Central MacHinery Co. v. Arizona State Tax Commission

448 U.S. 160, 100 S. Ct. 2592, 65 L. Ed. 2d 684, 1980 U.S. LEXIS 144

• Court: Supreme Court of the United States
• Decided: June 27, 1980
• Docket: 78-1604
• Status: Published

Opinions

Mb. Justice Marshall

delivered the opinion of the Court.

This case presents the question whether a State may tax the sale of farm machinery to an Indian tribe when the sale took place on an Indian reservation and was made by a corporation that did not reside on the reservation and was not licensed to trade with Indians.

Appellant is a corporation chartered by and doing business in Arizona. In 1973 it sold 11 farm tractors to Gila River Farms, an enterprise of the Gila River Indian Tribe. The Tribe is federally recognized and is governed by a constitution adopted pursuant to the Indian Reorganization Act, 25 U. S. C. § 476. Gila River Farms conducts farming operations on tribal and individual trust land within the Gila River Reservation, which was established in Arizona by the Act of Feb. 28, 1859, ch. 66, 11 Stat. 388, 401.

Appellant’s salesman solicited the sale of these tractors on the reservation, the contract was made there, and payment for and delivery of the tractors also took place there. Appellant does not have a permanent place of business on the reservation, and it is not licensed under 25 U. S. C. §§ 261-264 and 25 CFR Part 251 (1979) to engage in trade with Indians on reservations. The transaction was approved, however, by the Bureau of Indian Affairs.

The State of Arizona imposes a “transaction privilege tax” on the privilege of doing business in the State. Ariz. Rev. Stat. Ann. §§42-1309, 42-1312, 42-1361 (Supp. 1979).¹ The tax amounts to a percentage of the gross receipts of the taxable entity. The tax is assessed against the seller of goods, not against the purchaser. In this case, appellant added the amount of this tax — $2,916.62 — as a separate item to the price of the tractors, thereby increasing by that amount the total purchase price paid by Gila River Farms. Appellant paid this tax to the State under protest and instituted state administrative proceedings to claim a refund.² The administrative claim was denied, and appellant then filed this action in state court, contending that federal regulation of Indian trading pre-empted application of the state tax to the transaction in question. The Superior Court for Maricopa County held that the State had no jurisdiction to tax the transaction, and accordingly it ordered a refund. The Supreme Court of Arizona reversed. State v. Central Machinery Co., 121 Ariz. 183, 589 P. 2d 426 (1978).

We noted probable jurisdiction, 444 U. S. 822 (1979), and now reverse.

II

In 1790, Congress passed a statute regulating the licensing of Indian traders. Act of July 22, 1790, ch. 33, 1 Stat. 137. Ever since that time, the Federal Government has comprehensively regulated trade with Indians to prevent “fraud and imposition” upon them. H. R. Rep. No. 474, 23d Cong., 1st Sess., 11 (1834) (Committee Report with respect to Indian Trade and Intercourse Act of 1834, ch. 161, 4 Stat. 729). In the current regulatory scheme, the Commissioner of Indian Affairs has “the sole power and authority to appoint traders to the Indian tribes and to make .. . rules and regulations . . . specifying the kind and quantity of goods and the prices at which such goods shall be sold to the Indians.” 25 U. S. C. § 261. All persons desiring to trade with Indians are subject to the Commissioner's authority. 25 U. S. C. § 262. The President is authorized to prohibit the introduction of any article into Indian land. 25 U. S. C. § 263. Penalties are provided for unlicensed trading, introduction of goods, or residence on a reservation for the purpose of trade. 25 U. S. C. § 264. The Commissioner has promulgated detailed regulations to implement these statutes. 25 CFR Part 251 (1979).

In Warren Trading Post Co. v. Arizona Tax Comm’n, 380 U. S. 685 (1965), the Court unanimously held that these “apparently all-inclusive regulations and the statutes authorizing them,” id., at 690, prohibited the State of Arizona from imposing precisely the same tax as is at issue in the present case on the operator of a federally licensed retail trading post located on a reservation. We determined that these regulations and statutes are “in themselves sufficient to show that Congress has taken the business of Indian trading on reservations so fully in hand that no room remains for state laws imposing additional burdens upon traders.” Ibid. We noted that the Tribe had been left “largely free to run the reservation and its affairs without state control, a policy which has automatically relieved Arizona of all burdens for carrying on those same responsibilities.” Ibid. See White Mountain Apache Tribe v. Bracker, ante, at 152.

There are only two distinctions between Warren Trading Post, supra, and the present case: appellant is not a licensed Indian trader, and it does not have a permanent place of business on the reservation.³ The Supreme Court of Arizona concluded that these distinctions indicated that federal law did not bar imposing the transaction privilege tax on appellant. We disagree.

