Challenge to Chicago’s Netflix Tax Heads to Appeals Court

Chicago’s “Netflix tax” is an unconstitutional extraterritorial tax, customers of streaming entertainment services will contend during oral arguments before an Illinois appeals court.

The plaintiffs, users of Netflix Inc., Hulu, and Spotify, will call on the court to toss Chicago’s Amusement Tax Ruling No. 5, a revenue program created in 2015 to impose the city’s 9% tax on streaming services.

Among other things, the plaintiffs will tell the court that Chicago’s application of the tax based solely on a customer’s billing address—not where the customer uses the service—represents an illegal exercise of its taxing authorities. Oral arguments are ...