Illinois sued over digital advertising tax and social media fee

NetChoice, a trade organization representing major social media companies including Meta, Google, X, TikTok, and Snap, has filed two lawsuits in Cook County against the state of Illinois. The complaints challenge a digital advertising tax and a social media platform fee.

NetChoice argues that these measures violate the First Amendment by targeting specific segments of publishers and speakers for disfavored tax treatment. Legal representatives for NetChoice contend that the social media fee is effectively a tax and cannot bypass constitutional protections by being labeled a fee. Additionally, the Tax Foundation has raised concerns regarding due process and the commerce clause, suggesting the taxes may be discriminatory against interstate commerce by overtaxing out-of-state activity.

The digital advertising tax currently stands at 10% of gross receipts. In response to these measures, State Representative Travis Weaver has filed legislation aimed at repealing both the social media platform fee and the digital targeted advertising services tax.