The Chicago amusement tax is anything but amusing to those being taxed. The Chicago amusement tax is fairly new and is aimed directly at taxing the use of streaming services. The city has already slapped a tax on Netflix users and now the Chicago amusement tax is going to hit PlayStation users.
Sony has caved and agreed to comply with the city’s 9% tax rate on streaming services. Sony will start applying the tax on November 14th but only to rentals and not full sale games. The Chicago amusement tax was originally intended to cover event ticketing within the city limits. You know, things like concerts, festivals, sporting events. The types of events that affect city services and impact traffic and neighborhoods. The City of Chicago has been taken to court over this tax and actually won the case.
The Liberty Justice Center, the Illinois Policy Institute’s litigation partner, sued on behalf of online streaming service customers to stop implementation of the tax after its expansion in 2015. The Liberty Justice Center argued that the tax was illegal and unconstitutional under state and federal law. Federal law, namely the 1998 Internet Tax Freedom Act, prohibits states, counties and municipalities from levying taxes that discriminate against electronic commerce.
In Labell v. City of Chicago, a judge in May 2018 ruled in favor of the city, upholding the expansion of the amusement tax. Following the decision, the Liberty Justice Center appealed, and the case is pending before the First District Court of Appeals. Apple Inc. – which is not currently complying with the tax – filed a new legal challenge against the city in August, also on the grounds that the tax violates the Internet Tax Freedom Act.
Jeffrey Schwab, the lead attorney on
Labellv. Cityof Chicago, said, “We think the city doesn’t have the constitutional right to do that. They tax not based on whether or not anyone used it in Chicago, but if they had a billing address in Chicago.”
According to the website Illinois Policy, state lawmakers have also been trying to create a statewide amusement tax on streaming services. It’s no wonder residents are fleeing to other states getting out of the Land of Lincoln.
It’s not good enough to already charge a sales tax on streaming goods and services, no, Illinois has to dig into the consumer pocket even deeper with money grabs like the Chicago amusement tax.
Last Updated on February 3, 2021.