[3]. 28 U.S.C. §1341.[4].

After Wal-Mart timely removed the action to the District Court, the court, sua sponte reviewed the subject-matter jurisdiction.Although the action met CAFA’s jurisdictional requirements, the Court found that Tax Injunction Act of 1937, 28 U.S.C. § 1341, and principles of comity barred jurisdiction.Specifically, under § 1341 the lower federal courts have no jurisdiction to hear suits that seek to declare illegal, enjoin, or rescind methods of state tax collection.

Big Sandy, a wholesale cigarette distributor, asserted that California’s cigarette excise tax did not apply to its wholesale cigarette distribution business when distributed directly to other Indian tribes. Big Sandy also claimed that because it was a tribally owned and operated company, California’s regulations surrounding cigarette distributions and the licensing, reporting and recordkeeping requirements did not apply to it and are preempted by the federal Indian Trader Statutes.The district court dismissed Big Sandy’s tax claim on jurisdictional grounds under the Tax Injunction Act, 28 U.S.C., § 1341. This Act prohibits “district courts from enjoin[ing], suspend[ing] or restrain[ing] the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.”

The American Trucking Association and three other plaintiffs sued in federal court, arguing that the RhodeWorks Act violates the commerce clause of the U.S. Constitution and discriminates against out-of-state trucking companies. Rhode Island argued that the toll imposed by the RhodeWorks Act is really a “tax” within the meaning of that term under the Tax Injunction Act (28 U.S.C. § 1341), which provides that “[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under state law where a plain, speed and efficient remedy may be had in the courts of such State.”The district court dismissed the case, agreeing with Rhode Island and holding that the toll imposed by the RhodeWorks Act is “really a highly targeted and sophisticated tax designed to fund infrastructure maintenance and improvements that would otherwise need to be paid for by other forms of tax-generated revenue.” (American Trucking Associations, Inc. v. Alviti, C. A. No. 18-378-WES, March 19, 2019, emphasis added.)

The taxpayers argued the differential tax treatment violated, among other things, the Fourteenth Amendment’s Equal Protection Clause.The taxpayers’ state lawsuit dragged on for more than a decade without moving beyond the discovery phase, prompting the taxpayers to file suit in federal district court. The district court dismissed the case for lack of subject matter jurisdiction based on the Tax Injunction Act, 28 U.S.C. § 1341 (TIA), which prevents federal district courts from enjoining, suspending or restraining the assessment, levy or collection of any tax under state law if a “plain, speed and efficient” remedy is available in the state’s courts.The Seventh Circuit reversed the district court on appeal.

Those suits are now likely foreclosed by the Court's decision. This decision also undermines state legislative efforts to combat overly aggressive nexus positions of other states by adopting statutes giving courts in the seller's "home" state the power to issue declaratory judgments regarding assessments by other states.The decision is especially impactful, given that the Tax Injunction Act (28 U.S.C. sec. 1341) already bars access to the federal courts to enjoin, suspend, or restrain a state tax assessment, levy, or collection except where there is no plain, speedy, and efficient state court remedy.

The Tax Injunction Act (“TIA”) prohibits federal district courts from enjoining, suspending or restraining the “assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.” 28 U.S.C. § 1341 (emphasis added). According to the plain language of the statute, if an organization is aggrieved by the assessment, levying, or collection of any tax under state law, it must seek a remedy in the courts of that state if there is a plain, speedy and efficient one.In Islamic Center of Nashville v. Tennessee, 872 F.3d 377 (6th Cir. 2017), the Sixth Circuit highlighted the broad application of the TIA and the importance of seeking a remedy in state court before filing a federal lawsuit.

Instead, the court’s review was limited to a discussion of the application of the Tax Injunction Act to this case. The Tax Injunction Act, 28 U.S.C. § 1341, prevents district courts from interfering with local tax matters where a remedy is available in state court. Here, Tennessee law provides the opportunity for judicial review of decisions by the State Board of Equalization in the state chancery court.

Direct Marketing Ass’n v. Brohl, Case No. 12-1175, at 18 (10th Cir., Feb. 22, 2016).Id. at 22.Id. at 28. 28 U.S.C. § 1341. 397 U.S. 137 (1970). Under Pike, courts apply a balancing test to determine whether or not a statute creates an undue burden on interstate commerce.

Notwithstanding attempts to reconcile the holding with recent precedent, the majority’s decision directly conflicts with the recent unanimous Supreme Court decision in Direct Mktg. Ass’n v. Brohl, 135 S. Ct. 1124 (March 3, 2015) (DMA), which found that the Tax Injunction Act (TIA, codified at 28 U.S.C. § 1341) did not bar a retail association’s challenge to comparable Colorado notice and reporting requirements (and accompanying penalty) imposed on out-of-state retailers. The TIA is modeled off of, and has consistently been interpreted to apply in the same fashion as its federal companion, the AIA.