A federal appeals court directed a lower federal court on Wednesday to consider the merits of a challenge to Maryland’s first-in-the-nation digital advertising tax on First Amendment grounds, while agreeing that three other challenges should be dismissed. This legal case is being closely watched by other states that have also weighed a similar tax for online ads. The three-judge panel of the 4th U.S. Circuit Court of Appeals disagreed with a lower federal court’s decision to dismiss the challenge on First Amendment grounds argued by the U.S. Chamber of Commerce and other trade associations.
To note: Wednesday’s decision also vacated the lower federal court’s judgement to dismiss the three challenges with prejudice, instructing the court to dismiss without prejudice. This is significant because it means those challenges could be raised in another legal venue.
