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WA cancels cigarette deal with Yakama tribe

Washington state officially terminated a cigarette tax agreement with the Yakama Indian Nation on Monday, citing complaints that Cigarettes had been sold to non-Indians without proper tax stamps. The terminated tax compact dates to 2004, and has been the subject of a dispute between the state and tribe for months. The state Revenue Department began termination actions last year, and said it recently prevailed in mediation. In the meantime, a new tax agreement meant to replace the terminated one is tied up in tribal court. That lawsuit, from an owner of a tobacco company in White Swan, alleges that the newer tax compact should have been sent to tribal members for final approval. "Since we have no compact in existence right now ... we're in limbo," Tribal Council Chairman Ralph Sampson Jr. said. Under federal law, Cigarettes sold to Indians on tribal land are not subject to the tax, but Cigarettes sold to non-Indians are supposed to be taxed fully. The state now would consider any Cigarettes sold on the Yakama Reservation to non-Indians illegal without proper state tax stamps, but officials don't have any immediate plans for enforcement, Deputy Revenue Department Director Leslie Cushman said. In a letter to Sampson, the department said it will advise the tribe in advance what state officials decide to do about enforcing state tax laws in absence of a compact.