Internet Auction Listing Service Not Required to Collect Chicago Amusement Tax

A lawsuit filed by the City of Chicago seeking to require an online auction listing service used by third parties to buy and sell event tickets to collect the City’s 8% amusement tax was dismissed. The lawsuit aimed to enforce the 2006 amendment to the City Amusement Tax Ordinance requiring “reseller’s agents”, which includes anyone reselling or assisting in reselling a ticket on behalf of the ticket’s owner, whether in person, online, or otherwise, to collect and remit the amusement tax from the purchaser on the full selling price of the ticket.

However, a 2005 amendment to the Illinois Ticket Sale and Resale Act relieved internet websites who sell tickets at prices above face value from the requirement to collect the amusement tax. This tension has been resolved by the U.S. District Court, which decided that because the Preemption Act prohibits the City from using its home rule authority to tax the sale or purchase of tangible personal property, and because the City is not otherwise statutorily authorized to impose taxing obligations on Internet auction listing services, the City lacks the authority to obligate the online venue to collect and remit the amusement tax. (City of Chicago v. StubHub, Inc., U.S. District Court, Northern District of Illinois, No. 08-C-3284, March 30, 2009)

Posted on April 21, 2009