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SUPREME COURT OF THE UNITED STATES
DIRECT MARKETING ASSOCIATION, PETITIONER v.
EXECUTIVE DIRECTOR, COLORADO DEPARTMENT OF REVENUE
on writ of certiorari to the united states court of appeals for
the tenth circuit
[March 3, 2015]
Justice Thomas delivered the opinion of the Court.
In an effort to improve the collection of sales and use taxes
for items purchased online, the State of Colorado passed a law
requiring retailers that do not collect Colo-rado sales or use tax
to notify Colorado customers of their use-tax liability and to
report tax-related information to customers and the Colorado
Department of Revenue. We must decide whether the Tax Injunction
Act, which provides that federal district courts
â€œshall not enjoin, suspend or restrain the
assessment, levy or collection of any tax under State
law,â€28 U.Â S.Â C.
Â§1341, bars a suit to enjoin the enforcement of this
law. We hold that it does not.
Like many States, Colorado has a complementary sales-and-use tax
regime. Colorado imposes both a 2.9 percent tax on the sale of
tangible personal property within the State, Colo. Rev. Stat.
and an equivalent use tax for any prop-erty stored, used, or
consumed in Colorado on which a sales tax was not paid to a
39â€“26â€“204(1). Retailers with
a physical presence in Colorado must collect the sales or use tax
from consumers at the point of sale and remit the proceeds to the
Colorado Department of Revenue (Department).
39â€“26â€“106(2)(a). But under
our negative Commerce Clause precedents, Colorado may not require
retailers who lack a physical presence in the State to collect
these taxes on behalf of the Department. See Quill Corp.
,504 U.Â S.
298â€“318 (1992). Thus, Colorado requires its
consumers who purchase tangible personal property from a retailer
that does not collect these taxes (a
â€œnoncollecting retailerâ€) to fill
out a return and remit the taxes to the Department directly.
Voluntary compliance with the latter requirement is relatively
low, leading to a significant loss of tax revenue, especially as
Internet retailers have increasingly displaced their
brick-and-mortar kin. In the decade before this suit was filed in
2010, e-commerce more than tripled. App. 28. With approximately 25
percent of taxes unpaid on Internet sales, Colorado estimated in
2010 that its revenue loss attributable to noncompliance would grow
by more than $20 million each year. App.
In hopes of stopping this trend, Colorado enacted legislation in
2010 imposing notice and reporting obligations on noncollecting
retailers whose gross sales in Colorado exceed $100,000. Three
provisions of that Act, along with their implementing regulations,
are at issue here.
First, noncollecting retailers must â€œnotify
Colorado purchasers that sales or use tax is due on certain
purchases .Â .Â . and that the state of
Colorado requires the purchaser to file a sales or use tax
see also 1 Colo. Code Regs.
(2014), online at http://www.sos.co.us/CRR (as visited Feb. 27,
2015, and available in the Clerk of Courtâ€™s case
file). The retailer must provide this notice during each
transaction with a Colorado purchaser, ibid.,
and is subject
to a penalty of $5 for each transaction in which it fails to do so,
Colo. Rev. Stat.
Second, by January 31 of each year, each noncollecting retailer
must send a report to all Colorado purchasers who bought more than
$500 worth of goods from the retailer in the previous year.
1 Colo. Code Regs.
(c). That report must list the dates, categories, and amounts of
those purchases. Colo. Rev. Stat.
see also 1 Colo. Code Regs.
(c). It must also contain a notice stating that Colorado
â€œrequires a sales or use tax return to be filed
and sales or use tax paid on certain Colorado purchases made by the
purchaser from the retailer.â€ Colo. Rev. Stat.
The retailer is subject to a penalty of $10 for each report it
fails to send.
see also 1 Colo. Code Regs.
Finally, by March 1 of each year, noncollecting retailers must
send a statement to the Department listing the names of their
Colorado customers, their known addresses, and the total amount
each Colorado customer paid for Colorado purchases in the prior
calendar year. Colo. Rev. Stat.
1 Colo. Code Regs.
A noncollecting retailer that fails to make this report is subject
to a penalty of $10 for each customer that it should have listed in
the report. Colo. Rev. Stat.
see also 1 Colo. Code Regs.
