In its latest legal defeat at the hands of secondary ticket resale giant StubHub, the City of Chicago was left a small opening by the court in its fight to force StubHub to collect the city’s amusement tax from ticket sales.
U.S District Court Judge Wayne R. Anderson this week, denied the city’s request for reconsideration in its year-old lawsuit against StubHub, following Anderson’s initial decision this past April in favor of StubHub.
In the April decision, Anderson said the city’s laws governing the 8 percent amusement tax it collects on ticket sales contradicted each other. The two sides had no quarrel about the legality of the tax itself, only over whether StubHub should collect it, and the company said it shouldn’t be forced to because it is a marketplace therefore the ticket sellers themselves should be liable for the collection of the tax.
This month, Anderson denied the city’s request for new consideration partly because legal precedent was essentially on StubHub’s side.
“In our Opinion, we concluded that the City has no power under Illinois law to impose an obligation on StubHub to collect and remit the Amusement Tax when a ticket reseller uses the StubHub website to resell tickets at prices above face value. That decision was based in part on our determination that the City lacks home rule authority to tax the resale of tickets at above-face value because… such transactions involve the purchase and sale of ‘tangible personal property,'” Anderson wrote.
Neither Ed Walsh nor Sean Pate, spokespersons for the Chicago’s Department of Revenue and StubHub, respectively, returned messages seeking comment.
Anderson continued that the state legislature could settle the matter by creating a new law to address it, but whether the city will pursue that in the face of its legal defeats is unknown. The city has long maintained that it believes StubHub should collect the tax, so it may pursue the legislative tact to clear the matter up once and for all.
“We note that, if the General Assembly wishes to have internet auction listing sites, such as StubHub, collect Amusement Taxes when a ticket reseller uses the site to resell tickets at prices above face value, it has the power to do so by enacting legislation. As the legislation is currently written, however, we do not believe that StubHub has the obligation to collect and remit Amusement Taxes under these circumstances,” Anderson wrote.
John Moore, a Chicago-based attorney, said he respects Judge Anderson, but said the ruling to open it up to the legislature could put StubHub in a tough position. “I think [Judge Anderson] got this one wrong.”
Local Chicago ticket brokers have not liked Anderson’s decision because they believe it puts them at an unfair disadvantage because they have no choice but to collect the tax, which often makes their tickets more expensive than those found on StubHub.
