Maryland Seeks to Reverse Ruling on Digital Advertising Tax

Google LLC, Peacock TV LLC, and Apple Inc. won an initial court battle against Maryland's digital advertising tax in August, but now the state is asking a trial court to overturn that decision.

The Maryland Tax Court held that the tax was unconstitutional because it discriminates against large out-of-state companies, and also found it to be preempted by the federal Internet Tax Freedom Act (ITFA), which prohibits states from singling out electronic commerce for taxation.

This ruling is significant not only for Maryland's digital advertising tax but also for similar taxes being considered in other states. The trial court's decision provides valuable analysis of the relatively untested ITFA, which could have far-reaching implications for the digital economy.