North Dakota bill would allow tribes to levy state sales tax

BISMARCK, N.D. (AP) — A draft legislative bill sets the framework for American Indian tribes in North Dakota to levy state sales taxes on their reservations and keep a yet-to-be-determined share of the collections.
The bill, which would allow tribal leaders to enter into a tax agreement with North Dakota’s governor, comes largely in response to tribes’ concerns about dwindling federal dollars on the state’s five American Indian reservations, North Dakota Tax Commissioner Ryan Rauschenberger said.
It also comes after Three Affiliated tribal officials doubled taxes on non-American Indian retail businesses that sell liquor, leading some to halt sales.
The draft legislation would forbid tribal governments that reach an accord with the state on sales tax collections to impose such taxes.
“What we want to avoid is dual-taxation,” said Rauschenberger, whose agency would consult with the governor on any accord with the tribes.
Three Affiliated Tribal Chairman Mark Fox did not immediately return phone calls Wednesday for comment.
The bill is the work of the Legislature’s newly formed Tribal Taxation Issues Committee, which met with tribal leaders in August and has another meeting planned Dec. 15 in New Town, on the Fort Berthold Reservation, home to the Three Affiliated Tribes.
“We heard from most of the tribal leaders that state sales tax is important for tribal governments — federal aid for the tribes is not enough for their budgets,” said Rauschenberger, who is one of 10 members of the panel headed by Gov. Doug Burgum.
The Republican governor, in a statement, called the legislation “a good starting point for conversation.”
Tribal businesses on reservations currently are not obliged to levy the state’s 5 percent sales tax. Businesses that are within reservation boundaries and not owned by American Indians are required to collect sales tax from nontribal members.
If tribes reach a sales tax accord with the state, all businesses and individuals would be subjected to the tax.
“The cash register would be blind to whoever is buying,” Rauschenberger said.
Two years ago, the Legislature passed similar legislation that allowed the Standing Rock Sioux Tribe in southern North Dakota to impose state sales tax but the agreement was canceled by the state after the tribe exempted its “casino and a few other businesses,” said Republican Sen. Dwight Cook of Mandan, the chairman of the Senate’s Finance and Taxation Committee.
Standing Rock Tribal Chairman Mike Faith did not immediately return phone calls Wednesday seeking comment on the previous and new legislation.
Cook, the lead sponsor and primary author of the new bill, said requiring tribal-owned casinos to collect and remit the sales tax may cause “heartburn” with some tribes.
The earliest any sales tax accord could be reached with the state is in 2019, when the Legislature reconvenes.
Cook, who also is a member of the Tribal Taxation Issues Committee, said the draft legislation likely has “a long way to go.” He said the “whole purpose” is to talk to the tribes “about common sense tax policy and how to get it done.”