Department of Taxation and Finance of N. Y. v. Milhelm Attea & Bros., 512 U.S. 61, 5 (1994)

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Cite as: 512 U. S. 61 (1994)

Opinion of the Court

tion and Finance 1 determined that a large volume of un-stamped cigarettes was being purchased by non-Indians from reservation retailers. According to an affidavit submitted by an official in the Department's Audit Division, the volume of tax-exempt cigarettes sold on New York reservations in 1987-1988 would, if consumed exclusively by tax-immune Indians, correspond to a consumption rate 20 times higher than that of the average New York resident; in 1988-1989, putative reservation consumption was 32 times the statewide average. See Record 244-246 (Affidavit of Jamie Woodward). Because unlawful purchases of unstamped cigarettes deprived New York of substantial tax revenues—now estimated at more than $65 million per year—the Department adopted the regulations at issue in this case.2

The regulations recognize the right of "exempt Indian nations or tribes, qualified Indian consumers and registered dealers" to "purchase, on qualified reservations, cigarettes upon which the seller has not prepaid and precollected the cigarette tax imposed pursuant to article 20 of the Tax Law." 20 N. Y. C. R. R. § 336.6(a) (1992). To ensure that nonexempt purchasers do not likewise escape taxation, the regulations limit the quantity of untaxed cigarettes that wholesalers may sell to tribes and tribal retailers. The limitations may be established and enforced in alternative ways. A tribe may enter into an agreement with the Department "to regulate, license, or control the sale and distribution within its qualified reservation of an agreed upon amount of [un-1 The petitioners in this case are the Department of Taxation and Finance of the State of New York, its Commissioner James W. Wetzler, and the Tax Appeals Tribunal of the State of New York. For convenience we refer to petitioners collectively as the Department.

2 The cigarette regulations are similar to regulations New York adopted in an effort to prevent sales of untaxed gasoline to non-Indians on reservations. See Herzog Bros. Trucking, Inc. v. State Tax Comm'n, 69 N. Y. 2d 536, 508 N. E. 2d 914 (1987) (finding regulations pre-empted by federal law), vacated and remanded, 487 U. S. 1212 (1988), on remand 72 N. Y. 2d 720, 533 N. E. 2d 255 (1988).

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