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Wednesday, May 30, 2018

Court Dismissed Challenge to Chicago's Tax on Internet Streaming Services Such as Netflix

Last week, a Cook County Circuit Court Judge issued a ruling in favor of the City of Chicago in a challenge that its 9% amusement tax violated federal law and the constitution. Labell v. City of Chicago. Plaintiffs had filed a lawsuit against the City of Chicago alleging that the City's imposition of the amusement tax on Internet-based streaming services such as Netflix, violated the federal Internet Tax Freedom Act, the U.S. Commerce Clause, the Illinois constitution, and exceeded the City's home rule taxing powers. Plaintiffs were customers of Internet services who had been charged the amusement tax. 

The court addressed each allegation, finding no merit to plaintiffs' challenge to the City's tax. The court determined that the City had adequate authority under its home rule powers. The court also found no validity to plaintiffs' argument that the City's imposition of a different tax on live amusements than it does on Internet-based amusements discriminates against them. The court also rejected plaintiffs' argument that the tax violates the uniformity clause because it treats residents differently than non-residents. 

Post Authored by Julie Tappendorf


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