Maryland Digital Ad Tax Challenges Must Be in State Court (1)

The US Chamber of Commerce and two technology trade groups failed to convince the Fourth Circuit that the bulk of their challenge to Maryland’s first-in-the-nation tax on digital advertising belongs in federal court.

The US Court of Appeals for the Fourth Circuit on Wednesday rejected the groups’ arguments that the levy is a penalty disguised as a tax, and therefore not covered by the federal Tax Injunction Act’s limits on when federal courts can weigh in on state tax matters.

But the court held the groups’ Internet Tax Freedom Act, commerce clause, and due process clause arguments shouldn’t have been ...