Judge Dismisses Md. Digital Ad Tax Challenge

A U.S. district court judge dismissed businesses’ challenge to Maryland’s digital ad tax law Wednesday. U.S. District Court of Maryland Judge Lydia Kay Griggsby granted the state’s motion to dismiss and denied the U.S. Chamber of Commerce’s motion for summary judgment on the remaining count in the complaint. In January, the 4th U.S. Circuit Court of Appeals returned the case to the district court as it disagreed that a decision on the constitutionality of a related pass-through ban was moot (see 2401100060). The Maryland law’s pass-through prohibition “restricts protected speech, to the extent that this statute requires that a covered taxpayer not directly pass on the cost of the tax imposed” by the Digital Advertising Gross Revenues Tax Act, through a separate fee, surcharge or line item, Griggsby wrote. “But Plaintiffs have not met their burden to show that a substantial number of the Pass-Through Prohibition’s applications are unconstitutional, when judged in relation to the statute’s plainly legitimate sweep, to prevail on their First Amendment claim.”