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Wagnon v. Prairie Band Potawatomi Nation: Record No.: RS22321, Date: November 10, 2005 (gasoline tax) 1 (November 10, 2005)

handle is hein.tera/crstax0351 and id is 1 raw text is: Order Code RS22321 November 10, 2005 CRS Report for Congress Received through the CRS Web Wagnon v. Prairie Band Potawatomi Nation: State Tax on Motor Fuels Distributed to Indian Tribal Retailers M. Maureen Murphy Legislative Attorney American Law Division Summary On October 3, 2005, the U.S. Supreme Court heard oral arguments in Wagnon v. Prairie Band Potawatomi Nation (No. 94-631), which tests whether Kansas may apply its motor fuels tax to gasoline sold by off-reservation distributors to Indian tribal retailers for on-reservation sales. While the Court has consistently upheld state authority to tax on-reservation tobacco and gasoline sales to non-tribal members, tribal sovereign immunity bars states from collecting such taxes directly from Indian tribes. The Kansas tax is designed to resolve this problem by imposing the tax on the non-Indian, off- reservation distributor. The appellate court found the state tax to be preempted by the federal interest in tribal sovereignty and economic development. Although legislation has been introduced in several recent Congresses to compel tribes to remit state sales taxes on retail sales to non-Indians, to date no such requirement has been enacted. This report will be updated upon the issuance of a Supreme Court decision. Background. Near its casino, the Prairie Band Potawatomi Nation (Tribe) operates a convenience store which sells gasoline and diesel fuel, purchased from and brought to the reservation by a non-Indian off-reservation distributor. Sales to casino patrons and employees account for almost 75% of the fuel sold; sales are subject to a tribal tax yielding $300,000 annually that is used for reservation roads.' The Kansas Motor Fuel Tax Act of 19952 taxes all fuels used, sold, or delivered in Kansas.3 It specifies that the legal incidence of the tax, which generally means the duty of paying the tax, falls on the distributor4 and that receipts are to be used to maintain the state's highway Prairie Band Potawatomi Nation v. Richards, 241 F. Supp. 2d 1295, 1297-1298 (D. Kan. 2003). 2 Kan. Stat. Ann. §§ 79-3401 et seq. 3 Kan. Stat. Ann. § 79-3408(a) (Supp. 2003). 4 Kan. Stat. Ann. § 79-3408(c) (Supp. 1003). Congressional Research Service oe The Library of Congress

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