Who qualified as an Indian trader, who needed a seller's permit, and did another-tribe membership defeat reservation exemptions?

Plain-English summary

Headquarters reviewed an absent November 10, 1975 district request, an absent October 22 subordinate memorandum, and guidelines in an absent July 13, 1971 intradistrict memorandum. California confirmed the guidelines except for their treatment of all non-Indian reservation sellers as Indian traders. Only persons federally licensed as Indian traders qualified; a non-Indian seller did not obtain that status merely by selling on a reservation.

An Indian federally licensed as an Indian trader should not receive a seller's permit. A non-Indian federally licensed Indian trader did need one.

An Indian seller's sale to a non-Indian did not eliminate the non-Indian purchaser's use-tax liability.

An Indian association should not receive a seller's permit merely to buy items for resale at cost to members, although a qualifying Indian organization could purchase for resale without being required to hold a permit.

Federal Indian-law rules also applied to use-fuel tax. Exemption did not depend on the purchaser being enrolled in the same tribe whose reservation hosted the transaction.

The association-resale question was also pending in an Arcata Mobile Home Center, Inc. case, whose record and outcome are absent. The source identifies the McGunegill opinion as attached, but it is not in the PDF, and it cites no federal authority for the use-fuel conclusion. No district implementation, permit action, audit, appeal, or later outcome is supplied.

What this means for you

Indian traders, tribes, associations, and purchasers

Federal licensing, Indian or non-Indian status, purchaser tax liability, organizational resale rights, and tribal affiliation were separate questions.

Accountants and tax professionals

Retain federal trader licenses, seller permits, purchaser status, transaction location, resale evidence, association structure, fuel-tax facts, and tribal affiliation.

Common questions

Q: Who counted as an Indian trader?

A: Only a federally licensed Indian trader.

Q: Did an Indian licensed trader need a seller's permit?

A: No.

Q: Did the purchaser have to belong to the reservation's tribe?

A: No.

Citations and references

• Business Taxes Law Guide Annotation 305.0060 and the August 21, 1974 Memorandum Opinion in the Claim of Glenn and Margaret E. McGunegill — cited for federal-license treatment; complete annotation, advice, claim record, opinion history, implementation, and later treatment not reproduced, and the attached opinion is absent
• Sales and Use Tax Annotation 305.0020 — cited for an Indian organization's permit-free resale purchase; its application record and later treatment not reproduced in this PDF
• Federal laws concerning Indians, stated without citation to apply to the Use Fuel Tax Law — no federal or fuel-tax authority identified or reproduced
• July 13, 1971, October 22, 1975, and November 10, 1975 internal memoranda — all three, their facts, authorities, distribution, implementation, and intervening guidance not reproduced
• Pending Arcata Mobile Home Center, Inc. case — file, association, transactions, posture, decision, appeal, and later outcome not reproduced
• December 3, 1975 Headquarters Tax Counsel memorandum answering five questions — no implementation, application, permit action, audit, assessment, refund claim, appeal, or later outcome supplied
• Official Annotation 305.0027's federal trader license, Indian and non-Indian permit treatment, non-Indian purchaser use tax, other-tribe purchaser, and December 3, 1975 rules — annotation omits the internal-memorandum provenance, corrected guidance, prior authorities, association and Arcata issues, use-fuel conclusion, missing records, later outcome, and reliance status and supplies no additional proceeding record

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 305.0027
• Original supporting opinion: 305.0027 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

-----, District Principal Auditor

From:

Tax Counsel- Headquarters

Subject:

Administration of Sales and Use Tax Laws
Within the Boundaries of an Indian Reservation

305.0027

Date:

December 3, 1975

This is in response to your memorandum of November 10, 1975, by which you request that we review Mr. ------ memorandum to you of October 22 in regard to the referenced subject matter. Mr. ------ seeks confirmation of the guidelines set out in an intradistrict memorandum dated July 13, 1971, and raises certain additional questions in his memorandum to you. First, we can confirm the guidelines set out in the memorandum of July 13, 1971, except with regard to the statement that all non-Indian sellers are considered as "Indian traders" whether or not federally licensed as Indian traders. The only persons regarded as Indian traders are those persons federally licensed as Indian traders. See BTLG Anno. 305.0060; Memorandum Opinion in the Matter of the Claim of Glenn and Margaret E. McGunegill, August 21, 1974, copy attached for your reference. Second, our response to the additional questions are as follows: (1) If an Indian is licensed as an Indian trader, the Indian should not be issued a seller's permit. We do issue seller's permits to non-Indian federally licensed Indian Traders. (2) The sale by an Indian seller to a non-Indian does not extinguish the use tax liability of the non-Indian. (3) We should not issue a seller's permit to an Indian association so that the association may purchase items for resale at cost to members of the association. In a proper case, such as that discussed in annotation 305.0020, an Indian organization, even though not subject to the requirement that it hold a seller's permit, may nevertheless purchase property for resale. This question is presently being considered in the case of Arcata Mobile Home Center, Inc., which has arisen in your district. (4) Federal laws concerning Indians also apply to the Use Fuel Tax Law. (5) It is immaterial to the exemption that the Indian claiming the exemption may be an enrolled member of another tribe and not of the tribe upon whose reservation the transaction occurs.