4th Circuit Strikes Down Maryland Digital Ad Tax Speech Provision

The U.S. Court of Appeals for the Fourth Circuit ruled that a provision of Maryland's pioneering digital advertising tax, which prohibits companies from passing the tax cost directly to customers or disclosing the tax's impact on pricing, violates the First Amendment. The court found this "pass-through" provision to be a content-based restriction on speech, subject to strict scrutiny, and struck it down in a 3-0 decision. The ruling reversed a lower court's 2024 decision that had upheld the provision despite recognizing its speech restrictions. Judge Julius Richardson emphasized that criticizing taxes remains a foundational democratic right, and Maryland's attempt to suppress such speech effectively shields lawmakers from political accountability. The tax, enacted in 2021, targets large digital advertising companies to fund Maryland's education reform program, the Blueprint for Maryland’s Future Fund, but the court's decision challenges the state's ability to enforce how the tax is communicated to consumers. The case was sent back to the district court to determine appropriate remedies for the plaintiffs, including the U.S. Chamber of Commerce and trade groups who challenged the law.