Avalara Taxrates > Blog > Sales Tax News > Sales Tax Exemptions and Native Americans - Avalara

Sales Tax Exemptions and Native Americans


Only tribal governments have the right to collect taxes on transactions that occur on tribal lands; state and federal governments do not have that right. However, if tribal members do not live on tribal lands, they may be subject to state income, sales and other taxes. Furthermore, tribes may impose their own sales, income, and excise taxes on tribal lands.

According to the National Council of State Legislatures,

"Indian individuals are liable for state sales taxes on transactions conducted off Indian lands, unless a state chooses to exempt tribal members from this obligation. States cannot tax sales to and by tribal members when the transactions occur on tribal or trust lands. However, state sales taxes apply to purchases by non-Indians on tribal lands. Federal courts have ruled that tribal governments are obligated to help collect validly imposed state taxes."

During the last several years, concerns have arisen over the Streamlined Sales Tax Project (SSTP), and the issue has been addressed by both the National Council of State Legislatures and the National Congress of American Indians. In 2005, the SSTP recognized that "some Indian tribal lands are not subject to state sales tax."  In July of 2012, the SSTP Governing Board's agreement for Georgia acknowledged that on tribal lands, "the seller may, but is not required, to collect [state and local sales taxes] from the consumer."

A report on tribal tax issues recently released by the National Congress of American Indians (NCAI) underscored that:

  • "Tribe may collect tax when the product is received by a non-tribal member on tribal land. 
  • … [S]tate may collect the tax when the product is received by a non-tribal member on tribal land.
  • State may not collect tax when product is received on tribal land by tribal member -- both on-site and remote transactions."

With all this in mind, the Wisconsin Department of Revenue recently released a fact sheet entitled: Sales Tax Exemption -- Sales to Native American Tribal Members.  The fact sheet outlines the general guidelines listed above, and then illustrates them with several examples. These examples underscore that who makes the purchase and where the purchase takes place are critical to determining sales tax liability.

Examples:

  1. An enrolled member of a Tribe lives on tribal lands and makes a purchase on tribal lands. The sale is not subject to Wisconsin sales tax.
  2. An enrolled member of a Tribe lives off tribal lands and makes a purchase off tribal lands. The sale is subject to Wisconsin sales tax.
  3. An enrolled member of a Tribe lives on tribal lands, makes a purchase off tribal lands, and has it delivered to tribal lands. The sale is not subject to Wisconsin sales tax because the transfer of possession of tangible personal property takes place on the tribal lands.
  4. An enrolled member of a Tribe lives off tribal lands, makes a purchase off tribal lands, and has the tangible personal property delivered to tribal lands. It is presumed that the property is "intended for storage, use, or other consumption off the tribal reservation and is subject to Wisconsin sales or use tax."
  5. An enrolled member of a Tribe lives on tribal lands and makes a purchase off tribal lands. Since the transfer of tangible personal property takes place off the tribal reservation, it is subject to Wisconsin sales or use tax.

In other words, it's worth knowing where you stand before making a purchase.

Get Free Tax Rate Tables


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.