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Denials of Maryland Digital Advertising Tax Refund Claims Need Immediate Action

Tax Development Nov 02, 2023

Denials of Maryland Digital Advertising Tax Refund Claims Need Immediate Action

The Maryland Comptroller is issuing denials of all claims for refunds of the Digital Advertising Tax (DAT). The denial letters indicate that taxpayers have only 30 days from the date of the denial to petition the Maryland Tax Court for a review of the claim denial.

The denial letters claim that the taxpayer failed to demonstrate an overpayment of the tax, and regardless of whether a hearing was requested before a final determination was issued, the taxpayer must appeal directly to the Maryland Tax Court and bypass the usual Hearings and Appeals Division.

Taxpayers may not be receiving electronic notification of their refund claim denials, but rather a notice is sent through the United States Postal Service and, as such, receipt of the notice is subject to possible delays. According to the Comptroller’s letters, any delay in actual receipt of the notice does not adjust the short 30-day deadline to file an appeal. The Comptroller’s position is that the 30 days begins on the date listed on the letter, regardless of the contrary statutory language that calculates the deadline to be “within 30 days after the date on which a notice is mailed.” [Md. Code Ann., Tax-Gen. § 13-510(a)]

Despite legitimate challenges to the DAT, instead of holding the refund claims in abeyance, the state is attempting to mitigate the impact by prematurely denying the claims. Litigation is currently pending in the Apple1 case challenging the denial of a refund claim. In its petition to the Tax Court, Apple claims that the DAT violates the Internet Tax Freedom Act, the Supremacy Clause, and the Commerce Clause of the U.S. Constitution, as well as Articles 2 and 34 of the Maryland Constitution.

If you filed a claim for refund of the DAT and have not received a response to date, please contact a Ryan tax professional for assistance.

1 Apple Inc. v. Comptroller of the Treasury of Md., Md. T.C., No. 23-DA-00-0456, October 20, 2023.


Brian Stromen

Mary Bernard

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