Comptroller v. Comcast of California, Maryland, Pennsylvania, Virginia, West Virginia,
LLC, et al., No. 32, September Term, 2022.
EXHAUSTION OF ADMINISTRATIVE REMEDIES – TAX-GENERAL
ARTICLE §§ 13-501–13-532 – DECLARATORY JUDGMENTS – COURTS &
JUDICIAL PROCEEDINGS ARTICLE § 3-409
Companies sought a declaratory judgment in the Circuit Court for Anne Arundel County
to challenge the constitutionality of a new tax on digital advertising gross revenues. The
circuit court awarded summary judgment in favor of the companies and declared the tax
unconstitutional and illegal. The Supreme Court of Maryland held that the special statutory
administrative remedies provided in the Tax-General Article are exclusive with respect to
the companies’ challenge and, therefore, that the circuit court lacked jurisdiction over the
declaratory judgment action and was required to dismiss it.
Circuit Court for Anne Arundel County
Case No. C-02-CV-21-000509
Argued: May 5, 2023
IN THE SUPREME COURT
OF MARYLAND*
No. 32
September Term, 2022
______________________________________
COMPTROLLER OF MARYLAND
v.
COMCAST OF CALIFORNIA, MARYLAND,
PENNSYLVANIA, VIRGINIA, WEST
VIRGINIA, LLC, et al.
______________________________________
Fader, C.J.,
Watts,
Hotten,
Booth,
Biran,
Gould,
Eaves,
JJ.
______________________________________
Pursuant to the Maryland Uniform Electronic Legal Materials
Act (§§ 10-1601 et seq. of the State Government Article) this
document is authentic. Opinion by Fader, C.J.
______________________________________
Filed: July 12, 2023
Gregory Hilton, Clerk
* At the November 8, 2022 general election, the voters of Maryland ratified a constitutional
amendment changing the name of the Court of Appeals of Maryland to the Supreme Court
of Maryland. The name change took effect on December 14, 2022.
This appeal arises from a challenge to Maryland’s Digital Advertising Gross
Revenues Tax Act, codified at Title 7.5 of the Tax-General Article. The Act, which was
enacted in 2021 and became effective on January 1, 2022, imposes a tax on annual gross
revenues of certain high revenue businesses derived from digital advertising services in the
State. In the Circuit Court for Anne Arundel County, the challengers, various subsidiaries
of Comcast Corporation and Verizon Communications Inc. (collectively, the
“Companies”),1 obtained a declaratory judgment that the digital advertising tax was
unconstitutional and illegal under federal law. The Comptroller timely appealed, arguing,
among other things, that the Companies did not exhaust the comprehensive administrative
remedies provided in the Tax-General Article for resolution of tax disputes. We granted
certiorari before decision in the Appellate Court of Maryland.2
In a per curiam order issued after oral argument, we vacated the orders of the circuit
court, held that the circuit court lacked jurisdiction over the action because the Companies
failed to exhaust the mandatory administrative and judicial review remedies provided in
the Tax-General Article for the resolution of tax disputes, and remanded to the circuit court
with directions to dismiss the action. Comptroller v. Comcast of California, Maryland,
1
The challengers, the plaintiffs below and appellees here, are Comcast Cable
Communications Management, LLC, Comcast of Maryland Limited Partnership, Comcast
of Baltimore City, LLC, Comcast of California/Maryland/Pennsylvania/Virginia/West
Virginia, LLC, Comcast of Delmarva, LLC, Comcast of Maryland, LLC, Comcast of
Potomac, LLC, and Verizon Maryland LLC.
2
At the November 8, 2022 general election, the voters of Maryland ratified a
constitutional amendment changing the name of the Court of Special Appeals of Maryland
to the Appellate Court of Maryland. The name change took effect on December 14, 2022.
Pennsylvania, Virginia, West Virginia, LLC, ___ Md. ___, 2023 WL 3313208 (May 9,
2023) (per curiam). In this opinion, we explain the basis for our order. As will be apparent
from our discussion, our resolution is not premised on any view of the merits of the
challenges raised by the Companies.
BACKGROUND
A. The Digital Advertising Gross Revenues Tax Act
Title 7.5 of the Tax-General Article imposes a tax on annual gross revenues of more
than $1 million derived from digital advertising services in the State by certain businesses3
with at least $100 million in global annual gross revenues. Md. Code Ann., Tax-Gen.
§§ 7.5-103; 7.5-201(a) (2022 Repl.). “Digital advertising services” generally include
“advertisement services on a digital interface, including . . . banner advertising, search
engine advertising, interstitial advertising, and other comparable advertising services.”
Id.
§ 7.5-101(e)(1). The tax rate is progressive, beginning at 2.5% for entities with global
annual revenues between $100 million and $1 billion, and topping out at 10% for
businesses with global annual revenues exceeding $15 billion. Id. § 7.5-103. The tax rate
is calculated based on an entity’s global annual revenues but is then applied only to the
entity’s annual gross revenues derived from digital advertising services in Maryland. Id.
§§ 7.5-102; 7.5-101(c).
The digital advertising tax applies to taxable years beginning after December 31,
2021. 2021 Md. Laws ch. 669, § 6. Thus, the first year in which digital advertising services
3
The tax does not apply to advertising services on digital interfaces owned or
operated by a broadcast or news media entity. Id. § 7.5-101(d), (e)(2), (g).
2
were taxed was 2022, and the first tax returns on which the digital advertising tax had to
be reported were due in April 2023.
B. Factual Background
The Companies provide digital advertising services in Maryland. Because their
global revenues are over the statutory threshold, they are subject to the digital advertising
tax. The Companies have neither paid the tax nor explicitly declined to pay the tax.
