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H 3126

SC Dept. of Law Enforcement and Public Safety; created

2025-2026 Regular Session Introduced by Tommy Pope

Massachusetts would impose a 6.25% excise on annual revenue from digital advertising services provided to MA users, starting after a $500,000 exemption.

Scrivener's error corrected
0
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Bill Summary · H 3126

Summary — H 3126 (House Docket No. 1695) — “An Act establishing a tax for online advertising”

Status note: The legislative file contains two different texts (a Massachusetts bill proposing an online advertising excise and a separate South Carolina draft reorganizing public‑safety statutes). The sponsor, docketing, and legislative actions below correspond to the Massachusetts House bill filed by Rep. Russell E. Holmes. This summary focuses on the Massachusetts online‑advertising tax that appears as House No. 3126 (Chapter 63 addition, Section 82).

Purpose

To create a new excise (tax) on the sale of "digital advertising services" that are provided to users located within the Commonwealth of Massachusetts, thereby generating state revenue from online-advertising activity that is sourced to the state based on the user’s IP address.

Key provisions

  • Adds Section 82 to Chapter 63 of the General Laws.
  • Tax base and rate:
    • Imposes an annual excise equal to 6.25% of a person’s annual revenue from digital advertising services “provided within the commonwealth.”
  • Sourcing rule:
    • A digital advertising service is deemed provided within the Commonwealth if it is received on a user’s device with an IP address located in Massachusetts.
  • Definitions (selected):
    • “Digital advertising services” — advertisement services on a digital interface (examples: banner advertising, search engine advertising, interstitials, and comparable services).
    • “Digital interface” — any software (websites, site sections, or applications) accessible by users.
    • “IP address” — the Internet Protocol address assigned to a device.
    • “User” — an individual accessing a digital interface via a device with an IP address.
  • Administration and compliance:
    • Taxpayers (persons with revenue from such services within the Commonwealth) must remit the excise to the Commissioner of Revenue on a monthly basis.
  • Exemption:
    • The first $500,000 of annual revenue from digital advertising services provided within the Commonwealth is exempt from the excise.

Who would be affected

  • Primary targets: companies and entities that sell digital advertising services and generate revenue from impressions, clicks, or ad placements that are delivered to users in Massachusetts. This includes large platforms, ad networks, publishers, app developers, and intermediaries that monetize ads.
  • Small sellers with ≤ $500,000 in annual MA‑sourced digital ad revenue would be exempt from the tax.
  • Advertisers and end users could be indirectly affected if sellers pass on the cost.

Fiscal, legal, and administrative considerations

  • Revenue impact: The bill does not provide an explicit revenue estimate. Actual receipts would depend on total Massachusetts‑sourced digital ad revenue.
  • Compliance and enforcement: Monthly remittances create recurring administrative obligations; sourcing based on IP addresses may raise technical and legal issues (e.g., accuracy of geolocation, use of VPNs/rotating IPs).
  • Legal risk: Potential litigation risks include challenges under the Commerce Clause or other constitutional doctrines, and questions about extraterritorial application if sellers are located out of state or abroad.
  • Market effects: Could influence pricing, contracting, and ad delivery practices; may prompt shifts in how platforms determine user location.

Procedural status & timeline (as provided)

  • Prefiled: 2024-12-05
  • Introduced/read first time: 2025-01-14
  • Referred to Committee on Judiciary: 2024-12-05 and again 2025-01-14 (file shows multiple referrals)
  • Referred to Committee on Revenue: 2025-02-27
  • Senate concurred: 2025-02-27
  • Scrivener’s error corrected: 2025-02-04
  • Hearing scheduled (committee): 2025-10-28, 1:00 PM–5:00 PM (location B-2)

Related information

  • Sponsor: Representative Russell E. Holmes (6th Suffolk)
  • Related docket: HD 1695 (replacement reference)
  • Note: The legislative file also includes a long South Carolina draft (creating a “South Carolina Department of Law Enforcement and Public Safety”) that appears unrelated to this Massachusetts bill. The presence of both texts in the same file appears to be a clerical/compilation issue; readers should consult official legislative sources for the definitive version under House No. 3126.

Compiled from official sources — confirm details with the bill’s official record.

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