On August 15, the 4th U.S. Circuit Court of Appeals struck down a controversial part of Maryland’s Digital Advertising Gross Revenues Tax Act.
The law, which imposed a tax on digital advertising revenues for large tech companies, included a provision barring companies from itemizing the tax on customer invoices.
The court ruled that this disclosure ban was unconstitutional under the First Amendment, framing it as a government attempt to control how businesses communicate tax burdens to customers.
The ruling has major implications for both businesses subject to digital ad taxes and their clients:
For CPAs, attorneys, and corporate tax teams:
The Maryland decision highlights the legal vulnerability of digital tax regimes when paired with speech restrictions. While states may continue experimenting with taxing digital activity, courts are signaling that transparency cannot be legislated away.
For tax professionals, this is both a compliance update and a reminder: tax visibility matters as much as tax liability.
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