Tax regulations

Maryland Comptroller Passes Digital Advertising Gross Revenue Tax Regulations | McDermott Will & Emery


On December 3, 2021, the Maryland Comptroller released opinion of its adoption of the regulation on the tax on gross revenues from digital advertising (initially proposed on October 8, 2021). Pursuant to the Maryland Administrative Procedure Act, the final regulations passed will come into effect within 10 calendar days – December 13, 2021. (See Md. Code Ann., State Government § 10-117 (a) (1).)

The final bylaw passed almost entirely as proposed, with only two minor changes that the Maryland Attorney General (AG) certified as non-substantial. Specifically, the changes to the proposed regulation on October 8 relate to information that can be used to determine the location of a device and are described by the GA as follows:

  • Regulation .02 (C): Comptroller clarified wording regarding authorized sources of information that a taxpayer can use to determine the location of a device. Specifically, this final action amendment replaces “both technical information and the terms of the underlying contract” to “both technical and non-technical information included in the contract”.
  • Regulation .02 (C) (2): The Controller is in the process of modifying the non-exhaustive list of technical information to include “industry standard measurements”.

Note on practice: While “industry standard measurements” are a good addition to the list of sources that can be used to determine the location of devices for procurement purposes, the important and fundamental questions and concerns submitted as part of the Comments were not addressed by the Controller when adopting the digital advertising tax final regulation. The tax is the subject of several lawsuits (state and federal courts) and, pending a decision to the contrary, is expected to take effect from January 1, 2022, with the first reporting obligation for wholesalers. taxpayers in April 2022.

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