432 P.3d 411
Wash. Ct. App.2018Background
- Everi Payments, a non-Indian for-profit vendor, operated cash‑access kiosks (ATM, card cash advances, check cashing) on Washington tribal casino floors under contracts with tribes; patrons paid fees to Everi and Everi remitted large commissions to tribes.
- Everi conceded its kiosks were not gaming and did not track patrons’ tribal status during the audited period.
- Washington Department of Revenue audited Everi (2009–2012) and assessed B&O tax on Everi’s gross receipts from on‑reservation kiosk transactions; Everi paid taxes and then sought refund in superior court.
- Everi argued the B&O tax was preempted by federal law (IGRA and Indian Trader Statutes), was invalid under the Department’s Rule 192(7), and alternatively that some revenue was mere pass‑through (agency) and not taxable gross income.
- The trial court granted summary judgment for the Department; the Court of Appeals affirmed, holding no federal preemption or rule inconsistency and that Everi was not the tribes’ agent for pass‑through income purposes.
Issues
| Issue | Plaintiff's Argument (Everi) | Defendant's Argument (Dept. of Revenue) | Held |
|---|---|---|---|
| Whether IGRA preempts the State B&O tax on Everi’s kiosk fees | IGRA preempts taxation because cash‑access services are closely related to tribal class III gaming or otherwise compactable and therefore sheltered from state tax | IGRA does not reach non‑gaming services provided by non‑Indians to non‑Indians and does not interfere with tribal governance here | No preemption: kiosks are non‑gaming services to patrons; tax on non‑Indian vendor does not impair tribal governance or fall within IGRA’s preemptive scope |
| Whether the Indian Trader Statutes preempt the tax | Trader statutes bar state burdens on entities trading with tribes, so Department cannot tax Everi’s on‑reservation activity | Statutes protect transactions with Indians; they do not apply where vendor provided services to non‑Indian patrons and Everi did not show sales to Indians | No preemption: statutes do not apply because taxed transactions were between non‑Indians on reservation and Everi did not prove it traded with Indians |
| Whether the B&O tax is implicitly preempted under the Bracker balancing test | Federal and tribal interests outweigh state interest; tax interferes with tribal economic development/sovereignty | State’s revenue/ regulatory interests are strong because legal incidence falls on non‑Indian vendor and services benefit from state services | No implicit preemption: balancing favors the State (federal interest low; tribal interests minimal/moderate; state interest strong) |
| Whether Department Rule 192(7) bars assessment of B&O tax | Rule 192(7)(a),(b),(c) preclude taxing Everi because services relate to gaming or were performed for tribes/tribal members | Rule 192(7) applies only where services are gaming, or are provided by/paid to tribes/tribal members; Everi’s taxed services were provided by Everi to patrons | Rule 192(7) inapplicable: Everi was not engaged in gaming; services were not performed for tribes/tribal members; rule does not preempt the tax |
| Whether Everi can exclude amounts remitted to tribes as pass‑through/agency income | Large portions of receipts were commissions payable to tribes; if Everi acted as tribal agent those sums are non‑taxable pass‑throughs | Patrons contracted and paid Everi; patrons had no privity with tribes and did not know of commissions; no true agency existed | No agency as a matter of law; amounts retained by Everi constitute its gross income for B&O tax purposes |
Key Cases Cited
- White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (U.S. 1980) (establishes interest‑balancing test for state regulation on reservations)
- Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134 (U.S. 1980) (distinguishes taxes on non‑Indians vs. tribes and discusses burden of recordkeeping to segregate transactions)
- New Mexico v. Mescalero Apache Tribe, 462 U.S. 324 (U.S. 1983) (state lacks power to tax tribes or reservation lands absent authorization)
- Oklahoma Tax Comm’n v. Chickasaw Nation, 515 U.S. 450 (U.S. 1995) (focus on legal incidence of tax to determine categorical bar)
- Ramah Navajo School Bd., Inc. v. Bureau of Revenue of N.M., 458 U.S. 832 (U.S. 1982) (federal preemption where tax falls on tribe and concerns wholly preemptive federal interests)
- Mashantucket Pequot Tribe v. Town of Ledyard, 722 F.3d 457 (2d Cir. 2013) (IGRA does not preempt generally applicable taxes on non‑Indian parties where effects on tribal gaming are de minimis)
- Barona Band of Mission Indians v. Yee, 528 F.3d 1184 (9th Cir. 2008) (refuses to extend IGRA preemption to broadly cover non‑tribal commercial activities related to gaming)
- Wagnon v. Prairie Band Potawatomi Nation, 546 U.S. 95 (U.S. 2005) (applies Bracker framework to state taxes on reservation activities)