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NOTICE: This opinion is subject to formal revision before publication in the
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SUPREME COURT OF THE UNITED STATES
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No. 93-377
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DEPARTMENT OF TAXATION AND FINANCE OF
NEW YORK, et al., PETITIONERS v.
MILHELM ATTEA & BROS.,
INC., etc., et al.
on writ of certiorari to the court of appeals of
new york
[June 13, 1994]

  Justice Stevens delivered the opinion of the Court.
  Cigarette consumers in New York are subject to a
state tax of 56 cents per pack.  Enrolled tribal members
who purchase cigarettes on Indian reservations are
exempt from this tax, but non-Indians making purchases
on reservations must pay it.  To prevent non-Indians
from escaping the tax, New York has enacted a regula-
tory scheme that imposes recordkeeping requirements
and quantity limitations on cigarette wholesalers who
sell untaxed cigarettes to reservation Indians.  The
question presented is whether New York's program is
pre-empted by federal statutes governing trade with
Indians.

                      I
  Article 20 of the New York Tax Law imposes a tax on
all cigarettes possessed in the State except those that
New York is -without power- to tax. N. Y. Tax Law
471(1) (McKinney 1987 and Supp. 1994).  The State
collects the cigarette tax through licensed agents who
purchase tax stamps and affix them to cigarette packs
in advance of the first sale within the State.  The full
amount of the tax is part of the price of stamped
cigarettes at all subsequent steps in the distribution
stream.  Accordingly, the -ultimate incidence of and
liability for the tax [is] upon the consumer.- 471(2).
Any person who -willfully attempts in any manner to
evade or defeat- the cigarette tax commits a misde-
meanor.  N. Y. Tax Law 1814(a) (McKinney 1987).
  Because New York lacks authority to tax cigarettes
sold to tribal members for their own consumption, see
Moe v. Confederated Salish and Kootenai Tribes of Flat-
head Reservation, 425 U. S. 463, 475-481 (1976),
cigarettes to be consumed on the reservation by enrolled
tribal members are tax exempt and need not be
stamped.  On-reservation cigarette sales to persons other
than reservation Indians, however, are legitimately
subject to state taxation.  See Washington v. Confeder-
ated Tribes of Colville Reservation, 447 U. S. 134,
160-161 (1980).  In 1988, New York's Department of
Taxation and Finance determined that a large volume
of unstamped cigarettes was being purchased by non-
Indians from reservation retailers.  According to an
affidavit submitted by an official in the Department's
Audit Division, the volume of tax-exempt cigarettes sold
on New York reservations in 1987-1988 would, if
consumed exclusively by tax-immune Indians, correspond
to a consumption rate 20 times higher than that of the
average New York resident; in 1988-1989, putative
reservation consumption was 32 times the statewide
average.  See Record 244-246 (Affidavit of Jamie Wood-
ward).  Because unlawful purchases of unstamped
cigarettes deprived New York of substantial tax reve-
nues-now estimated at more than $65 million per
year-the Department adopted the regulations at issue
in this case.
  The regulations recognize the right of -exempt Indian
nations or tribes, qualified Indian consumers and
registered dealers- to -purchase, on qualified reserva-
tions, cigarettes upon which the seller has not prepaid
and precollected the cigarette tax imposed pursuant to
article 20 of the Tax Law.-  20 N. Y. C. R. R. 336.6(a)
(1992).  To ensure that non-exempt purchasers do not
likewise escape taxation, the regulations limit the
quantity of untaxed cigarettes that wholesalers may sell
to tribes and tribal retailers.  The limitations may be
established and enforced in alternative ways.  A tribe
may enter into an agreement with the Department -to
regulate, license, or control the sale and distribution
within its qualified reservation of an agreed upon
amount of [untaxed] cigarettes,- in which case wholesal-
ers must obtain the tribe's approval for each delivery of
untaxed cigarettes to a reservation retailer. 336.7(c)(1).
In the absence of such an agreement-and apparently
there have been none to date-the Department itself
limits the permitted quantity of untaxed cigarettes based
on the -probable demand- of tax-exempt Indian consum-
ers. 336.7(d)(1).