Petitioner Direct Marketing Association is a trade association
of businesses and organizations that market products directly to
consumers, including those in Colorado, via catalogs, print
advertisements, broadcast media, and the Internet. Many of its
members have no physical presence in Colorado and choose not to
collect Colorado sales and use taxes on Colorado purchases. As a
result, they are subject to Coloradoâ€™s notice
and reporting requirements.
In 2010, Direct Marketing Association brought suit in the United
States District Court for the District of Colo-rado against the
Executive Director of the Department, alleging that the notice and
reporting requirements violate provisions of the United States and
Colorado Constitutions. As relevant here, Direct Marketing
Association alleged that the provisions (1) discriminate against
interstate commerce and (2) impose undue burdens on interstate
commerce, all in violation of this Courtâ€™s
negative Commerce Clause precedents. At the request of both
parties, the District Court stayed all challenges except these two,
in order to facilitate expedited consideration. It then granted
partial summary judgment to Direct Marketing Association and
permanently enjoined enforcement of the notice and reporting
requirements. App. to Pet. for Cert. Bâ€“1 to
Exercising appellate jurisdiction under28
U.Â S.Â C. Â§1292(a)(1), the
United States Court of Appeals for the Tenth Circuit reversed.
Without reaching the merits, the Court of Appeals held that the
District Court lacked jurisdiction over the suit because of the Tax
Injunction Act (TIA),28 U.Â S.Â C.
Â§1341. Acknowledging that the suit
â€œdiffers from the prototypical TIA
case,â€ the Court of Appeals nevertheless found it
barred by the TIA because, if successful, it
â€œwould limit, restrict, or hold back the
stateâ€™s chosen method of enforcing its tax laws
and generating revenue.â€ 735 F.Â 3d 904, 913
We granted certiorari, 573 U.Â S. ___ (2014), and now
Enacted in 1937, the TIA provides that federal district courts
â€œshall not enjoin, suspend or restrain the
assessment, levy or collection of any tax under State law where a
plain, speedy and efficient remedy may be had in the courts of such
State.â€ Â§1341. The question before us is
whether the relief sought here would â€œenjoin,
suspend or restrain the assessment, levy or collection of any tax
under State law.â€ Because we conclude that it would
not, we need not consider whether â€œa plain,
speedy and efficient remedy may be had in the courts
The District Court enjoined state officials from enforcing the
notice and reporting requirements. Because an injunction is clearly
a form of equitable relief barred by the TIA, the question becomes
whether the enforcement of the notice and reporting requirements is
an act of â€œassessment, levy or
collection.â€ We need not comprehensively define these
terms to conclude that they do not encompass enforcement of the
notice and reporting requirements at issue.
In defining the terms of the TIA, we have looked to federal tax
law as a guide. See, e.g., Hibbs
U.Â S. 88,100 (2004). Although the TIA does not concern
federal taxes, it was modeled on the Anti-Injunction Act (AIA),
which does. See Jefferson County
U.Â S. 423â€“435 (1999). The AIA
provides in relevant part that â€œno suit for the
purpose of restraining the assessment or collection of any tax
shall be maintained in any court by any person.â€26
U.Â S.Â C. Â§7421(a). We assume
that words used in both Acts are generally used in the same way,
and we discern the meaning of the terms in the AIA by reference to
the broader Tax Code. Hibbs
at 115 (Kennedy, J.,
dissenting). Read in light of the Federal Tax Code at the time the
TIA was enacted (as well as today), these three terms refer to
discrete phases of the taxation process that do not include
informational notices or private reports of information relevant to
To begin, the Federal Tax Code has long treated information
gathering as a phase of tax administration procedure that occurs
before assessment, levy, or collection. See
Â§Â§1500â€“1524 (1934 ed.);
see also Â§1533 (â€œAll provisions of
law for the ascertainment of liability to any tax, or the
assessment or collection thereof, shall be held to apply
.Â .Â .Â â€). This step
includes private reporting of information used to determine tax
liability, see, e.g.,
reports by third parties who do not owe the tax, see, e.g.,
Â§6041 etÂ seq.
(2012 ed.); see also
Â§Â§1512(a)â€“(b) (1934 ed.)
