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Tax Law

First Things First: Cincinnati Billboard Tax Does Not Violate First Amendment

On June 18, 2020, the Ohio Court of Appeals held that Cincinnati’s excise tax on the gross receipts generated by billboards does not violate the First Amendment to the United States Constitution. The court found persuasive Clear Channel Outdoor, Inc. v. Director, Department of Finance of Baltimore, 223 A.3d 1050 (Md. Ct. Spec. App. 2020), where the Maryland Court of Special Appeals held that that Baltimore’s excise tax on billboards did not violate the First Amendment. That case is on appeal at the Maryland Court of Appeals. Here, the advertising company plaintiffs and the city did not dispute that billboards are a means of speech entitled to First Amendment protection. But the court concluded that Cincinnati’s billboard tax did not offend the First Amendment because the tax: (1) applies to billboards regardless of the message displayed and is, therefore, content neutral; (2) does not threaten to suppress the expression of certain viewpoints; and (3) does not single out a particular group of billboard operators to bear the tax burden.

However, the court concluded that the city violated the First Amendment by prohibiting billboard operators from issuing bills to advertisers displaying the tax or even making indirect statements that the advertisers will absorb the tax. This provision failed to satisfy the intermediate scrutiny standard applicable to commercial speech. This prohibition was broader than necessary to achieve the city’s interest in ensuring that the billboard tax remains an excise tax and not a sales tax. Rather, “a simple disclaimer to the customers would clear up any would-be confusion that the billboard tax remains the operators’ responsibility to pay.”

Lamar Advantage GP Co. v. City of Cincinnati, 2020-Ohio-3377 (Ohio Ct. App. June 18, 2020).