![]() ![]() In Europe, advertising across international borders had the genuine potential to be untaxable in either jurisdiction regardless of the tax sourcing rules of the countries involved. Some of the interest stems from digital tax trends in the European Union, based on a misunderstanding of how EU taxation differs from taxation in U.S. What’s lacking is any consistent rationale. As we have noted elsewhere, across the country, policymakers of both parties have developed a strong interest in taxing large technology companies through digital advertising taxes, social media taxes, and data taxes. Maryland is, thus far, the only state to adopt a tax on digital advertising, but it is far from the only state to consider one. ![]() The state’s prospects of prevailing, however, appear incredibly slim. Maryland is preserving its right to appeal the circuit court ruling and is still seeking dismissal of the separate federal case, which has different parameters. The tax went into effect this past January, and litigation has been proceeding on two tracks-federal and state-ever since. ![]() Almost a year later, in February 2021, the legislature overrode that veto but then quickly enacted legislation delaying the tax’s implementation in acknowledgment of the legal questions circulating around the tax, along with the statute’s ambiguity about how the tax would be assessed.Ĭomptroller Franchot’s office ultimately crafted regulations that, at times, seemed to disregard the language of the statute, replacing one set of unrealistic and constitutionally suspect sourcing rules with another set that was just as legally fraught. Right before the pandemic, Maryland lawmakers passed legislation to tax digital advertising served in Maryland, but the bill was vetoed by the governor, who cited both its adverse impact on Maryland businesses and its dubious constitutionality. In a statement issued after a Maryland circuit court ruled against the tax on three separate grounds, Franchot said that he has been “concerned about the constitutionality” of the law since General Assembly deliberations began, that he firmly believes the state should no longer expend resources “to defend a law that was constitutionally questionable at the time of enactment,” and that “the tax’s residual impact on small businesses that utilize digital advertising services” gives him pause about the prudence of the law. These days, he doesn’t seem too happy about it. As Maryland’s elected comptroller, Peter Franchot (D) is technically the defendant in two cases challenging the state’s first-in-the-nation digital advertising tax, whether he likes it or not. ![]()
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