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Yakama Nation Sues Washington State Over Taxes

  • Dec 17, 2012 | Gail Cole

Earlier this month, the Yakama Nation brought suit against the State of Washington in Yakama Tribal Court because the state has abandoned an agreement regarding fuel tax. The state claims that "the tribe failed to submit required audits of fuel sales from 2007 to present."

Under a federal consent decree between the tribe and the state, "tribal fuel station owners on the reservation …[may] buy bulk fuel mostly free from state taxes to sell to tribal members, who are exempt from state fuel taxes." Pursuant to the agreement, "tribal station owners pay the state fuel tax on only 25 percent of the bulk fuel delivered."

Tribal members who live on tribal lands are exempt from state fuel taxes, but non-tribal members who live on tribal lands are not. The Yakama reservation spans both tribal and nontribal land, and in the reservation towns of Toppenish and Wapato, "non-Indians outnumber tribal members… ."

The state "requires tribes to keep accounts of sales to non-members," and it claims that "the Yakima Nation was not abiding by its audit requirements… ." Last spring, the Department of Licensing maintained that "the Nation failed to submit audit reports in 2007, 2008, and 2009 that are required to differentiate sales to its members from sales to non-member." In a letter to the Yakama Nation, the DOL explained that, "The Yakama Nation is then subject to the state's taxes on all fuel delivered to the reservation under the Consent Decree." That amount totals approximately $11 million.

According to a Washington Department of Licensing spokesman, "the state ended the agreement because mediation between the two sides failed after more than 180 days. Tribal Council Chairman Harry Smiskin says that "the state negotiated in bad faith." (The Seattle Times).

Brad Benfield of the Department of Licensing has said the state will not order "distributors to collect the tax while the litigation is pending."

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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.