  The Department calculates -probable demand- in
either of two ways.  If a tribe -regulates, licenses or
controls the sale and distribution of cigarettes within its
reservation,- the Department will rely upon evidence
submitted by that tribe concerning local demand for
cigarettes. 336.7(d)(2)(i).  Otherwise, the Department
fixes the untaxed cigarette limit for a tribe by multiply-
ing the -New York average [cigarette] consumption per
capita- by the number of enrolled members of the
affected tribe. 336.7(d)(1), (d)(2)(ii).  Each sale of
untaxed cigarettes by a wholesaler to a tribe or reserva-
tion retailer must be approved by the Department;
approval is -based upon evidence of valid purchase
orders received by the agent [i.e., wholesaler] of quanti-
ties of cigarettes reasonably related to the probable
demand of qualified Indian consumers in the trade
territory- of the tribe. Ibid.  Retailers are sent -Tax
Exemption Coupons- entitling them to their monthly
allotment of tax-exempt cigarettes.  The retailer gives
copies of its coupons to the wholesaler upon delivery,
and the wholesaler forwards one to the Department.
See Brief for Petitioners 12-13; App. 44-45.  The De-
partment may withhold approval of deliveries to tribes
or retailers who -are or have been- violating the regula-
tions, 336.7(d)(6), and may cancel the exemption
certificates of noncomplying tribes or retailers.  See
336.6(d)(3), (e)(5).
  Wholesalers who wish to sell tax-free cigarettes to
Indian tribes or reservation retailers must ensure that
the buyer intends to distribute the cigarettes to tax-
exempt consumers, takes delivery on the reservation,
and holds a valid state tax exemption certificate.
Reservation retailers may sell unstamped cigarettes only
to -qualified Indian consumers,- who at the time of first
purchase must provide the retailer with a -certificate of
individual Indian exemption- and provide written
evidence of their identity for subsequent purchases.
336.6(e)(2), (g)(1).
  Wholesale distributors of tax-exempt cigarettes must
hold state licenses authorizing them to purchase and
affix New York cigarette tax stamps, and must collect
taxes on nonexempt sales.  336.7(b)(2), 336.7(e).  They
must also keep records reflecting the identity of the
buyer in each tax-exempt sale and make monthly reports
to the Department on all such sales.  336.6(g)(3-4).
New York's regulatory scheme, unsurprisingly, imposes
no restrictions on the sale of stamped cigarettes-i.e.,
those on which taxes have been precollected by whole-
salers.

                     II
 Respondents are wholesalers licensed by the Bureau of
Indian Affairs of the United States Department of the
Interior (BIA) to sell cigarettes to reservation Indians.
Before New York's cigarette tax enforcement scheme
went into effect, they filed separate suits in the Su-
preme Court in Albany County alleging that the regula-
tions were preempted by the federal Indian Trader
Statutes, 25 U. S. C. 261 et seq.  The trial court
agreed and issued an injunction.  After the Appellate
Division affirmed, Milhelm Attea & Bros., Inc. v. Dept.
of Taxation and Finance of New York, 164 App. Div. 2d
300, 564 N. Y. S. 2d 491 (1990), and the New York
Court of Appeals denied review, we granted certiorari,
vacated the judgment of the Appellate Division, and
remanded for further consideration in the light of our
decision in Oklahoma Tax Comm'n v. Citizen Band of
Potawatomi Tribe of Okla., 498 U. S. 505 (1991).  502
U. S. ___  (1992).  On remand, the Appellate Division
upheld the regulations, 181 App. Div. 2d 210, 585
N. Y. S. (1992), but the Court of Appeals reversed, 81
N. Y. 2d 417, 615 N. E. 2d 994 (1993).
 The Court of Appeals distinguished our decisions
holding that a State may require Indian retailers to
collect a tax imposed on non-Indian purchasers of ciga-
rettes, see Moe v. Confederated Salish and Kootenai
Tribes of Flathead Reservation, 425 U. S. 463 (1976),
Washington v. Confederated Tribes of Colville Reserva-
tion, 447 U. S. 134 (1980), on the ground that those
cases involved the regulation of sales to non-Indian
consumers.  81 N. Y. 2d, at 425, 615 N. E. 2d, at 997.
