California BOE Takes Progressive Turn Towards Exempting State Excise Taxes for Landless Tribes

The typically anti-tribal California State Board of Equalization has taken a turn, for the better, by proposing to exempt from state sales and use tax does the "sales of tangible personal property to and purchases of tangible personal property" by California tribal governments that do not have reservation trust lands. The proposed amendments to Regulation 1616 provides:

(G)Property Used in Tribal Self-Governance. Sales and use tax does not apply to sales of tangible personal property to and purchases of tangible personal property by the tribal government of an Indian tribe that is officially recognized by either the United States or the State of California if:

1. The tribal government’s Indian tribe does not have a reservation or the principal place where the tribal government meets to conduct tribal business cannot be its Indian tribe’s reservation because the reservation does not have a building in which the tribal government can meet or the reservation lacks one or more essential utility services, such as water, electricity, gas, sewage, or telephone, or mail service from the United States Postal Service; 2. The property is purchased by the tribal government for use in tribal self-governance, including the governance of tribal members, the conduct of inter-governmental relationships, and the acquisition of trust land; and 3. The property is delivered to the tribal government and ownership of the property transfers to the tribal government at the principal place where the tribal government meets to conduct tribal business.

The purchase of tangible personal property is not exempt from use tax under this paragraph if the property is used for purposes other than tribal self-governance more than it is used for tribal self- governance within the first 12 months following delivery.

The California BOE's proposed rulemaking is a spectacular acknowledgment of tax-exempt tribal status vis-a-vis fee lands owned by tribal governments. As most recently seen in Madison County v. Oneida Indian Nation, for which SCOTUS accepted certiorari before mooting the case this past term, states and their little siblings in county government typically do everything in their power to extract tax monies from Indian-owned fee lands, even though, like all tribal lands, such lands are used to provide essential governmental services and programs to tribal citizens.

The BOE's original April 2011 proposal is here and a more recent proposal of July 2001 is here.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

10th Circuit Sounds Death Knell for Bracker Balancing

In a recent 2-1 opinion, the Tenth Circuit Court of Appeals over-ruled a trial court ruling in Ute Mountain Ute Tribe v. Rodriguez that preempted several New Mexico state taxes on oil and gas extracted from tribal lands. Despite robust federal and tribal regulation of those natural resources, including the tribe's exclusion of state agents from any on-reservation regulatory behavior, the appeals court ruled that state roads traversed by non-Indian extraction companies while taking oil and gas to market represented a "substantial" state interest. That interest ultimately tipped the Bracker balancing away from tax preemption, in favor of the state. In so ruling, the Tenth Circuit disregarded SCOTUS' instruction in Bracker and Ramah to disregard alleged off-reservation state impacts, as Judge Lucero rightfully observes in dissent.

While in a footnote the court took care to not "purport to hold that off-reservation infrastructure or services may be considered in every instance where they provide a benefit of any magnitude to the on-reservation activity" (emphasis in original), after Ute Mountain it is hard to fathom how tribes in the Tenth Circuit will not encounter state tax collectors with their fingers firmly holding down the state side of the Bracker scale.

Thankfully for tribes in the Ninth Circuit Hoopa Valley Tribe v. Nevins still disallows federal trial and appeals courts from considering alleged off-reservation state burdens.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Republicans Threaten to Cut Federal Indian Country Tax Benefits

Amidst the debt reduction frenzy in Washington, DC, Republican leaders are now threatening to do away with the Tribal Economic Development Bond and New Market Tax Credit programs, both of which confer vital federal tax benefits which tribes are increasingly using to attract private dollars to the reservation in order to diversify Indian economies. Indian Country must brace itself for its tax status becoming a menu item in the intensely partisan federal spending imbroglio. Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Is Amazon Illegally Collecting State Sales Taxes from Reservation Indians?

Amazon.com has recently been making headlines regarding its opposition to various states' efforts to force the online retailer to collect excise taxes on sales of goods into those states. Those headlines made me wonder: is Amazon charging state sales tax on Indians who buy and receive goods from the online retailer, on the Reservation? State sales taxes of course not be imposed on Indians in Indian Country.

However, upon reviewing Amazon's sales tax policies, there is no mention of sales tax exemption for reservation Indians. That, despite the fact that Amazon is headquartered in a state with 29 federally-recognized tribes.

I'm left to wonder: is Amazon illegally collecting state sales taxes from reservation Indians? If you have reason to know the answer to this question, please let me know.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Oak Harbor's Not So Inadvertent Discovery

Ignoring SHPO's warning of Indian remains does not an inadvertent discovery make. Oak Harbor claims that its disturbance of Coast Salish ancestral remains was "not intentional." In other words, the city claims they inadvertently unearthed the Ancestors.

RCW 27.44.050 subjects Oak Harbor and its contractors to civil liability. That is because the city knew or should have known tribal ancestral remains would be uncovered through excavation, especially due to SHPO's warning. Having ignored that warning, Oak Harbor's acts were neither accidental nor inadvertent per RCW 27.44.050.

