After the U.S. Court of Appeals for the Tenth Circuit denied an en banc rehearing on October 1, 2013, the Direct Marketing Association (DMA) is expected to bring suit in Colorado District Court to challenge the constitutionality of the Colorado law that requires out-of-state retailers without a physical presence in Colorado to notify their customers of their use tax responsibilities. The DMA initially filed a complaint for declaratory and injunctive relief in U.S. District Court to enjoin enforcement of Colorado’s reporting requirements, which were scheduled to take effect on January 31, 2011, asserting that: (1) the regime discriminates impermissibly against out-of-state retailers; and (2) the regime imposes undue burdens on interstate commerce. On March 30, 2012, the U.S. District Court permanently enjoined the enforcement of the reporting requirements, finding that the law “patently discriminates” against interstate commerce in violation of the Commerce Clause by imposing a unique burden on out-of-state retailers with no physical presence in the state. With respect to the DMA’s second claim, the court held that the reporting requirements violate the U.S. Supreme Court’s holding in Quill Corp. v. North Dakota, 504 U.S. 298 (1992), which prohibits a state from imposing use tax on out-of-state retailers with no physical presence in the state. However, the U.S. Court of Appeals for the Tenth Circuit ordered that the permanent injunction be dissolved because the federal Tax Injunction Act (TIA) prevented the court from maintaining jurisdiction to enjoin Colorado’s reporting requirements. The TIA prohibits federal courts from interfering with state tax administration that would “inhibit state tax assessment, levy, or collection.” Based on this premise, the court concluded that the DMA’s challenge sought to restrain the collection of sales and use tax in Colorado because the reporting requirements were a substitute for requiring out-of-state retailers to collect sales and use tax. Notably, the court did not reach a decision on the merits of the case. The DMA is expected to challenge the law in state court, and may file a petition for writ of certiorari in the U.S. Supreme Court. Direct Marketing Ass’n v. Brohl, Appellate Case No. 12-1175 (10th Cir. Aug. 20, 2013), reh’g denied (10th Cir. Oct. 1, 2013).