The Chicago Department of Finance released an information bulletin January 21, 2021 providing guidance on the City’s nexus requirements and establishing an economic nexus safe harbor for the City’s Personal Property Lease Transaction and Amusement taxes. The information bulletin indicates that out-of-state entities with less than $100,000 of sales to customers in the City may not be required to collect these taxes as of July 1, 2021. This bulletin represents the Department’s first formal nexus guidance since the US Supreme Court’s Wayfair decision. The Department’s position is that the safe harbor protection will be limited to out-of-state entities’ obligation to collect the tax on nonpossessory computer leases or amusements delivered electronically, and only if such entities have no “other significant contacts” with the City. City of Chicago Information Bulletin – Nexus and Safe Harbor (1/21/21)
Out-of-state businesses with more than $100,000 of sales that may be subject to the City of Chicago’s Personal Property Lease Transaction or Amusement tax should consider the bulletin a notification of Chicago’s intention to enforce economic nexus. The City’s Audit Division has indicated its willingness to attempt to enforce economic nexus back to the state of Illinois’ enactment date of October 1, 2018.
