Taking Government-to-Government Relationships to the Bank

After years of fighting the development of a Cowlitz governmental gaming facility tooth and nail – appealing BIA decisions, questioning the honesty of tribal officials, and even arguing that tribal members do not need jobs as much as non-Indians – local governments in Southwest Washington have finally agreed to negotiate with the Cowlitz Indian Tribe in a government-to-government fashion regarding their proposed plans for a casino. Because now the local governments want something. As reported by the Columbian:

[T]he Cowlitz Indian Tribe . . . is in talks to help La Center pay a portion of the tab for the sewer lines to the junction, in exchange for aid moving waste from its 152 acres of land west of I-5, city and tribe officials said. The Cowlitz tribe aims to build a casino on its land.

Six months after the La Center City Council voted to open talks with the tribe, leaders of both bodies said Tuesday that preliminary negotiations are going well and they hope they can forge a mutually beneficial relationship. That includes current talks about sewers, which have been ongoing the past month, and soon-to-come discussions on a new interchange off I-5 that would allow motorists easier access to the tribe’s land.

Such talks are significant considering the council and tribe did not officially speak about the proposed casino for four years after the council banned all dialogue with the tribe in 2007.

“I am quite surprised,” La Center Mayor Jim Irish said of negotiations, “considering we didn’t want to work with them in the past.”

This is nothing new. Slowly, local governments are coming to realize that working with tribal governments to find amicable solutions to mutual problems is much more beneficial than the zero-sum games of yesteryear.

In fact, even cash contributions are not off the table. Earlier this year, in New york, the Seneca Nation contributed over $1 million to a fund to help local government infrastructure; in California, the Yolo Indian Gaming Community Benefit Committee awarded over $200,000 in grants to local agencies affected by tribal gaming; in Michigan, the Saginaw Chippewa Indian Tribe distributed over $2.3 million to nearby schools and local governments; and here in Washington State, as reported by NPR,

Native American tribes . . . are bailing out financially troubled local governments. Most native tribes are still among the poorest communities in the U.S. But in Washington, casino revenue has allowed tribes to make big donations to school districts and even to fund local government positions.

Unlike state and local governments who have no qualms invading the sovereignty of other nations when their coffers run dry, tribal governments are on their own, looking inward for solutions – and finding them. Diversifying business; actively asserting tribal sovereignty; reinvesting in local economies; protecting areas of cultural significance; investing in clean energy; generally reevaluating the playing field – this is what’s going on in Indian country today. As state and local governments flail around aimlessly, wreaking havoc in Indian country and beyond, tribes are showing integrity. And as good neighbors, tribes are willing to lend a helping hand. Indeed, according to Melvin Sheldon, Chairman of the Tulalip Tribes, many tribes in Washington State are now “able to help out other communities. [F]or the tribes that can give . . . it’s a way to say hey, we've made it, and this is who we are.”

Local governments take notice: working with tribal governments is an idea that you can take to the bank.

Ryan Dreveskracht is an Associate at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm. His practice focuses on representing businesses and tribal governments in public affairs, energy, gaming, taxation, and general economic development. He can be reached at 206.909.3842 or ryan@galandabroadman.com.

Beware: The Washington State Tax Man Cometh to Indian Country

Washington Indian Country, With the state down $1.4 billion in tax monies yet unable to raise taxes thanks to Tim Eyman, brace for continued tax attacks by Washington state and local government -- and dare I say, discussion of state-tribal gaming revenue sharing like never before.

The Washington State Tax Man Cometh. Be prepared.

Gabe

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Ryan Dreveskracht Joins Galanda Broadman

Ryan Dreveskracht has been hired as an Associate by Galanda Broadman, PLLC, a Seattle-based law firm dedicated to representing American Indian interests. In August, Ryan completed a clerkship with Judge Kathleen Kay of the U.S. District Court for the Western District of Louisiana. Ryan received his L.L.M. in Sustainable International Development from the University of Washington School of Law, and his J.D. from the University of Arizona College of Law, where he also obtained a certificate in Indigenous Peoples Law and Policy. He holds a B.A. in Philosophy and Law, Society, and Justice from the University of Washington, and an A.A. from Lower Columbia College.

Ryan is a prolific legal scholar, having published several works regarding energy development, taxation, jurisdiction, and tribal-federal relations. He is the Managing Editor of the National Lawyer’s Guild Review. Ryan’s recent cutting-edge legal and economic scholarship includes:

• Washington State: Collect Your Own Taxes – That’s Where the Money’s At, The Circle: News From a Native American Perspective, August 15, 2011 • The Shifting Tide of Economic Policy: Will Indian Country Be Left to Drown?, Indian Country Today, April 7, 2011 • Native Nation Economic Development via the Implementation of Solar Projects: How to Make it Work, 68 Washington & Lee Law Review 27 (2011) • Tribal Court Jurisdiction Stripping and Native Nation Economies: A Trip Down the Rabbit Hole, 68 National Lawyers Guild Review 65 (2011) • The Impact of Digital Technology on Indigenous Peoples, in Robert A. Hershey, EcoLiterateLaw: Globalization and the Transformation of Cultures and Humanity 114 (2010)

Galanda Broadman is a majority Indian-owned law firm that represents tribal governments, businesses and members in critical litigation, business and regulatory matters.