In the Court of Appeals' view, this case was signifi-
cantly different because New York's regulations apply to
sales by non-Indian wholesalers to reservation Indians.
Ibid.  The Court concluded that the Indian Trader
Statutes, as construed in Warren Trading Post Co. v.
Arizona Tax Comm'n, 380 U. S. 685 (1965), deprived the
States of all power to impose regulatory burdens on
licensed Indian traders.  81 N. Y. 2d, at 426-427, 615
N. E. 2d, at 997-998.  Even if States could impose
minimal burdens on Indian Traders, the Court of Ap-
peals alternatively held, New York's regulations are
nevertheless invalid because they -impose significant
burdens on the wholesaler.-  Id., at 427, 615 N. E. 2d,
at 998.  In particular, the regulations -dictate to Indian
traders the number of unstamped cigarettes they can
sell to reservation Indians and direct with whom they
may trade.-  Ibid.  Moreover, New York's scheme -re-
quires wholesale distributors to prepay taxes on all
cigarettes delivered on the reservations in excess of the
predetermined maximum amount and, with respect to
those cigarettes, imposes a sales tax on Indian retail-
ers.-  Ibid.
 We granted certiorari, 510 U. S. ___ (1993), and now
reverse.

                     III
 Respondents' challenge to New York's regulatory
scheme is essentially a facial one.  In reviewing a chal-
lenge of this kind, we do not rest our decision on conse-
quences that, while possible, are by no means predict-
able.  For example, respondents do not contest the
factual accuracy of the Department's initial calculations
of -probable demand- for tax-exempt cigarettes at partic-
ular reservations, see Record 244-248; rather, they
challenge the Department's authority to impose such
limits at all.  Therefore, for present purposes we must
assume that the allocations for each reservation will be
sufficiently generous to satisfy the legitimate demands
of those reservation Indians who smoke cigarettes.  In
other respects as well, we confine ourselves to those
alleged defects that inhere in the regulations as written.
 A second limitation on our review flows from the
nature of respondents' challenge.  Their claim is that
the New York scheme interferes with their federally
protected activities as Indian traders who sell goods at
wholesale to reservation Indians.  While the effect of
the New York scheme on Indian retailers and consum-
ers may be relevant to that inquiry, see Warren Trading
Post, 380 U. S., at 691, this case does not require us to
assess for all purposes each feature of New York's tax
enforcement scheme that might affect tribal self-govern-
ment or federal authority over Indian affairs.  Here we
confront the narrower question whether the New York
scheme is inconsistent with the Indian Trader Statutes.

                     IV
 Throughout this Nation's history, Congress has autho-
rized -sweeping- and -comprehensive federal regulation-
over persons who wish to trade with Indians and Indian
tribes.  Warren Trading Post, 380 U. S., at 687-689.
An exercise of Congress' power to -regulate Commerce
. . . with the Indian Tribes,- see U. S. Const., Art. I, 8,
cl. 3, the Indian Trader Statutes were enacted to pre-
vent fraud and other abuses by persons trading with
Indians.  See Central Machinery Co. v. Arizona Tax
Comm'n, 448 U. S. 160, 163-164 (1980).  The provision
principally relied upon by respondents and by the Court
of Appeals, enacted in 1876 and captioned -Power to
appoint traders with Indians,- states:
-The Commissioner of Indian Affairs shall have the
sole power and authority to appoint traders to the
Indian tribes and to make such rules and regula-
tions as he may deem just and proper specifying the
kind and quantity of goods and the prices at which
such goods shall be sold to the Indians.-  19 Stat.
200, 25 U. S. C. 261.
