The Tenth Circuit was recently all but forced to backpedal on a position it held in 2015 in which it held the Tax Injunction Act did not bar a sale-info-reporting suit in federal court. Now that the case is back down from SCOTUS, the Tenth Circuit has ruled that the suit had to go on and that, by the way, the rule did not violate the Commerce Clause.

The court concluded that the reporting requirements imposed by Colorado did not imposed a discriminatory burden on out-of-state vendors when viewed in the totality of context of foreign retailers tax reporting obligations.

This was not the first time the Tenth Circuit had held the case of Direct Marketing Ass’n v. Brohl in its hands. The case involved the Colorado law that required out-of-state retailers to fulfill various notice and reporting requirements of sales if they happened to be retailers that did not collect a sales tax.

SCOTUS unanimously slapped down that theory and sent it back to the Tenth Circuit to rule on the merits of the case.

On Facial Discrimination

The Tenth Circuit relied heavily on Tenth Circuit precedent established in the case Quill v. North Dakota (and also analyzed by SCOTUS) and found that Colorado’s requirement for non-collecting retailers to pony up information about sales did not discriminate against out of staters. The issue was whether there was facial discrimination against out of state retailers “based on whether the retailer collects sales or use taxes.” Analyzing the appropriate language, the Circuit found that there was no geograhic-specific discrimination against out of staters, just a requirement imposed on those who do not collect. A fine difference to be sure, but enough to get around the facial discrimination wall.

On Disparate Impact

The circuit then analyzed whether or not the law intentionally and disparately impacted in-state economic interests over out of state interests. Analyzing the totality of factors, the Tenth Circuit ruled against any finding of disparate impact or direct intent to enrich Colorado retailers over other non-Colorado retailers. It concluded that the DMA failed to demonstrate that the non-collecting retailers law was inconsistent with retailer’s tax collection and reporting obligations and that there was no “discriminatory economic burden.”

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