WASHINGTON—Groups representing major tech companies filed a lawsuit Thursday challenging Maryland’s new online advertising tax, contending it is an improper levy on the internet.
The suit in U.S. District Court in Maryland challenges the state’s recently enacted gross receipts tax on digital advertising revenue as unconstitutional and illegal under a federal internet tax moratorium.
The plaintiffs include the U.S. Chamber of Commerce, the Internet Association, NetChoice and the Computer and Communications Industry Association. Big tech companies including Facebook Inc., Alphabet Inc.’s Google unit and Amazon.com Inc. are represented by the groups.
The suit will be closely watched, as other cash-strapped states look to the burgeoning online economy as a new source of tax revenue.
Representatives of the tech companies contend that the tax will unfairly hit small businesses that depend on the internet during the Covid-19 pandemic.