City Of Chicago Sues Ebay Over Taxes On Event Tickets

The City of Chicago is sueing internet auctioneering site eBay and its subsidary, StubHub for not charging customers city amusement taxes on music or sporting event tickets sold via the websites.

According to the Associated Presss, eBay claims that the 8 percent amusement tax doesn’t apply to them or StubHub, which it purchased last year. In 1992 a US Supreme Court ruling said that a state was not allowed to force a business into collecting sales taxes unless the company had a physical presence in the area. While it’s not clear whether or not eBay has offices in Chicago, StubHub does have a property there.

However, in 2006 the city floated the idea of collecting taxes from online ticket sales, estimating that they could be losing out on $16 million in unpaid taxes and arguing that by allowing online retailers to not collect taxes, they were putting them in direct competition with retailers in the city.

Chicago Law Department Spokesperson Jennifer Hoyle said that they were unable to give an estimated amount of lost taxes because they didn’t have enough information from either site. The city filed two complaints Monday, one against each company, asking eBay and StubHub to hand over records of sales in Illinois.

eBay has said paying sales taxes could cripple small Internet businesses and for small business owners who operate through eBay implementing tax collection systems would be cost prohibitive.

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Associated Press