Personal Property Lease Transaction Tax Ruling | Chicago Association of REALTORS®

Update – January 28, 2016

A Cloud Tax Win for REALTORS®

We’re pleased to announce that coordinated efforts between the Chicago Association of REALTORS®, our fellow local REALTOR® Associations, IAR and MRED were successful in attaining a positive Private Letter Ruling from the City of Chicago, exempting REALTOR® data from being assessed a cloud tax based on exemption 11 (the de minimus use and transfer of proprietary information exemption). The coalition was able to prove the business model utilized to provide MLS data to REALTORS® fit within existing exemptions. As a result, REALTORS® will not have to pay the cloud tax for MLS data.

Learn more.

 


 

UPDATE- August 10, 2015

As reported by CRAIN’s Chicago Business and the Chicago Tribune,  amid complaints from tech and business groups including the REALTORS®, the City of Chicago will be deferring implementation of the Personal Property Lease Transaction Tax until January 1, 2016.

Taxes that apply to entertainment such as Netflix will go into effect as planned September 1, 2015.

We will continue to monitor and advocate on your behalf on this emerging and fluid issue.

For questions please contact bbernardoni@chicagorealtor.com

 


 

The Chicago Association of REALTORS® continues to work closely with a large group of affected businesses and organizations as we look at the technical, legal and policy implications of the Personal Property Lease Tax Ruling.

While we continue to wait for the City of Chicago to release guidelines on how the tax is to be assessed, we continue to raise concerns that the impact on consumers will be significant.  REALTORS® fear in the interim that the administration of the tax will create substantive issues for taxpayers, their accountants and service providers now required to collect and remit payments to Chicago. As of this writing, there has been little direction as to how this ruling will impact the complex landscape of cloud computing.

Cloud-based transactions surround us, and as a result, uncertainty as to the application and haste to implement may create haphazard compliance. REALTORS® should work with their vendors to ascertain how many of their transactions are cloud-based and if the tax will have an impact on their clients.

It bears repeating: the impact of this ruling on consumers may be considerable, with multiple hits on a consumer in a real estate transaction. The ruling explicitly states, “examples of transactions that are subject to lease tax include charges incurred:

  • To perform legal research or similar on-line database searches
  • To obtain consumer credit reports
  • To obtain real estate listings and prices, car prices, stock prices, economic statistics, weather statistics, job listings, resumes, company profiles, consumer profiles, marketing data, and similar information or data that has been compiled, entered and stored on the providers computer; and
  • To perform functions such as word processing, calculations, data processing, tax preparation, spreadsheet, preparation, presentations, and other applications available to a customer through access to a provider’s computer and its software. These last examples are sometimes referred to as cloud computing, cloud services, hosted environment, software as a service, platform as a service or infrastructure as a service.”

We continue to research the ruling. We will keep you informed on further developments and advise on actions taken as they occur.

Resources

Personal Property Lease Transaction Tax Ruling 12 Effective 7-1-2015

Brian Bernardoni, Senior Director of Government Affairs, discusses the issue with NPR. Listen Here.

Chicago’s 9 percent cloud tax will include real estate listings, prices (via Inman)

Brian Bernardoni, Senior Director of Government Affairs, talks taxes with WGN Radio’s Rick Pearson. Listen here.