Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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305.0000 INDIANS

Annotation 305.0060

305.0060 Traders on Reservations. As a result of the decision of the United States Supreme Court in Warren Trading Post v. Arizona Tax Commission, 380 U.S. 685 (1965), sales tax does not apply to sales by federally licensed Indian traders trading with Indians on reservations. After noting that Congress and the Commissioner of Indian Affairs have prescribed comprehensive statutes and regulations governing Indian traders, the court says:

"We think the assessment and collection of this tax would to a substantial extent frustrate the evident congressional purpose of ensuring that no burden shall be imposed upon Indian traders for trading with Indians on reservations except as authorized by Acts of Congress or by valid regulations promulgated under those Acts. This state tax on gross income would put financial burdens on appellant or the Indians with whom it deals in addition to those Congress or the tribes have prescribed, and could thereby disturb and disarrange the statutory plan Congress set up in order to protect Indians against prices deemed unfair or unreasonable by the Indian Commissioner. And since federal legislation has left the state with no duties or responsibilities respecting the reservation Indians, we cannot believe that Congress intended to leave to the state the privilege of levying this tax. Insofar as they are applied to this federally licensed Indian trader with respect to sales made to reservation Indians on the reservation, these state laws imposing taxes cannot stand." 1/17/67.