Brief of Interested Law Professors in Direct Marketing Association v. Brohl (10th Circuit)

45 Pages Posted: 23 May 2015 Last revised: 3 Aug 2015

See all articles by Darien Shanske

Darien Shanske

University of California, Davis - School of Law

Alan B. Morrison

George Washington University - Law School

Kirk J. Stark

University of California, Los Angeles (UCLA) - School of Law

Joseph Bankman

Stanford Law School

Jordan M. Barry

University of San Diego School of Law

Barbara H. Fried

Stanford Law School

John A. Swain

University of Arizona - James E. Rogers College of Law

Dennis J. Ventry

University of California, Davis - School of Law

Date Written: May 19, 2015

Abstract

This case, Direct Marketing Association v. Brohl, was recently remanded by the U.S. Supreme Court to the Tenth Circuit Court of Appeals. The Tenth Circuit then requested a full supplemental briefing; amici law professors submitted this brief.

Like all states with a sales tax, Colorado faced – and faces – a voluntary compliance problem with the collection of its use tax. The use tax is a complement to the sales tax; in-state vendors collect and remit the sales tax, while in-state consumers are responsible for remitting the use tax on purchases made from out-of-state vendors that do not collect the sales tax. To this compliance challenge, Colorado turned to a third-party reporting solution. In broad strokes, the Colorado Statute imposes a modest requirement on one party to a taxable transaction – specifically on relatively large retailers who do not collect the use tax - to report information on their Colorado sales both to the consumer/taxpayer and to the taxing authorities. Amici make three specific arguments. First, amici demonstrate that third-party reporting of tax information is a ubiquitous and longstanding feature of modern tax systems. When tax authorities rely on taxpayers to self-report their taxable activities, compliance rates for the collection of any tax is low. Therefore, from the broader perspective of tax collection theory and history, including the history of very similar transaction-based taxes that attempt to tax consumption, the Colorado Statute is an unexceptional response to an otherwise intractable problem.

Second, amici argue that the Supreme Court’s decision in Quill Corp. v. North Dakota, 504 U.S. 298 (1992), does not apply to the statute at issue in this case. Quill imposed a bright-line physical presence test as a precondition for a state to impose a use tax collection obligation on a retailer. Because of its own self-limiting language and logic, not to mention greatly changed circumstances, the rule of Quill should not be extended into a new area.

Third, amici argue that, because sales and use taxes constitute a unified system, there is no discrimination simply because differently situated retailers are required to aid in the collection of what is essentially a single tax in different ways.

Keywords: sales and use tax, third-party reporting, dormant commerce clause, Quill v. North Dakota, e-commerce

Suggested Citation

Shanske, Darien and Morrison, Alan B. and Stark, Kirk J. and Bankman, Joseph and Barry, Jordan and Fried, Barbara H. and Swain, John A. and Ventry, Dennis J., Brief of Interested Law Professors in Direct Marketing Association v. Brohl (10th Circuit) (May 19, 2015). UC Davis Legal Studies Research Paper No. 429; Stanford Public Law Working Paper No. 2608807. Available at SSRN: https://ssrn.com/abstract=2608807 or http://dx.doi.org/10.2139/ssrn.2608807

Darien Shanske (Contact Author)

University of California, Davis - School of Law ( email )

400 Mrak Hall Dr
Davis, CA CA 95616-5201

Alan B. Morrison

George Washington University - Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States

Kirk J. Stark

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-825-7470 (Phone)

Joseph Bankman

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-725-3825 (Phone)
650-725-7663 (Fax)

Jordan Barry

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

Barbara H. Fried

Stanford Law School ( email )

559 Nathan Abbott Way
Crown Quadrangle
Stanford, CA 94305-8610
United States
650-723-2499 (Phone)
650-725-0253 (Fax)

John A. Swain

University of Arizona - James E. Rogers College of Law ( email )

P.O. Box 210176
Tucson, AZ 85721-0176
United States
(520) 621-7673 (Phone)
(520) 621-9140 (Fax)

Dennis J. Ventry

University of California, Davis - School of Law ( email )

UC Davis School of Law
400 Mrak Hall Drive
Davis, CA 95616-5201
United States
530-752-4566 (Phone)

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