Federal Court Judge Richard Arcara ruled Tuesday in favor of the Seneca Nation’s challenge to New York State’s attempt to collect tax on cigarette sales to non-Indian customers. Judge Arcara granted the Seneca Nation a temporary restraining order, blocking the state from collecting taxes on cigarettes purchased at Indian smoke shops for two weeks.
The state had planned to collect the tax beginning Wednesday, September 1st after State Supreme Court Justice Donna M. Siwek refused to block the state on Monday from taxing the cigarette sales.
Carol E. Heckman, former federal magistrate judge representing the Seneca Indians, argued in State Supreme Court Monday that state officials circumvented proper procedures by adopting emergency rules outlining how the tax would be imposed. For that reason, the Senecas say, a 2009 court order blocking the state from taxing cigarette sales to non-Indian customers should remain in effect.
The original ruling stated that taxes would be collected on reservations in New York State other than the Seneca and Cayuga, which would affect the Tuscarora Reservation in Western New York where a $4.35 per pack tax would be imposed. A late bulletin from WBEN Radio informed the public that the New York State Court of Appeals has reversed this earlier rule and now bans the taxes for one week for all Indian tribes. The US1 District Court will hear arguments next Thursday on whether it should make the two week injunction permanent for the Seneca and Cayuga tribes. The order mentions only the Senecas and the Cayugas because they were the only tribes to contest the state law in Arcara’s court.
In past years, attempts by the Seneca Nation to lobby members of Congress on Native American issues have garnered no more than 11 votes from the 435-member House of Representatives. A ruling earlier this year forbade Seneca Indians in the mail-order cigarette business to use the post office to ship cigarettes.
The tax conflict has lasted for more than two decades but actually has historical roots dating back two centuries. Native Americans have used their sovereign status to sell cigarettes free of state taxes, which the state government opposes, particularly now when New York State has severe budget problems. Collecting taxes on cigarette sales to non-Indian customers would give the State a potential $150 million to $200 million in annual revenue.