Bloomberg Tax Michael Bologna June 1, 2023
“The lead counsel in a high-profile challenge to the constitutionality of Maryland’s digital advertising tax said the levy has the shelf life of a ‘Hula Hoop’ despite his client’s recent loss in front of the state Supreme Court. …
“Obviously the tax is unconstitutional and illegal and everyone who’s looked at it knows it,’ Friedman said during Villanova University School of Law’s First Annual State and Local Tax Forum.
“My prediction is that these digital advertising taxes—the one being challenged in Maryland and the other states that are considering it—it’s the Hula Hoop of our time,’ he added. ‘You know what a Hula Hoop is? It’s a really embarrassing toy that no one uses anymore.’ …
“… The ruling, he said, sets off a process by which his clients… and possibly dozens of other taxpayers will pay the tax and file claims for refund, leading to an administrative appeals process. The dispute could then advance to the Maryland Tax Court and possibly back to the Maryland Supreme Court.
“Several states have considered or introduced bills that resemble Maryland’s tax, Friedman said. In most cases lawmakers are lured by the revenue possibilities without considering the legal and competitive consequences, including possibilities for cross-border tax poaching or retaliation, he said.
“What’s to stop California from imposing a crab cake tax on Maryland businesses to fund education?’ he asked.
“The Comcast/Verizon case is one of two challenging the constitutionality of Maryland’s law. A second case, filed by the US Chamber of Commerce and a pair of technology trade associations, is pending before the US Court of Appeals for the Fourth Circuit. …”