State Successfully Taxes Relocated Indian's Retirement Income -- Really?

On August 12, the Eight Circuit Court of Appeals upheld the state of Minnesota's efforts to tax the retirement income of Charles Diver, a Chippewa Indian who was relocated to Ohio in 1960 under the federal relocation program. He worked there as a dockworker until 1998, when he retired and returned home to the Fond du Lac Reservation in Minnesota. As he drew upon his pension for his retirement, Minnesota began to assess him with income taxes. The Eight Circuit reasons: "Minnesota’s act in taxing a Band member’s pension, earned in Ohio, but received on the reservation, did not violate due process as the member’s Minnesota citizenship created a constitutional nexus for the taxation." That, despite Diver's residence on the Fond du lac Reservation, where he is drawing his retirement income.

Yet as Justice Murphy rightfully explains in dissent:

Diver has never earned income while working off the reservation as a citizen of Minnesota. His pension was earned entirely in the state of Ohio, where he lived and worked for thirty years. Minnesota could not have taxed his wages as he received them because the state did not have the required nexus. Now that Diver has retired and returned to the Fond du Lac reservation, tribal sovereignty precludes Minnesota from imposing a tax on a pension earned during thirty years of work in Ohio. Just as Minnesota could not tax Diver's preretirement Ohio wages simply because he now resides on a reservation located in the state, the same is true for the pension tied to those wages.

Minnesota now faces a $1.3 billion budget deficit in the next biennium and like many other states, seeks to balance the state's budget on the backs of Indians. The Eight Circuit case serves to demonstrate how low states will stoop in the process.

Lest there be any doubt, the state tax man cometh to Indian Country. Be prepared.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Tribal Employers Not Subject to Federal Unemployment Taxation

The Ninth Circuit held Thursday that a tribe or tribal business is excepted from paying Federal Unemployment (FUTA) taxes where services are performed “in the employ of an Indian tribe,” but only where a tribe or its instrumentality is a "common-law" employer of the worker performing the services. The court held that because the Tribe's employee leasing and temporary staffing business was a common-law, as opposed to statutory employer, the IRS had incorrectly failed to refund FUTA taxes paid. A common-law employer is an employer based on the law of agency, while a statutory employee for purposes of FUTA can simply be a paymaster. Although Blue Lake Rancheria had argued that even services provided by statutory employees were excepted from FUTA, it ended up not mattering to the Ninth Circuit, which found that the tribe's business was in fact a common-law employer.

Blue Lake will be required reading as tribal business form entities as the border of common-law employers. Any time a tribal business exercises less than total control over its employees, i.e. via staffing businesses, it should be sure to comply with the guidelines set forth in Blue Lake to ensure that FUTA exposure is minimized.

Anthony Broadman is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  His practice focuses on company-critical business litigation and representing tribal governments. He can be reached at 206.691.3631 or anthony@galandabroadman.com, or or via galandabroadman.com.

California BOE Takes Progressive Turn Towards Exempting State Excise Taxes for Landless Tribes

The typically anti-tribal California State Board of Equalization has taken a turn, for the better, by proposing to exempt from state sales and use tax does the "sales of tangible personal property to and purchases of tangible personal property" by California tribal governments that do not have reservation trust lands. The proposed amendments to Regulation 1616 provides:

(G)Property Used in Tribal Self-Governance. Sales and use tax does not apply to sales of tangible personal property to and purchases of tangible personal property by the tribal government of an Indian tribe that is officially recognized by either the United States or the State of California if:

1. The tribal government’s Indian tribe does not have a reservation or the principal place where the tribal government meets to conduct tribal business cannot be its Indian tribe’s reservation because the reservation does not have a building in which the tribal government can meet or the reservation lacks one or more essential utility services, such as water, electricity, gas, sewage, or telephone, or mail service from the United States Postal Service; 2. The property is purchased by the tribal government for use in tribal self-governance, including the governance of tribal members, the conduct of inter-governmental relationships, and the acquisition of trust land; and 3. The property is delivered to the tribal government and ownership of the property transfers to the tribal government at the principal place where the tribal government meets to conduct tribal business.

