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Senecas win temporary order to stop cigarette taxes

Members of the Seneca Nation of Indians protesting on their Irving property in Chautauqua County Sept. 1, the day the state was to begin enforcing its latest law to collect taxes on cigarettes sold on reservation territory to non-Indian customers. The collections have been halted by a series of court orders including one issued Thursday which applies only to the Senecas. Vasiliy Baziuk

The state may not move forward with its plans to collect taxes on cigarettes sold to non-Indians by Seneca Nation of Indians businesses.

On Thursday, the Senecas succeeded in getting another temporary restraining order against the state, which Wednesday had won a ruling to allow it begin collecting the taxes statewide.

Appellate Justice Jerome C. Gorski on Thursday morning signed a two-page order for the state to show cause June 20 on why the Seneca Nation should not be granted a preliminary injunction pending the appeal of Erie County Supreme Court Justice Donna M. Siwek’s Wednesday decision.

The temporary restraining order applies only to the Seneca Nation. The office of Attorney General Eric T. Schneiderman declined to comment on Justice Gorski’s order. There was no immediate comment from Gov. Andrew M. Cuomo’s office, which Wednesday announced it would take swift action to enforce the law.

On Wednesday, Justice Siwek sided with the state and lifted a temporary restraining order she had previously issued. She ruled the Department of Taxation and Finance “substantially complied” with the requirements of the state Administrative Procedure Act in analyzing the impact of a rule implementing tax law amendments to allow for the collection of taxes from non-Indians on reservation territory.

“The negative impacts cited by the Seneca Nation of Indians are directly related to, and flow from, the 2010 legislative amendments to the Tax Law,” Justice Siwek wrote. “The New York State Legislature declared and dictated this taxing scheme, not the department.”

Nation President Robert Odawi Porter said if the state courts eventually allow the state law to stand, it will cost good-paying retail jobs in Western New York, selling a legal product; and will not change the nation’s stand that it will never collect or impose sales taxes for the state.

“If the nation’s businesses need to shift their product mix to render such onerous tax laws moot, they will,” he said. “No one should underestimate the nation’s resolve to defend and protect its sovereign rights. Immunity from taxes by federal treaty is the law of the land. Our people survived state encroachment before and triumphed for centuries as an independent and successful people. That will not change now.”

The excise tax on a pack of cigarettes sold in New York is $4.35 per pack, the highest in the country. The legal battle over the state’s attempts to collect tax on reservation sales to non-Indians, as noted by Justice Siwek, dates back to 1988.