Last fall, when a Maryland County Circuit Court held that the Maryland Digital Ad Tax violated the dormant commerce clause, the supremacy clause, the Internet Tax Freedom Act, and the First Amendment of the U.S. Constitution, most of the tax world anticipated that the Maryland Comptroller would promptly appeal the ruling, which it did. The State argued that the Circuit Court’s decision must be reversed because the plaintiffs had not properly exhausted their administrative resources prior to bringing the lawsuit, as required under state law.
On May 9, 2023, the Maryland Supreme Court, in a per curiam opinion, handed the State of Maryland a major victory, only days after hearing oral arguments. The Maryland Supreme Court held that the Circuit Court did not have jurisdiction in the first place because the plaintiffs did not exhaust their administrative remedies, and vacated the lower court’s October 2022 ruling. In a somewhat unusual move, the Court rendered its decision in summary form and indicated that an opinion explaining its reasoning would be forthcoming, so there will be more to unpack in the future. But in the short term, what does this procedural decision mean for the Digital Ad Tax and SALT law more broadly?