C. Procedural Background
Without first pursuing any administrative remedies, the Companies filed a
complaint for declaratory judgment in the Circuit Court for Anne Arundel County in which
they sought a declaration that the digital advertising tax is unconstitutional and illegal under
federal law. Specifically, as stated in their amended complaint, the Companies contend
that the digital advertising tax violates the United States Constitution’s Commerce Clause
and First Amendment, as well as the Internet Tax Freedom Act, 47 U.S.C. § 151 note, a
federal statute that bans states from imposing discriminatory taxes on electronic commerce.
The Comptroller moved to dismiss the Companies’ complaint, arguing, among other
things, that the circuit court lacked jurisdiction over the action because the Companies had
failed to exhaust their administrative remedies. The Companies responded that their
declaratory judgment action was permitted by a constitutional exception to the exhaustion
requirement. Following a hearing, the court agreed with the Companies and denied the
Comptroller’s motion to dismiss.
3
The Comptroller and the Companies each thereafter filed motions for summary
judgment. The Comptroller again argued that the circuit court lacked jurisdiction over the
action because the Companies had failed to exhaust administrative remedies. The
Companies restated their argument that the digital advertising tax violates the Constitution
and the Internet Tax Freedom Act, and sought a declaration to that effect. The court again
agreed with the Companies, granted their motion for summary judgment, and denied the
Comptroller’s motion. In a final declaratory judgment order, the circuit court declared that
the “Maryland Digital Advertising Gross Revenues Tax violates the Supremacy Clause of
the United States Constitution and the Internet Tax Freedom Act . . . , the dormant
Commerce Clause of the United States Constitution . . . , and the First Amendment to the
United States Constitution[.]”
The Comptroller timely appealed to the Appellate Court of Maryland and, before
decision by that court, sought certiorari from this Court, which we granted. Comptroller
v. Comcast of California/Maryland/Pennsylvania/Virginia/West Virginia, LLC, 482 Md.
535 (2023).4
DISCUSSION
“Whether a plaintiff must exhaust administrative remedies prior to bringing suit is
a legal issue which [this Court] reviews” without deference. United Ins. Co. of Am. v. Md.
Ins. Admin., 450 Md. 1, 14 (2016).
4
The Comptroller also filed a Motion to Stay Enforcement Pending Appeal, which
we denied.
4
THE ADMINISTRATIVE REMEDIES IN THE TAX-GENERAL ARTICLE ARE
EXCLUSIVE.
A. Exhaustion of Administrative Remedies Generally
When the General Assembly enacts legislation giving rise to statutory claims, it
frequently also provides for special statutory administrative remedies to be pursued under
an administrative scheme, subject to judicial review. See, e.g., Md. Code Ann., State Gov’t
§§ 20-1001–20-1017 (2021 Repl.; 2022 Supp.) (establishing an administrative scheme
applicable to employment discrimination claims); Id. §§ 20-1020–20-1037 (same for
housing discrimination claims); Md. Code Ann., Lab. & Empl. §§ 9-701–9-750 (2016
Repl.; 2022 Supp.) (same for workers’ compensation claims);
Id. §§ 8-501–8-508,
8-5A-01–8-5A-12 (same for unemployment insurance claims);
Md. Code Ann., Tax-Prop.
§§ 14-501–14-516 (2019 Repl.; 2022 Supp.) (same for property tax claims); see also, e.g.,
Md. Code Ann., Local Gov’t § 10-305 (2013 Repl.; 2022 Supp.) (authorizing counties to
enact local laws to establish county boards of appeals with jurisdiction over, among other
things, zoning, licensing, and permitting).
When the General Assembly has provided such “an administrative and judicial
review remedy,” “the relationship between that administrative remedy and a possible
alternative judicial remedy will ordinarily fall into one of three categories.” Zappone v.
Liberty Life Ins. Co., 349 Md. 45, 60 (1998). “First, the administrative remedy may be
exclusive, thus precluding any resort to an alternative remedy.”
Id. Where an
administrative remedy is exclusive, the only manner of obtaining judicial involvement is
by pursuing judicial review of the final administrative decision.
5
“Second, the administrative remedy may be primary but not exclusive.” Id. at 60.
In that circumstance, a claimant may file an action to pursue an alternative judicial remedy,
but the “claimant must invoke and exhaust the administrative remedy, and seek judicial
review of an adverse administrative decision, before a court can properly adjudicate the
merits of the alternative judicial remedy.” Id.; see also Monarch Acad. Balt. Campus, Inc.
v. Balt. City Bd. of Sch. Comm’rs,
457 Md. 1, 13 (2017) (stating that just because a claim
is properly within the primary jurisdiction of an administrative agency “does not mean that
the circuit court is divested of jurisdiction over the claim[], or necessitate[] the dismissal
of the action before the court”; instead, the appropriate course of action is to stay
proceedings pending ‘“a final administrative determination’” (quoting Arroyo v. Bd. of
Educ. of Howard County,
381 Md. 646, 660 (2004))); State Ret. & Pension Sys. v.
Thompson,
368 Md. 53, 66 (2002) (“[A]lthough the court may well have subject matter
jurisdiction over the action before it, the exhaustion doctrine bars the court from exercising
that jurisdiction, thereby gratifying the paramount legislative intent that the matter be dealt
with first by the Executive Branch agency.”). In other words, the claimant maintains the
right to pursue an alternative judicial remedy, but generally not until first exhausting the
administrative remedy.
“Third, the administrative remedy and the alternative judicial remedy may be fully
concurrent, with neither remedy being primary[.]” Zappone, 349 Md. at 61. In that
6
circumstance, a claimant need not exhaust available administrative remedies before
pursuing an available judicial remedy.5 Id.
Determining whether an available administrative remedy is exclusive, primary to an
alternative judicial remedy, or concurrent with an alternative judicial remedy, “is ordinarily
a question of legislative intent.” Id. Although the General Assembly will occasionally
“expressly set forth its intent in this regard,” “most often statutes fail to specify the category
in which an administrative remedy falls,” leaving the matter to be resolved through
statutory interpretation by the courts.
Id. at 61-62.
