CHICAGO (Sept. 10, 2015) – The Liberty Justice Center public interest law firm has filed a lawsuit in Cook County Circuit Court to halt Chicago’s new 9 percent tax on Internet-based streaming media services, commonly referred to as the “Netflix tax.”

Chicago has a 9 percent “amusement tax” which traditionally has applied to concerts, sporting events and other entertainment or recreational activities. But in June, the city’s Finance Department unilaterally expanded the scope of the amusement tax to also include online streaming media services such as Netflix, Spotify and XBox Live.

“No aldermen voted on this tax. It never went before the Chicago City Council – which makes the so-called ‘Netflix tax’ an illegal tax,” said Jeffrey Schwab, an attorney with the Liberty Justice Center. “If the city wants to tax Internet-based streaming media services, then it should put the measure through the political process, and let Chicagoans have their voices heard through the democratic process.”

As of Sept. 1, Chicago residents who use these online streaming media services will be forced to pay an additional 9 percent surcharge “for the privilege” of using these services. However, the City of Chicago Finance Department does not have the authority to impose new taxes not authorized by the City Council. That’s why the Liberty Justice Center has filed a lawsuit seeking to strike down the new tax.

The lawsuit also alleges that the new tax violates the federal Internet Freedom Tax Act, because it taxes some Internet-based streaming media at a higher rate than similar services not delivered via the Internet.

The complaint is available online here.

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