Sales Tax Dispute Looks to 1882 Act of Congress for Answers
- Dec 10, 2015 | Gail Cole
Update, 3.28.2016: The United States Supreme Court has affirmed the lower court's ruling: Pender is on tribal lands and affected retailers in Pender must obtain a liquor license and collect and remit the 10% sales tax on all liquor sales.
Should businesses in Pender, Nebraska, collect and remit a tax imposed on alcohol sold within the Omaha Indian Reservation? The answer depends on whether or not Pender is on tribal lands, which depends on how one interprets an Act of Congress dating from 1882.
Seven businesses in Pender argue that they should not be required to buy a tribal liquor license or charge the 10% sales tax on alcohol because Pender is not located within the boundaries of the reservation. Their case is based on the 1882 Act of Congress, which they claim diminished reservation land. If Pender is not located on tribal lands, the tribe cannot tax transactions occurring in Pender.
The Omaha Tribe disagrees. While no one disputes that land was sold to non-native (white) settlers, the tribe maintains the land remained, and remains, within the boundaries of the reservation.
Last year, a federal district court judge ruled in favor of the Omaha — a decision upheld in May by the 8th Circuit Court of Appeals.
The Court of Appeals determined that the 1882 Act of Congress opened land on the reservation for sale and settlement but did not “clearly evince Congress’ intent to change boundaries of the Omaha Reservation.” Instead, it “‘indicates that the United States intended to act as the Omaha Tribe’s sales agent for purposes of surveying and auctioning its reservation land…with the proceeds held in trust in the United States Treasury for the benefit of members of the Omaha Tribe.’” There is no explicit reference to cessation in the document, and there is a precedence to “resolve any ambiguities in favor of the Indians.”
The court also noted the historical context and cultural significance of the case:
“The importance and impact that this determination has on the entire community of Pender and its residents is not lost on this court. As Appellants point out, this is not a matter of mere historical curiosity or academic interest.”
It will be interesting to learn the United States Supreme Court’s opinion on the case. The high court will hear arguments for Nebraska v. Parker (14-1406) on January 20, 2016.