The rationale behind the exhaustion requirement is well-established. An
administrative agency has the “expertise which [it] can bring to bear in sifting the
information presented to it,” and thus “should be afforded the initial opportunity . . . to
apply that expertise.” Soley v. Md. Comm’n on Hum. Rels., 277 Md. 521, 526 (1976).
“[T]o permit interruption for purposes of judicial intervention at various stages of the
administrative process might well undermine the very efficiency which the Legislature
intended to achieve in the first instance.”
Id. Thus, “where there exists a special statutory
remedy for a specific type of case, and the Legislature intends that remedy to be exclusive
5
Whether an administrative remedy is exclusive, primary, or concurrent has nothing
to do with the availability of judicial review of the final decision of the administrative
agency. The availability of judicial review is governed by statute, local law, or ordinance
or, where not provided by one of those sources, through administrative mandamus. See
Mayor & City Council of Balt. v. ProVen Mgmt., Inc., 472 Md. 642, 666, 669-70, 669 n.9
(2021). Instead, whether an administrative remedy is exclusive, primary, or concurrent
affects (1) whether a judicial remedy that is independent of and alternate to the
administrative remedy may be pursued, and (2) if so, when it may be pursued.
7
or primary, a party may not bypass the special statutory remedy by bringing an action for
a declaratory judgment or for equitable relief.” Furnitureland S., Inc. v. Comptroller, 364
Md. 126, 133 (2001).
One limited exception to the requirement of exhaustion of administrative remedies
is the so-called constitutional exception, which we discuss below in more detail. In
essence, the constitutional exception “permits a judicial determination without
administrative exhaustion when there is a direct attack upon the power or authority . . . of
the legislative body to adopt the legislation from which relief is sought.” County Council
of Prince George’s County v. Chaney Enters. Ltd. P’ship, 454 Md. 514, 538 (2017)
(quoting Harbor Island Marina, Inc. v. Bd. of County Comm’rs of Calvert County,
286
Md. 303, 308 (1979)). However, the constitutional exception is “extremely narrow,” and
is subject to several specific limitations. See Prince George’s County v. Ray’s Used Cars,
398 Md. 632, 650-54 (2007). One such limitation, which is dispositive here, is that it does
not apply when an administrative remedy is exclusive, as opposed to primary.
Id. at 650.
Notably, this Court has long held that many administrative agencies in Maryland, including
the Tax Court, are “fully competent to resolve issues of constitutionality and the validity
of statutes,” Furnitureland S., Inc.,
364 Md. at 137-38 (quoting Montgomery County v.
Broad. Equities, Inc.,
360 Md. 438, 451 n.8 (2000)), and, therefore, that “[t]he presence of
constitutional issues does not authorize a party to circumvent the statutorily prescribed
administrative remedies.” Furnitureland S., Inc.,
364 Md. at 138.
8
B. Administrative Exhaustion of Tax Claims
Our prior opinions have “consistently treated the special statutory administrative
remedies for the determination of tax questions to be exclusive or primary.” Id. at 134. In
examining whether the General Assembly intended those remedies to be exclusive or
primary here, we begin with the comprehensive nature of the remedies.
The Comptroller is charged with administering certain enumerated taxes, including
the digital advertising tax. Tax-Gen. § 2-102(a)(3). An aggrieved taxpayer has two
available administrative paths to challenge a tax administered by the Comptroller: (1) a
post-deprivation remedy path, in which the taxpayer pays the tax and then seeks a refund,
see id. §§ 13-901, 13-902, 13-904, 13-508, 13-510; or (2) a pre-deprivation remedy path,
in which the taxpayer declines to pay the tax, awaits an assessment, and then appeals the
assessment, see id. §§ 13-401, 13-402, 13-508, 13-510.
The post-deprivation remedy path permits a taxpayer to pay a disputed tax and then
seek a refund. See id. § 13-901(a). As applicable here, a refund claim may be filed with
the Comptroller in two scenarios: (1) where the taxpayer erroneously pays “a greater
amount of tax . . . than is properly and legally payable;” or (2) where the taxpayer “pays to
the State a tax . . . that is erroneously, illegally, or wrongfully assessed or collected in any
manner[.]” Id. A claim for a refund must be made under oath in the form provided by the
Comptroller, supported with proper documentation, id. § 13-902, and filed within the time
required by statute (three years from the date of payment in most scenarios, including for
refunds under the digital advertising tax), id. §§ 13-903; 13-1104. If a taxpayer pursues a
9
post-deprivation remedy, the Comptroller will “(1) investigate each claim for refund; and
(2) conduct a hearing at the request of the claimant prior to a final determination on the
claim.” Id. § 13-904(a). The Comptroller will then issue a notice of “the determination of
the claim for refund.” Id. § 13-904(b). If the taxpayer disagrees with the Comptroller’s
determination, the taxpayer can appeal to the Tax Court within 30 days after the notice of
the determination is mailed. Id. § 13-510(a)(6). If the Comptroller does not issue a
determination within six months after the taxpayer filed the claim, the taxpayer may
consider the claim disallowed and appeal to the Tax Court. Id. §13-510(b).
The pre-deprivation remedy path permits a taxpayer to challenge a tax that has been
assessed against it without first paying the tax. Id. § 13-401. If the Comptroller, upon
examining or auditing a tax return, determines that a taxpayer’s “tax due exceeds the
amount shown on the return, the tax collector shall assess the deficiency.” Id. § 13-401(a).
A taxpayer may contest such a final assessment by filing an appeal with the Tax Court
within 30 days after the notice of assessment is mailed. Id. § 13-510(a)(1).
