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THURSDAY, SEPTEMBER 12, 2002

A 19th century treaty does not exempt members of a Washington tribe from federal taxes, an appeals court decided on Wednesday.

In a unanimous opinion, the 9th Circuit Court of Appeals ruled against a Yakama Nation business owner who contested nearly $500,000 in road use taxes. A three-judge panel said Kip R. Ramsey was not entitled to a refund under the tribe's 1855 treaty.

"[T]here is no express exemptive language in the treaty to exempt the Yakama from the generally applicable, federal heavy vehicle and diesel fuel taxes," wrote Circuit Judge Stephen S. Trott for the majority.

The decision reverses a victory Ramsey, who owns a logging company, won at a lower court. In November 2000, U.S. District Judge Wm. Fremming Nielsen of the Eastern District of Washington said the treaty protected the rights of individual Indians.

Nielsen rejected $460,702.55 in taxes that Ramsey paid to IRS, relying on a related case in which state taxes were struck down under the treaty.

But the appeals court said the wrong legal standard was used to arrive at that conclusion. Federal exemptions must be weighed differently due to the "plenary and exclusive power" of the United States over Indian Country.

"For this reason, all citizens, including Indians, are subject to federal taxation unless expressly exempted," Trott wrote.

At issue was the exact language of the Yakama treaty. Article III says tribal members have "free access" to public roads "in common" with U.S. citizens.

In the state tax case, referred to as Cree II, this provision was interpreted in favor of the tribe. At the time of the treaty, Yakama leaders wanted to ensure the right to use public roads "for purposes of hauling goods to market," the 9th Circuit the Cree II case ruled.

The court, however, said the language wasn't specific enough with regard to federal assessments. For this reason, the judges yesterday refused to apply an Indian law principle which requires ambiguous provisions to be read "in favor of the Indians."

A similar federal issue was before the Supreme Court last year when it ruled against the Cherokee and Choctaw nations of Oklahoma. The Court also didn't invoke the Indian law principle to benefit the tribes.

Rep. J.D. Hayworth (R-Ariz.) has introduced a bill to exempt tribes from federal excise and wagering taxes. Congress would have to do the same regarding road use taxes that Indian business owners like Ramsey are required to pay.

Get the Case:
RAMSEY v. US, No. 01-35014 (9th Cir. September 11, 2002)

Related Cases:
"Cree II" (October 1998) | "Cree I" (March 1996)

Related Stories:
Tribes lose Supreme Court appeal (11/28)
Supreme Court accepts taxation case (01/23)