(authorizing a collector or the Commissioner of Internal Revenue,
when a taxpayer fails to file a return, to make a return
â€œfrom his own knowledge and from such
information as he can obtain through testimony or
â€œAssessmentâ€ is the next step in
the process, and it refers to the official recording of a
taxpayerâ€™s liability, which occurs after
information relevant to the calculation of that liability is
reported to the taxing authority. See Â§1530. In
, the Court noted that
â€œassessment,â€ as used in the
Internal Revenue Code, â€œinvolves a
â€˜recordingâ€™ of the amount the
taxpayer owes the Government.â€ 542
at 100 (quoting Â§6203 (2000
ed.)). It might also be understood more broadly to encompass the
process by which that amount is calculated. See United
,541 U.Â S. 114,122 (2004);
see also Hibbs
at 100, n. 3. But even
understood more broadly,
â€œassessmentâ€ has long been treated
in the Tax Code as an official action taken based on information
already reported to the taxing authority. For example, not many
years before it passed the TIA, Congress passed a law providing
that the filing of a return would start the running of the clock
for a timely assessment. See, e.g.,
Revenue Act of 1924,
Pub. L. 68â€“176, Â§277(a),43Stat.299.
Thus, assessment was understood as a step in the taxation process
that occurred after, and was distinct from, the step of reporting
information pertaining to tax liability.
â€œLevy,â€ at least as it is defined
in the Federal Tax Code, refers to a specific mode of collection
under which the Secretary of the Treasury distrains and seizes a
recalcitrant taxpayerâ€™s property. See26
U.Â S.Â C. Â§6331 (2012 ed.);
Â§1582 (1934 ed.). Because the word
â€œlevyâ€ does not appear in the AIA,
however, one could argue that its meaning in the TIA is not tied to
the meaning of the term as used in federal tax law. If that were
the case, one might look to contemporaneous dictionaries, which
defined â€œlevyâ€ as the legislative
function of laying or imposing a tax and the executive functions of
assessing, recording, and collecting the amount a taxpayer owes.
See Blackâ€™s Law Dictionary 1093 (3d ed. 1933)
(Blackâ€™s); see also Websterâ€™s
New International Dictionary 1423 (2d ed. 1939)
(â€œTo raise or collect, as by assessment,
execution, or other legal process, etc.; to exact or impose by
authority .Â .Â .Â â€);
Â§Â§1540, 1544 (using
â€œleviedâ€ in the more general sense
of an executive imposition of a tax liability). But under any of
these definitions, â€œlevyâ€ would be
limited to an official governmental action imposing, determining
the amount of, or securing payment on a tax.
Finally, â€œcollectionâ€ is the act
of obtaining payment of taxes due. See Blackâ€™s
349 (defining â€œcollectâ€ as
â€œto obtain payment or liquidationâ€
of a debt or claim). It might be understood narrowly as a step in
the taxation process that occurs after a formal assessment.
Consistent with this understanding, we have previously described it
as part of the â€œenforcement process
.Â .Â . that
â€˜assessmentâ€™ sets in
n.Â 4. The Federal Tax Code at the time the TIA was
enacted provided for the Commissioner of Internal Revenue to
certify a list of assessments â€œto the proper
collectors .Â .Â . who [would] proceed to
collect and account for the taxes and penalties so
certified.â€ Â§1531. That collection process
began with the collector â€œgiv[ing] notice to
each person liable to pay any taxes stated [in the list]
.Â .Â . stating the amount of such taxes and
demanding payment thereof.â€ Â§1545(a). When
a person failed to pay, the Government had various means to collect
the amount due, including liens, Â§1560, distraint,
Â§1580, forfeiture, and other legal proceedings,
Â§1640. Todayâ€™s Tax Code continues to
authorize collection of taxes by these methods. Â§6302
(2012 ed.). â€œCollectionâ€ might also
be understood more broadly to encompass the receipt of a tax
payment before a formal assessment occurs. For example, at the time
the TIA was enacted, the Tax Code provided for the assessment of
money already received by a person â€œrequired to
or withhold any internal-revenue tax from any other
person,â€ suggesting that at least some act of
collection might occur before a formal assessment.
Â§1551 (1934 ed.) (emphasis added). Either way,
â€œcollectionâ€ is a separate step in
the taxation process from assessment and the reporting on which
assessment is based.
