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Connecticut bill would tax digital ads on Facebook, Google, raising as much as $250M a year

Despite the threat of legal action, at least five other states — Massachusetts, New York, Washington, Indiana and West Virginia — are contemplating similar taxes.

Carl Szabo, vice president and general counsel for NetChoice, another industry group, said such state-level efforts to tax digital advertising would run afoul of the federal Internet Tax Freedom Act. The act, passed by Congress in 1998, bars states from imposing taxes on internet-only services.