Tech, Business Groups Sue Md. on Digital Ad Tax
Business and tech industry groups sought to stop Maryland’s digital ad tax in federal court Thursday. The U.S. Chamber of Commerce, Internet Association, NetChoice and Computer and Communications Industry Association (CCIA) sued in U.S. District Court for Northern Maryland after…
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the Assembly voted last week to override Gov. Larry Hogan’s (R) veto of the bill (see 2102120050). The Internet Tax Freedom Act preempts the Maryland law, which also violates constitutional due process and commerce clauses “by burdening and penalizing purely out-of-state conduct and interfering with foreign affairs,” industry plaintiffs said. “The Act is a punitive assault on digital, but not print, advertising. It is illegal in myriad ways and should be declared unlawful and enjoined.” Though “styled as a tax, several features confirm its punitive character, including its severity (up to 10% of gross revenues), its focus on extraterritorial conduct, the segregation of its proceeds from the State’s general fund, and the legislative history leading to its enactment,” they said. A Hogan spokesperson emailed that the suit "highlights how not only are there real policy problems with the digital ad tax, but also serious legal questions surrounding it as well." The Maryland attorney general's office didn't comment.