Maryland Tax Court Strikes Down Digital Ad Tax, Prompting Reconsideration in Other States
The Maryland Tax Court has invalidated the state's digital advertising tax, a decision that Americans for Tax Reform (ATR) President Grover Norquist believes will serve as a 'cautionary tale' for other states. The court ruled that the tax violated the Internet Tax Freedom Act (ITFA), the Commerce Clause, and the Due Process Clause. As a result, Maryland has been ordered to issue refunds for five years' worth of digital advertising tax payments. This tax, the first of its kind in the nation, was enacted after the Democrat-controlled Maryland House and Senate overrode a veto by former Governor Larry Hogan in 2021. The state budget had assumed significant revenue from this tax, initially projected to generate up to $250 million annually for education reforms. However, the tax has been mired in litigation since its inception, leading to what Samuel Handwerger, an accounting lecturer at the University of Maryland, described as 'endless litigation and a tax that may ultimately cost the state far more than it eve... 
