Business | Law

Seneca Nation business wins appeal for PACT Act injunction

A Seneca Nation business owner won't have to comply with tax provisions of the Prevent All Cigarette Trafficking Act after the D.C. Circuit Court of Appeals ruled in his favor on Friday.

The PACT Act, which President Barack Obama signed into law over tribal objections, requires retailers to comply with tax laws in state and local jurisdictions across the country. The D.C. Circuit affirmed a preliminary injunction that said the tax provisions "likely" violate the Due Process clause of the U.S. Constitution.

The D.C. Circuit said "likely" because it didn't reach a decision on the merits. That will be for Judge Royce Lamberth, who has been handling the case, to resolve on remand.

"Although it is well-settled that the Due Process Clause requires minimum contacts between the taxing sovereign and the taxed entity, this appeal presents a unique twist on that principle: with which sovereign must the taxed entity possess minimum contacts when there is one sovereign that defines and benefits from the tax obligation (in this case, the state or local government), and another that imposes and enforces the obligation (in this case, the federal government)?" Judge Thomas B. Griffith said in the June 28 decision.

"This question is novel and close, and we cannot say that the district court’s conclusion that Gordon is likely to succeed on the merits is an abuse of discretion. We are therefore bound to affirm its determination," Griffith continued.

The decision was not unanimous. One judge agreed in part but filed a dissent that said the injunction should have been lifted while another only agreed with the outcome.

Turtle Talk has posted documents from the case, Gordon v. Holder.

DC Circuit Court of Appeals:
Gordon v. Holder (June 28, 2013)

Related Stories:
Judge Lamberth blocks tax provisions in Seneca PACT Act case (12/6)

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