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California Tribe Sues to Stop Tax Collection

CALIFORNIA – As reported by the San Diego Union-Tribune: "In what appears to be the first case of its kind statewide, the Rincon Indian band is suing San Diego County Treasurer-Tax Collector Dan McAllister in federal court, seeking to halt the county's efforts to collect $1.6 million in room taxes on the hotel at Harrah's Rincon Casino & Resort.

"The case involves complex legal issues of tribal sovereignty and taxation of businesses operating on Indian land.

"Although Indian tribes are governments, and one government can't tax another, McAllister contends his office has been attempting for nearly two years to collect a 9 percent "transient occupancy tax" on a private corporation, not a tribe. Rincon's hotel is operated by a Harrah's subsidiary, HCAL Corp.

"…Rincon, with HCAL as co-plaintiff, contends that the tribe, not Harrah's, owns the casino and 200-room hotel near Valley Center. It describes the Nevada corporation as a partner hired by the tribe 'to provide day-to-day operational and managerial services.'

"'The tax is clearly a tax on the tribe,' the suit contends. It says HCAL does not lease or own any portion of the hotel-casino and does not control its business policies or decisions.

"…McAllister disputes whether Rincon's hotel belongs to the tribe or to Harrah's. He said his office has not attempted to collect taxes from hotels on the Barona and Pala reservations, which are clearly tribally owned…"

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