Judges: BRONSON C. La FOLLETTE, Attorney General
Filed Date: 7/1/1985
Status: Precedential
Modified Date: 7/6/2016
MICHAEL LEY, Secretary Department of Revenue
You ask a series of questions relating to whether the State of Wisconsin may constitutionally impose its general sales and use taxes, section
For purposes of this opinion the term "Indian retailer" means an individual Indian, Indian partnership, Indian corporation or Indian tribe which sells any type of tangible personal property or services taxed under section
For the reasons explained below, the state may not constitutionally impose the general sales tax, section
Considering first your questions concerning imposition of the tax, you ask:
*Page 1361. Whether the State of Wisconsin may impose the sales tax upon Indian retailers who make sales of tangible personal property under s.
77.52 (1), Stats., such as cigarettes, sold on Indian reservations to persons other than enrolled members of the tribe residing on the tribal reservations?
2. Whether the State of Wisconsin may require such Indian retailers to precollect the use tax on the sales described in the preceding question?
3. Whether the State of Wisconsin may impose the sales tax upon Indian retailers who sell taxable services, such as admissions to entertainment events and bingo under s.
77.52 (2)(a)2., Stats., furnished and sold on Indian reservations to persons other than enrolled members of the tribe residing on the tribal reservation?4. Whether the State of Wisconsin may require such Indian retailers to precollect the use tax on the sales described in the preceding question?
I discussed application of Wisconsin's former cigarette tax statute, chapter 139, subchapter II, Stats. (1979), to Indian persons or tribes selling cigarettes on Indian reservations in detail in an earlier opinion. 68 Op. Att'y Gen. 151 (1979). Seealso Washington v. Confederated Tribes of the Colville IndianReservation
As noted in my earlier opinion:
The United States Supreme Court . . . [has] made clear that a general exemption from state taxes extends to Indian tribes and Indian persons within reservation boundaries. As indicated the Court in Moe v. Confederated Salish and Kootenai Tribes Etc.,
425 U.S. 463 (1976), specifically struck down Montana's personal property tax on property located within the reservation; the vendor license fee sought to be applied to a reservation Indian conducting a cigarette business on reservation land; and the cigarette sales tax as applied to on-reservation sales by Indians to Indians. It follows that where the burden of the tax sought to be imposed is on an Indian person or Indian tribe located within reservation boundaries, such tax cannot be lawfully imposed. . . .Use taxes together with sales taxes constitute a general taxing plan under which everything is taxable at the retail level unless *Page 137 specifically exempted. See Dept. of Revenue v. Milwaukee Refining Corp.,
80 Wis. 2d 44 ,257 N.W.2d 855 (1977). The tax burden of a use tax is on the consumer.
68 Op. Att'y Gen. at 155-57.
Relying on Moe, the opinion concluded:
If [an Indian] retailer's sales are to Indian persons on a reservation, such sales are not subject to . . . tax [under ch. 139, such. II, Stats.].
. . . [Nonetheless], the state does have jurisdiction to require Indian retailers doing business on a reservation to precollect [alternate use] taxes on sales to non-Indians assuming that state law requires such precollection.
Id. at 158-61. See also Colville,
The statutory scheme authorizing the chapter 77 sales and use tax is similar in material respects to the manner in which cigarettes were taxed prior to the 1983 amendments to chapter 139, subchapter II, discussed below. As already noted, chapter 77, subchapter III, the Wisconsin sales and use tax law, constitutes a general taxing plan under which everything is taxable at the retail level unless specifically exempted. Dept.of Revenue v. Milwaukee Refining Corp.,
Under the statutory sales tax scheme, a "use" or excise tax equivalent to the sales tax is imposed on the "storage, use or other consumption" of goods and services to which the sales tax applies if the sales tax has not been paid. Sec.
