"Treaty fishery" means the fishing and shellfish rights preserved in a tribe's treaty, a federal executive order, or an act of Congress. It includes activities such as harvesting, processing, transporting, or selling, as well as activities such as management and enforcement.
The gross income directly derived from treaty fishing rights-related activity is not subject to state tax.
This exclusion from tax is limited to those businesses wholly owned and operated by Indians or Indian tribes who have treaty fishing rights. If a business wholly owned and operated by Indians or Indian tribes deals with both treaty and nontreaty fish, this exclusion from tax is limited to the business attributable to the treaty fish.
"Wholly owned and operated" includes entities that meet the qualifications under 26 U.S.C. 7873, which requires that:
- Such entity is engaged in a fishing rights-related activity of such tribe;
- All of the equity interests in the entity are owned by qualified Indian tribes, members of such tribes, or their spouses;
- Except as provided in the code of federal regulations, in the case of an entity which engages to any extent in any substantial processing or transporting of fish, ninety percent or more of the annual gross receipts of the entity is derived from fishing rights-related activities of one or more qualified Indian tribes each of which owns at least ten percent of the equity interests in the entity; and
- Substantially all of the management functions of the entity are performed by members of qualified Indian tribes.
Sales and use tax
The retail sales tax and use tax do not apply to the services or tangible personal property for use in the treaty fishery, regardless of where delivery of the item or performance of the service occurs. Gear, such as boats, motors, nets, and clothing, purchased or used by Indians in the treaty fishery is not subject to sales or use tax. Likewise, retail services in respect to property used in the treaty fishery, such as boat or engine repair, are not subject to sales tax.
Sales to nonmembers
Treaty fish and shellfish sold by members of the tribe are not subject to sales tax or use tax, regardless of where the sale takes place due to the sales and use tax exemption for food products.
A tribe and the Department may enter into an agreement covering the treaty fishery and taxable activities of enrolled members, in which case the terms of the agreement govern.