Okla. Stat. tit. 68, § 68-346

and tobacco products tax compacts - Audits.

A. The Legislature finds that:

1. Federal law recognizes the right of Indian tribes or nations

to engage in sales of cigarettes and tobacco products to their

members free of state taxation;

2. The doctrine of tribal sovereign immunity prohibits the

State of Oklahoma from bringing a lawsuit against an Indian tribe or

nation to compel the tribe or nation to collect state taxes on sales

made in Indian country to either members or nonmembers of the tribe

or nation without a waiver of immunity by the tribe or nation or

congressional abrogation of the doctrine; and

3. The Supreme Court of the United States, in "Oklahoma Tax

Commission v. Citizen Band Pottawatomie Indian Tribe of Oklahoma",

suggested that a state may provide other methods of collection of

state taxes on sales of cigarettes and tobacco products made by

Indian tribes or nations to persons who are not members of the tribe

or nation, such as entering into mutually satisfactory agreements

with Indian tribes or nations.

B. It is the intent of the Legislature to establish a system of

state taxation of sales of cigarettes and tobacco products made by

federally recognized Indian tribes or nations or their licensees,

other than such tribes or nations which have entered into a compact

with the State of Oklahoma pursuant to the provisions of subsection

C of this section, under which the rate of payments in lieu of state

taxes is less than the rate of state taxes on other sales of

cigarettes and tobacco products in order to allow such tribes or

nations or their licensees to make sales of cigarettes and tobacco

products to tribal members free of state taxation.

C. The Governor is authorized by this enactment to enter into

cigarette and tobacco products tax compacts on behalf of the State

of Oklahoma with the federally recognized Indian tribes or nations

of this state. The compacts shall set forth the terms of agreement

between the sovereign parties regulating sale of cigarettes and

tobacco products by the tribes or nations or their licensees in

Indian country. All sales in Indian country by those compacting

tribes or nations and their licensees shall be exempt from the taxes

levied pursuant to the provisions of Section 301 et seq., Section

401 et seq. and Section 1350 et seq. of Title 68 of the Oklahoma

Statutes and Sections 349 and 425 of this title, subject to the

following terms and conditions:

1. A payment in lieu of state sales and excise taxes, as

provided for in said compact, shall be paid to the State of Oklahoma

by the tribes or nations, their licensees or their wholesalers upon

purchase of all cigarettes and tobacco products intended for resale

in Indian country by the tribes or nations or their licensees;

Oklahoma Statutes - Title 68. Revenue and Taxation Page 195

2. All cigarettes and tobacco products sold or held for sale to

the public, without distinction between member and nonmember sales,

shall bear a payment in lieu of tax stamp evidencing that payment in

lieu of state taxes has been paid to the state. State and tribal

officials may provide for use of a single joint stamp evidencing

payment of both the payment in lieu of tax as specified in a compact

pursuant to the provisions of this section and any tax levied by a

tribe or nation;

3. In the event that a compacting tribe or nation fails to

comply with all terms and conditions of the compact including, but

not limited to, requirements to include all state taxes required by

the terms of the compact to be collected by the tribe or nation in

the price of its cigarettes or tobacco products, the tribe or nation

shall not be eligible to receive any payment due from the state

pursuant to the terms of the compact for the tax-reporting period

during which the noncompliance occurred;

4. Records of all sales of cigarettes and tobacco products to

the tribes or nations and their licensees shall be kept by all
ted by the tribe or nation in

the price of its cigarettes or tobacco products, the tribe or nation

shall not be eligible to receive any payment due from the state

pursuant to the terms of the compact for the tax-reporting period

during which the noncompliance occurred;

4. Records of all sales of cigarettes and tobacco products to

the tribes or nations and their licensees shall be kept by all

wholesalers doing business in the State of Oklahoma and shall be

made available for inspection by state officials on a timely basis.

Copies of all invoices of wholesale sales of cigarettes or tobacco

products to tribally owned or licensed retail stores shall be

forwarded by the wholesaler to the Oklahoma Tax Commission; and

5. For purposes of a compact pursuant to the provisions of this

section, the term "tribal licensee" shall only extend to:

a. members of the tribe or nation, and

b. business entities in which the tribe or nation or

tribal members have a majority ownership interest.

D. In addition to any other authority granted by law, the Tax

Commission shall regularly conduct an audit of wholesalers,

distributors, jobbers and warehousemen selling cigarettes or tobacco

products to a federally recognized Indian tribe or nation or a

tribally owned or licensed store to determine if the correct amount

of tax payable under this act has been collected and to determine

compliance with any and all compacts.