Judge dismisses suit over sales tax, tribe agrees

Filed in U.S. District Court in Seattle in December, the tribe argued tribal members should be exempt from the collection of 6.5 percent sales tax in online purchases, in addition to exemptions for in-person purchases on the reservation.

In June, Jack Fiander, the tribe’s general counsel, said the lawsuit was rendered “unnecessary” upon further investigation. There is an existing process for reimbursement from the state, and tribal members can notify online retailers of their tribal status before the payment is made and have the tax removed.

“The process already existed, but it seems to me ideally it should have been on the state to send out a notice to various online retailers that tribes at these locations are tax exempt,” Fiander said.

The federal law exempting enrolled tribal citizens from paying sales tax states the goods are exempt if “delivered to or the sale is made in the tribe or enrolled tribal member’s Indian country.”

Fiander argued that those requirements created an unnecessary hardship due to the remoteness of the 315-citizen tribe.

Located 30 miles up Highway 530, the reservation is near only a handful of brick-and-mortar retailers. The closest town is Darrington with a population of 1,400. Forcing members to pay for a 100-mile round trip delivery of an item from Seattle, Fiander explained, was not worth the tax exemption.

The suit also alleged the sales tax was a form of discrimination against the tribe. Tribal Council Chairman Nino Maltos Jr. called the tax exemption a sovereignty issue.

But in February, John Ryser, then-acting director of the state Department of Revenue, filed a motion to dismiss the case.

In an 18-page document, Ryser argued the tribe failed to state a claim for which relief can be granted. The motion also outlined the mechanism already available to refund the sales tax and explained how to work directly with online vendors to remove the tax preemptively.

Ryser’s motion to dismiss argued the “Tribe has failed to allege facts or law that support a preemption claim for declaratory or injunctive relief.” Ryser’s motion also stated the tribe’s allegations are “insufficient” to show intentional discrimination based on race, as the lawsuit alleged.

In May, U.S. District Court Judge Ricardo S. Martinez tossed the case, stating the tribe failed to properly state a claim.

With the case dismissed, Fiander said the tribe plans to “work directly with online vendors” in the future.

“The problem with the refund policy is you have to wait,” Fiander said. “The easiest way to (remove the sales tax) will be between the consumer and retailer — to contact the internet seller and provide them proper documentation and tribal ID.”

A spokesperson for the state Department of Revenue told the Herald that the department “appreciates the court’s decision and is awaiting further developments, if any, in the case.”

Kayla J. Dunn: 425-339-3449; kayla.dunn@heraldnet.com; Twitter: @KaylaJ_Dunn.

This article was published via AP Storyshare.