A federal appeals court has ruled unconstitutional a provision of a Maryland digital advertising tax law that prevents companies from displaying the tax charge on a bill.
The U.S. Court of Appeals for the Fourth Circuit held the tax speech ban violated the First Amendment. Maryland argued it was mere “commercial speech” and allowed companies to pass along the tax to consumers, but not say why.
The court took a historic view. “And complaining about taxes remains a grand American political tradition,” wrote Judge Julius Richardson on behalf of the three-judge panel. “Perhaps fearing such complaints, Maryland paired its tax with another rule. Companies that make money advertising on the internet must not only pay the tax but avoid telling their customers how it affects pricing: No line items, no surcharges, no fees. If companies pass on the cost of the tax, they must do so in silence — keeping customers in the dark about why prices have gone up and thereby insulating Maryland from political responsibility.”
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A group of trade associations, — the U.S. Chamber of Commerce, NetChoice and the Computer & Communications Industry Association — challenged the rule on the grounds that it abridges their freedom to speak.
“They say Maryland has no reason, other than insulating themselves from criticism and political accountability, to forbid them to explain the tax to their customers,” said the judge. “We agree. 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 Maryland law imposes a tax of up to 10% of global revenue on large tech companies such as Amazon, Google and Facebook and applies only to those that generate at least $100 million in global annual gross revenues. It prevents any of the companies from displaying the tax on any bill or invoice, or stating what effect the tax has on the price of their goods and services. The trade groups sued over the “pass-through prohibition,” calling the law a punitive assault on digital rather than print advertising.
“We are pleased that the Court of Appeals recognized that this Maryland law strikes at the heart of free speech,” said Stephanie Joyce, CCIA senior vice president and director of the CCIA Litigation Center for the Connected Economy, in a statement Friday. “States cannot use their taxation authority as a lever to squelch discourse and dissent. We look forward to obtaining a final judgment striking this law for once and all.”
The National Taxpayers Union Foundation had submitted a “friend of the court” brief in the case, claiming the law was effectively a gag order in violation of the First Amendment.
The case could be appealed next to the U.S. Supreme Court, but for now, the Fourth Circuit has remanded the case back to the district court to determine the scope of injunctive relief. (Under Trump v. CASA, district courts case no longer offer universal injunctions as a matter of course, the NTUF noted.) Other separate pending cases continue to challenge the Maryland digital advertising tax on Commerce Clause and Internet Tax Freedom Act grounds.
The case is Chamber of Commerce of the United States, et al. v. Lierman, No. 24-1727 (4th Cir. Aug. 15, 2025).
