Comcast Sues Over Washington State Tax On Digital Ads

Comcast has sued to invalidate a new Washington state law that imposes a tax on online advertising services such as creating and placing digital ads, analyzing their performance and planning online campaigns.

The measure (SB 5814), signed in May by Governor Bob Ferguson, is slated to take effect in October.

Unless blocked in court, the law will require Washington agencies (and other businesses that assist advertisers) to collect sales tax, likely ranging from 7.5% to 10.6%, on “advertising services.”

In a complaint filed Tuesday in Thurston County Superior Court, Comcast claims the law violates the federal Internet Tax Freedom Act, which prohibits states from imposing discriminatory taxes on "electronic commerce."

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The Washington state law "defines 'advertising services' subject to the tax to include only certain advertising services," Comcast alleges in its complaint.

"Almost all forms of advertising conducted over the internet are subject to the tax, while most forms of advertising conducted off the internet are not subject to the tax," the cable giant adds.

The Washington law defines "advertising services" as “digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements” -- including art direction, graphic design, search engine marketing, lead generation optimization, web campaign planning, online placements and analytics.

The definition exempts services provided to newspapers, “printing or publishing,” and radio and television broadcasting, as well as services for out-of-home signage, like billboards.

Comcast is seeking a declaratory judgment that the new state tax law is unconstitutional, arguing that a state can't constitutionally enact laws that violate federal statutes -- in this case, the federal Internet Tax Freedom Act.

Earlier this year, the major ad industry groups opposed the law, arguing in a veto request that the measure "threatens Washington's business community and would harm consumers across the state."

The Association of National Advertisers, American Association of Advertising Agencies, American Advertising Federation and others -- including the tech group NetChoice and cable lobbying organization NCTA-The Internet and Television Association -- argued in a letter to Ferguson that the legislation "would have far-reaching negative consequences for businesses, consumers, and the state’s economy as a whole."

1 comment about "Comcast Sues Over Washington State Tax On Digital Ads".
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  1. Harold Hallikainen from Independent, September 15, 2025 at 12:47 p.m.

    Interesting! Newspapers are exempt, but most, if not all, also place their content on the internet. Radio and Television stations are exempt, but most or all also place their content on the internet. In general, I think sales taxes are a complicated kludge. They are supposed to be paid by the residents of a state (or district) for purchase they make, but the taxes are collected by sellers who are often collected by sellers who are not in the state or district and would normally not be subject to the jurisdiction of the state or district. Customers are supposed to pay a "use tax" for purchases that did not include sales tax, but most people cannot figure out how much use tax is payable at the end of the year, so they skip it. If governments want to collect a tax from a state or district, it seems like income tax or perhaps property tax is the simplest way to do it. 

    "Make everything as simple as possible, but not simpler."

    Harold

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