The latest in a tangled series of state and federal court decisions has halted New York state's plan to collect taxes on cigarettes sold by Native American retailers to non-Indian customers. A state appellate court judge in western New York on Wednesday restored an order stopping the collections, Gov. David Paterson's office said. An earlier order had been lifted Monday by a state judge, a decision appealed by the Seneca and Cayuga nations. Those tribes won a separate federal court order Tuesday temporarily barring collections against them. But the state had said it would start imposing the $4.35 per pack levy on other reservation retailers starting Wednesday. "We are disappointed today that the appellate division has stayed the implementation of our statute and regulations with respect to licensed stamping agents," Paterson spokeswoman Jessica Bassett said. "Despite this ruling, we believe the state's legal arguments are sound and we believe that ultimately the state will prevail in this matter." The Indians' challenges are in multiple courts because they're attacking the taxation on several levels. The Senecas' federal court suit, which the Cayugas joined, seeks to invalidate the state tax law by arguing New York lacks jurisiction to regulate Indian nations within their territories. The tribes' state court challenge, meanwhile, opposes the expedited way New York tax officials chose to adopt the regulations to implement the law, not the law itself. Attempts to collect the tax in the 1990s resulted in sometimes-violent protests and fires on Seneca territories, which at one point shut down the New York State Thruway where it bisects the Senecas' Cattaraugus reservation. State officials have been reluctant to push the issue since. But with New York facing a fiscal crisis, the governor and state lawmakers vowed in June to go after what they view as a potential $200 million revenue source by requiring cigarette wholesalers, effective Sept. 1, to prepay the sales taxes before supplying reservation stores.
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