Judge strikes down provision of digital ad tax as First Amendment violation

"Maryland will not be able to enforce part of a 2021 law that allowed it to obscure the costs of a digital ad tax from consumers who were paying it. The order - which will not be appealed by the state - strikes down one portion of the first-of-its-kind tax on digital advertising within the state. That provision prohibited online companies from alerting consumers to the tax, by passing it on to them as a surcharge, fee or line item on their bills."

"Opponents of the law had said that it required them to collect the tax but prohibited them from telling customers where the tax came from - shielding lawmakers who approved the tax from criticism, and violating the businesses' free speech rights, they said. U.S. District Court Judge Lydia Kay Griggsby, in a one-page order Wednesday, issued a declaratory judgement in favor of the tech industry that had sued to block the tax, saying the targeted provision of the law "facially violates the First Amendment.""

"Griggsby permanently barred the state from enforcing that provision, but left the digital advertising tax in place, for now. Senate President Bill Ferguson (D-Baltimore), a sponsor of the 2021 bill, did not respond to a request for comment Friday. A spokesperson for the Office of the Comptroller said the office has Griggsby's final order under review."

A federal judge issued a declaratory judgment that a targeted provision of Maryland's 2021 digital advertising tax law facially violates the First Amendment. The provision prevented online companies from notifying customers about the tax by adding a surcharge, fee or line item. The judge permanently barred the state from enforcing that provision while leaving the tax itself intact for now. The state will not appeal the order. A separate challenge to the tax remains pending in Maryland Tax Court, and the state has collected nearly $419 million from the tax since 2022.

Read at Route Fifty