Maryland Collected Over $100 M a Year From a Digital Ad Tax Courts Just Called Unconstitutional

Maryland's Tax Court struck down the state's digital advertising tax and ordered refunds for more than five years of collections — a ruling the Tax Foundation says other states should watch closely. Jared Walczak, Tax Foundation senior policy analyst, joins The States to break down the decision and its implications for Illinois, Utah, and Washington, all of which have adopted similar digital ad taxes. The court found Maryland's tax violated the Internet Tax Freedom Act (which bars discriminatory taxes on e-commerce) as well as three of four prongs of the Commerce Clause test established in Complete Auto Transit v. Brady. Maryland had projected roughly $250 million a year in revenue from the tax but collected over $100 million annually; Walczak estimates the state may owe $500-700 million in refunds with interest, pending further appeals. Utah and Illinois adopted digital ad taxes this year; Washington applies its sales tax to digital advertising. Read more on this developing story at thecentersquare.com.