Maryland: U.S. District Court Partially Dismisses Trade Associations’ Challenge to Maryland Digital Ad Tax

The U.S. District Court for the District of Maryland March 4 concluded that the federal Tax Injunction Act (TIA) barred Taxpayers’ challenge to Maryland’s Digital Ad Tax Act (DATA) in the federal courts but didn’t bar their challenge to the DATA’s pass-through prohibition provision in the federal court for excise tax purposes. Taxpayers, four trade associations, brought statutory and constitutional law challenges to the DATA, arguing that the charge was a punitive fee, rather than a tax. The state moved to dismiss the matter, contending Taxpayers’ claims were jurisdictionally precluded by the TIA. The district court noted: 1) the claims ...