In Warren Trading Post, we held that this provision
prevented Arizona from imposing a tax on the income or
gross sales proceeds of licensed Indian traders dealing
with reservation Indians.  The Indian Trader Statutes
and the -apparently all-inclusive regulations- under
them, we stated, -would seem in themselves sufficient to
show that Congress has taken the business of Indian
trading on reservations so fully in hand that no room
remains for state laws imposing additional burdens
upon traders.-  380 U. S., at 690.  Therefore, Arizona's
tax -would to a substantial extent frustrate the evident
congressional purpose of ensuring that no burden shall
be imposed upon Indian traders for trading with Indians
on reservations except as authorized by Acts of Congress
or by valid regulations promulgated under those Acts.-
Id., at 691.  See also Central Machinery Co., 448 U. S.,
at 163-166 (tax on proceeds of sale of farm machinery
to tribe pre-empted by 261).
 Although language in Warren Trading Post suggests
that no state regulation of Indian traders can be valid,
our subsequent decisions have -undermined- that propo-
sition.  See Central Machinery, 448 U. S., at 172
(Powell, J., dissenting).  Thus, in Moe, we upheld a
Montana law that required Indian retailers on tribal
land to collect a state cigarette tax imposed on sales to
non-Indian consumers.  We noted that the Indian
smokeshop proprietor's competitive advantage over other
retailers depended -on the extent to which the non-
Indian purchaser is willing to flout his legal obligation
to pay the tax.  Without the simple expedient of having
the retailer collect the sales tax from non-Indian pur-
chasers, it is clear that wholesale violations of the law
by the latter class will go virtually unchecked.-  425
U. S., at 482.  In contrast to the tax in Warren Trading
Post, which fell directly upon an Indian trader, the
cigarette tax in Moe fell upon a class-non-Indians-
whom the State had power to tax.  425 U. S., at 483.
We approved Montana's -requirement that the Indian
tribal seller collect a tax validly imposed on non-Indi-
ans- as a -minimal burden designed to avoid the likeli-
hood that in its absence non-Indians purchasing from
the tribal seller will avoid payment of a concededly
lawful tax.-  Ibid.
 In Colville, we upheld in relevant part a more compre-
hensive Washington State cigarette tax enforcement
scheme that required tribal retailers selling goods on
the reservation to collect taxes on sales to nonmembers
and to keep extensive records concerning these transac-
tions.  We rejected the proposition that -principles of
federal Indian law, whether stated in terms of pre-emp-
tion, tribal self-government, or otherwise, authorize
Indian tribes thus to market an exemption from state
taxation to persons who would normally do their busi-
ness elsewhere.-  447 U. S., at 155.  Moreover, the
Tribes had failed to meet their burden of showing that
the recordkeeping requirements imposed on tribal retail-
ers were -not reasonably necessary as a means of pre-
venting fraudulent transactions.-  Id., at 160.  See also
California State Bd. of Equalization v. Chemehuevi
Tribe, 474 U. S. 9, 11-12 (1985) (per curiam).
 In Potawatomi, we held that sovereign immunity
barred the State of Oklahoma's suit against a Tribe to
recover cigarette taxes owed for sales to non-Indians at
a convenience store owned by the Tribe.  In response to
the State's protest that the Tribe's immunity from suit
made the State's recognized authority to tax cigarette
sales to non-Indians a -right without any remedy,-  498
U. S., at 514, we explained that alternative remedies
existed for state tax collectors, such as damage actions
against individual tribal officers or agreements with the
tribes.  Ibid.  We added that -States may of course
collect the sales tax from cigarette wholesalers, either
by seizing unstamped cigarettes off the reservation,
Colville, [447 U. S.,] at 161-162, or by assessing whole-
salers who supplied unstamped cigarettes to the tribal
stores.- Ibid.

                      V
 This is another case in which we must -reconcile the
plenary power of the States over residents within their
borders with the semi-autonomous status of Indians
living on tribal reservations.-  McClanahan v. Arizona
State Tax Comm'n, 411 U. S. 164, 165 (1973).  Resolu-
tion of conflicts of this kind does not depend on -rigid
rule[s]- or on -mechanical or absolute conceptions of
state or tribal sovereignty,- but instead on -a particu-
larized inquiry into the nature of the state, federal, and
tribal interests at stake, an inquiry designed to deter-
mine whether, in the specific context, the exercise of
state authority would violate federal law.-   White
Mountain Apache Tribe v. Bracker, 448 U. S. 136, 142,
145 (1980).  See also Cotton Petroleum Corp. v. New
Mexico, 490 U. S. 163, 176 (1989).
