Eventbrite has paid $799,000 (£623,500/€713,100) to Chicago to settle four years of liabilities under the city’s amusement tax, which has been dubbed the ‘Netflix Tax.’
The ticketing firm agreed to remedy what it owed stretching back to January 1, 2015 as part of the Illinois city’s nine per cent amusement tax as it applies to fees charged on top of the price of an event ticket, according to Bloomberg Tax, which obtained a confidential settlement through a Freedom of Information Act (FOIA) request.
Eventbrite’s service fees range from two to 3.5 per cent in addition to the price of a ticket, as well as a 2.5 per cent payment processing fee if the organiser of the event directs it to serve as the payment agent.
In the settlement, Eventbrite agreed to collect and remit the nine per cent amusement tax on the full price of a ticket as well as the applicable service fees and processing fees beginning July 1.
The company also confirmed it would submit an annual report summarising the details of its ticket sales for events in Chicago.
In addition to Eventbrite’s settlement, cinema ticketing firm Fandango has confirmed it will pay back $70,000 to Chicago in amusement tax liabilities dating back to 2007.
The amusement tax originally applied to concert and sporting event tickets, but the Chicago Department of Finance ruled in 2015 that the tax covered streaming services such as Netflix, Hulu and Spotify.
The Liberty Justice Center sued the city on behalf of online streaming service customers to stop implementation of the expanded tax. It argued that the tax was “illegal and unconstitutional under state and federal law.”
However, in May 2018 a judge ruled in favour of Chicago, which the Liberty Justice Center appealed. The case is still pending before the First District Court of Appeals.
Technology giant Apple also filed a lawsuit against the city in August 2018 on the grounds that the tax violates the Internet Tax Freedom Act.