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April 16, 2021

Maryland legislature approves bill that would move applicability date of digital advertising tax to 2022, exempt certain taxpayers from tax

The Maryland legislature approved and sent to Governor Larry Hogan SB 787, which would modify the state's new Digital Advertising Services Gross Revenues Tax.1 The applicability date of the new tax would be changed to tax years beginning after December 31, 2021 (from December 31, 2020). Thus, first quarterly estimated payments would be due April 15, 2022, based on first quarter 2022 revenues.

The new digital advertising services tax is imposed on the annual gross revenue2 derived from digital advertising in the state. The tax applies at a graduated rate3 that increases in increments based on the taxpayer's globalannual revenues. SB 787 would exempt from this tax advertising on digital interfaces owned or operated by or on behalf of a broadcast entity and a news media entity.4 A "news media entity" would not include "an entity that is primarily an aggregator or republisher of third-party content."5

SB 787 would also prohibit businesses subject to the digital tax from passing that cost to the customers who purchase the digital advertising services through a separate fee, surcharge or line item.6

Persons with annual gross revenues derived from digital advertising services within Maryland of at least $1 million in any year must file a return with the Office of the Maryland Comptroller of Treasury (Comptroller) on or before April 15 of the following year. Persons that reasonably expect their annual gross revenues from digital advertising services in the state to exceed that amount must file a declaration of estimated tax on or before April 15 of that year and pay quarterly estimated taxes.


Persons subject to the tax must maintain records of the digital advertising services they provide in the state to substantiate the basis for their apportionment and calculation of the taxes owed on digital advertising gross revenues. Failure to comply with provisions of this new tax could result in criminal penalties, including fines and imprisonment.

The Comptroller indicated that it is working on guidance and regulations on how to determine the state from which revenue from digital advertising services is derived. Interested parties will have an opportunity to comment on the draft regulations once they are published in the Maryland Register.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Karl Nicolas (
   • Joe Imbarlina (


1 Md. Laws 2020, ch. 37 (HB 732) (codified generally at Md. Code Tax-Gen. Sections 7.5-101 to -301), enacted over governor's veto on February 12, 2021.

2 "Annual gross revenues" is defined as income or revenue from all sources, before any expenses or taxes, computed according to generally accepted accounting principles. Md. Code Tax-Gen. Section 7.5-101(b).

3 The graduated rates are: (1) 2.5% of the assessable base for persons with global annual gross revenues of $100 million through $1 billion; (2) 5% of the assessable base for persons with global annual gross revenues of more than $1 billion through $5 billion; (3) 7.5% of the assessable base for persons with global annual gross revenues of more than $5 billion through $15 billion; and (4) 10% of the assessable base for persons with global annual gross revenues exceeding $15 billion. Id. Section 7.5-103.

4 SB 787, sec. 1 (amending Md. Code Tax-Gen. Sections 7.5-101(e)(2), (d) (defining "broadcast entity") and (g) (defining "news media entity")).

5 Md. Code Tax-Gen. Section 7.5-101(g)(2).

6 Md. Code Tax-Gen. Section 7.5-102(c).