A nonprofit group in the Chicago area is representing a group of Chicago residents who filed the lawsuit last week.
The lawsuit claims that the 9 percent tax on services such as Amazon, Netflix and Spotify, is out of bounds. One of the reasons the group is giving is in regards to the city’s process for changing the law on its books — the aldermen didn’t vote on the changes. Also, the lawsuit claims they should have been allowed to vote on the changes.
Another claim the lawsuit makes is that Chicago’s streaming tax violates the Federal Internet Tax Freedom Act, which forbids cities and states from enacting internet taxes, such as email taxes or bandwidth taxes.
Some claim this tax is illegal because it is treating streaming different from DVD-by-mail services, and it also imposes a higher rate than other types of live forms of entertainment.
Chicago has had an amusement tax for awhile now, which applies to charges paid for the privilege to participate in, witness or view amusement. The city said that included amusements that are delivered electronically. The tax also extends to online gaming
When the city announced plans to tax streaming services, one tax professor in Chicago said that he had never heard about this kind of tax anywhere else in the country.
