The DMA Way

Completely Compliance - Tribal Taxes

by DMA Staff | Mar 30, 2017

While Tribes are exempt from federal income taxes even when conducting commercial activities, this is not the case with state sales tax. The basis of sales tax collection on tribal lands and to tribe members comes from a long history of court cases, but can be generally summed up in three statements.

  • A Tribe may collect tax when the product is received by any purchaser on tribal land. (Colville)
  • For products without “Reservation generated value,” a state may collect the tax when the product is received by a non-tribal member on tribal land. (Moe, Colville)
  • A state may not collect tax when the product is received on tribal land by a tribal member. (Moe, Chickasaw, Warren Trading Post)

These general guidelines are applied broadly and with many subtle differences based both upon the tribe and state as there are 562 federally recognized Native American tribes operating 422 facilities across 28 states.

Tribal taxes are generally collected by the individual tribes, even when they overlap jurisdictions with a state or other governmental subdivision. For example, in Arizona, the Tribal taxes are not centrally collected. Even after the long awaited implementation of the centralized reporting of TPT (Transaction Privilege Tax) which consolidated all local taxes to the single state form, Tribal taxes are reported and remitted directly to the tribes, while city, county, and state taxes are reported on the state return.

Similarly, the North Dakota Office of State Tax Commissioner has issued a memoregarding the administration of the Standing Rock Sioux Tribe’s sales and use taxes, as well as farm machinery and alcohol gross receipts taxes. Effective March 7, 2017, the Standing Rock Sioux Tribe’s taxes will be administered by the Standing Rock Sioux Tribe Tax Department rather than by the North Dakota Office of State Tax Commissioner.

Additionally, as “junk food”, or “sugar sweetened” taxes are a rising trend in some cities around the country, these were preceded by the Navajo Nation’s “Healthy Dine’ Nation act of 2014” imposing a “2% sales tax on pastries, chips, soda, desserts, fried foods, sweetened beverages, and other products with "minimal-to-no-nutritional value."

Please do not hesitate to contact your local DMA office should you have specific questions or requests.

Completely Compliance is a quarterly e-newsletter exclusively for clients and employees of DMA. It is intended to provide relevant sales/use tax news, events, and information. As such, this e-newsletter should be used for general informational purposes only, and not as a substitute for consultation with professional tax, legal, or other competent advisers. Before making any decision or taking any action based upon information contained in this e-newsletter, you should consult with a DMA professional.