Court Strikes Down Maryland’s Digital Advertising Tax Ban

Richmond, Virginia – A federal appeals court ruled Friday that a Maryland law preventing companies from explaining digital advertising tax increases to customers is unconstitutional. The 4th U.S. Circuit Court of Appeals found the law violated First Amendment rights.

The Chamber of Commerce and two other trade groups challenged the law, arguing it limited free speech and protected lawmakers from criticism. In a unanimous decision, the court reversed a lower court ruling.

The law targeted large businesses producing at least $1 million in gross revenue from digital ad services. Maryland officials estimated it could bring in $250 million annually through taxes imposed on a sliding scale based on global revenue.

Circuit Judge Julius Richardson stated that the provision against passing the tax cost as a separate fee prevented companies from communicating clearly with consumers. He wrote, “Keeping out of hot water with voters is not among the interests that can justify a speech ban.”

The case was returned to U.S. District Judge Lydia Kay Griggsby in Greenbelt, Maryland, to determine the next steps and potential remedies. Trade groups applauded the decision, asserting it recognized censorship.

“Maryland tried to prevent criticism of its tax scheme, and the Fourth Circuit recognized that tactic,” said Paul Taske, co-director of the NetChoice Litigation Center.

The case is Chamber of Commerce et al v. Lierman, 4th U.S. Circuit Court of Appeals, No. 24-1727.