Direct Marketing Ass’n v. Brohl

Colorado requires residents who purchase goods from a retailer that does not collect sales or use taxes to file a return and remit taxes directly to its Department of Revenue. Noncollecting retailers must notify any Colorado customer of the requirement and report tax-related information to those customers and the Department. An association of retailers sued, alleging that Colorado’s law violates the United States and Colorado Constitutions. The district court enjoined enforcement of the notice and reporting requirements. The Tenth Circuit reversed, holding that the Tax Injunction Act (TIA), which provides that federal district courts “shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State,” 28 U.S.C. 1341, deprived the court of jurisdiction. The Supreme Court reversed. The requested relief would not “enjoin, suspend or restrain the assessment, levy or collection” of taxes. The terms “assessment,” “levy,” and “collection” do not encompass enforcement of notice and reporting requirements. The terms, read in light of the federal Tax Code, refer to discrete phases of the taxation process that do not include informational notices or private reports of information relevant to tax liability. Assessment and collection are triggered after the state receives the returns and makes the deficiency determinations that the notice and reporting facilitate. The context in which the TIA uses the word “restrain” favors a narrow meaning. The Court took no position on whether the suit such as this might be barred under the “comity doctrine.” View "Direct Marketing Ass'n v. Brohl" on Justia Law