PIERRE, S.D. -- Tribal governments in South Dakota are getting about $5 million in refunds for state motor fuel taxes that were illegally collected on American Indian reservations, a state official said, according to the Associated Press.
In the wake of a 2003 ruling by the South Dakota Supreme Court, four tribes also have enacted their own fuel taxes with provisions identical to the state tax, state Revenue Secretary Gary Viken said.
The high court ruled that because Congress has never authorized states to collect their fuel [image-nocss] taxes from tribal members in Indian Country, the state could not impose its fuel tax on tribal members who buy fuel on their own reservations.
The Supreme Court later decided that refunds are subject to a state law that specifically requires people to claim fuel-tax refunds within 15 months of the time the gasoline or diesel fuel is purchased.
The court ruling said refunds should go to tribal members who were improperly charged the state tax on their own reservations, but most people were unable to claim refunds because they had not kept receipts or other records showing fuel purchases, Viken said.
Governor Mike Rounds and tribal leaders then agreed that the amount of illegally collected state fuel tax in each area would be allocated to the tribal government on that reservation, said Viken. Individual tribal members who sought refunds have received $72,933, he said.
Eight tribes are receiving a total of nearly $4.9 million in refunds, with the money to be used by tribal governments for road and bridge work or the purchase of road equipment, the state revenue secretary said. The Yankton Sioux Tribe did not get any refund because no gas station is located on tribal land, he said.
And in late 2003, four tribes passed their own motor fuel taxes with provisions identical to the state tax of 22 cents a gallon. The state has agreements with the Cheyenne River, Oglala, Rosebud and Standing Rock Sioux Tribes so that the same tax is imposed on all customers, and the tribe gets a share of the revenue based on what percentage of a reservation's population consists of tribal members.
So far, the tribes have received a total of nearly $3.7 million under the tax-sharing agreements, Viken said. That works out to approximately $2.8 million a year that the state highway fund will lose because the money is going to the four tribes. Total state fuel tax collections exceed $120 million a year, and the money is dedicated to road and bridge projects.
On the other four reservations, tribal members who buy gasoline there are not charged any tax if they have documents showing they are tribal members, Viken said. That applies on the Lower Brule, Crow Creek, Flandreau and Sisseton-Wahpeton reservations.
Meanwhile, the state continues to encourage those other four tribes to consider imposing their own motor fuel tax, Viken said. That would make the tax consistent everywhere and would give those tribes extra money for road and bridge work, he said.