Comcast has filed a lawsuit in Thurston County Superior Court to invalidate a new Washington state law, SB 5814, which imposes a sales tax on online advertising services. Signed into law by Governor Bob Ferguson in May 2025, the measure is set to take effect in October unless blocked by the courts according to MediaPost. The law requires businesses, including advertising agencies, to collect sales tax—estimated at 7.5% to 10.6%—on “advertising services” such as creating and placing digital ads, analyzing their performance, and planning online campaigns. Comcast argues that the law violates the federal Internet Tax Freedom Act (ITFA), which prohibits states from imposing discriminatory taxes on electronic commerce.
The complaint, filed on Tuesday, September 9, alleges that SB 5814 unfairly targets internet-based advertising while exempting most traditional advertising formats. According to Comcast, the law’s definition of “advertising services” includes digital and nondigital services related to the creation, production, or dissemination of ads, such as graphic design, search engine marketing, lead generation optimization, and web campaign analytics. However, it exempts services tied to newspapers, printing, publishing, radio and television broadcasting, and out-of-home signage like billboards. “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,” Comcast stated in its filing, arguing that this discrepancy violates the ITFA’s prohibition on discriminatory taxation.
Comcast is seeking a declaratory judgment to deem the law unconstitutional, asserting that states cannot enact legislation that conflicts with federal statutes. The cable giant’s challenge has garnered attention from industry groups, many of which had previously opposed the law. Earlier this year, major advertising organizations—including the Association of National Advertisers, American Association of Advertising Agencies, and American Advertising Federation—alongside tech group NetChoice and cable lobbying organization NCTA-The Internet and Television Association, urged Governor Ferguson to veto the bill. In a letter, they warned that the tax “would have far-reaching negative consequences for businesses, consumers, and the state’s economy as a whole,” arguing it threatens Washington’s business community and could harm consumers by increasing advertising costs.
The lawsuit highlights ongoing tensions between state governments seeking new revenue streams and businesses advocating for fair taxation policies in the digital economy. If the court rules in Comcast’s favor, it could set a precedent for challenging similar state-level taxes on digital services. As the October implementation date approaches, the outcome of this legal battle will be closely watched by advertisers, tech companies, and policymakers alike.
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