Internet Tax Freedom Act

Maryland also had a big update this summer.

Just a couple of weeks ago on August 14th, in three separate decisions, Maryland's tax court struck down the state's digital advertising tax, ruling that the tax violates the Internet Tax Freedom Act, as well as the Commerce and Due Process Clauses of the Constitution.

The comptroller has not formally appealed these decisions, but the state does have 30 days from the date.

So it was August 14th.

Another thing to think about is these Maryland decisions likely will be instructive to other challenges, to other taxes.

Many states are trying to tax the digital economy in different ways, either directly as advertising or via other social media angles.

And When the Maryland cases looked at the Internet Tax Freedom Act, the court agreed with the challenger that the characteristics of traditional advertising and digital advertising were nearly identical.

So because Maryland was taxing digital advertising differently than traditional advertising, it was considered a discriminatory tax.

The second is that critics say it discriminates against online sellers.

The Federal Internet Tax Freedom Act bars discriminatory taxes on e-commerce.

And commissions earned by real estate agents, consignment stores, and oil and gas lease auctioneers, all of whom use computers, stay untaxed.

Only the online version got taxed.