Several organizations have filed amicus curiae briefs with the Supreme Court this week in support of the Direct Marketing Association in the case DMA v.Brohl. The nation’s highest court will begin hearing arguments this December in the case, which DMA brought to safeguard the rights of marketers to seek redress in federal courts over issues brought up in states where they have no physical presence.
DMA had originally won a preliminary injunction in U.S. District Court in Colorado in a case in which it opposed the state’s order for non-taxpaying, out-of-state merchants to turn over customer data to the state’s tax authorities. But the Tenth Circuit Court of Appeals overturned that decision and ordered DMA to refile its case in Colorado state court under the Tax Injunction Act (TIA).
Organizations filing briefs included the U.S. Chamber of Commerce, the National Federation of Independent Business, and the Council on State Taxation (COST).
“How far the [TIA] can reach to impede businesses from having their cases heard in a federal court is important to our membership,” said Fred Nicely, senior tax counsel for COST. “Cases asserting a state’s police authority rather than addressing a specific state tax should not be subject to the federal Tax Injunction Act. Subjecting out-of-state businesses to burdensome reporting and notice requirements encumbers interstate commerce and should be addressed by federal courts.”
Should DMA lose in the Supreme Court, said another filer, the resulting effects could be far-reaching and devastating for businesses. “The Tenth Circuit’s ruling would have a profound impact on the ability to challenge state laws in federal court—even laws that have little or nothing to do with taxation,” said Cass Vickers, executive director of the Institute for Professionals in Taxation. “IPT believes it is critical for the Supreme Court to make it clear that cases of this nature can be brought in the federal courts and are not barred by the Tax Injunction Act.”
The State of Colorado is expected to file its brief in the case next month. A decision in DMA v.Brohl is not expected until spring.
