A Maryland court has struck down the state’s first-in-the-nation tax on digital advertising.

The tax, approved in 2021, was designed to raise hundreds of millions of dollars for public schools by taxing online ads sold by big tech companies.

On Friday, the Maryland Tax Court ruled in favor of Apple, Google, and Peacock TV and ordered the state to refund taxes already paid by the companies. 

How Maryland’s digital ad tax worked

Companies making more than $100 million in global annual gross revenues were taxed at a 2.5% rate. The rate increased for companies with larger revenues, topping out at a 10% rate for companies making $15 billion or more in global gross annual revenues.

Supporters of the law contended Maryland needed to overhaul its tax methods in response to significant changes in how businesses advertise. But attorneys representing Big Tech companies, including Amazon and Meta, challenged the law in multiple legal venues, arguing in part that they were unfairly targeted.

Last year, 4th U.S. Circuit Court of Appeals ruled part of the law violated the Constitution because it blocked Big Tech companies from telling customers about the tax. That, Judge Julius Richardson said, violated the right to free speech.

Latest court ruling

In Friday’s ruling, the Maryland Tax Court said the tax violates the federal Internet Tax Freedom Act, as well as the First Amendment and the commerce and due process clauses of the U.S. Constitution.

The tax court said Congress — not the state legislature — is tasked with regulating interstate commerce, and that the tax law was inappropriately based on global revenue rather than revenue from in-state advertising.

The federal Internet Tax Freedom Act bars the taxation of e-commerce if similar services are not taxed. At least for now, the tax court found, there isn’t much of a difference between digital advertising and print or billboard ads, which means the bar on taxation applies.

Maryland Senate President Bill Ferguson and House Speaker Joseline Pena-Melnyk, both Democrats, issued a statement saying they “respectfully disagree” with the tax court ruling and expect the legal process to continue.

They said the tax was enacted to keep the state’s tax system in pace with a changing economy.

“We remain committed to ensuring that Maryland’s tax system is fair, sustainable, and reflects today’s economy,” they said. “We will continue working with the Attorney General and Comptroller as this matter proceeds through the courts.”

The postal employee told Maryland Lottery officials that the combination on his $1 straight bet Pick 5 ticket, 7-2-4-0-3, matched the results exactly, earning him a spot among those who’ve won the game’s top prize.

“I looked up the results on my phone and could not believe it when I saw my numbers. I had to ask a co-worker to check to see if I was seeing things,” he said.

BALTIMORE (WBFF) — One person suffered non-life-threatening burn injuries after a fire broke out at a BWI Marshall Airport parking garage Thursday morning.

Jonathan Dean, a spokesperson for the airport, said the fire led to the temporary closure of the parking garage.

“There was no impact on airline flight operations. The Daily Garage was fully reopened at about 2:00 p.m.,” Dean said in an email.

The fire was caused by a leak in the gas manifold that services the multistory parking garage, according to a news release from the Maryland State Fire Marshal.

Read the full story at The Baltimore Sun.