Yakama Nation business loses treaty claim in taxation case

Tuesday, August 14, 2018  

A tobacco manufacturer on the Yakama Nation is on the hook for almost $58 million in federal taxes after losing a treaty rights case.

King Mountain Tobacco cited the Treaty with the Yakamas of 1855 as well as the General Allotment Act of 1887 in seeking an exemption from federal excise taxes. But the 9th Circuit Court of Appeals on Monday said neither the treaty, nor the federal law, protects the business.

"We affirm our longstanding rule that Indians—like all citizens—are subject to federal taxation unless expressly exempted by a treaty or congressional statute," Judge M. Margaret McKeown wrote in the unanimous decision.

And in a separate action, the 9th Circuit on Monday upheld a judgment of $6,425,683 against King Mountain. The fees, assessed under the Fair and Equitable Tobacco Reform Act, do not violate the Yakama treaty or the constitutional rights of the business, the court ruled.

Both decisions come as Indian Country watches another Yakama treaty case. The U.S. Supreme Court is due to hear arguments in Washington State Department of Licensing v. Cougar Den this fall.

At issue is whether the Cougar Den, a business on the Yakama Nation, must pay fuel taxes to the state. The Washington Supreme Court ruled that the taxes violated the 1855 treaty, which specifically guarantees tribal citizens "free access" to public highways.

The state of Washington, as well as the Trump administration, insist that is not the case. The state filed its opening brief on August 9.

"The taxes do not violate a treaty right because they 'are not a charge for Cougar Den’s use of public highways,' but relate to the fuel itself," the brief stated.

Cougar Den will be filing a response to the brief. Oral arguments have not been scheduled but are expected after the court returns to work in October.

Turtle Talk has posted briefs from the King Mountain taxation case, as well as the King Mountain fees case.

Read More on the Story:
Ninth Circuit Court of Appeals: Yakama cigarette manufacture must pay federal taxes (The Yakima Herald-Republic August 14, 2018)
Ninth Circuit Nails Tribe for $58 Million in Cigarette Taxes (Courthouse News Service August 13, 2018)

9th Circuit Court of Appeals Decisions:
U.S. v. King Mountain Tobacco [Taxes] (August 13, 2018)
U.S. v. King Mountain Tobacco [Fees] (August 13, 2018)

Supreme Court delivers bad news to tribes as term draws to a close (June 25, 2018)
Supreme Court poised to take action on some major Indian law petitions (June 18, 2018)
Yakama Nation celebrates treaty whose provisions are questioned by Trump (June 7, 2018)
Trump administration goes against tribal interests in treaty case (May 16, 2018)
Another Indian law case in limbo as high court turns to Trump again (May 14, 2018)
Yakama Nation sues county for arresting minor on homelands in Washington (November 6, 2017)
Supreme Court opens term with new justice and with Indian law cases on horizon (October 2, 2017)
Washington asks high court to overturn Yakama Nation treaty victory (June 23, 2017)
Yakama Nation tobacco dispute goes before federal appeals court (September 1, 2016)
Supreme Court won't hear Yakama Nation treaty tobacco case (03/10)
9th Circuit rejects treaty claims of Indian tobacco manufacturer (September 26, 2014)
9th Circuit rejects treaty claims of Indian tobacco manufacturer (September 26, 2014)
9th Circuit hears case over Yakama Nation tobacco manufacturer (August 29, 2014)
Judge subjects Yakama Nation business to tobacco settlement (April 9, 2013)