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Chicago Extends Amusement Tax

The idea of amusement taxes being applied to restaurants and bars is not a new one. However, Chicago is the first to begin including satellite television services in that tax. Earlier this November, the city of Chicago served notice that its 9% amusement tax now also applies to businesses that subscribe to satellite television services, like DISH Network. Now, at first glance that may not seem that important, but for many small business owners in Chicago it’s a very big deal.

Operating a restaurant or bar is considered to be one of the more difficult small businesses to run successfully. Chicago is not making it any easier with this new extension of its amusement tax. Now, this won’t hurt the well established restaurants but it does effectively nickel-and-dime any small restaurant/bar owners hoping to boost their attendance. Most of these businesses use satellite television subscription to get access to popular sports packages like NFL Redzone, college games etc. Now these businesses are going to have to decide whether catering to the sports crowd is fiscally plausible anymore.

Perhaps the most ridiculous part of this new tax is the creativity needed to even bring it into existence. While cable companies have been taxed for commercial use for a while now, satellite television services are required to be taxed differently than cable by federal law. Knowing that, one would think extending the amusement tax like this would be a blatant disregard for that law. However, the Emmanuel administration realized that instead of requiring providers to tax their clients and provide that income to the city, they could simply tax the satellite television customers directly. This allows them to stay within federal guidelines, since they are not technically taxing satellite customers the same way that they are the cable customers.

Furthermore, Chicago is claiming that they are not pushing any new taxes on businesses. This is considered an extension of an existing tax. Small business owners need to constantly check clarification notices from the city, as this is often the only way the city conveys any changes in taxes. While this amusement tax is an extra burden for small business owners, owning sports packages, like the ones offered by DISH Network, can often pay for themselves with the additional attendance they bring in.

There is some light at the end of the tunnel as the city of Chicago has announced that they will allow businesses to only pay back a portion of their back taxes on this through the end of the year, with the intention of becoming fully compliant in the future. Chicago has been making life tough on newer bars and restaurants and this situation is certainly worth keeping an eye on moving forward.

 

Sources:

  1. http://www.chicagobusiness.com/article/20161126/ISSUE01/311269993/chicago-extends-amusement-tax-to-satellite-tv-in-restaurants-and-bars

  2. https://www.cityofchicago.org/city/en/depts/fin/supp_info/revenue/tax_list/amusement_tax_subscriberstopaidtelevisionprogramming.html

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