City of Chicago Cloud Tax Delayed

| 8/13/2015

On Aug. 7, the city of Chicago announced a delay from Sept. 1, 2015, until Jan. 1, 2016, in the implementation of the recently enacted 9 percent personal property lease transaction tax on cloud computing services. The new tax, originally imposed in June by Personal Property Lease Transaction Tax Ruling No. 12, sparked swift opposition from Chicago-based technology companies.

The city extended the effective date to give companies additional time to configure their billing and compliance systems and procedures and allow the city to review potential measures that might mitigate the impact on Chicago-based technology companies.

The extension to Jan. 1, 2016, is limited to the collection of the personal property lease transaction tax on cloud services. The Sept. 1, 2015, effective date of the new tax on electronically delivered movies, games, and music has not been extended.

Due to the complexity and uncertainty surrounding the effective date of the tax, businesses should consider carefully their options before moving forward with the collection of the tax.


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