Tribe sues over tax dispute with South Dakota

FLANDREAU, S.D. (AP) – A long-simmering tax dispute between the Flandreau Santee Sioux Tribe and the state of South Dakota is threatening to shut down alcohol sales at the Royal River Casino and Hotel in Flandreau.

The tribe has refused to pay the state’s use tax since 2009, saying its status as a sovereign nation exempts its patrons from state taxation. The state has refused to renew the casino’s licenses unless the tribe pays.

The tribe has now filed a lawsuit in federal court to bar the state from collecting use taxes from non-tribal members, The Argus Leader newspaper reported. The tribe also wants a federal judge to block the state from withholding a liquor license while the case proceeds. Without an injunction, the licenses will expire on Dec. 13.

“(The state) always says we have a government-to-government relationship, but when it comes down to something like this, it’s always a fight,” Tribal Vice President Jean Archambeau said.

The state says the tribe is thumbing its nose at a reasonable tax on non-tribal members. The legislature passed a law in 2006 requiring tribes to remit use taxes on the goods and services purchased by non-tribal members on Indian land, and most tribes comply.

Revenue Secretary Andy Gerlach declined comment on the lawsuit but pointed out that an Oct. 29 ruling by the state Office of Hearing Examiners said the law’s purpose was clear – to allow the state to collect taxes on those who benefit from a state-issued liquor license.

U.S. District Judge Lawrence Piersol has ordered the state to respond to the lawsuit by Nov. 26 and set a Dec. 1 hearing on the injunction request.

The case could have implications for the nine tribal casinos in South Dakota, most of which pay use taxes to the state through special jurisdiction agreements.

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Information from: Argus Leader, http://www.argusleader.com