Aug 29, 2016
From KPMG TaxWatch
In 2010, Colorado became the first state to adopt use tax notice and reporting requirements applicable to non-collecting retailers. Shortly after the Colorado reporting law was enacted, the Direct Marketing Association (DMA) filed suit in Colorado federal district court asserting that the use tax reporting requirements violated the dormant Commerce Clause by imposing an undue burden on interstate commerce. The U.S. District Court found for DMA and permanently enjoined the Department from enforcing the reporting requirements. On appeal, however, the U.S. Court of Appeals for the Tenth Circuit held that the federal Tax Injunction Act (TIA) barred DMA from bringing its suit in federal court. The U.S. Supreme Court subsequently reversed the Tenth Circuit and held that the TIA did not bar DMA’s action in federal court. On remand to the Tenth Circuit, the merits of the matter were finally addressed and the court concluded in its February 22, 2016 decision that the Colorado reporting requirements did not violate the dormant Commerce Clause. DMA subsequently petitioned the Tenth Circuit for a rehearing en banc, arguing that the panel failed to fully consider the burdens the reporting requirements imposed on retailers engaged in interstate commerce. That petition was denied. Thus, the next (and likely final) option was for DMA to file yet another petition for cert with the U.S. Supreme Court. After receiving an extension of time to file such a petition, DMA announced that it will be seeking review of the Tenth Circuit decision and will file its cert petition by the August 29, 2016 deadline. Please stay tuned to TWIST for future updates.
For more information about TWIST or to view archived episodes, please visit our TWIST homepage.
To receive TWIST e-mails each Monday morning, make sure that state, local and indirect is checked off as one of your topics of interest on the KPMG TaxWatch registration site.
The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.