Malcolm Owen
Apple's attempt to shake off Chicago's Amusement Tax in the courts on streaming has been dismissed, though the iPhone maker still has the opportunity to refile and try to rid itself of the 9% tax.
In 2015, Chicago introduced a change to its Amusement Tax that placed a 9% tax on streaming entertainment services. Also referred to as a "Netflix Tax" and impacting services like Netflix, Spotify, and Apple's own Apple TV+ and Apple Music, the iPhone maker has attempted to overturn the initiative.
On Friday, Cook County Circuit Court Judge Dan Duffy granted a motion by Chicago to dismiss Apple's lawsuit against the Amusement Tax, reports Bloomberg Law. The granted motion effectively ends the current round of litigation, but doesn't stop it completely.
Judge Duffy's order dismisses the complaint without prejudice, with the addition that Apple's legal team could file a second amended complaint within 35 days to keep the lawsuit alive.
In his order, Duffy says Apple isn't required to present any evidence at this time, but it still "must plead facts" to sufficiently state a cause of action, upon which some form of relief could be granted.
The Judge's declaration is in relation to Apple's original 2018 lawsuit, which said the tax violated the federal Internet Tax Freedom Act, as well as the U.S. Constitution's commerce and due process laws. That lawsuit was paused for more than two years while courts handled a related lawsuit against Chicago by users of Netflix, Hulu, and Spotify.
While Chicago won that trial, Apple amended its complaint to say that case was a "facial challenge" to the tax program, but that Apple was challenging how the tax was applied to its own services.
However, Judge Duffy found it was an insufficient challenge, due to Apple's complaint not being specific enough to be used in arguments over whether the Amusement Tax is constitutionally valid.
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28 Comments
Shameful money grab by Chicago government. Doesn't seem much different than class action lawyer looking for a deep pocketed defendant to file a lawsuit against.
Not a lawyer, but it certainly seems bogus and discriminatory to single out streaming services. If the tax is valid everything going through the internet pipes should be taxable. I thought (could be wrong) that no state could tax interstate commerce and it seems moving data between states is interstate commerce.
The Judge was a Cook County Judge, not state or Federal. I would be surprised to see this hold up as it moves up the judicial ladder toward Federal courts.
Chicago (Cook county not far behind, and IL too) has been gentrifying the entire city through increased taxes/fees across all aspects of life (property taxes some of the highest in the nation, along with Cigarettes, gas, and at one point any drink with SUGAR!!!). They need to wake up and realize that people aren't beholden to big city life for work anymore. As more and more corporations adopt and keep permanent work from home workforces the city will see all their cash cows dry up really really quick. Looking forward to the day when Chicago becomes an abandoned desert town.
So you're telling me that in addition to any sales tax that's paid on the streaming subscription, they want another 9%? I guess they figure they get their cut from cable services, they should get them from streaming services too. Bet they'd find a way to tax OTA broadcasts if they could.