Aug 17, 2015
From KPMG TaxWatch
In June 2015, the City of Chicago adopted a pair of rulings, including Personal Property Lease Transaction Tax Ruling No. 12, providing its position on the taxation of certain electronic services. As background, the City Personal Property Lease Transaction Tax is imposed on charges for the use of personal property, including charges paid for a nonpossessory lease of computers, computer software, and data processing equipment. The City has interpreted the relevant ordinance as imposing tax on the use of remotely hosted software, access to online data bases, and certain other electronic transactions. Ruling Number 12 was intended to clarify an exemption from the tax, Exemption 11, which exempts transactions in which the customer’s control of the provider’s computer is de minimis and the charge is predominantly for information transferred to the customer’s computer rather than for the customer’s use or control of the provider’s computer. The tax changes outlined in Ruling Number 12 were to become effective September 1, 2015.
The City recently announced that the effective date of Ruling Number 12 has been extended to January 1, 2016. The City Department of Finance indicated that the delay will give businesses additional time to comply and give the City time to consider additional ordinance changes. The City has not extended the second of the two rulings, Amusement Tax Ruling No. 5, which is set to take effect September 1, 2015. For a more detailed discussion of the content of both of these rulings, please contact Drew Olson at 312-665-2897.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.