The Computer & Communications Industry Association (CCIA) has submitted a reply brief to the U.S. Court of Appeals for the Fourth Circuit, contesting Maryland's Digital Advertising Gross Revenues Tax Act. The association argues that the tax represents an unconstitutional restriction on protected speech.
This tax imposes a levy ranging from 2.5% to 10% on global annual revenues and includes limitations on how businesses can communicate about the tax to consumers. A lower court previously acknowledged that such communication is protected by the First Amendment.
The brief, which has support from the U.S. Chamber of Commerce and NetChoice, challenges the lower court's analysis and contends that this constitutional challenge aligns with the Supreme Court’s standards for pre-enforcement lawsuits against state statutes. It argues that the Act infringes upon the First Amendment by preventing businesses from informing consumers that they have had to increase prices due to the tax.
Stephanie Joyce, CCIA Senior Vice President and head of the CCIA Litigation Center, stated: "American businesses are entitled by the First Amendment to speak freely with their clients about the effects that a law might have on their products, operations, and prices. This Maryland law attempts to bar businesses from telling the truth about what this tax means for consumer prices. This kind of statutory muzzle has been rejected by the courts as an unconstitutional infringement of speech."
Previously, CCIA and other trade associations filed a federal complaint challenging similar digital taxes' constitutionality.
