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A first-of-its-kind state tax on some digital ads has been struck down as a violation of the federal Internet Tax Freedom Act by the Maryland Tax Court.
The decision issued Friday morning related to three challenges to the tax by Apple, Google and Peacock TV, a streaming service.
In its ruling, the court orders the state to refund the taxes collected plus interest. A spokesperson for the Office of the Comptroller said the office was reviewing the ruling.
The law has been the subject of multiple state and federal court challenges since it was enacted.
Portions of the law were struck down last year as a聽聽by a federal appeals court.
罢丑别听聽targets big tech firms including Apple, Meta, and Google.
Under the law, companies reporting gross global annual revenue of at least $100 million are subject to a 2.5% levy. The tax increases in increments of 2.5% to a maximum rate of 10% levied against companies reporting more than $15 billion in gross global revenue.
The state could collect as much as $250 million annually from the digital ad tax, according to a聽. The funds are earmarked for the state鈥檚 education reform program.
In October, the comptroller鈥檚 office reported it had collected more than $400 million related to the tax.
Money collected from the tax was supposed to offset costs of the ever expensive Blueprint for Maryland鈥檚 Future education program. Costs for that program are responsible for driving billions of dollars in projected state structural budget gaps. Next year, the state will have to tame a more than $3 billion projected gap as more expensive parts of the program come online.
A spokesperson for Senate President Bill Ferguson (D-Baltimore), a sponsor of the 2021 bill, was not immediately available for comment.
But Doug Mayer, president of Americans for Digital Opportunity, hailed the decision.
鈥淭oday鈥檚 ruling validates what every person with the most basic understanding of tax law has been saying for over six years 鈥� digital advertising taxes are illegal on multiple levels,鈥� Mayer said. 鈥淚f elected officials really want to increase revenue, they should be empowering entrepreneurs, not concocting illegal taxes that stifle much of what is powering so much of the economy.鈥�
