Maryland’s attempt to stop businesses from telling customers about a controversial tax has hit a constitutional wall. On August 15, 2025, the US Court of Appeals for the Fourth Circuit ruled that the state’s “pass-through” provision in its Digital Advertising Gross Revenues Tax violates the First Amendment.
In Chamber of Commerce et al. v. Lierman, Case No. 24-1727 (4th Cir. Aug. 15, 2025), a unanimous panel held that Maryland’s “pass-through” provision is facially unconstitutional because it restricts how companies can talk about price increases tied to the tax.
The provision at issue
Maryland’s first-of-its-kind digital advertising tax applies to large companies earning more than $100 million in global revenue from online ads. The controversial “pass-through” provision provided that those companies “may not directly pass on the cost of the tax … by means of a separate fee, surcharge, or line-item.” Businesses could still raise prices to cover the tax, they just had to do it without saying so.
The Fourth Circuit’s reasoning
Writing for a unanimous panel, Judge Julius N. Richardson opened the opinion with a striking historical parallel. Just as colonists objected to Britain’s Stamp Act of 1765, which taxed printed materials and chilled political expression, Maryland’s rule targeted modern equivalents: internet companies and their speech about taxation. “We agree,” Richardson wrote. “As much today as 250 years ago, criticizing the government—for taxes or anything else—is important discourse in a democratic society. The First Amendment forbids Maryland to suppress it.”
The Court found that the pass-through provision regulated protected speech – not conduct –because it dictated how companies communicate price changes attributable to the tax, forbidding certain methods while allowing others. This made the provision a content-based restriction subject to heightened constitutional scrutiny.
Maryland argued that the provision was designed to ensure companies bear the tax’s economic and legal burden, but the Court found that justification hollow. Since businesses could still raise prices silently, the law did nothing to prevent cost-shifting. It only restricted speech about it. Accordingly, the Court found that “[t]he pass-through provision of Maryland’s digital advertising tax is unconstitutional in all of its applications.”
What’s next
The Fourth Circuit reversed the district court’s ruling and remanded the case to determine the appropriate remedy, noting that recent Supreme Court of the United States precedent limits the scope of injunctive relief. The broader tax itself remains in effect for now, with separate challenges pending in the Maryland Tax Court.
For businesses, the ruling lifts Maryland’s ban on explicitly itemizing the tax on invoices or contracts and stands as a reminder that states can’t sidestep political accountability by limiting how regulated entities talk about their regulations. For Maryland and other states, the decision sends a clear message: Governments may tax, but they cannot silence the businesses they tax when those businesses tell customers what’s driving prices.
