Sales/Use/Indirect:
Maryland: Industry Groups File Complaint Challenging Validity of New Digital Advertising Tax
Case 1:21-cv-00410-DKC, D. Md. (complaint filed 2/18/21). Following Maryland’s recent enactment of a new and novel digital advertising revenues tax – which imposes a tax on annual gross revenue from digital advertising services in Maryland based on a tiered tax rate schedule [see recently issued Multistate Tax Alert for more details on this new tax] – various trade and industry groups have filed a lawsuit in Maryland federal court challenging the tax’s validity and seeking a declaration and injunction against its enforcement. Among their assertions that Maryland’s new digital advertising revenues tax is “unlawful” are claims that the tax:
Is preempted by the federal Internet Tax Freedom Act (ITFA), which prohibits states from imposing “multiple and discriminatory taxes on electronic commerce;” and
Violates the Due Process and Commerce Clauses of the US Constitution by burdening and penalizing purely out-of-state conduct and interfering with foreign affairs.
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