So defined, these terms do not encompass
Coloradoâ€™s enforcement of its notice and
reporting requirements. The Executive Director does not seriously
contend that the provisions at issue here involve a
â€œlevyâ€; instead she portrays them as
part of the process of assessment and collection. But the notice
and reporting requirements precede the steps of
â€œcollection.â€ The notice given to
Colorado consumers, for example, informs them of their use-tax
liability and prompts them to keep a record of taxable purchases
that they will report to the State at some future point. The annual
summary that the retailers send to consumers provides them with a
reminder of that use-tax liability and the information they need to
fill out their annual returns. And the report the retailers file
with the Department facilitates audits to determine tax
deficiencies. After each of these notices or reports is filed, the
State still needs to take further action to assess the
taxpayerâ€™s use-tax liability and to collect
payment from him. See Colo. Rev. Stat.
(describing the procedure for â€œassessing and
collecting [use] taxesâ€ on the basis of returns filed
by consumers and collecting retailers). Colorado law provides for
specific assessment and collection procedures that are triggered
after the State has received the returns and made the deficiency
determinations that the notice and reporting requirements are meant
to facilitate. See
Colo. Code Regs.
(â€œThe statute of limitations on assessments of
.Â .Â . sales [and] use
.Â .Â . tax .Â .Â .
shall be three years from the date the return was filed
.Â .Â . â€).
Enforcement of the notice and reporting requirements may improve
Coloradoâ€™s ability to assess and ultimately
collect its sales and use taxes from consumers, but the TIA is not
keyed to all activities that may improve a
Stateâ€™s ability to assess and collect taxes.
Such a rule would be inconsistent not only with the text of the
statute, but also with our rule favoring clear boundaries in the
interpretation of jurisdictional statutes. See Hertz Corp.
,559 U.Â S. 77,94 (2010). The TIA is
keyed to the acts of assessment, levy, and collection themselves,
and enforcement of the notice and reporting requirements is none of
Apparently concluding that enforcement of the notice and
reporting requirements was not itself an act of
â€œassessment, levy or collection,â€
the Court of Appeals did not rely on those terms to hold that the
TIA barred the suit. Instead, it adopted a broad definition of the
word â€œrestrainâ€ in the TIA, which
bars not only suits to â€œenjoin
.Â .Â . assessment, levy or
collectionâ€ of a state tax but also suits to
â€œsuspend or restrainâ€ those
activities. Specifically, the Court of Appeals concluded that the
TIA bars any suit that would â€œlimit, restrict,
or hold backâ€ the assessment, levy, or collection of
state taxes. 735 F.Â 3d, at 913. Because the notice and
reporting requirements are intended to facilitate collection of
taxes, the Court of Appeals reasoned that the relief Direct
Marketing Association sought and received would
â€œlimit, restrict, or hold backâ€ the
Departmentâ€™s collection efforts. That was
â€œRestrain,â€ standing alone, can
have several meanings. One is the broad meaning given by the Court
of Appeals, which captures orders that merely inhibit
of â€œassessment, levy and
collection.â€ See Blackâ€™s 1548.
Another, narrower meaning, however, is â€œ[t]o
prohibit from action; to put compulsion upon
.Â .Â . to enjoin,â€ ibid.
which captures only those orders that stop (or perhaps compel) acts
of â€œassessment, levy and
To resolve this ambiguity, we look to the context in which the
word is used. Robinson
v. Shell Oil Co.
U.Â S. 337,341 (1997). The statutory context provides
several clues that lead us to conclude that the TIA uses the word
â€œrestrainâ€ in its narrower sense.
Looking to the company â€œrestrainâ€
v. G.Â D. Searle &
,367 U.Â S. 303,307 (1961), we first note that
the words â€œenjoinâ€ and
â€œsuspendâ€ are terms of art in
equity, see Fair Assessment in Real Estate Assn., Inc.
,454 U.Â S. 100, and n. 13 (1981) (Brennan,
J., concurring). They refer to different equitable remedies that
restrict or stop official action to varying degrees, strongly
suggesting that â€œrestrainâ€ does the
same. See Hibbs
, 524 U.Â S.,
(Kennedy, J., dissenting); see also Jefferson County
U.Â S., at 433.
