Top Court to Weigh Reservation Gas Tax

WASHINGTON -- The Supreme Court said Monday it will consider whether states may tax motor fuel that is sold on Indian reservations, The Associated Press reported.

Justices will review a case that sided with the Prairie Band Potawatomi tribe in Kansas. At issue is whether states may tax non-Indian companies off-site that distribute fuel to tribal operators on reservations, with the expectation that the companies would then recoup their costs by collecting from tribal retailers.

Federal law bars the imposition of tax on tribal retailers without clear congressional authorization. As a result, the Denver-based 10th U.S. Circuit Court of Appeals ruled that the tax, while not directly imposed on tribes, violated tribal sovereignty and created a barrier to interstate commerce.

“Although Kansas has a legitimate interest in raising revenue, this general interest is insufficient to justify the tax ... because it interferes with and is incompatible with strong tribal and federal interests against taxation,'' the court stated in imposing the ban.

-- NYSSCPA.org News Staff

Posted on 2/28/05