The contract of sale involved in the present case was executed on the Gila River Reservation, and delivery and payment were effected there. Under the Indian trader statutes, 25 U. S. C. §§ 261-264, this transaction is plainly subject to federal regulation. It is irrelevant that appellant is not a licensed Indian trader. Indeed, the transaction falls squarely within the language of 25 U. S. C. § 264, which makes it a criminal offense for “[a]ny person ... to introduce goods, or to trade” without a license “in the Indian country, or on any Indian reservation.” It is the existence of the Indian trader statutes, then, and not their administration, that pre-empts the field of transactions with Indians occurring on reservations.⁴

Nor is it relevant that appellant did not maintain a permanent place of business on the reservation. The Indian trader statutes and their implementing regulations apply no less to a nonresident person who sells goods to Indians on a reservation than they do to a resident trader. See 25 U. S. C. § 262 (“[a]ny person desiring to trade with the Indians on any Indian reservation” subject to regulatory authority of Commissioner of Indian Affairs); 25 U. S. C. § 263 (“President is authorized ... to prohibit the introduction of goods . . . into the country belonging to any Indian tribe”); 25 U. S. C. § 264 (making it an offense for “[a]ny person” to introduce goods or to trade on a reservation without a license). Indeed, an implementing regulation expressly provides for the licensing of “itinerant peddlers,” 25 CFR §251.9 (b) (1979), who are by definition nonresidents, see 25 CFR § 252.3 (i) (1979). One of the fundamental purposes of these statutes and regulations — to protect Indians from becoming victims of fraud in dealings with persons selling goods — would be easily circumvented if a seller could avoid federal regulation simply by failing to adopt a permanent place of business on a reservation or by failing to obtain a federal license.

Since the transaction in the present case is governed by the Indian trader statutes, federal law pre-empts the asserted state tax. As we held in Warren Trading Post, supra, at 691, n. 18, by enacting these statutes Congress “has undertaken to regulate reservation trading in such a comprehensive way that there is no room for the States to legislate on the subject.” It may be that in light of modem conditions the State of Arizona should be allowed to tax transactions such as the one involved in this case. Until Congress repeals or amends the Indian trader statutes, however, we must give them “a sweep as broad as [their] language,” United States v. Price, 383 U. S. 787, 801 (1966), and interpret them in light of the intent of the Congress that enacted them, see Wilson v. Omaha Indian Tribe, 442 U. S. 653, 666 (1979); Oliphant v. Suquamish Indian Tribe, 435 U. S. 191, 206 (1978).⁵

The decision of the Supreme Court of Arizona is

Reversed.

1 At the time of the transaction in question, Ariz. Rev. Stat. Ann. §42-1309 (Supp. 1979) provided:

“A. There is levied and there shall be collected . . . privilege taxes measured by the amount or volume of business transacted by persons on account of their business activities, and in the amounts to be determined by the application of rates against values, gross proceeds of sales, or gross income, as the case may be, in accordance with the schedule as set forth in §§ 42-1310 through 42-1315.”

At the time of the transaction, Ariz. Rev. Stat. Ann. § 42-1312 (Supp. 1979) provided:

“A. The tax imposed by subsection A of § 42-1309 shall be levied and collected at an amount equal to two per cent of the gross proceeds of sales or gross income from the business upon every person engaging or continuing within this state in the business of selling any tangible personal property whatever at retail. . . .”

At the time of the transaction, Ariz. Rev. Stat. Ann. § 42-1361 (Supp. 1973) provided:

“A. There is levied and shall be collected by the department of revenue a tax:

“1. On the privilege of doing business in this state, measured by the amount or volume of business transacted by persons on account of their business activities, and in the amounts to be determined by the application, against values, gross proceeds of sales, or gross income, as the case may be, in accordance with the provisions and schedules as set forth in [§42-1301 et seq.], at rates equal to fifty per cent of the rates imposed in such article.” 1973 Ariz. Sess. Laws, ch. 123, § 117.

2 It is stipulated that appellant will pay over any tax refund to Gila River Farms.

3 It is irrelevant that the sale was made to a tribal enterprise rather than to the Tribe itself. See Mescalero Apache Tribe v. Jones, 411 U. S. 145, 157, n. 13 (1973). Nor may appellee distinguish the present case from Warren Trading Post by contending that the tax at issue in this case falls upon the seller of goods and not the buyer because it is a tax on the privilege of doing business in Arizona rather than a Sales tax. The tax at issue in the present case is precisely the same tax as was involved in Warren Trading Post. The argument made by appellee in the present case was used by the Supreme Court of Arizona in Warren Trading Post to uphold imposition of the tax. Warren Trading Post Co. v. Moore, 95 Ariz. 110, 387 P. 2d 809 (1963). Our reversal of that decision recognized that, regardless of the label placed upon this tax, its imposition as to on-reservation sales to Indians could “disturb and disarrange the statutory plan Congress set up in order to protect Indians against prices deemed unfair or unreasonable by the Indian Commission.” 380 U. S., at 691. See id., at 686, and n. 1.

4 In any event, it should be recognized that the transaction at issue in this case was subjected to comprehensive federal regulation. Although appellant was not licensed to engage in trading with Indians, the Bureau of Indian Affairs had approved both the contract of sale for the tractors in question and the tribal budget, which allocated money for the purchase of this machinery.

5 We decline appellee’s invitation to re-examine our conclusion in Warren Trading Post, 380 U. S., at 691, n. 18, that the Buck Act, 4 U. S. C. §§ 105-110, does not permit States to tax transactions on Indian reservations.