In a previous blog, we noted that Lewiston firm Brann & Isaacson had a case before the Supreme Court this term regarding the scope of the Tax Injunction Act vis-à-vis state reporting requirements. (The Big Show) The Supremes have now spoken, and B&I prevailed. (Direct Marketing Assn. v. Brohl, No. 13-1032, March 3, 2015)
The Court was unanimous, with two concurring opinions. In his concurrence, Justice Kennedy said that the SCt holding in the opinion by Justice Thomas – that TIA didn’t apply, so the plaintiff could file its challenge to the state law in federal court – was correct, but he wanted to note “what may be a serious continuing injustice” faced by states in trying to collect taxes in the internet world, and exhorting a reconsideration of the Court’s holding in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). (Quill requires a physical presence in the state to require a business to collect use taxes.) Justice Ginsburg, joined by Justice Breyer and partially by Justice Sotomayer, also concurred to suggest that some types of suits regarding reporting requirements may fall under the TIA. Justice Thomas also noted that the Court wasn’t addressing whether the federal suit could be booted on a comity theory.
In short, this is a victory in this battle for the direct marketers, but the general war about taxing internet sales continues.