Direct Marketing Association v Brohl

Association filed suit seeking injunctive relief against Colorado’s notice and reporting requirements for out of state internet retailers. The district court granted partial summary judgment to Association. The 10th Circuit held the Tax Injunction Act 28 USC 1241 stripped the district court of jurisdiction and reversed. The Court, with two added concurrences, unanimously reversed. It held the Act only bars suits when government action to collect taxes namely assessment or calculating the tax, levy or actually declaring tax owed and collection which is actions like liens or garnishment. Here, notice and reporting is done by private parties before any of the government actions take place. Additionally, this narrow reading provides a clear jurisdictional line, is consistent with equity practice which the Act is based on and effectuates congressional intent. Justice Kennedy added a concurrence arguing Court precedent requiring a physical presence in a state before out of state retailers can be required to collect use taxes is wrong and should be overturned. Justice Ginsberg added a concurrence observing that the Act merely requires taxpayers to comply with the pay first model of tax challenges (Breyer and Sotomayor joined this observation) and that precedent involving a challenge to tax credits was consistent with the outcome here as there was no challenge to state assessment, levy or collection and more money would have gone to the state in that case (Breyer joined this observation).