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More Taxes for Chicago?

1 min readBy: Alicia Hansen

There’s a new chapter in the Chicago taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. saga. As if the Chicago sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. were not high enough already, now online buyers of tickets to city events might face an amusement tax as well. From the Chicago Tribune:

Buyers who purchase tickets to Chicago sporting and cultural events online through eBay and StubHub could end up paying an extra 8 percent tax if a lawsuit filed Monday by the city is successful.

The city argues in the lawsuit filed in Cook County Circuit Court that the two firms—eBay bought StubHub last year—are “reseller’s agents” and are therefore required under Chicago’s ordinance to pay an amusement tax. The lawsuit seeks a court order allowing the city to auditA tax audit is when the Internal Revenue Service (IRS) conducts a formal investigation of financial information to verify an individual or corporation has accurately reported and paid their taxes. Selection can be at random, or due to unusual deductions or income reported on a tax return. the companies and award fines for failing to collect and pay the tax.

Both companies say they will fight the lawsuit.

“We do not believe that the City’s Amusement Tax applies to either eBay’s or StubHub’s business models nor do we believe that the Amusement Tax can properly be assessed here,” said an identical statement issued by spokesmen for both companies. “We intend to fight this litigation vigorously.”

More on the Chicago sales tax rate here, here, here, and here.