§ 471-e. Taxes imposed on qualified reservations. 1. Indian tax
exemption coupon system. (a) Notwithstanding any provision of this
article to the contrary qualified Indians may purchase cigarettes for
such qualified Indians' own use or consumption exempt from cigarette tax
on their nations' or tribes' qualified reservations. However, such
qualified Indians purchasing cigarettes off their reservations or on
another nation's or tribe's reservation, and non-Indians making
cigarette purchases on an Indian reservation shall not be exempt from
paying the cigarette tax when purchasing cigarettes within this state.
Accordingly, all cigarettes sold on an Indian reservation to non-members
of the nation or tribe or to non-Indians shall be taxed, and evidence of
such tax will be by means of an affixed cigarette tax stamp.

(b) In order to ensure an adequate quantity of cigarettes on Indian
reservations which may be purchased by qualified Indians exempt from the
cigarette tax, the recognized governing body of an Indian nation or
tribe may annually elect to participate in the Indian tax exemption
coupon system for that year. If the recognized governing body of an
Indian nation or tribe elects within the time specified by the
department to participate in the Indian tax exemption coupon system for
that year, the department shall provide the Indian nation or tribe with
Indian tax exemption coupons as set forth in this section. If the
recognized governing body of an Indian nation or tribe does not elect to
participate in the Indian tax exemption coupon system for that year or
does not make this election for that year within the time specified by
the department, no Indian tax exemption coupons will be provided to that
Indian nation or tribe for that year. Instead, for that year, the prior
approval system set forth in paragraph (b) of subdivision five of
section four hundred seventy-one of this article shall be used. When the
recognized governing body of an Indian nation or tribe elects to use the
Indian tax exemption coupon system for a year, an Indian nation or tribe
and a reservation cigarette seller shall be able to present such Indian
tax exemption coupons to a wholesale dealer licensed pursuant to this
article in order to purchase stamped cigarettes exempt from the
imposition of the cigarette tax. Qualified Indians may purchase
cigarettes from a reservation cigarette seller exempt from the cigarette
tax even though such cigarettes will have an affixed cigarette tax
stamp.

2. Indian tax exemption coupons. (a) If the recognized governing body
of an Indian nation or tribe timely elects to participate in the Indian
tax exemption coupon system for that year, Indian tax exemption coupons
shall be provided to the recognized governing body of such Indian nation
or tribe to ensure that such Indian nation or tribe can obtain
cigarettes upon which the tax will not be collected that are for the use
or consumption by the nation or tribe or by the members of such nation
or tribe. The Indian tax exemption coupons shall be provided to such
Indian nations or tribes on a quarterly basis for each of the four
quarters beginning with the first day of December, March, June, and
September of that year. It is intended that the Indian nations or tribes
will retain the amount of Indian tax exemption coupons they will need
each quarter to purchase cigarettes for official nation or tribal use,
and will distribute the remaining Indian tax exemption coupons to
reservation cigarette sellers on such nations' or tribes' qualified
reservations. Only Indian nations or tribes or reservation cigarette
sellers on their qualified reservations may redeem such Indian tax
exemption coupons pursuant to this section.

(b) The amount of Indian tax exemption coupons to be given to the
recognized governing body of each Indian nation or tribe shall be based
upon the probable demand of the qualified Indians on such nation's or
tribe's qualified reservation plus the amount needed for official nation
or tribal use.

(i) Probable demand shall be determined by reference to, among other
data, the United States average cigarette consumption per capita, as
compiled for the most recently completed calendar or fiscal year,
multiplied by the number of qualified Indians for each such affected
Indian nation or tribe.

(ii) In making a determination of probable demand, the department
shall take into consideration any evidence submitted by such recognized
governing body relating to such probable demand (e.g., a verifiable
record of previous sales to qualified Indians or other statistical
evidence) and/or relating to the amount needed for such nation's or
tribe's official use.

(c) Each Indian tax exemption coupon shall consist of a retention
portion for a wholesale dealer's recordkeeping purposes and a redemption
portion for a wholesale dealer's submission to the department when
claiming a refund as set forth in subdivision four of this section, and
shall contain the following information:

(i) the identity of the Indian nation or tribe to which it is issued;

(ii) the identity and the quantity of the product for which it is
issued;

(iii) the date of issuance and the date of expiration; and

(iv) any other information as the commissioner may deem appropriate.

3. Tax exempt purchaser. (a) An Indian nation or tribe may purchase
cigarettes for its own official use or consumption from a wholesale
dealer licensed pursuant to this article without payment of the
cigarette tax to the extent that the Indian nation or tribe provides
such wholesale dealer with Indian tax exemption coupons entitling the
Indian nation or tribe to purchase such quantities of cigarettes as
allowed for on each Indian tax exemption coupon without paying the
cigarette tax.

(b) A qualified Indian may purchase cigarettes for his or her own use
or consumption without payment of the cigarette tax, provided that the
qualified Indian makes such purchase on a qualified reservation.

(c) A reservation cigarette seller may purchase cigarettes for resale
without payment of the cigarette tax from a wholesale dealer licensed
pursuant to this article:

(i) provided that such reservation cigarette seller brings such
cigarettes or causes them to be delivered onto a qualified reservation
for resale on such reservation;

(ii) to the extent that such reservation cigarette seller provides
such wholesale dealer with Indian tax exemption coupons entitling the
reservation cigarette seller to purchase such quantities of cigarettes
as allowed for on each Indian tax exemption coupon without paying the
cigarette tax; and

(iii) provided that such cigarettes are affixed with a cigarette tax
stamp.

(d) Wholesale dealers shall sell only tax-stamped cigarettes to Indian
nations and tribes, reservation cigarette sellers and all other
purchasers, but shall not collect the cigarette tax from any purchaser
to the extent the purchaser gives such wholesale dealer Indian tax
exemption coupons entitling the purchaser to purchase such quantities of
cigarettes as allowed for on each such Indian tax exemption coupon
without paying the cigarette tax.

4. Refunds. A wholesale dealer licensed pursuant to this article who
has one or more Indian tax exemption coupons may file a claim for refund
as provided for in section four hundred seventy-six of this article with
respect to any cigarette tax previously paid on cigarettes it sold
without collecting the tax because it accepted an Indian tax exemption
coupon from its purchaser pursuant to this section.

5. Tax agreements with Indian nations or tribes. If an Indian nation
or tribe enters into an agreement with the state and the legislature
approves such agreement regarding the sale and distribution of
cigarettes on the nation's or tribe's qualified reservation, the terms
of such agreement shall take precedence over the provisions of this
article and exempt such nation from such taxes to the extent that such
taxes are specifically referred to in the agreement, and the sale or
distribution, including transportation, of any cigarettes to the
nation's or tribe's qualified reservation shall be in accordance with
the provisions of such agreement.

6. The failure of the department to establish, issue and provide
Indian tax exemption coupons, pursuant to subdivisions one and two of
this section, or to promulgate any rules, regulations or directives
necessary to implement the provisions of this section, shall not relieve
wholesale dealers of the obligation to sell only tax-stamped cigarettes
to Indian nations and tribes, and to reservation cigarette sellers.