The City of Chicago has been one of the hardest hit cities during the current economic recession, and city officials have turned their eyes towards the Chicago Bears and some of their season ticket holders in an effort to help boost the city’s tax coffers.
According to the Chicago Tribune, the city sent letters to some of the team’s permanent seat license (PSL) owners saying they owe a city-issued amusement tax on their PSL, some of which were purchased seven years ago.
“The amusement tax is applicable when a license is sold,” Chicago Department of Revenue spokesman Ed Walsh told the newspaper. “The tax burden is on the purchaser. This includes initial sales and re-sales, as any amount paid for the right to witness a game is subject to the tax.”
The Bears introduced PSLs in 2002 to help pay for renovations to the team’s home stadium, Soldier Field. The seat licenses cover nearly half of the stadium and were sold at an original cost that ranged from $900 to $10,000. The letter was sent to season ticket holders who received their PSLs via transfer from the original license owner. The Bears had previously collected the amusement tax during the original purchase.
Chicago’s controversial amusement tax levies an 8 percent tax on event ticket sales, and the city has aggressively defended the measure, even thought it recently lost in a lawsuit it filed against StubHub, in which a court ruled that the secondary ticket giant did not have to collect it.
Team season ticket holders are not happy with the new tax, claiming the city is doubling up on the taxes. They already pay an amusement tax on their season tickets, a tax that was also increased recently from seven percent to nine percent.
“We don’t consider it double-taxation,” Walsh told the Chicago Sun-Times. “Our position is the license is part of what you’re paying to access the amusement. There’s the ticket amount and the PSL. The total is what’s subject to the tax.”
The Bears addressed the issue with a statement that was sent to PSL and season tickets holders:
“Dear [Season ticket holder],
A letter was recently sent by the City of Chicago’s Department of Revenue alleging that amusement tax is due on Permanent Seat License (PSL) transfers. It is our understanding the letter was sent to approximately 2,900 Bears PSL owners/ Season Ticket Holders who had a PSL transferred into their name between 2004 and 2008. If you area n original PSl owner, or a non-PSL Season Ticket Holder, you should NOT receive the City’s letter. During a routine city tax audit of the Bears, the City requested names on PSL transfers dating back to 2004 (which we were legally advised to provide) and informed us of their intent to assess amusement tax on these transfers. The letter was sent without our knowledge or input.
We have requested a meeting with the Chicago Department of Revenue in order to provide you with information and guidance. Your frustrations and concerns are understandable. We will communicate with you prior to the City’s response deadline. We appreciate you patience. ”
Recipients of the letter were asked to fill out an affidavit that was sent as well, in order to figure out the amount they will be taxed. The affidavit is required to be sent back within 45 days and then the PSL owner will have 30 days to pay off their tax debt after billing. Failure to pay will result in a 12 percent annual interest and penalties.
“I realize the City desperately needs to balance its budget, but, legally, this is really a stretch,” said Chicago attorney John Moore, who has represented ticket brokers in the past.