NY court nixes Indian cigarette sales tax cases

New York's top court has rejected prosecutors' cases against two Indian-owned convenience stores in central New York for selling tax-free cigarettes.

The Court of Appeals, divided 4-3, says the stores acquired by the Cayuga Indian Nation in 2003 qualify as reservation lands under state tax law and can sell the cigarettes to tribe members free of tax.

While sales to non-Indians should be taxed at $2.75 per pack, the court majority says Tuesday that proposed state regulations aren't yet in effect and defending against county enforcement efforts is too burdensome on the Indians.

In a dissent, three judges say it's undisputed that most of the cigarettes should be taxed, and the lack of regulations doesn't change the Cayugas' obligation to collect that money.