"A growing number of California Indian tribes have opened gas stations, often undercutting local competition by not charging state sales tax.

But the state Board of Equalization may put a kibosh on the practice. In a March 9 legal opinion, BOE tax counsel Carolee Johnstone said that tribes and tribal suppliers must pay most of the taxes in question—something that could quickly take away their competitive advantage.

“Indian and non-Indian retailers are required to collect and remit to the BOE use tax on on-reservation sales of tangible personal property, including gasoline and diesel fuel, to non-Indians and to Indians who do not reside on a reservation,” she wrote.

In other words, it is Indian customers who are exempt from taxes, not Indian retailers - and then only if the Indian lives on the reservation where the transaction takes place. This is important because a significant proportion of sales at many Indian gas stations are to non-Indians. For instance, several tribes own stations located next to casinos, though many of these have been paying taxes. Even tribal members themselves, the opinion states, must general apply to the state for repayment of these taxes after the fact. "

Get the Story:
Tribes and gaming roundup (Capitol Weekly 4/7)