By JAMES FINK
jfink@bizjournals.com | 716-541-1611

One day after a federal appeals court gave New York the green light to collect taxes sold by Indians, the Seneca Nation of Indians secured a temporary restraining order that prevents the state from beginning the controversial collections process.

The order, issued late Tuesday afternoon by state Supreme Court Judge Donna Siwek, is the latest legal maneuver between the Senecas and other Indian nations opposed to New York's effort to collect taxes on the sale of tobacco products to non-Indians.

The restraining order will remain in effect for three weeks until the case can be heard in a State Administrative Procedure Act, said Seneca Nation President Robert Odawi Porter, who is a lawyer and an expert on Indian rights and treaties.

"We have been saying all along that the state has it wrong on this issue and today the state Supreme Court sent an important message by issuing this temporary restraining order," Porter said.

Last year, cash-poor New York imposed a $4.35 excise tax on all cigarettes sold in the state, regardless of the retailer. The Senecas and other Indian nations said the tax violates centuries-old treaties.

New York wants to collect more than $100 million from the cigarette excise tax revenues. Tobacco sales from Indian retailers could generate $500,000 per day in taxes, said Attorney General Eric Schneiderman in a prepared release.

Gov. Andrew Cuomo, in a separate release, said he expects the state to begin efforts to collect those taxes from all Indian retailers.

"I have always said that taxes on cigarettes sold to non-tribal members must be collected because this revenue is rightly owed to the state," Cuomo said.

Porter disputes Cuomo's intentions to collect the taxes.

"For more than 20 years, New York state has attempted to devise a way to collect what they've said would be hundreds of millions of dollars in taxes from tobacco sales sold on Indian reservations," Porter said.

"The fact of the matter is that the state will not collect a dime from the Senecas, nor I suspect from any other Indian Nation. This prolonged effort will amount to an unnecessary struggle that will provide no return or benefit to the state coffers, but result in the loss of jobs and loss of income to hundreds of non-native and native families across the state. And as I said yesterday the Seneca Nation will not be tax collectors for the state."

Earlier Tuesday, the Seneca Nation Council and executives met with Seneca businesses, tobacco retailers and manufacturers to discuss how the Nation's private-sector economy will move forward. The meeting was held in the Cattaraugus Council Chambers in response to Monday's decision by the 2nd Circuit Court of Appeals that ruled it would allow the New York state tax department to proceed with the collection of a cigarette tax on products sold on Indian reservations.

"The Appeals Court decision is another affront to the sovereign rights of the Seneca Nation," said Richard Nephew, Seneca Nation chairman. "We have a basic right to survival, and that includes the right to an economy and the right to have our treaties recognized and enforced."