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appealleasetax law

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Mescalero Apache Tribe v. Jones, 411 U.S. 145, 93 S.Ct. 1267, 36 L.Ed.2d 114

Facts

The Mescalero Apache Tribe operates a ski resort on land leased from the federal government, adjacent to their reservation. The state of New Mexico assessed a use tax on materials used to construct ski lifts and claimed the right to impose a gross receipts tax on the resort's income. The Tribe protested the assessments and sought a refund of sales taxes paid, arguing that the taxes violated their rights under the Indian Reorganization Act.

The Tribe has paid under protest $26,086.47 in taxes to the State, pursuant to the sales tax law, N.M.Stat.Ann. s 72—16—1 et seq. (1953), based on the gross receipts of the ski resort from the sale of services and tangible property.

Issue

Whether the state of New Mexico can impose a gross receipts tax and a use tax on the Mescalero Apache Tribe's ski resort operated on off-reservation land leased from the federal government.

Whether paramount federal law permits these taxes to be levied is the issue presented by this case.

Rule

The state may impose a nondiscriminatory gross receipts tax on tribal enterprises operating on off-reservation land, but the Indian Reorganization Act exempts lands and rights acquired under the Act from state and local taxation.

The State of New Mexico may impose a nondiscriminatory gross receipts tax on a ski resort operated by petitioner Tribe on off-reservation land that the Tribe leased from the Federal Government under s 5 of the Indian Reorganization Act, 25 U.S.C. s 465.

Analysis

The court determined that the gross receipts tax could be applied to the ski resort since it was operated on off-reservation land leased from the federal government. However, the use tax on personal property purchased out of state and installed at the resort was found to be barred by the Indian Reorganization Act, as the property became intimately connected with the exempt land.

We think the same immunity extends to the compensating use tax on the property.

Conclusion

The Supreme Court affirmed in part and reversed in part, allowing the gross receipts tax but barring the use tax on the personal property installed at the resort.

The judgment of the Court of Appeals is affirmed in part and reversed in part.

Who won?

The state of New Mexico prevailed in part, as the court upheld the imposition of the gross receipts tax on the ski resort's income.

The court held, essentially, that the State had authority to apply its non-discriminatory taxes to the Tribe's enterprise and property involved in the dispute.

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