At the beginning of 2016, Chicago implemented a unique method to tax businesses for their use of remote computing services, also known as the cloud. The Personal Property Lease Transaction Tax program collected $13.9 million during its first six months and rose to $42.2 million through 6/30/18.
In an article by Bloomberg Law News, Samantha Breslow explained that Chicago is aided by substantial home rule authorities that allow the city to creatively enact a program such as the Personal Property Lease Transaction Tax despite being barred from taxing services.
"That's why Chicago and Cook County have all these strange and wacky local taxes that you don't see in other jurisdictions."
And lease tax issues come up frequently in audits, Breslow added.
“We are seeing quite a few taxpayers dealing with the application of the tax to software in the audit stage, in the assessment stage,” she said. “They are very aggressive.”
The program is an innovative--and lucrative--way to tax the cloud with Chicago's collections most likely surging for several years as businesses continue to embrace cloud-based products.
Click here to read the full Bloomberg Law News article by Michael J. Bologna.