As noted, whether following the post-deprivation remedy path or the pre-
deprivation remedy path, a taxpayer’s right of appeal from a final determination or a final
assessment of the Comptroller is to the Maryland Tax Court. The Tax Court is not part of
the judicial branch but “is an adjudicatory administrative agency in the executive branch
of state government.” Comptroller v. FC-GEN Operations Invs. LLC, 482 Md. 343, 358
(2022) (quoting Comptroller v. Wynne,
431 Md. 147, 160 (2013), aff’d,
575 U.S. 542
(2015)). Proceedings on appeal to the Tax Court are thus a continuation of a taxpayer’s
10
administrative remedies, not judicial review, and are governed by Part IV of Subtitle 5 of
Title 13 of the Tax-General Article. Sections 13-514 through 13-527 provide rules
governing proceedings in the Tax Court, including: (1) prohibiting taking an appeal to the
Tax Court “[u]nless a person has exhausted all available administrative remedies before
the appropriate tax determining agency,” Tax-Gen. § 13-514; (2) requiring the appealing
party to file a petition with certain elements and the opposing party to file a response, Id.
§ 13-516; (3) permitting the Tax Court to allow or require the filing of briefs, memoranda,
and amendments to pleadings, id. §§ 13-517, 13-518; (4) requiring the Tax Court to “hear
and determine appeals promptly,” id. § 13-519; (5) authorizing the Tax Court to issue
subpoenas for witnesses and documents and providing a mechanism for enforcement
through a circuit court, id. §§ 13-520, 13-522; (6) authorizing depositions, id. § 13-521;
(7) providing that appeals are to be considered without deference and in the manner of a
bench trial, although not bound by “the technical rules of evidence,” id. §§ 13-523, 13-524;
(8) permitting the Tax Court to address questions of law submitted to it and to submit “an
issue of fact to a circuit court for a jury trial,” id. §§ 13-525, 13-526; and (9) providing for
the recording of proceedings, id. § 13-527.
The Tax Court has “full power to hear, try, determine, or remand any matter before
it,” including the ability to “reassess or reclassify, abate, modify, change or alter any
valuation, assessment, classification, tax or final order appealed to” it. Id. § 13-528(a). In
every case it hears, the Tax Court is required to “issue a written order that sets forth its
decision.” Id. § 13-529(a). A final order of the Tax Court, which constitutes the final
11
administrative decision in a case, is then “subject to judicial review as provided for
contested cases in” the State Administrative Procedure Act. Id. § 13-532(a).
We and the Appellate Court of Maryland have both described the special statutory
administrative remedies for resolving tax disputes as “comprehensive.” See Furnitureland
S., Inc., 364 Md. at 135; Holzheid v. Comptroller,
240 Md. App. 371, 391 (2019) (“The
Tax-General Article is . . . comprehensive in nature in that it details specific procedures an
aggrieved party must take when seeking relief from an adverse decision of a tax
collector[.]”). We agree with the Appellate Court that “the extensive and comprehensive
administrative remedies available to taxpayers under the Tax-General Article” constitute
persuasive evidence of “the necessity of exhausting those remedies before seeking relief in
the circuit court[.]” Comptroller v. Zorzit,
221 Md. App. 274, 293-94 (2015); see also
United Ins. Co.,
450 Md. at 17 (in the context of determining whether the special statutory
administrative remedy at issue was primary or concurrent, identifying “the
comprehensiveness of the administrative remedy in addressing an aggrieved party’s claim”
as a relevant factor).
C. Other Manifestations of Legislative Intent
The comprehensive nature of the special statutory administrative remedies available
for resolving tax disputes suggests that the General Assembly intended them to be either
exclusive or primary rather than concurrent, as we have consistently held. See
Furnitureland S., Inc., 364 Md. at 134. As the Companies point out, however, the statutory
scheme does not expressly state that the remedies provided are either exclusive or primary.
12
Nonetheless, two statutory provisions leave us with no doubt as to the legislative intent.
See Monarch Acad., 457 Md. at 60 (“Unless the legislature expressly states that the remedy
before the agency is exclusive, courts must make this determination.”). The first, § 13-505
of the Tax-General Article, broadly prohibits judicial action that would interfere with the
assessment or collection of taxes. The second, § 3-409 of the Courts and Judicial
Proceedings Article (2020 Repl.), prohibits the use of declaratory judgment actions as an
end-run around special statutory administrative remedies. Together, they establish a
legislative intent that the special statutory administrative remedies provided for the
resolution of tax disputes are exclusive.
Section 13-505 of the Tax-General Article provides: “A court may not issue an
injunction, writ of mandamus, or other process against the State or any officer or employee
of the State to enjoin or prevent the assessment or collection of a tax under this article.”
The Comptroller interprets the language of § 13-505 broadly, as an unambiguous
expression of legislative intent to preclude judicial intervention in tax cases until a final
administrative determination is issued. The Companies interpret that provision more
narrowly, precluding only the use of certain remedies, specifically coercive ones, in tax
matters. Because a declaratory judgment is not referenced in § 13-505 and is not coercive,
the Companies contend that the circuit court had jurisdiction over their complaint seeking
a declaratory judgment.
In determining whose interpretation of § 13-505 is correct, we resort to our familiar
canons of statutory interpretation. As we set forth earlier this term:
13
“Our goal is to ascertain and effectuate the intention of the legislature and
we begin that exercise by reviewing the statutory language itself.”
[Comptroller v.] Citicorp[ Int’l Commc’ns, Inc.], 389 Md. 156, 165 [2005]
(quotations omitted). We read the plain meaning of the language of the
statute “as a whole, so that no word, clause, sentence or phrase is rendered
surplusage, superfluous, meaningless or nugatory.” Wheeling v. Selene Fin.
LP,
473 Md. 356, 376 (2021) (quoting Koste v. Town of Oxford,
431 Md. 14,
25-26 (2013) (internal quotations omitted)). “Additionally, we neither add
nor delete language so as to reflect an intent not evidenced in the plain and
unambiguous language of the statute, and we do not construe a statute with
forced or subtle interpretations that limit or extend its application.”
Wheeling,
473 Md. at 376-77 (quoting Lockshin v. Semsker,
412 Md. 257,
274 (2010)) (cleaned up). “If the language of the statute is unambiguous and
clearly consistent with the statute’s apparent purpose, our inquiry as to
legislative intent ends ordinarily and we apply the statute as written, without
resorting to other rules of construction.”
