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    Feds Seize Tribal Smoke Shops in Washington

    State says the tax-free cigarettes give tribal businesses an unfair advantage over nontribal businesses.

    YAKIMA, Wash. -- Federal agents raided tribal smoke shops across Washington and Idaho yesterday, reopening a lingering dispute over the taxation of cigarettes sold on Indian reservations.

    The Bureau of Alcohol, Tobacco and Firearms, with help from state investigators, descended on three stores licensed by the Puyallup Tribe of Indians simultaneously with raids on Eastern Washington and North Idaho reservations. Agents used sealed search warrants that were issued by a U.S. District judge in Spokane, according to tribal officials.

    Most tribal smoke shops don't charge state taxes -- $1.42 per pack, plus an 8 percent sales tax -- claiming they are exempt and citing their tribes' sovereign rights as independent nations. Washington officials say the cut-rate cigarettes give tribal businesses an unfair advantage over nontribal businesses, and cost the state tens of millions of dollars a year in lost tax revenue.

    Agents seized boxes of cigarettes from one smoke shop on the Puyallup reservation, but made no arrests there, said tribal spokesman John Weymer. The U.S. Attorney in Spokane, James McDevitt, would say only that 12 search warrants were served at locations in Washington and Idaho. "We don't talk about ongoing investigations. It's not fair to the people involved," he said. It was unclear how many cigarette cartons were seized in the coordinated raids.

    State and federal agents similarly raided Puyallup tribal smoke shops four years ago and last year seized 3,200 cartons from a United Parcel Service terminal that were destined for area reservations. At least one tribe, the Squaxin Island Tribe, collects the taxes but keeps the revenue for tribal services. Several tribes, including the Puyallups, have been negotiating with Gov. Gary Locke for compacts that would end the tax dispute.

    The raids yesterday won't affect those negotiations, the tribal council said in a news release.

    "The tribe regrets that the federal and state governments find it necessary to resort to confrontation and conflict in their dealings with these issues," the council's statement said.

    Agents from the Washington State Liquor Control Board helped with the raids, said agency spokeswoman Trisha Currier. The agency teamed up with the ATF three years ago to crack down on cigarette smuggling. The Puyallup smoke shops are independent businesses licensed by the tribe, and the owners of The Indian Smoke Shop and Lyle's Smoke Shop, which saw two locations raided, are cooperating with federal authorities, Weymer said.

    The Puyallups are frustrated that the raids occurred despite promising negotiations with the state. "It's a fine line here that is being crossed," Weymer said. "Our tribal council will probably step up their efforts to resolve these issues, working government to government."

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