Sales Tax 101

Sales Tax and Native American Reservations 101

by Mark Faggiano

Did you know that the U.S. government holds approximately 56.2 million acres in trust for Native American reservations? This equates to 326 Native American land areas across nearly all the states. The federal government’s relationship with federally recognized tribes is one of a government to a government, which means that tribes have control over activities and can regulate on their lands. This is true when it comes to charging sales tax and other tax laws.

Many tribes set up their own rules regarding sales tax on reservations. For instance, the Navajo tribe recently passed a junk food sales tax of 2% on chips, candy, soda, etc.  However, the general rule of thumb for sellers both on and off tribal lands is as follows:

Tribal Sales Tax Rules

So, if you are selling on a Native American reservation to a Native American, the tribe can collect sales tax on that product. The state cannot collect sales tax if you sell to a tribal member on a reservation, however, the state can collect sales tax if you sell to a tribal member off the reservation. If you are selling on a reservation to a non-Native American, the state may also require that sales tax is collected.

As always, you should check with tribal government and your state’s department of revenue if you are dealing with tribal sales tax either as someone living and selling on a reservation or sell into a reservation. You can see an example of how California treats Sales to American Indians and Sales in Indian Country.

Do you have questions or comments about sales tax on Native American reservations? Tell us in the comments.

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