The saga continues over Maryland’s Digital Advertising Gross Revenues Tax (Digital Ad Tax), much to the chagrin of Peter Franchot, Comptroller of Maryland, who is tasked with administering and enforcing the tax and has publicly issued concerns with the constitutionality of the tax.
A Maryland state court struck down the state’s Digital Advertising Gross Revenues Tax (“Digital Ad Tax”) as invalid under both the federal Internet Tax Freedom Act (“ITFA”) and U.S. Constitution.
Enacted February 12, 2021, Maryland’s Digital Ad Tax by its terms applies to any person with at least $1 million of annual gross revenues from digital advertising services in Maryland and global annual gross revenues of at least $100 million. The tax applies broadly to “digital advertising services,” including banner advertisements, search engine advertisements, interstitial advertisements, and other comparable advertising services accessed on a digital interface in Maryland. The Digital Ad Tax is imposed on revenue derived from digital advertising services in Maryland and applies at rates increasing from 2.5% to 10% depending on the taxpayer’s global annual gross revenue, regardless of where the revenue is earned. Continue Reading ›
On February 15, 2021, the Maryland Court of Appeals issued a decision in Clear Channel Outdoor, Inc. v. Director, Department of Finance of Baltimore City, Case No. 24-C-18-001778 (Md. 2021), upholding the constitutionality of a local ordinance that imposes an annual excise tax on businesses selling advertising space on off-site billboards. The tax in question applies only to businesses that own or control off-site billboards in the City of Baltimore i.e., billboards that are not located on the premises where the goods or services being advertised are offered for sale. Continue Reading ›
On February 12, 2021, Maryland legislators voted to override Gov. Larry Hogan’s (R) veto of H.B. 732, making Maryland the first state in the nation to impose a digital advertising tax. While Maryland’s enactment of the bill is a first, other states have impending digital advertising tax bills, such as New York, Connecticut, Indiana, Nebraska, Washington, Montana and Massachusetts. Maryland’s digital advertising tax, which becomes effective March 14, 2021 (30 days after the Governor’s veto), has been preemptively challenged in U.S. District Court. Continue Reading ›
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