RESPONDENT: Barbara Brohl, Executive Director, Colorado Department of Revenue
LOCATION: United States District Court for the District of Colorado, Alfred A. Arraj Courthouse
DOCKET NO.: 13-1032
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Tenth Circuit
CITATION: 574 US (2015)
GRANTED: Jul 01, 2014
ARGUED: Dec 08, 2014
DECIDED: Mar 03, 2015
Daniel D. Domenico - Solicitor General, Colorado, for the respondent
George S. Isaacson - for the petitioner
Facts of the case
Colorado imposes a 2.9% tax on the sale of tangible goods in the state, which retailers with a physical presence in the state are required to collect from purchasers and remit to the state. If a Colorado purchaser has not paid the sales tax on tangible goods, as occurs in some online and mail-order transactions in which the businesses have no physical presence in Colorado, the purchaser must pay a 2.9% use tax and is responsible for reporting and paying the tax to the state. To increase the rate of collection of the use tax, in 2010, Colorado implemented regulations for non-collecting retailers whose gross sales in Colorado exceed $100,000. These retailers must provide transactional notices to Colorado purchasers, send annual purchase summaries to Colorado customers, and annually report Colorado purchaser information to the Colorado Department of Revenue. Retailers that do not comply with these regulations are subject to penalties.
In June 2010, Direct Marketing Association (DMA)—a group of businesses and organizations that market products via catalogs, advertisements, broadcast media, and the Internet—sued the Colorado Department of Revenue's executive director and argued that the regulations violated the Commerce Clause by discriminating against interstate commerce. The district court granted DMA's request for an injunction and later granted summary judgment in favor of DMA. The U.S. Court of Appeals for the Tenth Circuit did not reach a decision on the merits of the appeal and instead held that the Tax Injunction Act deprived the district court of jurisdiction to enjoin Colorado's tax collection effort.
Does the Tax Injunction Act bar federal court jurisdiction over a suit brought by non-taxpayers to enjoin the enforcement of notice-and-reporting requirements of state tax law that neither impose nor require the collection of a tax?
Media for Direct Marketing Association v. BrohlAudio Transcription for Oral Argument - December 08, 2014 in Direct Marketing Association v. Brohl
Audio Transcription for Opinion Announcement - March 03, 2015 in Direct Marketing Association v. Brohl
John G. Roberts, Jr.:
Justice Thomas has our opinion this morning in case 13-1032, the Direct Marketing Association versus Brohl.
This case comes to us on a writ of certiorari to United States Court of Appeals for the Tenth Circuit.
Colorado passed a law requiring retailers that do not collect Colorado sales or use tax to notify Colorado customers of their tax liability and to report tax related information to customers and the Colorado Department of Revenue.
Petitioner, Direct Marketing Association, represents businesses subject to these requirements.
Petitioner sued respondent, the Executive Director of the Colorado Department of Revenue, alleging that the law and its supporting regulations violate the United States and Colorado Constitutions.
The District Court enjoined respondent from enforcing the notice and reporting requirements, but the Tenth Circuit reversed, holding that petitioner's suit is barred by the Tax Injunction Act.
In an opinion filed with the Clerk today, we reverse the judgment of the Tenth Circuit.
The Tax Injunction Act provides that federal district courts “shall not enjoin, suspend, or restrain the assessment, levy, or collection of any tax under state law.”
The terms assessment, levy, and collection refer to discrete phases of the taxation process that occur after the information gathering that the notice and reporting requirements are meant to facilitate.
For this reason, the mere fact that petitioner seeks an injunction against enforcement of those requirements does not bring its suit within the bounds of the act.
Moreover, we disagree with the Tenth Circuit that the suit is barred simply because the requested relief would inhibit assessment and collection down the line by depriving the department of useful information.
Instead, the act bars only relief that would stop acts of assessment, levy, or collection.
For these reasons and others set out more fully in our opinion, we reverse the judgment of the Tenth Circuit and remand for further proceedings.
The opinion of the Court is unanimous.
Justice Kennedy has filed a concurring opinion.
Justice Ginsburg has filed a concurring opinion in which Justice Breyer joins in full and Justice Sotomeyor joins in part.