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Seneca Nation allowed to intervene in tax-challenge case

The Seneca Nation of Indians is pulling out all the stops in its battle with the state over the collection of taxes on cigarettes its sells to non-members.

Nation representatives were still in court at press time Friday, seeking an injunction to delay the Sept. 1 implementation of new state regulations to collect a $4.35 per pack excise tax on cigarettes sold on tribal lands to non Indians.

The case was being heard in U.S. District Court for the Western District of New York in Buffalo by Judge Richard J. Arcara.

Earlier Friday, the Nation announced that State Supreme Court Justice Donna M. Siwek had granted the Senecas their  request to intervene in a pending 2006 case, Day Wholesale et al v. State of New York.

The purpose of that action is also to challenge the state’s June 21 issuance of emergency regulations to begin collecting the taxes.

Judge Siwek ruled the Nation has a “substantial interest” in the outcome of the action, that the regulations would “impose significant burdens on the Nation, its licensed stamping agents, its licensed cigarette retailers” and “conflict with the Nation’s impost/export laws.”

The basis for the challenge is set forth in the Nation’s pre-suit petition filed with the New York Department of State on July 30. In the Day Wholesale case, Erie County Supreme Court Justice Rose H. Sconiers granted a preliminary injunction on the state’s collection of taxes sold on Indian reservations because the state Department of Taxation and Finance had not established the means in which to implement the regulations.

The state now maintains its emergency regulations address implementation and it is seeking to lift any injunctions.

The Nation will ask the court to keep them in place.

“We are very pleased the court will [include] our significant concerns regarding enactment and enforcement of New York State’s current taxing scheme,” Nation President Barry E. Snyder Sr. said in the release. “We believe the state violated its own procedural guidelines in its rush to find a new revenue source.”

Gov. David Paterson has vowed to move ahead with the tax collections next week, acknowledging there may be violence.

Snyder has repeatedly said “violence is not on our agenda,” but that he cannot control all of the tribe’s more than 7,000 members, most of whom reside in Western New York.

Violence has broken out on earlier occasions when the state has tried to implement tax collections involving reservations. Seneca members have burned tires on the New York State Thruway which runs through reservation lands, resulting in its closure.

The Senecas are also fighting a new national law that went into effect in late June, called the Prevent All Cigarette Trafficking Act which bans the U.S. Postal Service from shipping cigarettes and tobacco products to the 48 contiguous United States.

They won a partial victory in that case July 30 when Judge Arcara ruled the portion of the law banning the U.S. Postal Service from shipping cigarettes could be enforced. But, Judge Arcara, also issued a preliminary injunction on the enforcement of a section requiring sellers who ship goods to other states to comply with all state, local, tribal and other laws applicable to the sale of cigarettes and smokeless tobacco where they are delivered, including the payment of state and local taxes.

The Nation and federal government are appealing to the U.S. Court of Appeals for the Second Circuit.