Oak Harbor and its contractors can now be subject to class action litigation for a potentially staggering amount of imputed and punitive damages under RCW 27.44.050, given Judge Robert Lasnik's decision in Lummi Nation v. Golder. The imputed/actual damages calculus alone could go like this:

Number of defendants X Number of remains X $500 or actual damages, whichever is greater X Thousands of Coast Salish Indians with ancestral ties to the Oak Harbor Ancestors

Hopefully the threat of a class action lawsuit for millions of dollars (nothwithstanding the Supremes' Wal-Mart decision) will cause Oak Harbor to remedy the situation. That said, the harm already inflicted upon Coast Salish People is irreparable.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

The Indian Tax Double Standard

Ryan Dreveskracht points out the double standard of sales tax in Washington State: the Department of Revenue turns a blind eye to the sales taxes it loses when Washington citizens drive to Oregon to make large consumer purchases. Meanwhile, the state vigorously enforces its tobacco sin taxes on Washington citizens who drive to Indian reservations to purchase cigarettes. Similarly, Idaho Governor Butch Otter infamously wrote a love letter to Washington and Oregon businesses, seeking to woo them to Idaho by promising lower corporate income taxes. Washington responded in kind: ("States trying to attract each others' businesses"). Still, nobody accused any Northwest state government of "marketing a tax advantage" or "creating an unlevel playing field." Meanwhile, tribal governments that leverage their favorable sovereign tax status are perennially accused of doing such things by their neighbor governments.

In addition, state and local governments can issue tax-exempt bonds for economic development projects like hotels, convention centers, golf courses and recreation facilities to promote their economic development. Meanwhile, the IRS has determined that like-kind hotels, convention centers, golf courses and recreation facilities on Indian reservations do not serve "essential governmental functions." As such, tribal governments cannot avail themselves of cheaper capital.

On June 15, the Internal Revenue Service Advisory Committee on Tax Exempt and Government Entities issues a report, which in part concluded that: "the [tribal] essential governmental function standard should be eliminated. Achieving at least parity with state and local governments in terms of access to low cost capital for more wide-ranging economic development projects has been an unmet goal of the tribes for decades." Agreed.

The Indian tax double standard. Will it ever end? Will there ever be parity? I'm not optimistic.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Wall Street Journal Exposes State-Big Tobacco Scheme to Snuff Out Tribal Tobacco Economies

It has been no secret that the states and Big Tobacco are in cahoots to destroy tribal tobacco economies (see the 1998 MSA), but the lengths to which they would go to do so, was left to speculation. Now, the Wall Street Journal has blown the cover off dealings between the States and Big Tobacco, which, as with the original MSA negotiations, concern tribal tobacco economics but do not involve any tribal governments. Nor can there be any doubt whatsoever that state governments are actively looking to balance their hundred-plus-million-dollar budget deficit on the backs of Indians.

The MSA is a convoluted mess, as the states would agree, but the upshot of the unholy alliance between them and Big Tobacco relatively straightforward: States pledge MSA monies to back bonds they issue to fund state government, especially while state tax revenues are at an all time low. In exchange for MSA monies paid by Big Tobacco, the states must protect Big Tobacco's multi-billion dollar market share, including in Indian Country.

Big Tobacco complains that tribal tobacco manufacturers and retailers are eating into that market share. So Big Tobacco threaten the states.

Unless the states more rigorously enforce state tobacco tax laws in Indian Country, Big Tobacco will take the MSA monies back, through push or shove, which could cause the state MSA-backed bonds to default. The States literally cannot afford a default so they are forced to cut a deal with Big Tobacco, promising to do more to protect Philip Morris and Friends' market share, with the tribal tobacco economy being the bargaining chip that both parties are all to happy to cede.

If, or when, the deal currently being negotiated between the states and Big Tobacco is consummated, it could result in the biggest heist of tax value derived from Indian Country by state government and non-Indians, since the Dawes Act. And the model state tobacco tax laws contemplated by the agreement, when, not if, passed by state legislatures, would cause massive, further incursion of state civil regulatory authority into Indian Country.

Indian Country -- meaning not just tribal governments with tobacco economies -- unite! And take action to defend tribal sovereignty as we now know it.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Trahant Reports Quotes from Galanda Broadman's Blog on Indian Tax

Gabe Galanda's blogs on Indan taxation are quoted in Trahant Reports, as featured on indianz.com: It's time for tribes and states to work together.

Seattle attorney Gabriel Galanda puts it this way, on the social network, LinkedIn: “Tax-starved states and counties will continue to attempt to extract value from reservation economic development projects, through taxation or otherwise. Tribes must be vigilant in their defense against illegal inter-local cash grabs.”

On Galanda’s blog he writes that Washington state Republicans are proposing to “close” tribal tax loopholes worth $110 million. His message is clear. “Make no mistake about it,” he writes, “the state tax man cometh to Indian Country. Be prepared.”

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Has California Consulted With Tribes Regarding MPLA Closures?

California tribal members gathered to protest proposed MLPA closures on June 18, and they will raise their concerns at the California Fish & Game Commission (CFGC) meeting in Stockton on June 29-30. But has the CFGC consulted with California tribes regarding proposed restrictions on coastal gathering proposed under the Marine Life Protection Act (MLPA) Initiative? Make no mistake, even though California tribes' treaties weren't ratified, the state of California still must consult with those tribes regarding state laws and policies that will detrimentally impact the tribal religious, cultural and subsistence practices of gathering food from the sea.

Government-to-government consultation is a fundamental aspect and necessary component of tribal sovereignty that has never been extinguished – explicitly or implicitly – by the federal government. California tribes should demand consultation from CFGC regarding the proposed coastal gathering restrictions, to the extent the state has not yet provided that opportunity to affected tribes.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Gabe Galanda Testifies At Centennial Accord

Gabe Galanda was privileged to testify before the twenty-nine Tribes in Washington State, and Governor Christine Gregoire and her cabinet, at the 2011 Centennial Accord on June 9. Gabe spoke of the progress the Tribes and State made in restoring the religious rights of Native inmates incarcerated in the State Department of Corrections, since those rights were infringed in 2010. Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.