Does a gas utility charge sales tax on gas it sells to Seneca Nation members who live on their reservation?

Plain-English summary

National Fuel Gas Distribution Corporation asked whether it must charge sales tax on gas or gas service sold to individual members of the Seneca Nation who live on the Cattaraugus and Allegany Reservations.

The Department held these sales are not taxable.

• The reservation-delivery rule. Under the U.S. Supreme Court's decisions in Washington v. Confederated Tribes of the Colville Indian Reservation (447 U.S. 134) and Moe v. Confederated Salish and Kootenai Tribes (425 U.S. 463), an Indian who resides on their reservation is not liable for New York State and local sales tax on:
  • tangible personal property delivered to the reservation;
  • services delivered on the reservation; and
  • even items bought off the reservation but delivered to the Indian on the reservation.
• Off-reservation delivery is taxable. An Indian is subject to sales tax on property delivered to them off the reservation, and on services delivered off the reservation.
• Result here. Seneca Nation members residing on the Cattaraugus or Allegany Reservations who buy gas or gas service for use on the reservation are not subject to New York State or local sales tax.
• Why not § 1116(a)(6)? The petitioner pointed to § 1116(a)(6), which exempts the named Indian nations or tribes (Cayuga, Oneida, Onondaga, Poospatuck, Saint Regis Mohawk, Seneca, Shinnecock, Tonawanda, and Tuscarora) where the tribe is the purchaser, user, or consumer. But that statute exempts purchases by the nation or tribe as such, not purchases by individual members. So the exemption here derives from the court decisions, not from § 1116(a)(6).

What this means for you

Delivery location controls sales to on-reservation residents. For an enrolled member living on their reservation, the exemption tracks where the goods or services are delivered. Delivered on the reservation (even for an off-reservation purchase) → not taxable; delivered off the reservation → taxable.

Tribe-as-purchaser and member-as-purchaser are different exemptions. New York's statutory exemption (§ 1116(a)(6)) is for the listed nations/tribes buying as the purchaser. Individual members rely instead on the constitutional/federal principles in Colville and Moe. Don't conflate the two.

Document the reservation delivery. Because the exemption is delivery-based, keep records showing the customer is an on-reservation resident member and that delivery/use occurs on the reservation.

Common questions

Q: Do I charge sales tax on gas sold to a tribal member living on the reservation?
A: No, when the gas is delivered to and used on the reservation. Under Colville and Moe, an on-reservation resident member isn't liable for New York sales tax on property or services delivered on the reservation.

Q: What if the member takes delivery off the reservation?
A: Then it's taxable. Property delivered off the reservation, and services delivered off the reservation, are subject to sales tax.

Q: Isn't there a statute (§ 1116(a)(6)) that exempts the Seneca?
A: That statute exempts the named nations/tribes when the tribe itself is the purchaser — not individual members. Members' exemption comes from the Supreme Court decisions.

Citations and references

Statutes:

• Tax Law § 1116(a)(6) — exemption for the named Indian nations or tribes where the tribe is the purchaser, user, or consumer (not individual members)

Authority cited:

• Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134
• Moe v. Confederated Salish and Kootenai Tribes, 425 U.S. 463

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1982.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a82_29s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-82(29)S
Sales Tax
August 25, 1982

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S811123A

On November 23, 1981 a Petition for Advisory Opinion was received from National Fuel Gas
Distribution Corporation, 10 Lafayette Square, Buffalo, New York 14203.
The issue raised is whether sales tax is due on sales of gas or gas service to individual
members of the Seneca Nation residing on the Cattaraugus and Allegany Reservations. It is
concluded herein that it is not.
In accordance with the United States Supreme Court decisions in Washington v.
Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134 and Moe v. Confederated
Salish and Kootenai Tribes, 425 U.S. 463, an Indian who resides on his or her reservation in New
York is not liable for New York state and local sales taxes on sales of tangible personal property
delivered to the reservation, or sales of services where the services are delivered on the reservation.
An Indian who resides on his or her reservation is also exempt from sales tax on items purchased off
the reservation but delivered to the Indian on the reservation. Indians are subject to sales tax on sales
of tangible personal property delivered to them off the reservation and sales to them of services
where the services are delivered off the reservation. Accordingly, members of the Seneca Nation who
reside on either the Cattaraugus or Allegany Reservations and who purchase gas or gas service from
Petitioner for use on the reservation would not be subject to New York state or local sales tax.
It is to be noted that the foregoing applies to sales made to Indians residing on reservations
of their tribe. Section 1116(a)(6) of the Tax Law, cited by Petitioner, provides for a general
exemption from sales tax with respect to: "The following Indian nations or tribes residing in New
York State: Cayuga, Oneida, Onondaga, Poospatuck, Saint Regis Mohawk, Seneca, Shinnecock,
Tonawanda and Tuscarora, where it is the purchaser, user or consumer." This provision, thus,
exempts purchases made by the named Indian nations or tribes as such, but not purchases made by
individual members of such nations or tribes. Thus, such provision is not applicable in the present
instance. That is to say, the exempt status of the sales described by Petitioner derives not from
section 1116(a)(6) of the Tax Law but from the principles set forth in the judicial decisions cited
above.

DATED: August 9, 1982

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR