Massachusetts: Legislators Propose Draft Digital Advertising Tax Bills

There are several digital advertising proposals pending in the Massachusetts General Assembly. House Docket 3210 would impose tax on taxpayers with at least $50 million in annual gross revenues and $100,000 in revenues derived from Massachusetts digital advertising services, with a rate ranging from five percent to fifteen percent, depending on the taxpayer’s annual gross revenues. Digital advertising services would be sourced to Massachusetts if they appear on a user’s device with an IP address located in Massachusetts, or the user is known or reasonably presumed to be using the device in the state. Massachusetts House Docket 3601 would impose a five percent excise tax on the annual revenue from digital advertising services in Massachusetts for companies with revenue exceeding $25 million from such services. Again, a digital advertising service would be deemed to be provided in Massachusetts if it is received on a user’s device with an IP address located in Massachusetts. House Docket 3558, in contrast, would establish a special commission to conduct a comprehensive study relative to generating revenue from digital advertising that is displayed inside of Massachusetts by companies that generate over $100 million a year in global revenue. The commission would be required to file its report not later than February 15, 2022. House Docket 3522 and House Docket 3812 purport to impose new taxes on online or digital advertising, but the draft legislation for both bills has not yet been released. Please stay tuned to TWIST for additional information on these proposals.