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Apple resolves its case against Chicago's so-called 'Netflix Tax'
26 Jul, 2022 / 10:30 am / Apple

Source: http://www.mashable.com

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Mashable: More than $30 million was collected from streaming service customers in 2021 according to a report.

According to reports, Apple and the city of Chicago have settled their legal spat over Chicago's groundbreaking tax on streaming services.

Daniel Duffy, a Cook County Circuit Court Judge, announced the dismissal of the lawsuit Wednesday. The specifics of the agreement remained confidential. In the year ending June 30, 2021, Bloomberg Tax reported that the tax—widely considered to be the first of its kind—collected over $30 million in revenue.

Streaming entertainment services were subject to a 9% "Netflix tax" in Chicago in 2015 when the city enacted the tax. The city's tax on tickets for recreational activities and concerts was extended to "amusements delivered online" as a consequence of a reinterpretation of a long-standing tax scheme. One of the first taxes aimed against streaming services like Disney+, Spotify, and Amazon Prime Video.

Due process and the Constitution's commerce sections were used as well as the federal Internet Tax Freedom Act in Apple's 2018 lawsuit against a New York City tax collection agency, which it said violated the act's anti-discrimination provisions. There is a "illegal tax" on customers, says the lawsuit. A tax that the City of Chicago does not have the jurisdiction to establish or enforce will fall solely on Apple if it does not collect it from its customers.

While a separate lawsuit from Netflix, Hulu, and Spotify subscribers went through the courts, this case was placed on hold for two years. Streamers and tech corporations alike kept a careful eye on this issue, which went all the way to the Supreme Court. On the basis of assertions that the tax discriminates against streaming services compared to live performances, an appeals court found no violations of the Internet Tax Freedom Act.

After the verdict, Apple changed its complaint to claim that the levy is unlawful for its specific services. Despite this, Duffy was unconvinced and threw out the investigation.

Re-filing the case was not an option for the company. The judge never even touched on the substance of the matter. To avoid setting a precedent, Apple and other broadcasters affected by the tax decided not to pursue their claims any further.