Comcast Sues Washington State Over Digital Ads Tax

Global media giant Comcast is suing Washington state to block a new law that applies sales tax to digital advertising services.

The company filed the lawsuit September 9 in Thurston County Superior Court, arguing the law is discriminatory and violates the federal Internet Tax Freedom Act by taxing most internet advertising but exempting many traditional ad services.

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The measure, Engrossed Substitute Senate Bill 5814, was signed by Gov. Bob Ferguson in May and takes effect October 1. It expands the state’s retail sales and use tax to include advertising services such as search engine marketing, online campaign planning, and ad analytics.

The state Department of Revenue says removing the advertising services tax would cut about $475 million from the four-year state budget. The Department of Revenue says they’re reviewing the lawsuit and expect to issue interim reporting guidance for taxpayers within two weeks.

Major advertising groups also oppose the law, warning it will drive up costs for businesses and consumers and place an unfair burden on digital advertisers. Comcast is asking the court to declare the law unconstitutional.