Q&A: Tulalip Tribes sue to reclaim sales taxes

What’s the lawsuit all about?

The Tulalip Tribes want to collect their own taxes on sovereign land, more particularly at Quil Ceda Village, their retail hub along I-5 near Marysville. They filed a federal lawsuit June 12 to stop the state of Washington and Snohomish County from collecting sales tax there. In addition to sales tax, the tribes want to stop the county from collecting personal property tax (mainly levied on business equipment) and the state from collecting business-and-occupation tax.

So what?

If the tribes prevail, the state and county could lose more than $40 million per year. By some estimates, Snohomish County receives roughly $9 million of that. That’s nearly 4 percent of the county’s $226 million operating budget for 2015. Losing those dollars could mean layoffs at the county — possibly 90 employees, some county officials say.

Is that really going to happen?

Unknown. It depends on what the courts decide. Some county and tribal leaders say they’re optimistic about reaching a revenue-sharing agreement to avoid drastic impact to county services, particularly those involving public safety, the county’s largest area of expense.

No sales tax … couldn’t that turn Quil Ceda Village into a tax-free zone?

The tribes insist that’s not their goal. They want to collect their own taxes, and could do so today, except that they don’t want to double-tax their tenants and shoppers. Their lawsuit states: “Tulalip and the Village have not offered, do not currently offer, and will not offer any tax advantage to businesses, suppliers, or patrons at Quil Ceda Village in relation to other municipalities in Snohomish County with respect to the taxes challenged in this action.”

Didn’t something similar come up recently?

In 2013, a 9th U.S. Circuit Court of Appeals decision over the Great Wolf Lodge on the Chehalis Reservation in Thurston County had statewide effect. It forced Snohomish County last year to stop collecting property taxes on buildings owned by non-Indians on Tulalip trust lands.

The Tulalip tribes subsequently imposed their own property taxes on those properties at the same rate. Indian-owned businesses on the reservation, such as the Tulalip Resort Casino, were not affected by the decision because they were already exempt from state and county property taxes.

The ruling affected about 1,200 non-Indian homeowners on the reservation, as well as businesses paying property taxes at Quil Ceda Village. As a result, the county refunded about $5 million to property owners. The Marysville School District, fire departments and other taxing districts recouped the money from the remaining taxpayers.

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