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NOVEMBER 28, 2000

The Supreme Court on Monday agreed to decide if the Navajo Nation can legally impose a tax on non-Indians who stay in hotels located within reservation borders.

So far, two federal courts and the Navajo tribal court system have sided with the tribe. Each has ruled that the Navajo Nation has the right to collect a hotel occupancy tax on non-tribal members.

The five percent tax was first enacted in 1992, then raised to eight percent in 1994. Hotels located within the reservation borders are required to collect the tax and remit the funds to the tribe's tax commission.

But the owner of a hotel located in Cameron, Arizona, has been contesting the tax since 1993. The Atkinson Trading Co., a non-Indian business based in New Mexico, owns several properties on the tribe's three-state reservation.

Generally, the Navajo Nation wouldn't have much authority over the activities of Atkinson. But the Tenth Circuit Court of Appeals sided with the tribe based on what are known as the Montana exceptions, in reference to a 1981 Supreme Court case.

Since non-Indians voluntarily choose to stay at hotels within the reservation borders, they enter into a consensual relationship with the tribe, said the court in May. Therefore, the tribe has the authority to impose the tax whether or not the guests stay on non-Indian land because they might need services the tribe provides, such as police and fire protection. Additionally, the court said the company's status as an "Indian trader" solidified its consensual relationship with the tribe.

One of the three judges in May disagreed and said the guests themselves never enter into a relationship with the tribe, only perhaps the company. He also said the guests don't benefit from any services the tribe provides.

The judge also said the since the hotel is on non-Indian land, only treaty language or Congress can allow the tribe to impose the tax on non-Indians. Finding neither, he concluded the tax was illegal.

In agreeing to hear the case, the Supreme Court appears to be resolving a dispute between the Tenth Circuit and the Ninth Circuit. A federal court in the Ninth Circuit decided against a similar tax imposed by the Crow Tribe of Montana.

Get the 10th Circuit Case:
Atkinson v. Joe, et. al (10th Circuit No. 982247. May 2000)

Related Case:
Montana v. US (US Sup Ct. 450 US 544. 1981)

Relevant Links:
The Supreme Court - www.supremecourtus.gov

Related Stories:
Crow tax dispute continues (Tribal Law 11/22)
Crow may appeal tax case to Supreme Court (Tribal Law 09/19)
Crow lose another taxation case (Tribal Law 08/10)
The effects of the Crow tax ruling (Tribal Law 07/21)
Court rules against Crow tax (Tribal Law 07/18)