Id. at 377 (quoting Lockshin,
412
Md. at 275). That said, as the Court recently reiterated in Wheeling,
[w]e, however, do not read statutory language in a vacuum, nor do we
confine strictly our interpretation of a statute’s plain language to the
isolated section alone. Rather, the plain language must be viewed
within the context of the statutory scheme to which it belongs,
considering the purpose, aim, or policy of the Legislature in enacting
the statute. We presume that the Legislature intends its enactments to
operate together as a consistent and harmonious body of law, and,
thus, we seek to reconcile and harmonize the parts of a statute, to the
extent possible consistent with the statute’s object and scope.
Where the words of a statute are ambiguous and subject to more than
one reasonable interpretation, or where the words are clear and
unambiguous when viewed in isolation, but become ambiguous when
read as part of a larger statutory scheme, a court must resolve the
ambiguity by searching for legislative intent in other indicia,
including the history of the legislation or other relevant sources
intrinsic and extrinsic to the legislative process. In resolving
ambiguities, a court considers the structure of the statute, how it
relates to other laws, its general purpose, and the relative rationality
and legal effect of various competing constructions.
In every case, the statute must be given a reasonable interpretation,
not one that is absurd, illogical, or incompatible with common sense.
14
473 Md. at 377 (quoting Lockshin,
412 Md. at 275-76) (internal quotations
omitted).
Additionally, because we are tasked with interpreting a tax statute, “this
Court recognizes that any ambiguity within the statutory language must be
interpreted in favor of the taxpayer.” Citicorp, 389 Md. at 165 (quoting
Supervisor of Assessments of Anne Arundel County v. Hartge Yacht Yard,
Inc., 379 Md. 452, 461 (2004) (quoting Comptroller v. Clyde’s of Chevy
Chase, Inc., 377 Md. 471, 484 (2003))).
FC-GEN,
482 Md. at 379-81.
Turning to the plain language of the statute, § 13-505 is a limitation on the power
of “[a] court” to take certain actions “against the State or any officer or employee of the
State.” Tax-Gen. § 13-505. The prohibited actions are the issuance of “an injunction, writ
of mandamus, or other process . . . to enjoin or prevent the assessment or collection of a
tax under this article.” Id. Here, there is no dispute over the “who” elements of § 13-505:
the relevant court is the Circuit Court for Anne Arundel County and the relevant State actor
is the Comptroller. Instead, the dispute centers on the “what” elements, and specifically
whether the circuit court was prohibited by § 13-505 from: (1) issuing an order granting
the Companies’ motion for summary judgment against the Comptroller; and (2) issuing a
declaratory judgment that the “Maryland Digital Advertising Gross Revenues Tax violates
the Supremacy Clause of the United States Constitution and the Internet Tax Freedom Act
. . . , the dormant Commerce Clause of the United States Constitution . . . , and the First
Amendment to the United States Constitution[.]” As those orders were neither injunctions
nor writs of mandamus, the resolution of the dispute turns on whether those orders
15
constitute “other process . . . to enjoin or prevent the assessment or collection” of the digital
advertising gross revenues tax. Tax-Gen. § 13-505.
We begin with the meaning of “process.” The statute does not define the term. As
defined in our Rules, “process” “means any written order issued by a court to secure
compliance with its commands or to require action by any person and includes a summons,
subpoena, an order of publication, a commission or other writ.” Rule 1-202(x). Black’s
Law Dictionary defines it to include “[a] summons or writ, esp. to appear or respond in
court.” Process, Black’s Law Dictionary 1458 (11th ed. 2019). At the time the predecessor
to § 13-505 was enacted, “process” in the legal context included, among other definitions,
“any writ, order, notice, summons, or other writing by which a court exercises its
jurisdiction over the parties or subject matter of any action or proceeding.” Process,
Webster’s New Int’l Dictionary of the English Language 1972 (2d ed. 1934); see also
Process, Black’s Law Dictionary 1432-33 (3d ed. 1933) (defining “process” to include “[a]
writ, summons, or order issued in a judicial proceeding to acquire jurisdiction of a person
or [that person’s] property, to expedite the cause or enforce the judgment,” and “all other
writs which may be issued during the progress of an action”). From these definitions, the
Comptroller emphasizes that “process” can include “any order,” while the Companies
emphasize the link in some of the definitions to coercion. Finding some merit in both
arguments, we do not view the dictionary definitions as dispositive.
The Companies also point to our canon of statutory interpretation requiring that we
read terms in the context in which they are used. They then look to the doctrine of ejusdem
16
generis6 in arguing that we must construe “other process” consistent with the two more
specific terms that precede it—“injunction” and “writ of mandamus”—and conclude that
“other process” must also refer to only “coercive remedies” that “command[] or restrict[]
some action.”
Although we agree with the Companies that the context in which “other process” is
used sheds light on the General Assembly’s intent, we find the most critical context to be
the General Assembly’s statement of the purpose for which process may not be used: “to
enjoin or prevent the assessment or collection of a tax under this article.” Tax-Gen.
§ 13-505. If not for that final phrase, the Companies’ reliance on ejusdem generis would
be more persuasive. But we need not look to the terms “injunction” or “writ of mandamus”
for insight into what the General Assembly was trying to prohibit by invoking “other
process,” because the General Assembly has told us directly: court action that will enjoin
or prevent tax assessment or collection.
With that understanding, a declaratory judgment that declares a tax unlawful,
including the one sought by the Companies and entered by the circuit court here,
necessarily runs afoul of § 13-505. Although the Companies protest that the purpose of a
declaratory judgment is not to “prevent the assessment or collection” of a tax, but merely
6
As we stated in Elsberry v. Stanley Martin Cos., 482 Md. 159, 189 n.8 (2022):
Ejusdem generis is Latin for “of the same kind or class[.]” Ejusdem Generis,
Black’s Law Dictionary (11th ed. 2019). It is “[a] canon of construction
holding that when a general word or phrase follows a list of specifics, the
general word or phrase will be interpreted to include only items of the same
class as those listed.” Id.
