Direct Marketing Association v. Brohl

Whether the Tax Injunction Act precludes federal court jurisdiction over issues dealing with "secondary aspects of state tax administration."

Colorado has a 2.9% sales tax, however the state cannot force out of state retailers to collect the sales tax and the residents rarely ever report out of state or internet purchases to pay the use tax on those purchases.

Petitioner sued Respondent, Colorado Department of Revenue, after Colorado imposed a notice and reporting requirement on out of state, non-tax collecting retailers who sell to Colorado residents requiring Petitioner to inform every Colorado purchaser that they must report the purchase and pay Colorado’s use tax.

The district court enjoined the notice and reporting requirement and granted Petitioner’s request for summary judgment. On appeal the Tenth Circuit held that it could not rule on the Commerce Clause issue but the Tax Injunction Act (“TIA”) precludes federal jurisdiction over “so important a local concern as the collection of taxes."

The Supreme Court granted certiorari to determine the scope and reach of TIA and to clarify how the statute should be applied by the district courts.