Supreme Court reverses decision on Tax Injuction Act
Supreme Court reverses decision on Tax Injuction Act

[JURIST] The US Supreme Court [official website] on Tuesday published its opinion [text, PDF] in Direct Marketing Association v. Brohl [docket; Cornell LII backgrounder], reversing the US Court of Appeals for the Tenth Circuit [official website] decision and ruling that the petitioner’s suit is not barred from going forward. In this case, a trade association of retailers who sell personal property to Colorado residents without collecting taxes sued the Director of the Colorado Department of Revenue [official website]. The retailers claimed that recent legislation enacted in Colorado, which required tax-exempt retailers to notify all Colorado customers of the sales and use tax requirement, violated both US and Colorado constitutions. The court was asked to determine whether the Tax Injunction Act (TIA) [28 USC § 1341] 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. The TIA states 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 ma y be had in the courts of such State,.” The Supreme Court decision, written by Justice Clarence Thomas, determined that the relief sought by the retailers would not “enjoin, suspend or restrain the assessment, levy or collection” of Colorado taxes, finding that the Tenth Circuit defined the words too broadly.

The US Supreme Court heard oral arguments [JURIST report] in December. The court granted certiorari [JURIST report] in the case in July. The Tenth Circuit had ruled [opinion] that the TIA deprived the district court of jurisdiction to enjoin Colorado’s tax collection effort.