Retailers Welcome U.S. Circuit Court Decision in DMA v. Broh

The Retail Litigation Center (RLC) issued the following statement in response to a decision from the United States Court of Appeals for the Tenth Circuit in the case Direct Marketing Association v. Brohl. In its decision, the court upheld the constitutionality of a Colorado law that requires retailers that do not collect sales or use taxes to notify any Colorado customer of the state’s use tax requirement and to report tax-related information to those customers and the Colorado Department of Revenue.

The RLC submitted an amicus brief in the case in partnership with the Colorado Retail Council and the Retail Industry Leaders Association (RILA).

“Retailers welcome the court’s decision and its alignment with the arguments laid out in our brief,” said RILA General Counsel and President of the Retail Litigation Center Deborah White.

The case relates to a market distortion reinforced by the 1992 U.S. Supreme Court decision in Quill v. North Dakota. The resulting loophole allows out of state retailers to avoid the obligation to collect and remit the sales tax due on every purchase. By absolving remote sellers of an obligation required of local retailers, the loophole creates the perception of a price advantage, which ultimately costs local retailers business.

For years retailers have pressed Congress to address this issue. In the 1992 Quill decision, the Court said “… that the underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve.”

While federal legislation remains under consideration, states, which have grown frustrated by a lack of action at the federal level, have passed laws aimed at addressing the inequity. However, each law is limited or faces constitutional challenges because of the precedent reiterated in the 1992 U.S. Supreme Court decision in Quill v. North Dakota. As a matter of policy, RILA has not supported statutes like the Colorado law, which could surprise consumers with unexpected tax bills while failing to resolve the disparity at the point of sale. However, as a matter of constitutional law, RILA unequivocally supports the power of the states to enact reasonable measures that promote evenhanded compliance with valid tax laws.

“In the absence of final congressional action, it’s no surprise that states are moving independently to ensure fair competition for local businesses and to collect taxes rightfully owed,” said White. “Until a complete resolution is achieved either by a comprehensive federal solution or a clarification of Supreme Court doctrine, we believe that lower courts are correct to narrowly interpret outdated Supreme Court decisions in order to uphold state remedies.”

Because the Colorado law creates reporting obligation and not a tax collection obligation, the 10th Circuit concluded “…the Colorado Law does not violate the dormant Commerce Clause because it does not discriminate against or unduly burden interstate commerce.

Further, the decision reinforced the important role of Congress in this area. “We conclude by noting the Supreme Court’s observation in Quill that Congress holds the “ultimate power” and is “better qualified to resolve” the issue of “whether, when, and to what extent the States may burden interstate [retailers] with a duty to collect [sales and] use taxes.”


The Retail Litigation Center is a public policy organization that identifies and engages in legal proceedings which affect the retail industry. The RLC, whose members include some of the country's largest retailers, was formed to provide courts with retail industry perspectives on significant legal issues, and highlight the potential industry-wide consequences of legal principles that may be determined in pending cases.

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