Utah’s New Targeted Advertising Tax Faces Legal and Economic Challenges

• Utah’s S.B. 287 creates a 4.7% targeted advertising tax effective January 1, 2027, based on in-state ad impressions and revenue thresholds.
• The law appears designed to tax digital advertising indirectly, potentially to avoid federal Internet Tax Freedom Act limits.
• It may burden business-to-business transactions, causing tax pyramiding that could be passed on to local businesses and consumers.
• The tax faces serious legal risk after Maryland’s similar digital advertising tax was struck down under ITFA, the Commerce Clause, and Due Process Clause.
• Although Utah’s tax is a gross receipts tax, its economic impact is likely to fall mainly on end consumers and local advertisers.

Source: taxfoundation.org

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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