United States: U.S. Supreme Court Denies Cert In Direct Marketing Association v. Brohl

Today, the U.S. Supreme Court declined to review the Tenth Circuit's holding in Direct Marketing Association v. Brohl, which upheld Colorado's use tax reporting regime on out-of-state taxpayers. In so doing, the Court also denied a cross-petition for certiorari filed by Colorado, which urged the Court to grant cert and directly address whether Quill's physical presence standard should be overruled.

Today's Decision At-a-Glance

  • The U.S. Supreme Court declined to review the Tenth Circuit's decision upholding Colorado's reporting regime against a Commerce Clause challenge.
  • Colorado is now free to enforce its reporting regime. Failure to comply will cost taxpayers $10 per violation.
  • Remote sellers must consider the impact of today's denial in Colorado, as well as in other states that have passed similar statutes, including Vermont, Louisiana, and Oklahoma.
  • Reviewing your compliance in Vermont is of particular concern, as its regime becomes effective on the first day of the first quarter after Colorado begins enforcing its regime (or July 1, 2017 at the latest), and it imposes a penalty—up to $15—for noncompliance.
  • Louisiana's regime becomes effective July 1, 2017, but does not carry a monetary fine for failing to comply. Similarly, Oklahoma's regime carries no fine for non-compliance, thus effectively making compliance voluntary.

Colorado's Use Tax Reporting Regime

Colorado's use tax reporting regime requires sellers that did not collect Colorado sales tax on taxable purchases by Colorado customers to provide the Colorado Department of Revenue (the "Department") specific information regarding these sales.1 The statute and regulations impose the following duties on non-collecting retailers with gross sales to Colorado customers in excess of $100,000:

  1. Provide transactional notices to Colorado customers;
  2. Send annual purchase summaries to certain Colorado customers; and
  3. Annually report Colorado purchaser information to the Department.2

Prior Court Decisions

The Direct Marketing Association ("DMA") sought a permanent injunction in federal district court against the regime, arguing that it violated the Commerce Clause because it imposed a tax-related obligation on DMA's members who lacked a physical presence in Colorado. DMA relied on the U.S. Supreme Court's decision in Quill Corp. v. North Dakota, which held that sales and use tax collection obligations could only be imposed on entities physically present in the state.3 Because DMA' members that would be required to comply with the regime did not have a physical presence in Colorado, DMA argued that Colorado could not impose the reporting requirement on its members. The district court agreed and granted DMA's permanent injunction against the regime.4

The Tenth Circuit had previously declined to hear the appeal on jurisdictional grounds, but that decision was overruled by the U.S. Supreme Court and the appeal was remanded to the Tenth Circuit for a decision on the merits (Brohl I).5 In February 2016, the Tenth Circuit held that Colorado's use tax reporting regime did not violate the Commerce Clause, and thus overturned the district court's 2012 decision striking down the law.6 In upholding the law, the Tenth Circuit court narrowly interpreted Quill's physical presence requirement—finding that it applies solely to sales and use tax collection and remittance obligations.7 And concluding that "Quill applies narrowly to and has not been extended beyond tax collection."8 The Court then analyzed Colorado's law and found that it did not discriminate against out-of-state taxpayers and did not impose an undue burden on interstate commerce. Therefore, it did not violate the Commerce Clause. (See Reed Smith's prior coverage of this decision.)

Petitions for Cert Filed, But Denied

DMA filed a petition for a writ of certiorari ("cert petition") with the U.S. Supreme Court on August 29, 2016.9 DMA urged the Court to review the Tenth Circuit's decision, citing that court's misapplication of Supreme Court precedent—as well as the national impact of the case. It was joined by the Council on State Taxation ("COST") and the National Federation of Independent Businesses as amici curiae. On October 24, Colorado filed its brief in opposition of the cert petition, and it was joined by the National Governors Association as amicus curiae.

In an interesting and uncommon move, Colorado filed a Cross-Petition for Certiorari on October 4, 2016.10 This petition requested that, if the Court were to grant DMA's cert petition, it should address an additional question upon review: whether Quill is still good law. Colorado's cert petition was undoubtedly an effort to remind the Court of Justice Kennedy's concurrence in Brohl I, which urged the "legal system" to "find an appropriate case for this Court to reexamine Quill and Bellas Hess."11 Colorado received the support of "interested law professors"—including Richard Pomp—as well as 10 states as amici curiae. DMA opposed this cert petition, arguing that the Court lacks jurisdiction to address a question not briefed or argued at the lower court.

Today, the Court denied both petitions—effectively giving Colorado permission to enforce its use tax reporting regime.

Time to Comply?

After a legal battle spanning over four years, Colorado has finally prevailed, and its use tax reporting regime has been upheld under the Commerce Clause. Barring a challenge of the regime on other grounds, Colorado is free to begin enforcing its reporting regime. For out-of-state taxpayers, this means that a new compliance burden exists in Colorado, including notifying customers of their duty to remit use tax to the Department, as well as providing the Department customer information. Failure to fulfill these obligations carries with it a $10 per violation fine.12

Since Colorado's enactment of its reporting regime in 2010, other states have enacted similar laws to combat use tax avoidance by their residents. Vermont has enacted a similar reporting regime, H.873, but with a strategically chosen effective date. The default effective date is July 1, 2017. But if Colorado begins enforcing its reporting regime, Vermont's regime becomes effective on the first day of the first quarter after Colorado's enforcement date. Like Colorado's law, the Vermont law punishes taxpayers for non-compliance by imposing a fine, up to $15, for non-compliance. Because the U.S. Supreme Court declined to review the Tenth Circuit's decision, Colorado is likely to begin enforcement, thus triggering Vermont's reporting regime. (Louisiana and Oklahoma have also imposed reporting requirements substantially similar to Colorado's, but those requirements do not carry a monetary fine for failing to comply.)

For out-of-state taxpayers with substantial sales to Colorado and Vermont, the penalties for failing to comply with the reporting regimes can add up quickly. For information regarding your business and whether and how to comply with these and similar laws, contact the authors of this alert or any member of Reed Smith's State Tax Team.


1. Colo. Rev. Stat. §§ 39-21-112(3.5)(c), (d).

2. Id.; 1 Colo. Code Regs. § 201-1:39-21-112.3.5.

3. 504 U.S. 298 (1992).

4. Direct Marketing Ass'n v. Huber, No. 10–CV–01546–REB–CBS, 2012 WL 1079175 (D.Colo. Mar. 30, 2012).

5. Importantly, the Court held that because Colorado's use tax reporting regime was not a "tax" for purposes of the Tax Injunction Act, no jurisdictional barrier prohibited DMA from filing suit in federal court.

6. Direct Marketing Ass'n v. Brohl, Case No. 12-1175 (10th Cir., Feb. 22, 2016).

7. Direct Marketing Ass'n, 575 U.S. at __.

8. Id.

9. Docket No. 16-267.

10. Docket No. 458.

11. Direct Marketing Ass'n, 575 U.S. at __ (Kennedy, J. concurring).

12. Colo. Rev. Stat. § 39-21-112(3.5)(d).

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.