Increasingly taxes on streaming services are becoming more popular. Chicago was one of the first to launch a so-called Netflix Tax with a 9% tax on internet-based entertainment services including video, music, and gaming services.
Recently the Liberty Justice Center filed a lawsuit challenging the tax on behalf of Chicago taxpayers. This week the court ruled in favor of the city upholding the tax.
Under this ruling anyone “whose residential street address or primary business street address is in Chicago, as reflected by their credit card billing address, zip code or other reliable information” are subject to the amusement tax.
Jeffery Schwab, senior attorney at the Liberty Justice Center, said:
We plan to appeal this decision because it has far broader implications than this single attempt to tax online entertainment. Cloud-based entertainment isn’t unique to Chicago, and people take this entertainment in and out of city limits all the time. Therein lies one of the biggest problems with this tax: The city is taxing activity outside its borders because the tax applies regardless of whether a customer actually uses a service in Chicago. If today’s decision is allowed to stand, then local governments across Illinois could tax activity that occurs outside their borders. We will continue to fight for taxpayers against the city’s expansion of its taxing power.
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