In 2015, Chicago introduced a so-called “Netflix tax,” levying a 9 percent surcharge on users of streaming entertainment services. The revenue program was a result of a reinterpretation of a long-standing tax program, extending the city’s tax on tickets for recreational activities and concerts to “amusements that are delivered electronically.

In 2018, Apple sued Chicago alleging violations of the commerce and due process clauses of the Constitution as well as the federal Internet Tax Freedom Act, which prohibits jurisdictions from imposing discriminatory taxes on several types of electronic commerce.“ Customers are subject to an illegal tax,” read the complaint. “If Apple does not collect the tax from its customers, it will directly be liable for a tax that the City of Chicago has no power to impose or authority to enforce.”

The case was put on hold for two years while a separate lawsuit against Chicago from Netflix, Hulu and Spotify users worked its way through the courts. Chicago won the case, which was closely watched by tech companies and streamers. An appeals court found no violations of the Internet Tax Freedom Act, rejecting arguments that the tax discriminates against streaming services compared to live performances, which are taxed by the city at a lower rate.

Apple amended its lawsuit after the ruling, alleging that the tax is unconstitutional with respect to its particular services. However, Cook County Circuit Court Judge Daniel Duffy Duffy was unconvinced and dismissed the case.

Apple and Chicago have now come to terms on a deal to Apple’s lawsuit challenging the city’s first-of-its-kind tax on users of streaming services. For more, read the full report from The Hollywood Reporter.  

Archive: Apple TV News