In my opinion, section
Finally, the conclusion that section
Your fourth question asks about application of the use tax to taxable services such as admissions to bingo and entertainment events conducted on the reservation. I have been unable to locate any precedent which resolves the issue of whether taxes on the sale of tangible goods are distinguishable, under Colville, from taxes on the sale of services. My analysis of Moe, Colville and subsequent *Page 139
Supreme Court cases addressing the question of a state's taxing or regulatory authority over non-Indians on an Indian reservation suggests that the state arguably may apply the use tax to sales of bingo admissions, but that authority to tax other services cannot be resolved without reference to the facts of each case.See gen. White Mountain Apache Tribe v. Bracker,
The cited cases suggest a number of factors that are relevant to the determination of whether a particular state tax on non-Indians on a tribal reservation may infringe on tribal sovereignty or be preempted by federal law. These include:
1. Is there a pervasive scheme of federal regulation in the area? See White Mountain, Ramah Navajo Central Machinery and Mescalero Apache II.
2. Would the state tax or regulation adversely affect the tribe's ability to comply with federal policies, including tribal self-sufficiency and self-determination See White Mountain and Mescalero Apache II.
3. Do the taxes burden commerce that would exist on the reservation regardless of the claimed exemption? See Moe, Colville.
4. On whom does the burden of the tax ultimately fall? See Moe, Colville White Mountain and Ramah Navajo.
5. Is the state's tax justified by any regulatory function or service? See Ramah Navajo and Mescalero Apache II, cf: Rice v. Rehner
463 U.S. 713 ,724 103 S. Ct. 3291 ,3298 (1983).
In the case of taxation of bingo admissions, application of each of the five factors identified above would appear to favor imposition of the chapter 77 use tax on non-Indians. There is no pervasive scheme of federal regulation, nor does it appear that the tribe's ability to comply with federal policies would be adversely affected by imposition of the tax. As discussed, the burden of the tax falls on the non-Indian consumer. Wisconsin has a strong interest in the regulation of bingo, at least with regard to non-Indians. Wis. *Page 140
Const. art. IV, sec. 24 and chs. 163 and 945, Stats. See alsoOneida Tribe of Indians of Wis. v. State of Wis.,
In answer to your fourth question, therefore, the state arguably has authority to impose the chapter 77 use tax on non-Indians purchasing admission to bingo events on Indian reservations. As already discussed, section
Assuming that a delinquent tax liability can be assessed against Indian retailers for failure to precollect the chapter 77 use tax, you ask the following questions about enforcement:
5. In the event of a delinquent tax liability, to what extent may the department pursue collection efforts against Indian retailers, particularly in regard to:
a. Garnishing bank accounts of Indian tribes?
b. Seizing cigarettes?
c. Off-setting refunds of cigarette excise taxes?
6. If not currently authorized, may any of the foregoing collection procedures be authorized by enabling legislation at the state level without violating the federal constitution or laws?
Indian tribes possess the common law immunity from suit enjoyed by sovereign powers and are exempt from suit absent congressional authorization. United States v. United States Fidelity andGuaranty Co.,
Garnishment is the only one of the enforcement methods you mention which requires an action in state court. Garnishment in Wisconsin is a statutory procedure requiring service of process upon both the garnishee and the defendant (in this case, the tribe or tribal corporation). Sec.
The requirements for service upon a garnishee defendant are not only statutory, chapter 812, but have a constitutional basis as well. See generally Sniadach v. Family Finance Corp.,
An action for garnishment of a tribal bank account collides directly with the problem of tribal sovereign immunity. UnitedStates Fidelity Guaranty Co.,
A waiver of sovereign immunity by Congress cannot be implied, but must be unequivocal. Santa Clara Pueblo,
For tribes organized under the Indian Reorganization Act,
Courts have uniformly held that section 16 corporations, i.e.
tribal governmental units, enjoy full sovereign immunity. See,e.g. Atkinson,
Section 17 business corporations, on the other hand, clearly have the ability to waive sovereign immunity, although the mere fact of corporate activity or the mere existence of a corporate charter does not waive tribal immunity for governmental conduct.Parker Drilling,
In summary, bank accounts of a tribal governmental corporation enjoy sovereign immunity from state court garnishment actions. Bank accounts of a tribal business corporation may also be immune from garnishment, unless a sue and be sued clause in the corporate *Page 143 charter waives sovereign immunity. Even then, scope of the waiver may preclude the availability of garnishment as a remedy for collection of outstanding tax liability in a garnishment action.
