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WASHINGTON -- Eleven years after ruling that New York State could tax cigarette distributors whose products are sold on Indian land, the Supreme Court turned Monday to the question of whether states could do likewise with gasoline, The Buffalo News reported.
In a case from Kansas, the high court heard arguments on whether to reverse an appeals court decision, which said the state violated the sovereignty of the Prairie Band Potawatomi tribe by imposing a tax on its gas suppliers, according to the The Buffalo News .
The state cited the unanimous opinion in the 1993 Western New York case, Department of Taxation and Finance v. Milhelm Attea, as one of several Supreme Court precedents for the gasoline tax, according to the report.
In those previous cases, the Supreme Court ruled that a state cannot impose taxes directly on sales to Indians, but can tax distributors whose products are sold to non-Indians on Indian lands. Kansas is doing exactly that, Theodore B. Olson, the former U.S. solicitor general who argued the case for the state said in the The Buffalo News .
"The why, when and where of the tax is all off-reservation and non-Indian," Olson told the court.
But Ian Gershengorn, a lawyer for the Potawatomis, argued that the Kansas state tax has an unusually harsh impact on the tribally owned gas station at its rural casino. With distributors charged the state tax, he said the tribe can't afford to impose its own tax to maintain the road to the casino, The Buffalo News reported.
By law, The Buffalo News reported that American Indian tribes are regarded as sovereign nations, exempting them from state taxation. But many states, like Kansas, have imposed "upstream" taxes, although some, like New York, have faced great difficulty in collecting them