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Relationship Between the Streamlined Sales and Use Tax Agreement and Tribal Governments

WHEREAS, the 1967 Bellas Hess and the 1992 Quill Supreme Court decisions denied states the authority to require the collection of sales and use taxes by out-of-state sellers that have no physical presence in the taxing state; and

WHEREAS, the combined weight of the inability to collect sales and use taxes on remote sales through traditional carriers and the tax erosion due to electronic commerce threatens the future viability of the sales tax as a stable revenue source for state and local governments; and

WHEREAS, tribal governments are sovereign entities that have the authority to levy and collect sales taxes on transactions that occur on tribal lands, including transactions that occur remotely conducted by a tribal member; and

WHEREAS, the sales tax regimes of tribal governments can be as different and complex as current  state sales and use tax systems and thus tribal governments can encounter similar difficulties in collecting sales taxes on transactions that occur remotely; and

WHEREAS, the Streamlined Sales and Use Tax Agreement provides the states with a blueprint to create a simplified sales and use tax collection system that when implemented, allows justification for Congress to overturn the Bellas Hess and Quill decisions by granting to those states that comply with the Agreement the authority to require sellers, regardless of nexus, to collect those states’ sales and use taxes; and

WHEREAS, the states have shown the resolve to acknowledge the complexities of the current sales and use tax collection system, have worked with the business community to formulate a truly simplified and streamlined collection system and have shown the political will to enact the necessary changes to make the streamlined collection system the law; and

WHEREAS, the National Congress of American Indians and the National Conference of State Legislatures began discussions with regard to the relationship of the Agreement to tribal governments in July of 2004; and

WHEREAS, these discussions have served to:

• provide an understanding to tribal government representatives the intent of the state governments to honor existing agreements between states and tribal governments,
• identify issues that need to be clarified between the Streamlined Sales and Use Tax Agreement and its impact on members of tribal areas, and
• identify the interest of some tribal governments to participate as members of the Agreement;

NOW, THEREFORE BE IT RESOLVED THAT the National Conference of State Legislatures supports the participation of tribal governments as individual cooperating sovereign members of the Streamlined Sales and Use Tax Agreement; and

BE IT FURTHER RESOLVED THAT the National Conference of State Legislatures agrees to proceed with further discussions with the National Congress of American Indians, tribal government representatives, members of the Streamlined Sales and Use Tax Implementing States and representatives of the business community to facilitate the participation of those tribal governments wishing to comply with the Streamlined Sales and Use Tax Agreement and become members of the Agreement’s Governing Board; and

BE IT FURTHER RESOLVED THAT these discussions serve to establish safeguards for the collection of sales and use taxes under the Streamlined Sales and Use Tax Agreement that will not infringe upon the sovereignty of tribal governments, tribal taxing authority and the tax status of tribal members.

Unanimously adopted by Task Force on State and Local Taxation of Telecommunications and Electronic Commerce, Friday, May 13, 2005 in Annapolis, Maryland.

Unanimously adopted by NCSL’s Executive Committee on Saturday, May 14, 2005 in Annapolis, Maryland.