Gantenbein Law Firm is pleased to announce that two of its Denver IRS tax lawyers, Tyler Murray and Michelle McCarthy, were the featured authors this month in the Colorado Tax Bar Association monthly newsletter.
The article, The Supreme Court Weighs in on Colorado’s Attempt to Circumvent Quill in Direct Marketing Association v. Brohl, discussed a recent Supreme Court decision that affects whether the Tax Injunction Act barred federal courts from enjoining Colorado’s efforts to impose additional tax reporting requirements through its Collection Act: The Supreme Court ruled that Colorado's reporting requirements are not the "assessment, collection, or levy" of a state tax, so the Tax Injunction Act does not apply, and remanded back to the 10th Circuit.
On March 3, 2015 the Supreme Court of the United States decided Colorado’s latest contribution to Supreme Court jurisprudence—Direct Marketing Association v. Brohl.3 The case focuses on the interaction between the Colorado Collection Act and the Tax Injunction Act (“TIA”).
Colorado enacted reporting requirements for out-of-state online retailers so that they could send use tax bills to people who purchased items online that were not subject to sales tax at the time of sale. States can only require retailers who have a physical presence in the state to collect sales tax. Colorado enacted its Collection Act in 2010. This legislation was enacted to circumvent the requirements of Quill Corp. v. North Dakota which prevent a state from forcing out-of-state retailers to collect and remit sales tax due on online purchases delivered across state lines. The Collection Act exempts out-of-state retailers who collect sales tax from these reporting requirements.
The reporting requirements were struck down by the Federal District Court as unconstitutional. Direct Marketing Association (“DMA”) sought an injunction against the regulations issued under the Collection Act in Federal District Court on grounds that they violated the Constitution’s dormant commerce clause.
The Colorado Department of Revenue appealed to the Tenth Circuit Court of Appeals, who remanded the case back to the District Court on the grounds that it lacked jurisdiction as a result of the TIA. The Department of Revenue ultimately appealed the Tenth Circuit decision to the Supreme Court of the United States. On appeal to the 10th Circuit, the Court ruled in favor of Colorado, ruling that the Federal Courts are barred from ruling on the reporting requirements under the Tax Injunction Act, which bars federal court challenges to state tax assessments, collection, and levies.
You can read the full article, published by the Colorado Bar Association, here.
Tyler Murray, LL.M., is a senior associate attorney at Gantenbein Law Firm practicing in business, corporate and tax law. Michelle McCarthy, LL.M. is an associate lawyer at the Gantenbein Law Firm practicing business and tax law. Gantenbein Law is located in Denver and serves clients throughout Colorado. For the best tax attorney, call Gantenbein Law Firm at 303-618-2122.
Gantenbein Law Firm practice areas include: Tax Law, Business Law, Real Estate, Foreclosure Defense, Estate Planning/Wills & Trusts, and HOA Defense. For more information regarding our practice areas, please visit our website at www.gantenbeinlaw.com.