DeAndre Morrow (Greenberg Traurig): Maryland Digital Ad Tax Rulings Shift Debate to What Comes Next, Bloomberg Tax (Aug. 21, 2026):
Although the decisions may be viewed as taxpayer victories, they aren’t the final word and instead shift the controversy into its next phase. The comptroller has indicated that Maryland will continue defending the tax and intends to appeal. Appellate review therefore might focus attention on the tax court’s reasoning, while taxpayers confront more immediate questions involving refund claims, limitations periods, and continuing compliance.
The procedural history matters. A Maryland circuit court previously held the tax unlawful, but the Supreme Court of Maryland vacated that judgment in 2023 because the challengers hadn’t exhausted the state’s administrative remedies.
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That history also places the tax court’s constitutional analysis in context. In directing challenges to the digital advertising tax through the administrative process, the Supreme Court of Maryland reaffirmed that the tax court is “fully competent to resolve issues of constitutionality and the validity of statutes” and that the presence of constitutional questions doesn’t permit taxpayers to bypass prescribed administrative remedies.
Maryland’s courts now have a developed record and multiple grounds for reviewing the tax. Appellate courts may affirm, narrow, or reject portions of the analysis, but the tax court’s consideration of the constitutional claims was neither unexpected nor beyond its recognized adjudicatory role.
Michael J. Bologna (Bloomberg): Maryland Ad Tax Defeat Threatens to Upend Other States’ Plans
Tax administrators in Illinois, Utah, and Washington are combing through the Maryland Tax Court’s sweeping rejection of the state’s first-in-the-nation digital advertising tax, aware the ruling could mean trouble in their own backyards.
In the past year, all three states enacted laws resembling Maryland’s Digital Advertising Gross Revenues Tax, which was struck down Aug. 14 for violating the federal Internet Tax Freedom Act, the US Constitution’s commerce and due process clauses, and the First Amendment. Utah and Washington are facing similar legal challenges, and Illinois isn’t far behind, Stephen Kranz, an attorney involved in the Maryland litigation, told Bloomberg Tax.
The Maryland ruling, which the state is expected to appeal, isn’t binding on other states, but it could have a chilling effect, observers say.
At least a dozen states and a handful of local governments have examined some type of levy on the surging profits of technology and digital entertainment companies such as Apple Inc., Google LLC, and Peacock TV LLC, the Maryland plaintiffs. Most of the states — including California, Connecticut, Indiana, Massachusetts, Minnesota, Nebraska, New York, and Pennsylvania — have adopted a wait-and-see posture since Maryland enacted its law five years ago to determine whether it would hold up to legal scrutiny.
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