On March 4, 2022, a federal judge ruled that the federal Tax Injunction Act (“TIA”) bars a challenge to Maryland’s Digital Advertising Gross Revenues Tax (“Digital Ad Tax”) from proceeding in federal district court, but does not bar the plaintiffs from challenging Maryland’s prohibition on passing the tax to a customer “by means of a separate fee, surcharge, or line-item” (the “Pass-Through Prohibition”). Chamber of Commerce of the United States of America v. Franchot, No.…
On April 30, 2021, the Court of Appeals of Maryland held in Travelocity.com LP v. Comptroller of Md., No. 14, 2021 Md. LEXIS 200 (Apr. 30, 2021), that the taxpayer, an online travel company, was not required to collect and remit state sales and use tax prior to the enactment of Maryland’s accommodations intermediary law in 2015. This ruling by the state’s highest court, which overruled the lower courts’ decisions, helps clarify the “pre-accommodations intermediary law” tax obligations of online travel companies, and may also be helpful in understanding the impact of marketplace facilitator law enactments more generally.
Connecticut legislative leaders recently announced support for a digital advertising tax (“Connecticut Digital Advertising Tax”) proposed by the Connecticut Joint Committee on Finance, Revenue and Bonding (the “Finance Committee”). Connecticut joins Maryland, Massachusetts, New York, and Texas, among others, as states with concrete digital advertising tax proposals on the table (and in Maryland’s case, an enacted law).
On April 12, 2021, Maryland legislators passed Senate Bill 787, which proposed several significant amendments to Maryland’s digital ad tax (see Maryland Passes Digital Advertising Gross Revenues Tax After Overriding Veto). Governor Larry Hogan declined to take action with respect to signing or vetoing Senate Bill 787. As a result, the legislation automatically became law, effective May 12, 2021. Most notably, Senate Bill 787 delays the effective date of the digital advertising tax to tax…