Utah’s targeted advertising tax heads to court

On July 28, 2026, McDermott Will & Schulte, together with Holland & Hart, filed a verified complaint on behalf of the Utah Taxpayers Association challenging Utah’s new targeted advertising tax. The lawsuit asks the Third Judicial District Court in Salt Lake County to declare the tax unlawful and unconstitutional and permanently enjoin the Utah State Tax Commission from enforcing it. Because the action challenges the constitutionality of a Utah statute, state law requires the case to be heard by a three-judge district court panel.

Enacted earlier this year as Senate Bill 287 and codified at Utah Code Ann. § 59-35-201, Utah’s tax borrows from Maryland’s digital advertising gross receipts tax but applies specifically to receipts from “targeted advertising.” The law imposes a 4.7% tax on Utah gross receipts from targeted advertising earned by an entity that derives at least:

• $1 million in annual gross receipts from targeted advertising in Utah
• $100 million in annual gross receipts from targeted advertising worldwide
• 50% of its total worldwide gross receipts from targeted advertising.

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