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Rita Rich

Anne Arundel Circuit Judge Strikes Down Maryland Tax on Online Ads as Unconstitutional

An Anne Arundel County Circuit Court judge struck down Maryland’s tax on digital advertising Monday, saying it violates the U.S. Constitution’s prohibition on state interference with interstate commerce and discriminates against certain online companies while not taxing others.

The Maryland Daily Record says that Judge Alison Asti said that the tax essentially imposes a state regulation on interstate commerce, which is the constitutional province of Congress. Maryland was the first state in the nation to pass this type of tax.

Judge Asti adds the law also violates the federal Internet Tax Freedom Act’s prohibition on discriminatory taxes on online services. She said tha Maryland does not similarly tax non-digital advertising.

In addition, the tax violates the First Amendment because it is not viewpoint neutral. The tax applies to companies like Facebook, Google and Amazon, while exempting the online sites of news organizations.

Asti issued her decision in granting summary judgment for Verizon and Comcast, which had challenged the statutory tax on digital ads as unconstitutional and in violation of federal law.

The office of Maryland Comptroller Peter Franchot stated Monday that it is “reviewing the decision and deciding next steps,” which could include an appeal.

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