A Maryland state tax court has struck down the state’s first-in-the-nation tax on digital advertising and ordered state officials to repay the tax money already collected from big tech firms.
The Maryland Tax Court said the tax violates the federal Internet Tax Freedom Act as well as the First Amendment and the commerce and due process clauses of the US Constitution.
The legal fight has been watched by other states that are considering taxes for online advertisements. Maryland estimated the tax, approved in 2021, could raise about USD 250 million a year to help pay for a sweeping K-12 education measure.
In Friday’s decision, the tax court ordered the state to repay the tax money already collected by Apple, Google and Peacock TV.
The law taxed revenue that large companies make on digital advertisements shown in Maryland. Companies making more than USD 100 million in global annual gross revenues were taxed at a 2.5 per cent rate. The rate increased for companies with larger revenues,
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