Clause or New York law were unpreserved.

    Facts

    The plaintiff, an enrolled member of the Seneca Nation, operated a retail business on the Cattaraugus Reservation. The New York State Department of Taxation and Finance sought to compel the plaintiff to collect and remit sales, use, and excise taxes on sales of cigarettes and motor fuel to non-Indian consumers at the plaintiff’s business. The state also sought to compel the plaintiff to keep records necessary for tax compliance.

    Procedural History

    The plaintiff initiated an action for declaratory and injunctive relief, challenging the state’s authority to impose the tax collection requirement. The Appellate Division dismissed the plaintiff’s complaint. The plaintiff then appealed to the New York Court of Appeals.

    Issue(s)

    Whether the State Department of Taxation and Finance may require the plaintiff, an enrolled member of the Seneca Nation, to collect and remit sales, use and excise taxes on sales of cigarettes and motor fuel to non-Indian consumers at plaintiff’s retail business on the Cattaraugus Reservation.

    Holding

    Yes, because the United States Supreme Court has clearly established that state tax statutes requiring Indian retailers to collect and remit taxes on sales to non-Indian purchasers, and to keep the records necessary to ensure compliance, violate neither the Commerce Clause nor the constitutional proscription against direct taxation of Indians absent explicit congressional consent.

    Court’s Reasoning

    The Court of Appeals relied heavily on established Supreme Court precedent, citing Oklahoma Tax Commn. v Potawatomi Tribe, 498 US 505; Washington v Confederated Tribes, 447 US 134; and Moe v Salish & Kootenai Tribes, 425 US 463. These cases established the principle that states can require Indian retailers to collect taxes on sales to non-Indians. The court stated that the plaintiff’s arguments regarding the Supremacy Clause and New York law were not properly preserved for appeal, as the plaintiff’s complaint asserted only violations of the Commerce Clause and “the Laws of the United States enacted pursuant thereto”. The court did not delve into a detailed analysis of the Commerce Clause, deeming itself bound by existing Supreme Court precedent.