17
to afford a defense if the Comptroller initiates legal action against them, we see no daylight
between those scenarios when it comes to compliance with the purpose underlying
§ 13-505. Indeed, we cannot conceive of any purpose for the Companies’ lawsuit or the
court’s declaration other than to (1) prevent the Comptroller from assessing the digital
advertising tax against them as an initial matter or (2) ultimately prevent the Comptroller
from collecting that tax through eventual legal action. See, e.g., Prevent, Black’s Law
Dictionary 1439 (11th ed. 2019) (defining “prevent” as to “stop from happening; to hinder
or impede”); Prevent, Merriam-Webster 984 (11th ed. 2014) (defining “prevent” as “to
keep from happening or existing”; “to hold or keep back”; “to deprive of power or hope of
acting or succeeding”; “to interpose an obstacle”); see also Cts. & Jud. Proc. § 3-412(a)
(“Further relief based on a declaratory judgment or decree may be granted if necessary or
proper.”).7
7
We find the plain language of the current version of § 13-505 to be unambiguous.
The statutory history of that provision provides yet further support for our interpretation.
The predecessor to § 13-505, which was first adopted in 1947, initially applied only to the
State’s sales-and-use tax. See 1947 Md. Laws ch. 281, § 286; see id. § 260; id. ch. 681,
§ 309. That statute provided:
No injunction or writ of mandamus or other legal or equitable process shall
issue in any suit, action or proceeding in any court against this State or any
officer or employee thereof to prevent or enjoin the collection under this
subtitle of any tax sought to be collected, and no suit or proceeding shall be
maintained in any court by any taxpayer for the recovery of any amount of
taxes alleged to have been erroneously or illegally assessed or collected
except as is provided by §§ 351 [providing for administrative remedy] and
352 [providing for judicial review of the Comptroller’s final determination
under § 351] of this subtitle.
Md. Code Ann., art. 81 § 350 (1957). The predecessor provision thus expressly applied to
“other legal or equitable process,” and “in any suit, action or proceeding in any court.” Id.
18
Stated another way, the Companies’ attempts to carve declaratory judgment suits
out of the scope of § 13-505 run head-long into one of our core canons of statutory
construction, which is that “[i]n every case, the statute must be given a reasonable
interpretation, not one that is absurd, illogical, or incompatible with common sense.” See
FC-GEN, 482 Md. at 380 (quoting Wheeling,
473 Md. at 377). The Companies’
protestations that a declaratory judgment cannot prevent the assessment or collection of a
tax because it “stands by itself[,] and does not involve executory process or coercive relief,”
(quoting Davis v. State,
183 Md. 385, 389 (1944)) (emphasis omitted), simply cannot be
squared with logic or common sense. The only reason for the Companies to seek a
declaratory judgment from the circuit court is the expectation that such a judgment would
prevent the Comptroller from assessing or collecting the digital advertising tax from them.
Indeed, a declaratory judgment may be granted only if “it will serve to terminate the
uncertainty or controversy giving rise to the proceeding[.]” Cts. & Jud. Proc. § 3-409(a).
It also expressly cross-referenced statutory provisions providing for administrative
remedies and judicial review of administrative determinations. Id.
Two 1988 legislative changes led to the current version of § 13-505. First, as part
of the State’s ongoing recodification process, the General Assembly established the Tax-General Article. 1988 Md. Laws ch. 2. According to a Revisor’s Note, any linguistic
change made to what then became § 13-505 was meant to be “new language derived
without substantive change.” 1988 Md. Laws ch. 2, § 1, at 517 Revisor’s Note.
Second, Chapter 569 of the 1988 Laws of Maryland made two substantive changes
to the new § 13-505 that had been proposed during the revision process: (1) adding
“assessment or” before “collection” in the statute; and (2) expanding the reach of the statute
from the sales-and-use tax to any “tax under this Article.” Thus, the only substantive
changes made in the adoption of § 13-505 were intended to broaden its scope when
compared to its already broadly worded predecessor.
19
For that reason, the Companies asserted in their complaint that the declaratory judgment
they sought would “terminate” an “actual controversy exist[ing] between the [Companies]
and the Comptroller.” It is difficult to see how the circuit court’s declaratory judgment
could terminate the present controversy between the Companies and the Comptroller if it
did not have the effect of preventing the collection of the digital advertising gross revenues
tax.
A declaratory judgment may be a slightly less effective mechanism to prevent
assessment and collection of a tax than an injunction, if only because additional steps would
be necessary for the ruling to be directly enforceable. But would there be any question
about the Comptroller’s ability to successfully assess or collect the digital advertising tax
from the Companies if this Court were to uphold the circuit court’s declaratory judgment
that the tax is unconstitutional and illegal? To ask the question is to answer it. As the
Supreme Court of the United States has noted, “there is little practical difference between
injunctive and declaratory relief,” California v. Grace Brethren Church, 457 U.S. 393, 408
(1982), and a declaratory judgment “procedure may in every practical sense operate to
suspend collection of the state taxes until the litigation is ended[.]”
Id. (quoting Great
Lakes Dredge & Dock Co. v. Huffman,
319 U.S. 293, 299 (1943)).
Ultimately, to allow a declaratory judgment action to be pursued as an exception to
the scope of § 13-505 would permit an end-run around the legislative intent to resolve tax
disputes through the special statutory administrative remedy process. We cannot faithfully
interpret the broad language and stated purpose of § 13-505 to implicitly leave such a large
20
loophole through the special statutory administrative remedy scheme the General
Assembly has established. For the same reason, we reject the Companies’ contention that
even if declaratory judgment actions are not generally available to resolve tax disputes,
they are permissible if they are filed before the tax is due (and so before an administrative
remedy claim can be initiated). Such an interpretation would incentivize early court
challenges to new or altered tax regimes. Although we express no opinion on the
Companies’ policy argument for permitting such early court challenges,8 that is not the
scheme the General Assembly has adopted. Like the United States Supreme Court, we are
“hard pressed to conclude that” the General Assembly “intended to prohibit taxpayers from
seeking one form of anticipatory relief,” such as an injunction, “while permitting them to
seek another,” like a declaratory judgment, “thereby defeating the principal purpose” of
the remedial administrative scheme. Grace Brethren Church, 457 U.S. at 408.
