Maryland Digital Ad Tax Update

Annapolis, MD, April 5, 2021
—AAF Maryland Leaders: As you know, the Digital Ad Tax is now Maryland law. However, there is still a great deal of uncertainty – within the business community and government – as to what that means.
The Maryland General Assembly is currently considering legislation that would amend the law by delaying implementation until 2022, and excluding broadcasters and news media entities from the tax. The legislature is scheduled to adjourn April 12, so we should know relatively soon if these changes are made.
If the legislation does not pass and the tax stays in effect as is, the confusion remains. It is our understanding the Maryland State Comptroller, charged with collecting the tax, is still studying how to implement the new law and has no current expectations of new payments from businesses. Depending on what the General Assembly does, the Comptroller may offer some initial guidance this summer or fall.
Due to ongoing legal challenges related to the Digital Ad Tax, it is also possible that any implementation or collections of the tax will be delayed until resolution of those issues.
Finally, since the new tax is written to target very large businesses, it is possible that there will be no direct tax impact on many Maryland businesses – however, we do believe they will most likely see other negative effects, such as increased prices and reduced inventory.
Once the law is finalized, Maryland taxpayers should consult with their tax professionals to determine any new liabilities. For the present, the best we can do is wait for new developments and the ultimate resolution.
I hope this helps provide a bit of clarity to a very unclear situation. We will keep you apprised of any changes. Please feel free to forward this message to other members of your ad club and do not hesitate to contact me if you have any questions.

Clark Rector

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