The purchase of tangible personal property is not exempt from use tax under this paragraph if the property is used for purposes other than tribal self-governance more than it is used for tribal self- governance within the first 12 months following delivery.

The California BOE's proposed rulemaking is a spectacular acknowledgment of tax-exempt tribal status vis-a-vis fee lands owned by tribal governments. As most recently seen in Madison County v. Oneida Indian Nation, for which SCOTUS accepted certiorari before mooting the case this past term, states and their little siblings in county government typically do everything in their power to extract tax monies from Indian-owned fee lands, even though, like all tribal lands, such lands are used to provide essential governmental services and programs to tribal citizens.

The BOE's original April 2011 proposal is here and a more recent proposal of July 2001 is here.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

10th Circuit Sounds Death Knell for Bracker Balancing

In a recent 2-1 opinion, the Tenth Circuit Court of Appeals over-ruled a trial court ruling in Ute Mountain Ute Tribe v. Rodriguez that preempted several New Mexico state taxes on oil and gas extracted from tribal lands. Despite robust federal and tribal regulation of those natural resources, including the tribe's exclusion of state agents from any on-reservation regulatory behavior, the appeals court ruled that state roads traversed by non-Indian extraction companies while taking oil and gas to market represented a "substantial" state interest. That interest ultimately tipped the Bracker balancing away from tax preemption, in favor of the state. In so ruling, the Tenth Circuit disregarded SCOTUS' instruction in Bracker and Ramah to disregard alleged off-reservation state impacts, as Judge Lucero rightfully observes in dissent.

While in a footnote the court took care to not "purport to hold that off-reservation infrastructure or services may be considered in every instance where they provide a benefit of any magnitude to the on-reservation activity" (emphasis in original), after Ute Mountain it is hard to fathom how tribes in the Tenth Circuit will not encounter state tax collectors with their fingers firmly holding down the state side of the Bracker scale.

Thankfully for tribes in the Ninth Circuit Hoopa Valley Tribe v. Nevins still disallows federal trial and appeals courts from considering alleged off-reservation state burdens.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Republicans Threaten to Cut Federal Indian Country Tax Benefits

Amidst the debt reduction frenzy in Washington, DC, Republican leaders are now threatening to do away with the Tribal Economic Development Bond and New Market Tax Credit programs, both of which confer vital federal tax benefits which tribes are increasingly using to attract private dollars to the reservation in order to diversify Indian economies. Indian Country must brace itself for its tax status becoming a menu item in the intensely partisan federal spending imbroglio. Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Is Amazon Illegally Collecting State Sales Taxes from Reservation Indians?

Amazon.com has recently been making headlines regarding its opposition to various states' efforts to force the online retailer to collect excise taxes on sales of goods into those states. Those headlines made me wonder: is Amazon charging state sales tax on Indians who buy and receive goods from the online retailer, on the Reservation? State sales taxes of course not be imposed on Indians in Indian Country.

However, upon reviewing Amazon's sales tax policies, there is no mention of sales tax exemption for reservation Indians. That, despite the fact that Amazon is headquartered in a state with 29 federally-recognized tribes.

I'm left to wonder: is Amazon illegally collecting state sales taxes from reservation Indians? If you have reason to know the answer to this question, please let me know.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

The Indian Tax Double Standard

Ryan Dreveskracht points out the double standard of sales tax in Washington State: the Department of Revenue turns a blind eye to the sales taxes it loses when Washington citizens drive to Oregon to make large consumer purchases. Meanwhile, the state vigorously enforces its tobacco sin taxes on Washington citizens who drive to Indian reservations to purchase cigarettes. Similarly, Idaho Governor Butch Otter infamously wrote a love letter to Washington and Oregon businesses, seeking to woo them to Idaho by promising lower corporate income taxes. Washington responded in kind: ("States trying to attract each others' businesses"). Still, nobody accused any Northwest state government of "marketing a tax advantage" or "creating an unlevel playing field." Meanwhile, tribal governments that leverage their favorable sovereign tax status are perennially accused of doing such things by their neighbor governments.

In addition, state and local governments can issue tax-exempt bonds for economic development projects like hotels, convention centers, golf courses and recreation facilities to promote their economic development. Meanwhile, the IRS has determined that like-kind hotels, convention centers, golf courses and recreation facilities on Indian reservations do not serve "essential governmental functions." As such, tribal governments cannot avail themselves of cheaper capital.

On June 15, the Internal Revenue Service Advisory Committee on Tax Exempt and Government Entities issues a report, which in part concluded that: "the [tribal] essential governmental function standard should be eliminated. Achieving at least parity with state and local governments in terms of access to low cost capital for more wide-ranging economic development projects has been an unmet goal of the tribes for decades." Agreed.

The Indian tax double standard. Will it ever end? Will there ever be parity? I'm not optimistic.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.