Over the past few years, the City of Chicago and Cook County have enacted two new taxes that directly impact restaurants and bars. Last fall, we reported on Cook County's penny-per-ounce tax on sales of sugary drinks, which will take effect on July 1, 2017.
On the entertainment front, the City of Chicago's "Amusement Tax," originally implemented in 2015, left many restaurateurs and bar owners less than amused, as a tax was placed on streaming services, such as Netflix, Hulu and Spotify, as well as cloud computing services to which many subscribe. Now, the City has extended that same Amusement Tax to cover satellite TV services. Below, we provide a play-by-play on how the tax works.
The Amusement Tax
In November 2016, the City of Chicago extended its current 9% amusement tax to charges paid for satellite TV services by businesses that subscribe to satellite TV.
Do not get this confused with the City's tax on cable TV service, which requires cable providers to charge and collect the amusement tax from customers and to pass it along to the City. The main difference between the tax on cable TV services and the new tax on satellite TV services is that the Chicago Department of Finance is going to collect the tax from satellite TV customers directly—in other words, your restaurant/bar.
The City did not hold any public hearings or get the City Council's vote on this matter. It is simply reinterpreting the tax code by saying that the existing law is an extension of the City's Amusement Tax.
Your business may be subject to this tax and you as the business owner may not even know it. The Chicago Department of Finance regularly issues clarification notices to inform businesses of tax requirements.
The City of Chicago can hold your business liable for up to six years if you have not filed and paid the amusement tax. If the city's Finance Department determines that there is Amusement Tax liability due, your business may be assessed tax, interest and penalties for all periods open under statute.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.