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Labell v. City of Chicago

Appellate Court of Illinois, First District, Fourth Division

September 30, 2019, Decided

No. 1-18-1379


 [*P1]  Defendant, the city of Chicago (City), imposes a nine percent amusement tax on charges paid for the privilege to enter, witness, view, or participate in certain activities within Chicago. In 2015, the City's comptroller issued Ruling 5, which provided guidance on the collection of the amusement tax as it pertained to amusements that are delivered electronically. Electronically Delivered Amusements Ruling 5 (eff. July 1, 2015) (Ruling 5). Ruling 5 stated that beginning July 1, 2015, charges paid for the privilege of watching electronically delivered television shows, movies, or videos would be subject to the amusement tax if the shows, movies, or videos are delivered to a patron in the City. [**2]  Ruling 5 also clarified that the amusement tax would cover the privilege of listening to electronically delivered music and participating in games, online or otherwise, when delivered to a customer in the City. To determine the sourcing for the amusement tax, the City's department of finance indicated it would utilize the rules set forth in the Mobile Telecommunications Sourcing Conformity Act (MTSCA) (35 ILCS 638 (West 2014)), which meant that the amusement tax would apply to customers whose residential street address or primary business address was in Chicago, "as reflected by their credit card billing address, zip code, or other reliable information."

 [*P2]  In November 2015, the City council amended the Chicago Municipal Code as it related to the amusement tax to include that in the case of amusements delivered electronically to mobile devices, such as in the case of video streaming, audio streaming, and on-line games, the rules set forth in the MTSCA may be utilized to determine which customers are subject to the tax. Chicago Municipal Code § 4-156-020(G1) (added Nov. 21, 2017).

 [*P3]  Plaintiffs, Michael Labell, Jared Labell, Natalie Bezek, Emily Rose, Bryant Jackson-Green, Zach Urevig, and Forrest Jehlik (collectively plaintiffs) brought [**3]  this suit in the circuit court of Cook County against defendants, the City and Erin Keane in her official capacity as comptroller. In their complaint, plaintiffs challenged the constitutionality of the City's amusement tax as it related to internet-based streaming services (streaming services tax) and sought declaratory and permanent injunctive relief.

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2019 IL App (1st) 181379 *; 2019 Ill. App. LEXIS 810 **; 2019 WL 6258401

MICHAEL LABELL, JARED LABELL, NATALIE BEZEK, EMILY ROSE, BRYANT JACKSON-GREEN, ZACK UREVIG, and FORREST JEHLIK, Plaintiffs-Appellants, v. THE CITY OF CHICAGO and ERIN KEANE, in her official capacity as Comptroller of the City of Chicago, Defendants-Appellees.

Subsequent History: Substituted opinion at, Modified by, Rehearing denied by Labell v. City of Chicago, 2019 IL App (1st) 181379, 2019 Ill. App. LEXIS 912 (Sept. 30, 2019)

Prior History:  [**1] Appeal from the Circuit Court of Cook County. No. 15 CH 13399. Honorable Carl Anthony Walker, Judge Presiding.

Disposition: Affirmed.


streaming, amusements, amusement tax, customer, ordinance, electronically, taxes, patron's, automatic, machines, uniformity clause, billing, music, residency, video, summary judgment, marketing, internet, games, circuit court, home rule, car wash, plaintiffs', residential, collection, street, facial challenge, classification, entertainment, Municipal