Washington cancels tribal cigarette pact

OLYMPIA – Washington state officially terminated a cigarette tax agreement with the Yakama Indian Nation on Monday, citing complaints that cigarettes had been sold to non-Indians without proper tax stamps.

The terminated tax compact dates to 2004 and has been the subject of a dispute between the state and tribe for months.

The state Revenue Department began termination actions last year and said it recently prevailed in mediation.

In the meantime, a tax agreement meant to replace the terminated one is tied up in tribal court. That lawsuit, from an owner of a tobacco company in White Swan, alleges that the newer tax compact should have been sent to tribal members for final approval.

“Since we have no compact in existence right now … we’re in limbo,” Tribal Council Chairman Ralph Sampson Jr. said.

Under federal law, cigarettes sold to Indians on tribal land are not subject to the tax, but cigarettes sold to non-Indians are supposed to be taxed fully.

The state now would consider any cigarettes sold on the Yakama Reservation to non-Indians illegal without proper state tax stamps, but officials don’t have any immediate plans for enforcement, Deputy Revenue Department Director Leslie Cushman said.

In a letter to Sampson, the department said it will advise the tribe in advance what state officials decide to do about enforcing state tax laws in absence of a compact.