04 March 2015

Law in Plain English: Direct Marketing Association v. Brohl

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogDirect Marketing Association v. Brohl

Argument: Dec 8 2014 (Aud.)

Background: The Direct Marketing Association sought to block enforcement of a Colorado law that imposes notice and reporting requirements on retailers who do not collect taxes on sales to Colorado purchasers ("non-collecting retailers"). The law requires non-collecting retailers to provide transactional notices to Colorado purchasers, send annual purchase summaries to Colorado customers, and annually report Colorado purchaser information to the Department of Revenue. The district court granted a preliminary injunction prohibiting enforcement of the notice and reporting requirements, and later ruled that the requirements facially discriminated against interstate commerce and unconstitutionally interfered with interstate commerce. The Tenth Circuit reversed, finding that the Tax Injunction Act deprived the district court of jurisdiction to block Colorado's notice and reporting requirements.

Issue: The question before the Court is whether the Tax Injunction Act, which provides that “[t]he 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,” bars federal court jurisdiction over a suit brought by non-taxpayers to enjoin the informational notice and reporting requirements of a state law that neither imposes a tax, nor requires the collection of a tax, but serves only as a secondary aspect of state tax administration.

Holding: In a unanimous decision, the Supreme Court ruled that the relief sought by petitioner would not “enjoin, suspend or restrain the assessment, levy or collection” of Colorado’s sales and use taxes. As a result, the Direct Marketing Association's lawsuit is not barred by the Tax Injunction Act and can move forward.
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