Chicago: My kind of taxing town (where The Cloud costs 9 percent more)

B2C services passing on tax cost, will B2B do the same?

Chicago 9 percent tax cloud
Credit: Chicago (is)

If you live or work in Chicago, get ready for some new cloud taxes. You'll be paying an extra 9 percent on media streaming and business cloud services. Think of it as a replacement for the sales tax you used to pay at Blockbuster.

Predictably, the ruling is coming under fire. But Mayor Rahm Emanuel (pictured) is unrepentant: That toddlin' town is just clarifying existing laws, you see.

In IT Blogwatch, Windy City bloggers change their billing addresses. Not to mention: Frank makes it swing...

curated these bloggy bits for your entertainment.

Now this could only happen to a guy like John Byrne, and a gal like Amina Elahi:

Chicagoans who pay to stream movies and music from services like Netflix and Spotify will now need to fork over an additional 9 percent.

The added costs are the result of a ruling by the city Finance Department that extends the reach of [tax] cover many products streamed to businesses and residents bring in about $12 million each year. ... Companies that deliver cloud-based services will be responsible for collecting taxes...if the person paying to receive the data is in Chicago.  MORE

And only happen in a town like this, reasons Cyrus Farivar:

Starting Wednesday, the city of Chicago’s new "cloud tax" went into effect. ... To be clear, the "Amusement Tax Ruling" applies to a number of digital services. ... Elizabeth Langsdorf, a cityspokeswoman, [said] this new "ruling" is consistent with current tax law and is "not an expansion of the laws. ... The City's new rulings clarify the application of taxes to digital goods to ensure consistency."

Chicago is facing a massive budget shortfall largely due to school district pension payments.  MORE

So may Neil McAllister say to each of you most gratefully, as he throws each one of you a kiss:

The Windy City..."amusement tax" [applies] to any activity that constitutes "watching electronically delivered television shows, movies or videos," "listening to electronically delivered music," or "participating in games, on-line or otherwise." [But] Chicago residents who prefer to download their music...are in luck: The change to the tax law doesn't apply.

A second new city ordinance [taxes] "nonpossessory computer leases," a legalese term for when people pay to access online services such storage and other services. Presumably, this means both rules will face legal challenges [based on] provisions of the Federal Telecommunications Act, the Internet Tax Freedom Act, and various limits on taxation imposed by both the federal government and the State.  MORE

This is Kate Cox's kind of town, Chicago is -- her kind of town, Chicago is:

The logic goes something like this: In the long-gone ancient era of “twenty whole years ago,” when you went down to your corner video store for some’d leave a few cents of sales tax behind. [So] your town, city, or county got some revenue out of it. But now, you’re streaming all your media [so] there’s no sales tax going anywhere.

And cities can’t collect business or property taxes on businesses that don’t exist.  MORE

Nancy Gohring's kind of people too -- people who smile at you:

While much of the focus of new taxes...has been on implications for consumers of turns out the laws have a big impact on businesses using a very wide array of cloud services. [And] it might give other municipalities and states ideas.

Chicago companies that use Amazon Web Services, for instance, to offer a service to customers, must pay the tax. Likewise, businesses that use, Workday or any other software as a service, are on the hook. ... Users of Office 365 may also be charged the tax.

Businesses in Chicago will need to stay on top of the cloud services they use and make sure they pay what they owe..  MORE

And each time Michael J. Wynne, Adam P. Beckerink, Jennifer C. Waryjas and Douglas A. Wick roam, Chicago is -- calling them home, Chicago is: [You're fired -Ed.]

Both rulings are staggering in their breadth. ... The city of Chicago is facing monumental fiscal pressures [and] bad times make for bad tax administration.

As a consequence, the time to look at the impact of these rulings is now, before mounting exposure and interest accrual makes challenging these positions economically infeasible.  MORE

Why Zac Shipley just grins like a clown: It's his kind of town:

We all agree that Netflix basically put Blockbuster and similar video stores out of business, right? Tax losses include: sales tax, rental taxes, property tax, and of course all the money the employees of those stores put in to the local economy.

So less jobs for police, less jobs for public workers, less jobs for electricians and plumbers... This has a domino effect. ... Yes we paid more for stuff but that money went into my neighbor’s pockets and they bought food and paid their rent with it.  MORE

And Finally...
My Kind Of Town (Frank swings in Vegas, baby)

You have been reading IT Blogwatch by , who curates the best bloggy bits, finest forums, and weirdest websites… so you don't have to. Catch the key commentary from around the Web every morning. Hatemail may be directed to @RiCHi or Opinions expressed may not represent those of Computerworld. Ask your doctor before reading. Your mileage may vary. E&OE.

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