Tax Insight

Maryland Tax Court finds digital advertising tax invalid in three refund cases

Insight
5 minute read
August 24, 2026

What happened?

The Maryland Tax Court on August 14, 2026 issued three memoranda and orders granting these petitioners summary judgment, finding that:

The digital advertising gross revenues (DAGR) tax violates the Internet Tax Freedom Act (ITFA), the dormant Commerce Clause, and Due Process.
In one of the decisions, the broadcast news media exemption results in a First Amendment violation. In that same decision, the court separately rejected a foreign Commerce Clause challenge.

The court reversed the Comptroller's denial of tax year 2022 (TY2022) refund claims, ordering refunds along with interest for all three petitioners.

Apple Inc. v. Comptroller, Md. Tax Ct. No. 23-DA-OO-0456 (8/14/26); Google LLC v. Comptroller, Md. Tax Ct. No. 23-DA-OO-0649 (8/14/26); Peacock TV, LLC v. Comptroller, Md. Tax Ct. No. 23-DA-OO-0654 (8/14/26).

Why is it relevant?

These are the first Maryland Tax Court decisions addressing the core validity of the DAGR tax on its merits. The Supreme Court of Maryland held in 2023 that the plaintiffs in the earlier circuit court action had failed to exhaust their administrative remedies and ordered dismissal of that action. The plaintiffs subsequently filed refund claims, which were denied and appealed to the Tax Court. The Comptroller may petition for judicial review in circuit court within 30 days. Any judicial review would extend uncertainty. .

Actions to consider

Digital advertising service providers should:

Assess the opportunity for any potential refund claims against the three-year limitation period, which generally runs from the date each tax payment was made;
Inventory/track any existing refund claims that may have been initiated;
Evaluate appropriate reserve and financial-statement treatment while judicial review remains possible;
Carefully evaluate the impact of these decisions before ceasing payment, since the decisions are only binding for the three petitioners and there is a strong possibility that the Comptroller will appeal;
Monitor the 30-day window for circuit court judicial review.