Parties Support May Argument in Md. Digital Ad Tax Case

Maryland and business challengers of the state’s digital ad tax supported May oral argument on remaining issues at the U.S. District Court in Baltimore. Judge Lydia Griggsby ruled last month the Tax Injunction Act precluded the court from reviewing the tax itself, though it could review the law’s prohibition on passing the tax’s cost onto consumers (see 2203040060). The court should give parties three weeks to simultaneously file supplemental briefs, both sides agreed in a Monday joint status report. Plaintiffs including the U.S. Chamber of Commerce think reply briefs aren’t needed, but defendants would like the option to file replies three weeks later. If oral argument can’t occur in May, Maryland asks that it occur after July 11 “due to previously scheduled matters,” the joint report said: If the court doesn’t order supplemental briefs, plaintiffs think it should happen at the court’s “earliest convenience.” The parties stipulated that Maryland’s tax statute doesn’t “prohibit a person who derives gross revenues from digital advertising services in the State from indirectly passing on the cost of the tax … by factoring such cost into its customer pricing.” Cost “is passed on directly only when it is imposed on the customer by means of a ‘separate fee, surcharge, or line-item,’” said the joint report: As such, plaintiffs withdraw part of their complaint claiming the tax law “violates the Commerce Clause or dormant Commerce Clause.”