The U.S. Supreme Court’s seminal decision in Complete Auto Transit provides that a state tax satisfies the requirements of the Dormant Commerce Clause if the tax: The first three prongs have been litigated extensively, and courts have provided substantial, detailed analysis of their application. But the fourth prong? Courts have set the bar so low … Continue Reading
Unlike many other states, California and Colorado have historically excluded software as a service (SaaS) from their definition of tangible personal property, exempting from sales tax most digital transactions.[1] However, in the span of about three weeks this June, both states enacted legislation that pulls SaaS and other remotely accessed, prewritten software into their sales … Continue Reading
The City of Chicago’s widely reported first-of-its-kind Social Media Amusement Tax (the Chicago SMAT) went into effect on January 1, 2026, promising to deliver tens of millions of dollars of additional revenue to the City. Whether the Chicago SMAT will actually deliver on that revenue promise is questionable, however, as its implementation and legality remain … Continue Reading
For over 65 years, Public Law 86-272 has dictated a state’s ability to assert income tax on an out-of-state business. While the 1959 federal law predated the emergence of e-commerce and digital services and could not have anticipated the way businesses would operate today, P.L. 86-272 has nonetheless remained the law of the land. P.L. … Continue Reading
In an ongoing battle against Netflix Inc., the Colorado Department of Revenue has argued that the historical definition of “tangible personal property” is sufficiently broad as to encompass digital goods — including streaming subscriptions.[1] The case, currently in the Colorado Court of Appeals, raises fundamental questions about the application of outdated legal definitions to the … Continue Reading
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 … Continue Reading
Maryland’s controversial Digital Advertising Gross Revenues Tax (the “Digital Ad Tax”) recently shot back to the top of the headlines when Maryland Circuit Court Judge, Alison Asti, ruled from the bench that the tax is unconstitutional and violates the federal Internet Tax Freedom Act (“ITFA”). Judge Asti ruled in favor of Verizon and Comcast that … Continue Reading
