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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Court Decisions
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Online Merchants Guild v. Maduros … (2023)
The Federal Tax Injunction Act Precludes the Exercise of Federal Jurisdiction Where the Requested Relief Would Stop the Assessment or Collection of Tax
Petitioner, a trade association for e-commerce companies that participate in the Fulfilled by Amazon ("FBA") program, alleged CDTFA’s registration and tax collection efforts against its member out-of-state FBA sellers, violated the Due Process, Equal Protection, Privileges and Immunities, and Commerce Clauses of the United States Constitution, as well as the Internet Tax Freedom Act, 47 U.S.C. § 151. The district court granted CDTFA’s motion to dismiss because the claims were barred by the Federal Tax Injunction Act ("TIA") and did not "fall within the exception to the TIA for ‘information gathering’ activity."
The Ninth Circuit Court of Appeals affirmed, holding that the TIA bars federal courts from enjoining the collection of state taxes where the requested relief would "to some degree" stop the assessment or collection of a state tax and an adequate state law remedy exists. Online Merchants Guild v. Maduros (9th Cir. 2022) 52 F.4th 1048, cert. denied (2023) 143 S.Ct. 2642.