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Apple & other tech giants appeal Maryland's digital advertising tax

Maryland taxes digital ads

A digital advertising tax law passed in Maryland in 2021 is coming under fire, with Apple and other tech companies appealing the law and demanding refunds on taxes already paid.

Maryland passed the first-of-its-kind tax on digital advertising in 2021. It was expected to bring in about $250 million per year to fund lofty education goals.

According to a report from The Baltimore Banner, Apple is leading the charge in opposing the tax. A hearing is set for November 17, and other companies like Google, Amazon, Meta, and Microsoft have filed appeals as well.

Apple argues in its court filings that the tax "singles out advertising services delivered over the internet for taxation while advertising services delivered through other means are expressly excluded from taxation altogether." The company also takes issue with how the taxes are determined to be paid.

Companies that earn at least $100 million per year globally are required to pay the advertising tax on all digital ads run within Maryland. These requirements and implementations allegedly violate multiple federal laws and constitutional protections.

Apple is appealing to have the tax struck down and a full refund be issued. Maryland has reportedly collected $32 million from the tax in 2023 so far.

Americans for Digital Opportunity, which represents the interests of the advertising industry, isn't a part of the case but its president Doug Mayer offered some commentary on the case.

"This suit is just one more proof point that Maryland has bitten off way more than it can chew with this short sighted and illegal tax," Mayer said. "Digital advertising is utilized by businesses of all sizes and that is exactly who is paying for this now: Maryland businesses both small and large. Someday soon this tax will be ruled unconstitutional, and the state will be forced to pay back every penny it took — hope they haven't started spending it."

Comptroller Brooke Lierman has filed a motion to dismiss Apple's case that will be considered by a Maryland Tax Court judge. The comptroller asserts that Apple didn't properly apply for a refund and isn't due one.

The case will be heard Friday, November 17.