Business | Law

Flandreau Santee Sioux Tribe sues South Dakota over sales tax

The First America Mart in Flandreau, South Dakota. Image from Google Maps

The Flandreau Santee Sioux Tribe filed suit against the state of South Dakota on Tuesday as part of a dispute over sales taxes and a liquor license.

The state has repeatedly refused to renew the tribe's liquor licenses because the tribe won't collect a tax on the sale of liquor to non-Indians. The lawsuit claims the state's actions infringe on the tribe's sovereignty and are pre-empted by federal law.

"Under applicable federal law, including the Indian Commerce Clause, U.S. Constitution Article I, § 8, Clause 3; and federal common law, the state does not have jurisdiction within Indian country to assess, or is preempted from assessing, use taxes attributable to the purchase, by non-members, of tangible personal property and services from an Indian tribe or tribal member, when the tribal interests and federal interests, including the interests in promoting tribal sovereignty and economic development, outweigh the state interest in collecting the tax," the complaint in Flandreau Santee Sioux Tribe v. Gerlach states. "Such state tax assessments infringe on the rights of tribes to self-government and place an undue burden on Indian commerce."

The tribe holds state licenses to sell liquor at three locations -- the Royal River Casino, a bowling alley and the First America Mart convenience store and gas station. When the Department of Revenue and Regulation refused to renew them, the tribe took the matter to the Office of Hearing Examiners.

In an
October 29 decision, the office sided with the state. That prompted the tribe to go to federal court to prevent the state from withholding the licenses.

A hearing on the tribe's request for a preliminary injunction is set for December 1.

Get the Story:
Flandreau tribe files lawsuit in tax dispute with state (The Sioux Falls Argus Leader 11/20)

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