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Google, Others File Legal Complaint Over Maryland Digital Ad Tax

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(Image credit: The Pancake of Heaven! - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=77221979)

Computer companies have filed a complaint in U.S. district court against Maryland's Digital Advertising Gross Revenues Tax, asking the court to declare the law is, itself, unlawful and barring its enforcement.

The complaint was filed by the Computer & Communications Industry Association (CCIA) along with the U.S. Chamber of Commerce, Internet Association, and NetChoice. CCIA members include Amazon, Dish, Google, eBay, and Facebook.

The Maryland General Assembly last week overrode Governor Larry Hogan's veto of the new law (HB 732). The Association of National Advertisers (ANA), which signaled it would take the law to court as well.

The law institutes a gross revenues tax on "certain" digital ad services, and presumes that digital ads are provided in the state under "certain" circumstances and require "certain" persons with "certain" annual gross revenues from digital ad services to pay the tax.  

Also Read: ANA Warns of D.C. Ad Tax

In its complaint, the groups call the act a "punitive assault on digital, but not print, advertising."

They argue it is meant to penalize digital advertisers, citing testimony during the bill's consideration to the effect that digital ad companies were eroding "the shared values and norms of American society."

They say taxing digital ads will reduce resources for creating high-value content, leaving the field open to low-quality "junk." They also say that it will raise consumer costs. 

Also Read: Advertisers Try to Help Providers Navigate CCPA

"Simply put, the Act will harm Marylanders and small businesses and reduce the overall quality of internet content—all while doing nothing to stave off the dissemination of misinformation and hate speech."

The law is itself unlawful in "myriad" ways, they say, including that it is preempted by the Internet Tax Freedom Act (ITFA) prohibition on “multiple and discriminatory taxes on electronic commerce," and violates due process "by burdening and penalizing purely out-of-state conduct and interfering with foreign affairs."