 The specific kind of state tax obligation that New
York's regulations are designed to enforce-which falls
on non-Indian purchasers of goods that are merely
retailed on a reservation-stands on a markedly differ-
ent footing from a tax imposed directly on Indian trad-
ers, on enrolled tribal members or tribal organizations,
or on -value generated on the reservation by activities
involving the Tribes,- Colville, 447 U. S., at 156-157.
Moe, Colville and Potawatomi make clear that the
States have a valid interest in ensuring compliance with
lawful taxes that might easily be evaded through pur-
chases of tax-exempt cigarettes on reservations; that
interest outweighs tribes' modest interest in offering a
tax exemption to customers who would ordinarily shop
elsewhere.  The -balance of state, federal, and tribal
interests,- Rice v. Rehner, 463 U. S. 713, 720 (1983), in
this area thus leaves more room for state regulation
than in others.  In particular, these cases have decided
that States may impose on reservation retailers minimal
burdens reasonably tailored to the collection of valid
taxes from non-Indians.
 Although Moe and Colville dealt most directly with
claims of interference with tribal sovereignty, the rea-
soning of those decisions requires rejection of the sub-
mission that 25 U. S. C. 261 bars any and all state-
imposed burdens on Indian traders.  It would be anom-
alous to hold that a State could impose tax collection
and book-keeping burdens on reservation retailers who
are themselves enrolled tribal members, including stores
operated by the tribes themselves, but that similar
burdens could not be imposed on wholesalers, who often
(as in this case) are not.  Such a ruling might well
have the perverse consequence of casting greater state
tax enforcement burdens on the very reservation Indians
whom the Indian Trader Statutes were enacted to pro-
tect.  Just as tribal sovereignty does not completely
preclude States from enlisting tribal retailers to assist
enforcement of valid state taxes, the Indian Trader
Statutes do not bar the States from imposing reasonable
regulatory burdens upon Indian traders for the same
purpose.  A regulation designed to prevent non-Indians
from evading taxes may well burden Indian traders in
the sense that it reduces the competitive advantage
offered by trading unlimited quantities of tax-free goods;
but that consideration is no more weighty in the case of
Indian traders engaged in wholesale transactions than
it was in the case of reservation retailers.
 The state law we found pre-empted in Warren Trading
Post was a tax directly -imposed upon Indian traders for
trading with Indians.- 380 U. S., at 691.  See also
Central Machinery, 448 U. S., at 164.  That character-
ization does not apply to regulations designed to prevent
circumvention of -concededly lawful- taxes owed by non-
Indians.  See Moe, 425 U. S., at 482-483.  Although
broad language in our opinion in Warren Trading Post
lends support to a contrary conclusion, we now hold
that Indian traders are not wholly immune from state
regulation that is reasonably necessary to the assess-
ment or collection of lawful state taxes.  That conclusion
does not, of course, answer the Court of Appeals' alter-
native basis for striking down the New York scheme-
namely, that it imposes excessive burdens on Indian
traders.

                     VI
 Respondents vigorously object to the limitation of
wholesaler's tax-exempt cigarette sales through the
-probable demand- mechanism.  We are persuaded,
however, that New York's decision to stanch the illicit
flow of tax-free cigarettes early in the distribution
stream is a -reasonably necessary- method of -prevent-
ing fraudulent transactions,- one that -polices against
wholesale evasion of [New York's] own valid taxes with-
out unnecessarily intruding on core tribal interests.-
Colville, 447 U. S., at 160, 162.  The sole purpose and
justification for the quotas on untaxed cigarettes is the
State's legitimate interest in avoiding tax evasion by
non-Indian consumers.  By imposing a quota on tax-free
cigarettes, New York has not sought to dictate -the kind
and quantity of goods and the prices at which such
goods shall be sold to the Indians.-  25 U. S. C. 261.
