Electronic Billboard Tax Was Constitutional

A local tax on outdoor advertising in Maryland was constitutional and did not violate free speech rights.

Tax on Electronic Billboards

A media company owned and used outdoor signs in Baltimore. The company sold advertising space on the signs to customers. Baltimore imposed a tax on advertising signs that were larger than 10 square feet. The outdoor advertising tax is:

  • imposed on digital signs; and
  • based on the sign’s square footage.

The media company paid taxes for its signs, but sought a refund. The company claimed the tax violated free speech rights under both:

  • the Maryland Declaration of Rights; and
  • the U.S. Constitution.

Selling Advertising Space is a Business

The Maryland Tax Court held that the tax on advertising signs did not violate the company’s free speech rights because the tax was on the privilege of doing business. The company charged customers for the right to display advertising messages on the signs. The company did not use the signs to express itself.

Further, Baltimore imposed the tax to raise revenue. The tax is imposed on a means of expression, and not on expression itself. Therefore, the tax does not impose an undue burden on speech.

Finally, the city had a rational basis for taxing the use of large, electronic billboards that were not on a business’ premises. One group of billboards was not singled out for taxation due to the fact that a limited number of users were subject to the tax.

Clear Channel Outdoor, Inc. v. Department of Finance of Baltimore City, Maryland Tax Court, No. 16-MI-BA-0571, February 27, 2018, ¶202-046

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All stories by: CCHTaxGroup