With regard to garnishment actions, the limitations on the state's ability to garnish assets of an Indian tribe or tribal business corporation based on tribal sovereign immunity is a matter of federal law. Because only Congress and to a limited extent the tribe itself can waive tribal immunity from suit. state legislation authorizing garnishment of tribal assets would have no effect.
You inquire next about the department's authority to seize cigarettes, presumably shipments destined for sale on the reservation prior to the actual retail sale. As you are undoubtedly aware, off-reservation seizures of cigarettes destined for delivery to Indian retailers on their reservation have been approved by the courts if authorized by statute and warranted by surrounding circumstances. Colville,
After Colville, on-reservation seizures are not likely to be approved by the courts, particularly when an off-reservation seizure is an available option. At best, the legality of on-reservation seizures is technically unsettled. The assertion by the state of authority to make on-reservation seizures would invite litigation which the state is likely to lose, given the implicit suggestion in Colville that such seizures would "unnecessarily intrud[e] on core tribal interests." Id.,
Unlike under the cigarette tax statute itself, chapter 139, subchapter II, there appears to be no clear statutory authority for the department to seize shipments of cigarettes en route to Indian retailers who have refused to comply with the collection and remittance obligations of section
Finally, you ask about the department's authority to offset refunds to Indian tribes of cigarette taxes under chapter 139, subchapter II, particularly section
I am, however, of the opinion that such an offset is not currently authorized by statute and that it may be difficult, for a variety of reasons, for the department to secure the additional authority to offset tribal refunds under section
Following my 1979 opinion, the department interpreted chapter 139, subchapter II, as containing an implied exemption from the state's cigarette tax law for Indian persons or tribes buying or selling cigarettes on their reservations See section
In 1982, then Governor Dreyfus vetoed statutory amendments to chapter 139 patterned directly on the Washington statute approved in Colville, largely because of vigorous tribal opposition to *Page 145 the amendments. In doing so, the Governor urged that legislation be developed which would accommodate both state and tribal interests. Id.
Following the Governor's veto of the 1981 amendments to chapter 139, state and tribal representatives developed a mutually acceptable proposal which was substantially incorporated into Governor Earl's 1983 Budget Bill (See LRB bill folder for 1983 S.B. 83, secs. 1496-1507). The amendments to chapter 139, subchapter 11, were modified in minor respects during consideration by the Joint Finance Committee and were subsequently enacted without further change. See Sen. Sub. Amend. 1 to 1983 S.B. 83, secs. 1502m and 1506m, and 1983 Wisconsin Act 27, secs. 1496-1506m.
The 1983 amendments made two principal changes in chapter 139, subchapter II. First, the tax on cigarettes imposed by section
Section
The enactment of the 1983 amendments to the cigarette tax law and their ongoing administration with regard to sales on Indian reservations has been, as you know, dependent to a significant degree on the cooperation of tribal authorities. This is a factor you undoubtedly will wish to consider in deciding whether to seek statutory *Page 146
authority to offset section
BCL:MAM
Stagner v. Wyoming State Tax Commission ( 1984 )
Parker Drilling Co. v. Metlakatla Indian Community ( 1978 )
Mescalero Apache Tribe v. Jones ( 1973 )
Sniadach v. Family Finance Corp. of Bay View ( 1969 )
National Geographic Society v. California Board of ... ( 1977 )
Gold v. Confederated Tribes of the Warm Springs Indian ... ( 1979 )
Maryland Casualty Company v. Citizens National Bank of West ... ( 1966 )
Namekagon Development Co. v. Bois Forte Reservation Housing ... ( 1975 )
Maricopa County v. Valley Nat. Bank of Phoenix ( 1943 )
Department of Revenue v. Milwaukee Refining Corp. ( 1977 )
Opinion No. Oag 56-79, (1979) ( 1979 )
Kenai Oil & Gas, Inc. v. Department of the Interior ( 1981 )
Oneida Tribe of Indians of Wis. v. State of Wis. ( 1981 )
Confederated Tribes of the Colville Indian Reservation v. ... ( 1978 )
County of Vilas v. Chapman ( 1985 )
Rice Insulation, Inc. v. Wisconsin Department of Revenue ( 1983 )
Boe v. Fort Belknap Indian Community of Fort Belknap ... ( 1978 )