Today, four trade associations filed a lawsuit in federal court against Maryland's newly passed tax on digital advertising services.

My colleagues and I review the case in a new piece:

As a reminder, the new law imposes a gross receipts tax ranging from 2.5% to 10% on revenues derived from digital advertising services in MD. The tax applies to companies with global revenues from all sources of $100 million+, and no deductions for expenses are permitted.

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The tax must be paid on a quarterly basis throughout the year, with the first payment due April 15, 2021, and fines and penalties for failure to file up to five years’ imprisonment.

Connecticut, Indiana, Montana, and Oregon, are also considering new digital tax legislation.

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The lawsuit filed today in federal court challenges the Maryland legislation on several grounds:

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One is that it violates the Permanent Internet Tax Freedom Act (PITFA). Signed into law by President Obama in 2016, PITFA bans state taxes that discriminate against interstate commerce.

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