Maryland Comptroller Adopts Digital Advertising Gross Revenues Tax Regulations

On December 3, 2021, the Maryland Comptroller published notice of its adoption of the digital advertising gross revenues tax regulations (which was originally proposed on October 8, 2021). Per the Maryland Administrative Procedure Act, the final adopted regulations will go into effect in 10 calendar days, or December 13, 2021. (See Md. Code Ann., State Gov’t § 10-117(a)(1).)

The final regulations were adopted almost entirely as proposed, with just two minor changes that the Attorney General (AG) of Maryland certified as non-substantive. Specifically, the changes to the October 8 proposed regulations concern the information that may be used to determine the location of a device and are described by the AG as follows:

  • Regulation .02(C): The Comptroller is clarifying language regarding the allowable sources of information a taxpayer may use to determine the location of a device. Specifically, this final action amendment changes “both technical information and the terms of the underlying contract” to “both technical information and nontechnical information included in the contract.”
  • Regulation .02(C)(2): The Comptroller is amending the non-exhaustive list of technical information to include “industry standard metrics.”

Practice Note: While “industry standard metrics” is a nice addition to the list of sources that may be used to determine the location of devices for sourcing purposes, significant and fundamental questions and concerns submitted as part of the comments were not addressed by the Comptroller in adopting the final digital ad tax regulations. The tax is subject to multiple lawsuits (both state and federal court) and pending a court order to the contrary is scheduled to take effect beginning January 1, 2022, with the first filing obligation for large taxpayers in April 2022. Taxpayers grappling with how to comply with this new tax are encouraged to contact the authors.

Stephen P. Kranz
Stephen (Steve) P. Kranz is a tax lawyer who solves tax problems differently. Over the course of his extensive career, Steve has acquired specific skills and developed a unique approach that helps clients develop and implement holistic solutions to all varieties of tax problems. He combines strategic thinking with effective skills for the courtroom, the statehouse and the conference room. Read Stephen P. Kranz's full bio.


Eric Carstens
  Eric D. Carstens focuses his practice on state and local tax matters, assisting clients with state tax controversy, compliance and multistate planning across all states for a variety of tax types and unclaimed property. Eric engages in all forms of taxpayer advocacy, including litigation, legislative monitoring and audit defense. He works closely with several of the Firm's taxpayer coalitions focused on specific state tax policy issues such as the taxation of digital goods and services and unclaimed property. Read Eric D. Carstens' full bio.


Jonathan C. Hague
Jonathan C. Hague focuses his practice on state and local tax matters. He assists businesses and individual taxpayers with state and local tax controversies, compliance and multistate planning opportunities across a variety of tax types, including income, sales and use, and tax credits. Jonathan also works closely with several of the Firm’s taxpayer coalitions focused on specific state tax policy issues such as the taxation of digital goods and services. Read Jonathan Hague's full bio.

STAY CONNECTED

TOPICS

ARCHIVES