OPINION OF THE COURT
Tax Law § 471-e (as amended by L 2005, ch 61, part K, § 2; ch 63, part A, § 4) embodies the Legislature’s most recent effort to collect taxes on cigarettes sold on Indian reservations. The primary issue before us is whether the amended version of the statute is presently in effect. We conclude that it is not.
Plaintiff Day Wholesale, Inc. (Day) is a wholesale dealer of cigarettes (see Tax Law § 470 [8]) and a licensed cigarette stamping agent (see § 470 [11]), and plaintiff Scott B. Maybee is a member of the Seneca Nation of Indians (Seneca Nation) who owns and operates businesses engaged in the wholesale and retail sale of cigarettes on land owned by the Seneca Nation. Plaintiffs commenced this action seeking a determination that the amended version of Tax Law § 471-e is not in effect and injunctive relief preventing the enforcement of the amended version of the statute against them.
Pursuant to Tax Law § 471 (2), the ultimate liability for the cigarette tax falls on the consumer, but the cigarette tax is advanced and paid by agents such as Day through the use of tax stamps (see Tax Law § 473). The tax applies to “all cigarettes possessed in the state by any person for sale, except that no tax shall be imposed on cigarettes sold under such circumstances that this state is without power to impose such tax” (§ 471 [1]). Those circumstances pertain only to some of the cigarettes sold on Indian reservations. The amended version of Tax Law § 471-e is designed to serve dual goals, i.e., providing for the collection at the wholesale level of cigarette tax from non-Indians or Indians purchasing cigarettes off of their own reservation and
“A reservation cigarette seller [may] present such Indian tax exemption coupons to a wholesale dealer ... 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” (§ 471-e [1] [b]).
Subdivision (2) (c) of section 471-e prescribes both the form of the Indian tax exemption coupons and the information to be included thereon. Subdivision (3) of that section addresses the use of such coupons by an Indian nation, tribe or reservation cigarette seller to make purchases of cigarettes without payment of the cigarette tax. Subdivision (4) permits a wholesale dealer to seek a refund of a cigarette tax paid but not collected because the wholesale dealer accepted an Indian tax exemption coupon from its purchaser.
The Legislature provided that the amended version of Tax Law § 471-e “shall take effect March 1, 2006, provided that any actions, rules and regulations necessary to implement the provisions of [the statute] on its effective date are authorized and directed to be completed on or before such date” (L 2005, ch 63, part A, § 4).
The Department, however, did not take any action or promulgate any rules or regulations necessary to implement the statute on or before March 1, 2006. Rather, on March 16, 2006, the Department issued an advisory opinion setting forth its po
After Philip Morris suspended sales to Day, plaintiffs commenced this action asserting that, until the Department takes the actions necessary to implement the amended version of Tax Law § 471-e, the amended version is not in effect. By plaintiffs’ order to show cause “with temporary restraining order” signed by Supreme Court, the court enjoined defendants from taking any action to enforce the amended version of Tax Law § 471-e “until a determination is made as to whether or not this Law is in effect.” Plaintiffs moved for a preliminary injunction and defendants cross-moved to dismiss the complaint. The court granted the motion, denied the cross motion and preliminarily enjoined defendants from enforcing the amended version of Tax Law § 471-e “until such time as the [Department] has adopted the necessary rules and regulations to implement the Indian Tax Exemption Coupon System and has distributed Indian tax exemption coupons to the recognized governing bodies” of specified Indian nations and tribes. We conclude that the order should be affirmed.
Contrary to defendants’ contention, we conclude that the effective date clause expresses the Legislature’s intent that the
Based on the necessity of the implementation of the coupon system to the functioning of the procedure set forth in the amended version of Tax Law § 471-e, we conclude that the effective date clause at issue in this case makes this case distinguishable from N.Y.A.A.D., Inc. v State of New York (1 NY3d 245 [2003]), which contains a similar clause in the legislation at issue therein, i.e., the Airbag Safety and Anti-theft Act (Act) (L 1996, ch 161). Pursuant to the Act, as of March 1, 1998 (later extended to March 1, 1999), a vehicle airbag could be replaced only with a new airbag or a salvaged airbag “certified according to standards established by a nationally recognized testing, engineering and research body approved by the commissioner [of Motor Vehicles] in consultation with the superintendent of insurance” (Vehicle and Traffic Law § 415-c [2]; see Vehicle and Traffic Law § 398-d [6] [e]). The effective date clause of the Act provides in pertinent part that the Act would “take effect immediately, provided[ ] that . . . the commissioner of motor vehicles shall promulgate such rules and regulations as are necessary to implement the provisions of [the A]ct on or before
Based on the language and intent of the amended version of Tax Law § 471-e in the instant case, however, we are compelled to conclude that the amended version of the statute is effective only in the event that the Department takes certain actions with respect to the distribution and use of Indian tax exemption coupons and promulgates rules and regulations necessary to implement its provisions. The procedure envisioned by the Legislature cannot function in the absence of those actions. Indeed, the statute expressly requires that the Department “shall provide Indian nations and tribes within this state with Indian tax exemption coupons” (§ 471-e [1] [b] [emphasis added]). It further expressly provides that such coupons
“shall be provided to the recognized governing body of each Indian nation or tribe to ensure that each 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” (§ 471-e [2] [a] [emphasis added]).
In addition, a reservation cigarette seller may purchase cigarettes without paying the cigarette tax by providing a wholesale dealer with Indian tax exemption coupons (§ 471-e [3] [c] [ii]; [d]), and a wholesale dealer may file a claim for a cigarette tax refund based upon its acceptance of Indian tax exemption coupons (§ 471-e [4]). In sum, unlike the Act at issue in N.Y.A.A.D., the amended version of Tax Law § 471-e cannot become effective absent certain actions, rules and regulations necessary to implement it, and it is undisputed that there have been no such actions taken or rules and regulations promulgated
Defendants contend that Indian tax exemption coupons are not necessary to effectuate the Legislature’s goals of taxing cigarettes sold on reservations to non-Indians and non-members of the tribe or nation while ensuring tax-exempt sales to qualified Indian purchasers because refunds are available for cigarette taxes paid in connection with such tax-exempt sales. We reject that contention, inasmuch as the relevant provisions of the Tax Law do not support it. Pursuant to section 471-e (4),
“[a] wholesale dealer . . . 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.”
Refunds pursuant to that section are available only to licensed wholesale dealers who are able to establish their claim with “one or more Indian tax exemption coupons” (id.). In support of their contention, defendants rely upon section 476, the more general refund provision in Tax Law article 20. That section provides for refunds in specified circumstances, including “whenever the commissioner of taxation and finance shall have determined that any tax imposed by this article shall have been paid in error” (§ 476). Neither that section nor the implementing regulation (see 20 NYCRR 77.1 [c]) provides a means for documenting or otherwise demonstrating that taxes on cigarettes sold on an Indian reservation were paid in error. The enactment of the Indian tax exemption coupon system in section 471-e was intended, in large measure, to provide such a means for verifying tax-exempt cigarette purchases on Indian reservations. Absent that coupon system, the general refund provision of section 476 is inadequate to serve the intent of the Legislature to collect taxes that are legitimately due while at the same time “leav[ing] ample room for legitimately tax-exempt sales” (Department of Taxation & Finance of NY. v Milhelm Attea & Bros., 512 US 61, 76 [1994]).
Accordingly, we conclude that the order should be affirmed. In light of our decision, we do not address defendants’ remaining contentions.
It is hereby ordered that the order so appealed from unanimously affirmed without costs.