The plain language of § 13-505 thus evidences the General Assembly’s intent to
generally preclude courts from interfering with the collection or assessment of taxes. And
even if the broad language of the provision could still be interpreted to leave open a window
8
In their brief, the Companies made a public policy argument that “[i]t is far better
for taxpayers and the Comptroller to have [a] determination made [by way of a declaratory
judgment] before the tax is assessed and before taxpayers pay millions of dollars in tax
only for the State to have to refund those amounts at some later, undetermined time.”
Whether we agree or disagree with that argument is, for purposes of this case, irrelevant,
because the General Assembly has discretion to decide whether to require taxpayers to
exhaust their administrative remedies. Nothing in this opinion should be interpreted to
suggest that the General Assembly lacks the authority to permit early court challenges to
new and innovative tax regimes as a way of minimizing uncertainty and disruption in the
event a tax is found to be unconstitutional. All we decide today is that the General
Assembly has not done so.
21
for a declaratory judgment action like the one filed by the Companies here, § 3-409(b) of
the Courts and Judicial Proceedings Article shuts it tight. Section 3-409(b), which is part
of the Maryland Uniform Declaratory Judgments Act, states: “If a statute provides a
special form of remedy for a specific type of case, that statutory remedy shall be followed
in lieu of a proceeding under this subtitle.”9 Cts. & Jud. Proc. § 3-409(b). “We have, in
numerous opinions, taken the position that where the General Assembly enacts an
exclusive or primary special form of remedy, no action under the Declaratory Judgments
Act may be maintained.” Laurel Racing Ass’n, Inc. v. Video Lottery Facility Location
Comm’n, 409 Md. 445, 465 (2009) (citing several opinions expressing that position).10 We
specifically applied that rule in the context of a tax dispute in Furnitureland South, Inc., in
which we concluded that the Comptroller could not file an action in court without first
exhausting prescribed statutory administrative remedies.
364 Md. at 128. Citing
§ 3-409(b), we reaffirmed “that where there exists a special statutory remedy for a specific
type of case, and the Legislature intends that remedy to be exclusive or primary, a party
9
The General Assembly enacted the special remedies exclusion to the Declaratory
Judgments Act (now codified at Courts and Judicial Proceedings § 3-409(b)) just two years
before adopting the precursor to Tax-General § 13-505. 1945 Md. Laws ch. 724, § 1. Like
the current version of the special statutory remedies exclusion, the 1945 version precluded
pursuit of a declaratory judgment when “a statute provides a special form of remedy for a
specific type of case,” and mandated that in such cases the “statutory remedy must be
followed.” Id.
10
See also Ray’s Used Cars, 398 Md. at 647-50; Sprenger v. Pub. Serv. Comm’n,
400 Md. 1, 24-25 (2007);
id. at 33-38 (Eldridge, J., concurring); Md. Reclamation Assocs.,
Inc. v. Harford County,
382 Md. 348, 362 (2004); Fosler v. Panoramic Design, Ltd.,
376
Md. 118, 128-29 (2003); Utilities, Inc. of Md. v. Wash. Suburban Sanitary Comm’n,
362
Md. 37, 44-45 (2000); Hartman v. Prince George’s County,
264 Md. 320, 323 (1972).
22
may not bypass the special statutory remedy by bringing an action for a declaratory
judgment or for equitable relief.”11 Id. at 133.
In sum, the comprehensive nature of the special statutory administrative remedies
that are provided for the resolution of tax disputes suggests that those remedies must be at
least the primary, if not the exclusive, mechanisms for resolving tax disputes. The
combined effect of (1) the general prohibition against judicial remedies that would prevent
the assessment or collection of taxes in § 13-505 of the Tax-General Article and (2) the
specific prohibition against the use of a declaratory judgment action as an end-run around
special statutory administrative remedies in § 3-409(b) of the Courts and Judicial
Proceedings Article, make clear the General Assembly’s intent that the special statutory
administrative remedies for resolution of tax disputes are exclusive. We so hold.12
11
In their efforts to differentiate declaratory judgments from coercive judicial
mechanisms, the Companies rely on Professor Edwin Borchard’s 1941 treatise on
declaratory judgments, in which the professor states that “[t]he main characteristic of the
declaratory judgment . . . is the fact that it conclusively declares the pre-existing rights of
the litigants without the appendage of any coercive decree.” (quoting Edwin Borchard,
Declaratory Judgments xiii (2d ed. 1941)). However, as this Court noted more than 80
years ago, Professor Borchard also agreed that the prescription of a special statutory
remedy renders a declaratory judgment unavailable: “[A]s Professor Borchard, who is
regarded as an authority on the subject, points out in his work, ‘where, however, a special
statutory method for the determination of the particular type of case has been provided, it
is not proper to permit that issue to be tried by declaration.’” Williams v. Tawes, 179 Md.
224, 229 (1941) (quoting Edwin Borchard, Declaratory Judgments 156 (1st ed. 1934)).
12
We observe that our holding aligns with the persuasive analysis of the Appellate
Court of Maryland in its decision in Comptroller v. Zorzit, 221 Md. App. 274, 297 (2015).
There, the intermediate appellate court engaged in a thorough review of the remedial
statutory scheme in the Tax-General Article and concluded that “[t]he General Assembly
has unambiguously expressed its intent to preclude judicial intervention in tax cases.”
Id.
at 296. The court observed that interpreting § 13-505 along with Tax-General § 13-514
(requiring exhaustion of administrative remedies with the tax collector before appeal to the
23
D. The Constitutional Exception to the Exhaustion Requirement Does
Not Apply.
