The NCSL Blog


By Lisa Soronen

A dream shared by states and local governments nationwide may be realized shortly in Colorado. Use tax collection on Internet purchases in the state may increase.

Mouse in shopping cartThe 10th U.S. Circuit Court of Appeals held that a Colorado law requiring remote sellers to inform Colorado purchasers annually of their purchases and send the same information to the Colorado Department of Revenue is constitutional.

In Quill Corp. v. North Dakota, decided in 1992, the U.S. Supreme Court held that states cannot require retailers with no in-state physical presence to collect use tax (retailers collect sales tax, consumers remit use tax).

To improve tax collection, in 2010 the Colorado legislature began requiring remote sellers to inform Colorado purchasers annually of their purchases and send the same information to the Colorado Department of Revenue. The Direct Marketing Association sued Colorado in federal court claiming the law was unconstitutional under Quill

In Direct Marketing Association v. Brohl, the 10th Circuit disagreed, concluding that Quill “applies narrowly to sales and use tax collection.” The 10th Circuit noted that neither the Supreme Court nor the 10th Circuit has extended Quill “beyond the realm of sales and use tax collection.” The 10th Circuit further concluded the Colorado law doesn’t discriminate against interstate commerce because DMA was unable to point to any evidence that the notice and reporting requirements imposed on out-of-state retailers are more burdensome than the sales tax collection and administration requirements imposed on in-state retailers.

In March 2015 the Supreme Court held unanimously that the Tax Injunction Act does did not bar the 10th Circuit from deciding this case. The State and Local Legal Center (SLLC)  filed an amicus brief discussing the devastating impact Quill has had on state and local governments in light of the rise of Internet purchases, Congress’ failure to pass the Marketplace Fairness Act, and states’ need to improve use tax collection through statutes like Colorado’s. Justice Anthony Kennedy wrote a concurring opinion, which appeared to rely on the SLLC’s brief, stating that the “legal system should find an appropriate case for this court to re-examine Quill.”

The SLLC filed an amicus brief in the 10th Circuit making the same policy arguments that it made in the Supreme Court. The brief also argued that Quill does not apply to the Colorado law and that the notice and reporting requirements aren’t discriminatory.

The 10th Circuit began its opinion by noting the difficulty states and local governments face collecting use tax in an e-commerce economy. The opinion cited the SLLC brief, which provided an estimate of the very low rate of use tax compliance, and quoted Kennedy’s recent criticism of Quill.

At least three other states—Oklahoma, South Dakota and Vermont—have similar notice and reporting requirements but no other state has Colorado's provisions.

All of the Big Seven members of the SLLC joined the amicus brief as did SLLC associate members the International Municipal Lawyers Association and the Government Finances Officers Association. Ron ParsonsJohnson, Abdallah, Bolleg & Parsons in Sioux Falls, South Dakota, and Lisa Soronen, SLLC, wrote the SLLC brief.

The SLLC generally only files amicus briefs in U.S. Supreme Court merits cases affecting state and local government. The SLLC made an exception and filed an amicus brief in the 10th Circuit because of the importance of this issue to SLLC members.

Lisa Soronen is the executive director of the State and Local Legal Center and writes frequently for the NCSL blog about the U.S. Supreme Court.




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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.