After years of litigation focused largely on procedural questions, the Maryland Tax Court has issued three significant decisions addressing the merits of Maryland’s Digital Advertising Gross Revenues Tax (DAT). The decisions represent the most significant substantive development since Maryland enacted the nation’s first tax targeting digital advertising revenues. 

In decisions issued Aug. 14, 2026, the court concluded that the DAT violates the federal Internet Tax Freedom Act (ITFA), the dormant Commerce Clause, and the Due Process Clause. One of the decisions also included a separate First Amendment holding. The court ordered refunds and applicable interest to the taxpayers involved in the cases.

The rulings are particularly noteworthy because they provide what may be the first comprehensive merits analysis of the DAT by a Maryland tribunal. Since the tax’s enactment, much of the litigation has centered on procedural issues, including jurisdiction, exhaustion of administrative remedies, refund procedures, and the proper forum in which taxpayers may challenge the tax. As a result, taxpayers and practitioners have spent years navigating administrative appeals and procedural disputes while awaiting a ruling on the underlying validity of the tax itself. 

On the merits, the Tax Court rejected the comptroller’s position that digital advertising services are materially different from traditional advertising services for purposes of ITFA. The court also concluded that Maryland’s use of global revenues in determining the applicable tax rate raises constitutional concerns under the dormant Commerce Clause and Due Process Clause.

Although the decisions could be viewed as major taxpayer victories, they may not represent the final chapter of the controversy. The rulings remain subject to judicial review, and important questions remain regarding the practical administration of refund claims, the timing of potential refunds, and the broader impact of the decisions on taxpayers with pending administrative appeals.

The decisions may be especially significant for taxpayers that paid the DAT but have not yet filed refund claims. Taxpayers should not assume that favorable rulings involving other taxpayers automatically preserve their own refund rights. Maryland’s refund statutes and statutes of limitation continue to apply, and taxpayers may wish to evaluate promptly whether refund claims, protective refund claims, or administrative appeals should be filed for any open periods. As prior Maryland tax controversies have demonstrated, favorable merits decisions do not necessarily translate into automatic relief for every affected taxpayer, particularly where refund rights have not been timely preserved. 

For those who have followed the DAT since its enactment, the decisions mark a notable transition from years of procedural litigation to substantive judicial review of the tax itself. While we may see additional appellate proceedings, the decisions provide the strongest indication to date that Maryland’s first-in-the-nation digital advertising tax faces substantial legal obstacles.