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Many states have long been trying to tax the digital economy. The most recent trend involves imposing taxes on digital advertising services, with Maryland, Nebraska and New York having introduced such legislation in 2020, to objection by the advertising industry.
The proposed taxes would generally be a gross receipts tax or a sales tax applied to a broad definition of digital advertising. Legislators would have to contend with the Permanent Internet Tax Freedom Act (PITFA), which does not allow taxing on goods or services unless there’s a physical counterpart that is taxed. Consult your tax advisor on your unique situation.
– Laura Mirro, Anchin, Block & Anchin LLP