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May 10, 2023

Maryland Supreme Court dismisses taxpayer challenge to state's Digital Advertising Services Tax

On May 9, 2023, the Maryland Supreme Court (Court) vacated a lower court ruling that invalidated the state's Digital Advertising Services Tax as violating the US Constitution and federal law. The Court concluded that the taxpayers failed to exhaust their administrative remedies before filing their action in the Maryland courts and did not reach the merits of the case. In doing so, the Court implicitly agreed with the Maryland Attorney General's argument that Md. Code, Tax-General Section13-505 1 extends to actions for declaratory judgments and requires taxpayers to exhaust their administrative remedies through the Maryland Tax Court. The Court rejected the taxpayers' claim that a constitutional exception to that law applied because they were challenging the entirety of the law. Comptroller of Maryland v. Comcast of California, Maryland, Pennsylvania, Virginia, West Virginia, LLC, et al., per curiam (Md. Sup. Ct. May 9, 2023).


The Court's order effectively requires the taxpayers to refile their claim in the Maryland Tax Court, a process that could take more than a year before the matter can return to the courts. In the interim, it is likely that states awaiting the outcome of this case before enacting their own versions of the tax could move forward with a tax or fee on digital advertising services. To date, at least five states — Connecticut, Massachusetts, Montana, New York and Texas — have introduced or considered identical measures. Ultimately, Maryland's Digital Advertising Services Tax may prove too flawed to withstand constitutional scrutiny. But, for now, the tax remains law and may be enforced by the Maryland Comptroller.


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

Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor


1 Md. Code, Tax-General Section13-505 bars Maryland courts from issuing "an injunction, writ of mandamus, or other process against the state … to enjoin or prevent the assessment or collection of a tax."