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State Tax Exemptions and Reform Planning National Intertribal Tax Alliance September 17, 2015
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Welcome Moderator: Aubrey Seffernick, Partner, Miller Nash Graham & Dunn LLP Panelists: James T. Meggesto, Partner, Holland & Knight LLP Mary Streitz, Partner, Dorsey Whitney LLP F. Michael Willis, Partner, Hobbs, Strauss, Dean & Walker LLP
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Introduction Survey of the tools a Tribe can use to resolve taxing jurisdiction issues with the state Whether it be asserting an immunity, resolving a “grey area,” or pushing for a legislative exemption as good public policy
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Overview Legislation: the carpenter’s pencil Litigation: the hammer Tribal-State Compacts: the level Business Structures: the monkey wrench Agency letter rulings and interpretations: the chisel
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Legislation When is legislation a good tool? Current issues being addressed through legislative efforts: – Federal Authority to issue tax-exempt debt Income of minors Streamline sales tax collection Tribal charities classified as public charities – State Taxation of off-reservation property Areas with strong public policy implications
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Legislation, cont. Case Study: – HB 1287 in Washington State regarding fee land owned by the tribe – Original Bill: expand definition of “essential governmental services” to include “economic development” for property tax exemption on land owned in fee by a tribe. – Bill as enacted: PILT provision added; cut-off & sunset added – Legal Challenge: King County Superior Court declared the PILT provision unconstitutional holding that the PILT is a property tax and, as such, violates the uniformity provision of the State Constitution.
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Litigation When is litigation the best or only option? What can a tribe do to prepare a case for litigation? What are some issues we expect will only be resolved through litigation? Examples: – AUTO v. State – Tulalip Quil Ceda Village
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Tribal-State Compacts What issues are ripe for state tribal agreements? What are some of the issues that will bring the state to the table? – Enforcement issues – Tax parity – Collection from non-Indians – Uniform regulatory structure
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Tribal-State Compacts, cont. Examples: – Fuel compacts – Cigarette tax compacts – Liquor tax compacts – New: HB 2000 Washington State Cannabis Compacts
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Business Structure What tax consequences can be avoided through careful business planning or deal structuring? – Tribe itself – Tribal corporation – Section 17 corporation – State entity with majority tribal ownership
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Agency Rulings What issues may be chipped away at through negotiations with state revenue or other agencies? Examples of resolution that might be reached through a state revenue department: – Interpretive statement/FAQ’s – Letter Rulings: e.g. applying Bracker to facts a tribe offers – Settlement for a specific assessment – Closing Agreement - Minimal burdens analysis
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Agency Rulings, cont. What is the scope of the agency’s authority? Can the state agency assist the tribe with resolving issues with a local jurisdiction? Can the state agency provide certainty for business partners or vendors?
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Thank You Aubrey Seffernick: aubrey.seffernick@millernash.com aubrey.seffernick@millernash.com James Meggesto: james.meggesto@hklaw.com james.meggesto@hklaw.com Mary Streitz: Streitz.Mary@dorsey.comStreitz.Mary@dorsey.com F. Michael Willis: mwillis@hobbsstraus.commwillis@hobbsstraus.com
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