King Mountain Tobacco, its owner Delbert Wheeler Sr. and the Yakama Nation sued the United States in 2011, claiming an 1855 treaty bars collection of excise taxes on tobacco products produced on the reservation.
Wheeler died in 2016, but the Yakama continued to dispute the taxes on tobacco products grown on tribal land.
King Mountain manufactures all of its tobacco products, and grows some of its own tobacco, on Yakama Nation trust lands in Washington state.
The long-running case has shuttled between the Western District of Washington and the Ninth Circuit on various procedural and substantive grounds.
Monday’s ruling by the Ninth Circuit stems from the trial court’s accidental failure to enter the amount of taxes in the final judgment and over a challenge of the basis for the assessments.
The three-judge appellate panel found that finished tobacco products – unlike unprocessed tobacco grown on the reservation – are not exempt from taxation under the General Allotment Act, affirming U.S. District Judge Rosanna Peterson’s decision.
The Treaty with the Yakamas of 1855 also does not exempt King Mountain from taxation, the panel found.
“We affirm our longstanding rule that Indians – like all citizens – are subject to federal taxation unless expressly exempted by a treaty or congressional statute,” U.S. Circuit Judge M. Margaret McKeown wrote in the unanimous opinion.
“In this case, neither the General Allotment Act nor the Treaty with the Yakamas expressly exempts King Mountain from the federal excise tax on manufactured tobacco products. King Mountain is therefore liable for payment of the tax and associated penalties and interest,” McKeown wrote.
The omission of the amount of taxes owed was rectified properly with an amended judgment to include the amount. The amended version should be considered the final judgment, the panel said.
Rounding out the panel were U.S. Circuit Judge Fernando Fernandez and Third Circuit Judge Julio Fuentes, sitting by designation.