Flandreau Santee Sioux Tribe v. Noem, No. 18-1271 (8th Cir. 2019)
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After the Tribe failed to remit the use tax on goods and services sold to nonmembers at its casino and store, the State's Department of Revenue denied the Tribe renewals of alcoholic beverage licenses that were issued to the casino and the store. The South Dakota Office of Hearing Examiners upheld the decision and the Tribe appealed.
The Eighth Circuit affirmed the district court's conclusion that imposition of the South Dakota use tax on nonmember purchases of amenities at the Casino is preempted by the Indian Gaming Regulatory Act (IGRA). Applying the analysis in White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980), the court held that the Tribe’s on-reservation Class III gaming activity is analogous to the nonmember logging activity on tribal land at issue in Bracker, and to the nonmember activity in building a reservation school at issue in Ramah Navajo School Bd., Inc. v. Bureau of Revenue of N.M., 458 U.S. 832, 838 (1982). Furthermore, raising revenues to provide government services throughout South Dakota does not outweigh the federal and tribal interests in Class III gaming reflected in the IGRA and the history of tribal independence in gaming.
However, the court reversed the district court's Amended Judgment declaring that the State could not condition renewal of any alcoholic beverage license issued to the Tribe on the collection and remittance of a use tax on nonmember consumer purchases. In this case, the Tribe has failed to meet its burden to demonstrate that the State alcohol license requirement was not reasonably necessary to further its interest in collecting valid state taxes.
Court Description: Loken, Author, with Colloton and Kelly, Circuit Judges] Civil case - Indian Gaming Regulatory Act. The Tribe failed to remit the State of South Dakota's use tax on goods and services sold to nonmembers at the Tribe's Casino and related store, and the State's Department of Revenue denied the Tribe's applications for renewal of the alcoholic beverage licenses issued to the casino and the store. The Tribe filed this action alleging the imposition of the use tax on purchases by nonmembers on reservation land was preempted by the Indian Gaming Regulatory Act and that conditioning renewal of the Tribe's alcohol licenses on use tax remittance violated 18 U.S.C. Sec. 1161. The district court concluded the state could not collect the tax on the sale of amenities in the casino but could collect the tax on sales of goods and services to nonmembers at the store. The court further determined that the state could not condition renewal of the liquor licenses on remittance of the taxes due on store sales. Held: The Indian Gaming Regulatory Act does not expressly preempt the imposition of the use tax on nonmember purchases throughout the casino but under relevant Supreme Court precedent, the tax is preempted because the revenues generated by the sales of the amenities contribute significantly to the economic success of the Tribe's Category III gaming at the casino, and imposition of the tax would be contrary to the Act's broad policies of increasing tribal revenue and ensuring the tribes are the primary beneficiaries of gaming revenue; the State may condition renewal of the alcoholic beverage licenses on the Tribe's failure to remit the validly imposed portions of the use tax, and the district court's holding that it could not, is reversed. Judge Colloton, concurring in part and dissenting in part.
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