Supreme Court Rules in Favor of DMA on Tax Injunction Act

The Supreme Court ruled in favor of the Direct Marketing Association in its case against Colorado. In the unanimous decision released Tuesday, the court said interstate and remote merchants can challenge state tax issues in federal court, overturning a previous ruling by the 10th U.S. Circuit Court of Appeals in DMA v. Brohl (see 1411250042). DMA CEO Thomas Benton called the ruling a “landmark victory.” The ruling “protects marketers and all businesses from the overreach of state laws,” he said in a statement. “DMA believes national businesses having access to a neutral, federal forum is a critical aspect of our judicial system.” Legal experts told us last year that the case hinged on the high court’s interpretation of the Tax Injunction Act, which says “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 may be had in the courts of such State.” The "terms ‘assessment,’ ‘levy,’ and ‘collection’ do not encompass Colorado’s enforcement of its notice and reporting requirements,” Justice Clarence Thomas said in the opinion. “These terms … refer to discrete phases of the taxation process that do not include informational notices or private reports of information relevant to tax liability,” he said. “Information gathering has long been treated as a phase of tax administration that occurs before assessment, levy, or collection.”