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David A. Hughes Discusses Maryland’s Digital Advertising Tax Ruling with Tax Notes

Tax Notes Today State 10/21/2022
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The following excerpt is from Andrea Muse’s article, “Maryland Digital Ad Tax Ruling Applauded but Questions Remain” published by Tax Notes Today State on October 19, 2022. Read the full article on Tax Notes’ website here (subscription required).

Anne Arundel Circuit Court Judge Alison Asti struck down Maryland’s tax on digital advertising services during the October 17, 2022, motions hearing in Comcast v. Comptroller. She concluded the tax violates the dormant commerce clause, the First Amendment and the Internet Tax Freedom Act (ITFA).

David A. Hughes told Tax Notes he always thought the plaintiffs’ ITFA argument had merit but said, “the state tried to take the court down a rabbit hole on that issue.”

David said Maryland argued that digital advertising and traditional advertising are different because you can do things with digital advertising that you cannot do through traditional advertising, such as tracking consumer purchasing through the internet.

“But if that’s the test, then ITFA’s internet discrimination ban becomes meaningless because there will always be some difference between internet and non-internet-based activity,” David said. “The judge, to her credit, took a more holistic view and said advertising is advertising, and if Maryland chooses not to tax traditional advertising, then ITFA bars digital advertising.”

Read the full article by Tax Notes here (subscription required).

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