Additionally, as used in the TIA,
â€œrestrainâ€ acts on a carefully
selected list of technical
collectionâ€â€”not on an
all-encompassing term, like
â€œtaxation.â€ To give
â€œrestrainâ€ the broad meaning
selected by the Court of Appeals would be to defeat the precision
of that list, as virtually any court action related to any phase of
taxation might be said to â€œhold
backâ€ â€œcollection.â€ Such
a broad construction would thus render
levyâ€â€”not to mention
suspendâ€â€”mere surplusage, a result
we try to avoid. See Hibbs
(interpreting the terms of the TIA to avoid superfluity).
Assigning the word â€œrestrainâ€ its
meaning in equity is also consistent with our recognition that the
TIA â€œhas its roots in equity
v. Griffin, Inc.
U.Â S. 68,73 (1976). Under the comity doctrine that the
TIA partially codifies, Levin
v. Commerce Energy,
,560 U.Â S. 413â€“432 (2010),
courts of equity exercised their â€œsound
discretionâ€ to withhold certain forms of extraordinary
relief, Great Lakes Dredge & Dock Co.
,319 U.Â S. 293,297 (1943); see also
, 11 Wall. 108, 110 (1871). Even while
refusing to grant certain forms of equitable relief, those courts
did not refuse to hear every suit that would have a negative impact
on Statesâ€™ revenues. See, e.g
v. Rutherford County
U.Â S. 121,127 (1930); see also 5 R. Paul & J.
Mertens, Law of Federal Income Taxation Â§42.139 (1934)
(discussing the word â€œrestrainingâ€
in the AIA in its equitable sense). The Court of
Appealsâ€™ definition of
â€œrestrain,â€ however, leads the TIA
to bar every suit with such a negative impact. This history thus
further supports the conclusion that Congress used
â€œrestrainâ€ in its narrower,
equitable sense, rather than in the broad sense chosen by the Court
Finally, adopting a narrower definition is consistent with the
rule that â€œ[j]urisdictional rules should be
clear.â€ Grable & Sons Metal Products, Inc.
v. Darue Engineering & Mfg.
,545 U.Â S.
308,321 (2005) (Thomas, J., concurring); see also Hertz
at 94. The questionâ€”at
least for negative injunctionsâ€”is whether the
relief to some degree stops â€œassessment, levy or
collection,â€ not whether it merely inhibits them. The
Court of Appealsâ€™ definition of
â€œrestrain,â€ by contrast, produces a
â€œÂ â€˜vague and
obscureâ€™Â â€ boundary that
would result in both needless litigation and uncalled-for
,497 U.Â S.
358,375 (1990) (Scalia, J., concurring in judgment), all in the
name of a jurisdictional statute meant to protect state
Applying the correct definition, a suit cannot be understood to
â€œassessment, levy or collectionâ€ of
a state tax if it merely inhibits those activities.[2
We take no position on whether a suit such as this one might
nevertheless be barred under the â€œcomity
doctrine,â€ which â€œcounsels lower
federal courts to resist engagement in certain cases falling within
their jurisdiction.â€ Levin
421. Under this doctrine, federal courts refrain from
â€œinterfer[ing] .Â .Â .
with the fiscal operations of the state governments
.Â .Â . in all cases where the Federal rights
of the persons could otherwise be preserved
unimpaired.Â â€ Id.,
at 422 (internal
quotation marks omitted).
Unlike the TIA, the comity doctrine is nonjurisdictional. And
here, Colorado did not seek comity from either of the courts below.
Moreover, we do not understand the Court of
Appealsâ€™ footnote concerning comity to be a
holding that comity compels dismissal. See 735 F.Â 3d,
at 920, n.Â 11 (â€œAlthough we remand
to dismiss [petitionerâ€™s] claims pursuant to the
TIA, we note that the doctrine of comity also militates in favor of
dismissalâ€). Accordingly, we leave it to the Tenth
Circuit to decide on remand whether the comity argument remains
available to Colorado.
Because the TIA does not bar petitionerâ€™s
suit, we reverse the judgment of the Court of Appeals. Like the
Court of Appeals, we express no view on the merits of those claims
and remand the case for further proceedings consistent with this
It is so ordered.