Relates to the definition of qualified reservation

BILL NUMBER:S3286

Title of bill

An act to amend the tax law, the Indian law and the real property tax law, in relation to the definition of "qualified reservation"

Purpose

To clarify that Indian nations are only exempt from the payment of sales taxes on cigarettes purchased for their own use on reservations where they exercise sovereignty over such lands and that only such lands are exempt from the payment of real property taxes and specify that the Cayuga Indian Nation does not meet these qualifications.

Summary of specific provisions

This bill amends subdivision (16) of Section 470 of the Tax Law to make clear that the definition of a "qualified reservation" does not include The Cayuga Indian Nation The bill also amends Section 6 of the Indian Law and Section 454 of the Real Property Tax Law by defining "Indian reservation" to be consistent with the definition of "qualified reservation" in Section 470 of the Tax Law.

Justification

In 2010, the New York Court of Appeals issued its decision in CAYUGA INDIAN NATION OF NEW YORK V. CAYUGA COUNTY wherein it reaffirmed the Appellate Division 4th Department's 2009 ruling that the Cayuga Nation did not have to collect the sales tax on cigarettes sold to non-Indian consumers at two stores located on their aboriginal land. Specifically, the Court ruled that despite the fact that the Cayuga Nation has no present reservation in the state, the properties involved met the statutory test under the Tax Law of being a qualified reservation (wherein the state is without power to impose a tax on sales to Indians) because their reservation, established by a treaty in 1789 and further acknowledged by the treaty of Canandaigua in 1794, was never disestablished by Congress. Thus, the Court ruled that the two Cayuga Nation stores were located on reservation land even though the Nation exercised no sovereign control over them. Ultimately, only Congress or the United States Supreme Court can settle the issue concerning the ramifications of a Native American nation acquiring real property in an unrecognized but also un-disestablished reservation, Until that occurs, this bill would require that real property owned by the Nation to be taxed support for the bill's provisions can also be found in the 2005 decision of the Supreme Court of the United States in CITY OF SHERRILL V. ONEIDA INDIAN NATION OF NEW YORK which held that the Oneida do not exercise sovereignty in whole or in part over parcels they recently purchased on the open market and that such parcels are subject to real property taxes. The holding in SHERRILL applies not only to the specific parcels within the City of Sherrill at issue but also to lands recently purchased by the Oneida within their historic reservation of 250,000 to 300,000 acres. The principle of SHERRILL applies equally to lands recently purchased by other New York Tribes including the Cayuga Indian Nation because in that the historic reservation has not been "disestablished."

Prior legislative history

2011/2012: S.3866, 2013/2014: S.4679A

Fiscal implications

Could result in a minimal increase in sales tax collection from any affected stores.

Effective date

Immediately.