N.Y. Indian Tribe Wins Stay After Adverse Court Ruling

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N.Y. Indian Tribe Wins Stay After Adverse Court Ruling

By Melissa Kress, Convenience Store News - 06/09/2011

ALBANY, N.Y. -- The Seneca Indian Nation won a stay in the Appellate Division of the State Supreme Court in New York in its battle with the state over the collection of state excise and sales taxes on cigarettes sold to non-Indian customers. The temporary restraining order, issued this morning, is in effect until June 20.

The Senecas sought the stay after New York State Supreme Court Justice Donna Siwek rejected the Senecas' claim that New York State failed to follow state procedural requirements in adopting regulations spelling out how the taxes would be collected and how the undisputed tax exemption on Indian sales to tribal members would be preserved.

Siwek's decision came a month after she granted the Seneca Indian Nation a preliminary injunction against the state's collection. That injunction followed a decision by the U.S. Court of Appeals for the Second District on May 9, which unanimously upheld New York State's attempt to collect the taxes.

In 2010, the New York State Legislature passed a law requiring the collection of cigarette taxes on cigarette sales to non-tribal members. The law provided Indian tribes with several options for collecting those taxes, while ensuring that cigarette sales to qualified tribal members would remain tax free. The law was slated to go into effect Sept. 1, 2010.

However, in August 2010, several Indian tribes sued the state in federal district court to bar enforcement of the new law. The tribes argued that the law violated their tribal sovereignty and caused them irreparable harm.

"If New York State courts eventually allow this New York State law to stand, it will have two primary results. One, good-paying retail jobs selling a legal product in Western New York will be lost; and, two, there will be no change in the Seneca Nation's stand that it will never collect or impose sales taxes for New York State. If the Nation's businesses need to shift their product mix to render such onerous taxes moot, they will," said Nation President Robert Odawi Porter.

"No one should underestimate the Nation's resolve to defend and protect its sovereign rights. Immunity from taxes by federal treaty is the law of the land. Our people survived state encroachment before and triumphed for centuries as an independent and successful people. That will change now," he added.

Jim Calvin, president of the New York Association of Convenience Stores, said "good grief" when reached about today's temporary restraining order. In his comments following Siwek's ruling on Wednesday, he seemed to anticipate further legal moves. "It is conceivable that the Senecas will appeal this ruling, commence some new legal action, or try some other maneuver to prevent the state from moving forward with enforcement," Calvin said, "but ultimately the law is the law, and the state has the right to collect these taxes."