Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
The U.S. Supreme Court will hear a case that could result in vast swaths of the U.S. being tax-exempt for treaty-protected tribal commerce.
At issue is whether the state can tax the import of motor fuel by a Yakama Nation tribal member from Oregon to his on-reservation gasoline station—Cougar Den. Or whether it is shielded from Washington taxes on wholesale fuel by the Yakama Treaty of 1855. The treaty reserved and secured a range of rights for the Yakama bands, whose sprawling reservation in Washington state hugs the eastern slopes of the Cascade range.
The pivotal question in Washington Department of Licensing v. Cougar Den Inc. is whether a right-to-travel provision in that treaty preempts Washington’s tax. Cougar Den imports fuel from Oregon without an importers license and without paying state fuel taxes. Cougar Den prevailed before the state Supreme Court.
The U.S. Court of Appeals for the Ninth Circuit, the federal appellate court encompassing Washington state, “has held that the Yakama Treaty exempts Yakama members from charges imposed specifically for using the highway, but not from taxes or charges like the ones at issue here, which would apply no matter how Cougar Den transported this fuel into Washington,” Washington Attorney General Bob Ferguson (D) told Bloomberg Tax in an email.
“This is not a parochial controversy affecting only one State and one tribe or its members,” Idaho, Kansas, Nebraska, South Dakota, and Wyoming wrote in their friend-of-the-court-brief supporting Washington’s petition for review. The Idaho Attorney General’s Office declined to comment on the Supreme Court deciding June 25 to grant the petition.
But the now-retired author of the states’ friend-of-the-court brief, attorney Clay Smith, told Bloomberg Tax if the high court affirms the Washington Supreme Court, “Cougar Den could do what it’s doing in Washington—certainly in the states of Idaho and Montana and possibly in California depending on how you construe the term ‘public highways’ of the United States.” Smith said he was speaking in his private capacity and not as the chief editor of “The American Indian Law Deskbook.”
Smith pointed out that a tribe in Idaho and another in Montana have identical language in their treaties that could allow their members to do the same as Cougar Den if the gas station prevails. And the state official said that a substantial majority of the states have a taxation structure similar to Washington’s that levies a fuel tax at the wholesale level that could make those state’s vulnerable to a ruling in favor of Cougar Den.
But the potential impact of a Cougar Den victory is rooted deeply in the history of the Yakama bands, who historically roamed far and wide trading goods deep inland and up and down the West Coast, Smith said. Tribal history combined with how the high court construes the term public highways could encompass sweeping areas of the nation.
“If you construe the treaty provisions to be geographically co-terminus with the prior trading area, it’s likely to include portions of Colorado, Utah, and California,” Smith said.
Attorneys for Cougar Den and the Yakama Nation didn’t immediately respond to requests for comment. But Cougar Den’s supplemental brief linked the right to travel on those highways with the right to trade. Cougar Den contends that courts have long held that Indian treaties must be construed as the tribal negotiators would have understood them at the time. And the Yakamas’ friend-of-the-court brief with the Washington Supreme Court asserts that the treaty guarantees the Yakamas “‘the right to transport goods to market’ for ‘trade and other purposes.’''
The case is Wash. Dep’t of Licensing v. Cougar Den, Inc. , U.S., No. 16-1498, petition for review granted 6/25/18 .
To contact the reporter on this story: Paul Shukovsky in Seattle at email@example.com
To contact the editor responsible for this story: Ryan C. Tuck at firstname.lastname@example.org
Copyright © 2018 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)