In the 1993 case Department of Taxation and Finance of New York v. Milhelm Attea & Bros., Inc., the Supreme Court ruled that a state can regulate cigarette sales on Indian reservations to non-Indians and Indians who are not members of the tribe operating the reservation. The court held that such regulations do not infringe upon tribal sovereignty, as they only apply to transactions involving individuals who are not members of the tribe in question. This decision was based on previous rulings which established that while states cannot directly tax Indian tribes or their members within their own territory, they can tax non-members even when those transactions occur on an Indian reservation. The ruling allowed for New York State's scheme requiring wholesalers like Milhelm Attea & Bros., Inc., who supply cigarettes to reservation stores, to prepay taxes before delivering goods into "Indian country".

In the dissenting opinion for Department of Taxation and Finance of New York v. Milhelm Attea & Bros., Justice Thomas, joined by Justice Scalia, argued that the majority's decision was a misinterpretation of the Commerce Clause. They contended that it should not be used to uphold state regulations which discriminate against interstate commerce or place undue burdens on it. The dissenters believed that New York’s tax scheme discriminated against out-of-state wholesalers in favor of in-state ones because only out-of-staters were required to prepay taxes on cigarettes sold for resale on Indian reservations. This requirement imposed significant financial burdens and risks upon them compared to their in-state competitors who did not have such obligations. Furthermore, they pointed out inconsistencies with previous court rulings regarding similar issues involving Native American tribes' sovereignty rights over taxation within their territories.