Indian traders remain free to sell Indian tribes and
retailers as many cigarettes as they wish, of any kind
and at whatever price.  If the Department's -probable
demand- calculations are adequate, tax-immune Indians
will not have to pay New York cigarette taxes and
neither wholesalers nor retailers will have to precollect
taxes on cigarettes destined for their consumption.
While the possibility of an inadequate quota may pro-
vide the basis for a future challenge to the application
of the regulations, we are unwilling to assume, in the
absence of any such showing by respondents, that New
York will underestimate the legitimate demand for tax-
free cigarettes.  The associated requirement that the
Department preapprove deliveries of tax-exempt ciga-
rettes in order to ensure compliance with the quotas
does not render the scheme facially invalid.  This proce-
dure should not prove unduly burdensome absent wrong-
ful withholding or delay of approval-problems that can
be addressed if and when they arise.  See Colville, 447
U. S., at 160 (burden of showing that tax enforcement
scheme imposes excessive regulatory burdens is on
challenger).
 New York's requirements that wholesalers sell untaxed
cigarettes only to persons who can produce valid exemp-
tion certificates and that wholesalers maintain detailed
records on tax-exempt transactions likewise do not
unduly interfere with Indian trading.  The recordkeep-
ing requirements and eligible buyer restrictions in the
New York scheme are no more demanding than the
comparable measures we approved in Colville.  See n. 8,
supra.  Indeed, because wholesale trade typically in-
volves a comparatively small number of large-volume
sales, the transactional recordkeeping requirements
imposed on Indian traders in this case are probably less
onerous than those imposed on retailers in Moe and
Colville.  By requiring wholesalers to precollect taxes on
and affix stamps to cigarettes destined for nonexempt
consumers, New York has simply imposed on the whole-
saler the same precollection obligation that, under Moe
and Colville, may be imposed on reservation retailers.
We therefore disagree with the Court of Appeals' conclu-
sion that New York has in this way -impose[d] a sales
tax on Indian retailers.-  81 N. Y. 2d, at 427, 615 N. E.
2d, at 998 (emphasis added).  Again assuming that the
-probable demand- calculations leave ample room for
legitimately tax-exempt sales, the precollection regime
will not require prepayment of any tax to which New
York is not entitled.
 The United States, as amicus supporting affirmance,
agrees with the Court of Appeals' alternative holding
that the New York scheme improperly burdens Indian
trading.  In addition to the provisions disapproved by
the Court of Appeals, the United States attacks the
requirement that reservation retailers obtain state tax
exemption certificates on the ground that it invades the
BIA's -sole power and authority- to appoint Indian
traders.  We do not, however, understand the regula-
tions to do anything more than establish a method of
identifying those retailers who are already engaged in
the business of selling cigarettes.  At this stage, we will
not assume that the Department would refuse certifica-
tion to any federally authorized trader or stultify tribal
economies by refusing certification to new reservation
retailers.  Indeed, the Department assures us that
certification is -virtually automatic- upon submission of
an application.  Reply Brief for Petitioners 5 (citing 20
N. Y. C. R. R. 336.6(f)(1) (1992)).
 The United States also objects to the provisions for
establishing -trade territories- and allocating each
reservation's overall quota among its retail outlets.
Depending upon how they are applied in particular
circumstances, these provisions may present significant
problems to be addressed in some future proceeding.
However, the record before us furnishes no basis for
identifying or evaluating any such problem.  Agreements
between the Department and individual tribes might
avoid or resolve problems that are now purely hypothet-
ical.  Possible problems involving the allocation of
cigarettes among reservation retailers would not neces-
sarily threaten any harm to respondent wholesalers,
whose main interest lies in selling the maximum num-
ber of cigarettes, however ultimately allocated.
 Because we conclude that New York's cigarette tax
enforcement regulations do not, on their face, violate the
Indian Trader Statutes, the judgment of the New York
Court of Appeals is reversed.
                            It is so ordered.