Apple's turf war over Chicago's 'Netflix tax' ends in settlement

After years of legal back-and-forth, Apple and the city of Chicago have reached an agreement on the so-called "Netflix tax" applied to streaming services.

On Wednesday, Apple officially dropped its lawsuit against Chicago, choosing to reach a settlement rather than pursue further legal action. The case was dismissed by Cook County Circuit Court Judge Daniel Duffy, who recently granted a motion by Chicago to dismiss Apple's challenge.

According to The Hollywood Reporter, the terms of the settlement weren't disclosed.

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+.

In 2018, Apple filed a lawsuit against the city, arguing 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.

At the time, Judge Duffy dismissed the lawsuit. He declared that Apple's filing was an insufficient challenge, and gave Apple leave to file an amended complaint.

6 Comments

docbburk 109 comments · 7 Years

About 2 years ago

Are they going to tax air, tears, perspiration, farts, extra tax on toilet paper? I have no desire to live in a large city. These stupid taxes are just a way to make up for poor decisions and fiscal irresponsibility. Internet services already has taxes on it. So, the crap they are pulling is equivalent to taxing cable tv, then taxing you for each channel you want to watch.

iOS_Guy80 899 comments · 5 Years

Decades ago New York State implemented a new 5% sales tax (in addition to the current local tax rates at the time) on lodging rooms (hotels, motels, b&b) if the room rate exceeded a certain amount. That room “luxury” tax was rescinded several years later when date showed that it had a negative impact on occupancy.

StrangeDays 12959 comments · 8 Years

docbburk said:

Are they going to tax air, tears, perspiration, farts, extra tax on toilet paper? I have no desire to live in a large city. These stupid taxes are just a way to make up for poor decisions and fiscal irresponsibility. Internet services already has taxes on it. So, the crap they are pulling is equivalent to taxing cable tv, then taxing you for each channel you want to watch.

Hmm it’s the supposed “poor decisions” and “irresponsibility” of cities that has enabled society and humanity to flourish. Cities are our centers of thought and development, and are the economic engines that power states and nations. Go to country with no big cities and I’ll show you a land of economic despair.

9secondkox2 3124 comments · 8 Years

StrangeDays said:

docbburk said:

Are they going to tax air, tears, perspiration, farts, extra tax on toilet paper? I have no desire to live in a large city. These stupid taxes are just a way to make up for poor decisions and fiscal irresponsibility. Internet services already has taxes on it. So, the crap they are pulling is equivalent to taxing cable tv, then taxing you for each channel you want to watch.

Hmm it’s the supposed “poor decisions” and “irresponsibility” of cities that has enabled society and humanity to flourish. Cities are our centers of thought and development, and are the economic engines that power states and nations. Go to country with no big cities and I’ll show you a land of economic despair.

While I agree with your point, that doesn’t excuse lazy greed. Just because a city can force a tax that doesn’t belong doesn’t mean it should.

The fact that they continue to double down despite federal law to the contrary is actually quite unbelievable s as me ridiculous. I don’t see where the settlement details are, but I imagine it was favorable to Apple, who otherwise might have appealed and climbed the courts - and won.