In a case with implications that will ripple throughout the ticket resale landscape, StubHub will not be forced to collect Chicago’s amusement tax on ticket resales after the company won a decision this week from the Illinois Supreme Court.
The court ruled that the state’s legislature, which is a higher authority than municipalities, wrote the Auction License Act in a way that would give marketplaces like StubHub “the choice of collecting and remitting all federal, state, and local taxes, or notifying resellers of their own liabilities for any applicable local amusement taxes.”
StubHub currently tells resellers of tickets for Chicago events about the tax, but the company argued, among other things, that it would be logistically difficult for the company to collect the tax for such resales because it would have to drastically alter its business to do so.
“The legislature imposed some measure of order on internet ticket resales by requiring internet auctioneers to register with the State and make various assurances in the name of consumer protection, and in exchange allowed them to skirt the ban on scalping and, more importantly, the tax collection obligation the Act places on ticket brokers,” the Supreme Court wrote in the ruling.
However, the ruling puts Chicago-based ticket brokers at a disadvantage to resellers on StubHub’s marketplace because brokers in the city have to pay the tax because they’re located there.
“We are pleased with the Court’s ruling that Illinois municipalities cannot require online platforms like StubHub to collect and remit amusement taxes on resold tickets,” Lance Lanciault, Head of Legal Affairs at StubHub, said in a statement. “In reaching this decision, the Court recognized that there still exists a viable mechanism for Illinois municipalities to collect taxes from ticket resellers. The Court likewise acknowledged the consumer protection benefits provided by marketplaces like StubHub that guarantee ticket orders so that users can buy and sell tickets with confidence.”
Chicago-based attorney John Moore, who has represented members of the ticket broker community, told TicketNews that the state Supreme Court ruling is the final step for the city, but if it wants to pursue a remedy, it can still lobby the legislature.
“The gist of the opinion is that if the city can prevail upon the Illinois legislature to change a few words in the law, the tax will have to be collected,” Moore said. The city has tried that tact in the past, but so far has not been successful.
Ed Walsh, spokesperson for the City of Chicago Department of Revenue, did not immediately reply to a message seeking comment.
“Brokers in Chicago have had a very simple argument, they’d prefer not to have an amusement tax, but if there is one, then they want everyone to have to pay it,” Moore said.