The Companies invoke the constitutional exception to the administrative exhaustion
requirement. That exception generally “permits a judicial determination without
administrative exhaustion when there is a direct attack upon the power or authority . . . of
the legislative body to adopt the legislation from which relief is sought.” County Council
of Prince George’s County v. Chaney Enters. Ltd. P’ship, 454 Md. 514, 538 (2017)
(quoting Harbor Island Marina, Inc. v. Bd. of County Comm’rs of Calvert County,
286
Md. 303, 308 (1979)). However, the constitutional exception is “extremely narrow,” and
is subject to several specific limitations. See Prince George’s County v. Ray’s Used Cars,
398 Md. 632, 650-54 (2007) (emphasizing that Maryland administrative agencies are
competent to address and resolve constitutional challenges; that “this Court has
consistently held that exclusive or primary administrative remedies must be pursued and
exhausted, before resort to the courts, in cases presenting constitutional issues”; and
recognizing several specific limitations on the constitutional exception); see also, e.g.,
United Ins. Co. of Am. v. Maryland Ins. Admin.,
450 Md. 1, 35-36 (2016) (stating that the
constitutional exception applies only to challenges that attack a statute as a whole);
Tax Court) and Court & Judicial Proceedings § 3-409(b) “demonstrate[s] the Legislature’s
intent that tax disputes be resolved through the procedures established in Md. Tax-Gen.
Code Ann. §§ 13-510 through 13-529.” Id. at 297 (quoting Bancroft Info. Grp., Inc. v.
Comptroller,
91 Md. App. 100, 115 (1992)); see also Kuypers v. Comptroller,
173 F. Supp.
2d 393, 396 (D. Md. 2001) (recognizing that the General Assembly has through § 13-505
“expressed its intention that no suit may be brought to interfere with the statutory process
for the assessment or collection of a state tax”). We agree.
24
Montgomery County v. Broad. Equities, Inc., 360 Md. 438, 455-58 (2000) (discussing
several limitations on the application of the constitutional exception, including that it
applies only to challenges that attack the entirety of a statute, does not apply in the absence
of an alternative judicial remedy, does not apply where the “administrative and judicial
review remedy” is exclusive, does not apply where there is a need for factual exploration
to decide the challenge, and generally applies only where the basis for the constitutional
challenge will terminate the entire controversy).
One such limitation, which is dispositive here, is that “where the legislature has
expressly provided or intended that the administrative and judicial review remedy be the
‘exclusive’ remedy,” the constitutional exception “is inapplicable, and a declaratory
judgment or equitable action challenging the validity of an enactment ‘as a whole’ will not
lie.” Ray’s Used Cars, 398 Md. at 653 (quoting Broad. Equities, Inc.,
360 Md. at 457).
Here, because we have decided that the applicable special statutory administrative
remedies are exclusive with respect to the Companies’ challenge to the digital advertising
gross revenues tax, the constitutional exception is not applicable.
The Companies contend that we have previously applied the constitutional
exception in tax cases, citing Pressman v. State Tax Commission, 204 Md. 78 (1954),
Oursler v. Tawes,
178 Md. 471 (1940), and Jones v. Gordy,
169 Md. 173 (1935).13
13
Our decision in Pressman is particularly instructive concerning the type of case
in which we have applied the constitutional exception. See Broad. Equities, Inc., 360 Md.
at 459 (identifying Pressman as “an illustration of the type of case which is most
appropriate for resolution by a declaratory judgment under the ‘constitutional exception’”).
In Pressman, we addressed challenges to a statute that reduced the franchise tax on mutual
25
However, all three of the cases on which the Companies rely predate both (1) the 1988
legislative changes that expanded the reach of the predecessor to § 13-505 to all taxes
assessed under the Tax-General Article, see footnote 7 above, and (2) our articulation of
the tripartite framework for categorizing special statutory administrative remedy schemes
in Zappone. Those cases are not applicable to the existing statutory scheme.
CONCLUSION14
The Companies are challenging the digital advertising gross revenues tax, a tax they
acknowledge the law requires them to pay. The Tax-General Article provides special
statutory administrative remedies for the Companies to pursue their challenge. Instead of
pursuing those remedies, however, the Companies filed a direct challenge by way of a
declaratory judgment action in the circuit court. Absent exhaustion of the special statutory
administrative remedies provided in the Tax-General Article, the circuit court lacked
jurisdiction over the challenge and was required to dismiss it. For that reason, we vacated
savings banks situated in Maryland. 204 Md. at 82. However, the challenge in Pressman,
unlike the Companies’ challenge here, “did not involve any of the substantive tax
provisions . . . which would be administered by the administrative tax officials and
agencies”; instead, “the only challenge to” the enactment “was that the title of the statute
was not descriptive of the body of the statute as required by Article III, § 29, of the
Maryland Constitution.” Broad. Equities, Inc.,
360 Md. at 459 (analyzing Pressman).
14
The Court wishes to acknowledge the helpful amicus submissions provided in this
case by the Chamber of Commerce of the United States of America, the Maryland Chamber
of Commerce, and the Maryland Tech Council; Council on State Taxation; Peter A.
Johnson, Ph.D., Association of National Advertisers, American Advertising Federation,
Interactive Advertising Bureau, and American Association of Advertising Agencies;
Silicon Valley Tax Directors Group, Information Technology Industry Council, TechNet,
NCTA, and National Taxpayers Union Foundation; Tax Executives Institute; and Tax Law
Professors.
26
the orders of the Circuit Court for Anne Arundel County and remanded this case to that
court with directions to dismiss the action.
In sum, we hold that: (1) with respect to the Companies’ challenge to the Digital
Advertising Gross Revenues Tax Act, the administrative remedies in the Tax-General
Article are exclusive; (2) the Companies were required to exhaust their remedies; and
(3) their failure to do so deprived the circuit court of jurisdiction to entertain this
declaratory judgment action.
27
