I recently wrote an article¹ on the legal battle brewing between Maryland’s enactment of HB 732 and the Internet Tax Freedom Act (“ITFA”). Maryland’s HB 732 imposes a tax on companies based on their revenue generated from the sale of digital advertising services.²
Many observers believe HB 732’s tax on digital advertising revenues is in direct conflict with ITFA.³ There is currently a lawsuit filed in the U.S. District Court for the District of Maryland Northern Division alleging ITFA preempts HB 732.⁴ The reasoning is that ITFA prohibits “discriminatory tax” on electronic commerce and HB 732’s tax on digital advertising…
A major story last week was how the state of Maryland became the first to pass a law that will tax companies based on a percentage of their revenue derived from selling digital advertising (Digital Ad Tax). Whether a company will be subject to the tax will depend on its “Global Annual Gross Revenue” as defined under HB 732.
Long before the Digital Ad Tax was passed last Friday, the Office of the Maryland Attorney General submitted a letter analyzing the legal risks involved. In my opinion, one of those legal risks stands out above the rest.