Apple challenges Maryland’s tax on digital advertising

Apple is challenging Maryland’s tax on digital advertising in a lesser-known state tax court after previous legal challenges brought by other businesses failed, according to The Baltimore Banner.

On February 12, 2021, Maryland’s General Assembly enacted two bills over the veto of Gov. Larry Hogan that make major changes in the state’s tax code. The first bill, H.B. 932, expands the existing sales and use tax base to include “digital products.” It became effective March 14, 2021.

The tax applies to companies based on the amount of money they make on ads that are shown to Marylanders as they click and scroll their way around the internet, and was designed to raise money for public schools. It ranges from 2.5% to 10%, with companies with larger advertising revenues paying more.

Apple was the first to file an appeal to the Maryland Tax Court, and a hearing is set for Friday. But several other companies have followed with their own appeals in recent days: Google, Amazon Advertising, A9.com (a subsidiary of Amazon), Meta Platforms (parent company of Facebook and Instagram), Yahoo, Twitch, Snap, Microsoft Online, ABC, Peacock TV, IMDB.com, Grubhub and Catalina Marketing.

The tax, Apple argued in court filings, “singles out advertising services delivered over the Internet for taxation while advertising services delivered through other means are expressly excluded from taxation altogether.”