Earlier this year, we mentioned that Chicago would be hit with a "cloud tax" effective July 1, 2015. With this cloud tax now in effect, Chicago consumers have to pay 9% tax on streaming and cloud services.
Months later, residents of Chicago have filed a lawsuit against the tax policy on digital entertainment claiming the tax policy on digital entertainment is illegal.
According to a recent article, "a group of Chicago residents claim the city comptroller’s decision to apply the Amusement tax to streaming service amounted to a new tax that could only have been imposed by a vote of city officials. They claim they are being harmed since the tax makes them pay more for Amazon Prime, Netflix, Hulu, Xbox Live, and Spotify."
The article then goes on to state, "The lawsuit says the Chicago streaming tax violates the federal Internet Tax Freedom Act, which forbids states and cities from imposing discriminatory Internet-only taxes. Specifically, the Chicago subscribers claim the tax is illegal because it treats streaming differently from DVD-by-mail services and also imposes a higher rate than various live forms of entertainment."
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