Direct Marketing Association v. Brohl

The Tax Injunction Act does not bar suits in federal district courts where petitioners seek to enjoin enforcement of notice and reporting requirements, which is different than assessment, collection, or levy of taxes.

Colorado has a law requiring its residents who buy tangible property from retailers that do not collect a sales or use tax to file a return or to remit said taxes directly to Colorado's Department of Revenue. In order to make this law more effective, Colorado enacted another law forcing retailers that do not collect taxes to inform customers from Colorado of the tax requirements and also to report tax-related information to the customers and directly to the Department of Revenue.

A retail trade association, Petitioner, sued in district court, alleging that the law violates the Constitutions of Colorado and the United States. Petitioner was granted partial summary judgment, and Respondent was permanently enjoined from enforcing the notice and reporting requirements. Respondent appealed, and the Tenth Circuit reversed, holding that the Tax Injunction Act took jurisdiction away from the district court in this matter due to its language that district courts, "shall not enjoin, suspend, or restrain the assessment, levy, or collection of any tax under State law."

The Supreme Court held that the Tax Injunction Act does not deprive the district court of jurisdiction. The Court reversed the Tenth Circuit's holding, and remanded to the Tenth Circuit to determine whether Colorado could defend its law under the comity doctrine. The Court reasoned that Petitioner's relief sought would not "enjoin, suspend, or restrain the assessment, levy, or collection" of taxes because "assessment," "levy," and "collection" refer to different phases of tax collection, and are not encompassed in the notice or reporting requirements.