In the News

Tax Collectors Target “Netflix and Chill”

Taxes on Streaming ServiceA generation ago, “serious” filmmakers flocking to Hollywood set their sights on movies, not television. Visionary directors like Martin Scorsese and Francis Ford Coppola redefined their craft with a new generation of challenging, personal films. By contrast, television was a vast wasteland dominated by lightweight comedies like Happy Days and sappy, feel-good dramas like The Waltons.

In 1999, HBO’s The Sopranos started luring wannabe auteurs to TV. Today, movie theaters are dominated by CGI-generated superheros and endless sequels, while cable networks and streaming video services churn out too many quality programs for anyone but a professional critic to watch. When fan favorites like Netflix’s Stranger Things or Amazon’s Bosch drop a new season, millions of Americans take a timeout from their ordinary lives to spend whole weekends binge-watching, staring bug-eyed at their screens like so many popcorn-munching zombies.

Naturally, the renaissance of “quality television” has attracted the tax collector’s eye, too. So this week’s story begins, like any good story, deep in the bowels of the Chicago Department of Finance in the heart of the city’s downtown “Loop.”

The revenue-starved Windy City imposes a 9% amusement tax on professional sports, theatrical performances, movie screenings, and even the architecture tours cruising the Chicago river. In 2015, officials declared that it includes “not only charges paid for the privilege to witness, view or participate in amusements in person but also charges paid for the privilege to witness, view or participate in amusements that are delivered electronically.” That ruling extended the tax to streaming video, music, and gaming services like Netflix, Spotify and Xbox Live.

Now, one of the reasons those streaming services are so popular is because they’re so cheap. Netflix’s basic streaming plan, which gives you standard definition video on one screen at a time, sets you back a whopping $6.99/month. The premium plan, which immerses you in Ultra-HD video nirvana on up to four screens, is still just $13.99. Even the most-addicted fans won’t get mugged for more than $1.26/month in tax. (And when tax collectors see gold in $1.26, you know you’re living in tough times.)

But those penny-ante amounts didn’t stop a group of fans backed by a public-interest law firm from challenging the tax in Cook County Circuit Court. They argued that extending it to streaming services violates the Internet Freedom Act and federal and state constitutions.

In May, the judge brought Season One of the series to a dramatic close with a cliffhanger episode, “Opinion and Order.” Do tax collectors really have the authority to nickel-and-dime our “Netflix and chill”? Or are they just another bunch of bureaucrats with boundary issues? Sadly for fans, he ruled for the city and upheld the tax. But plaintiffs have already announced plans for an appeal, which means a second series should be dropping sometime soon.

We’re pretty sure your least-favorite episode of any series is “The One Where You Pay Too Much Tax.” The good news is, we can help you fast-forward through it. Just call us for a plan to pay less. See how much you can save. And get ready to click “thumbs up” on our service!

By Cs104group15 [CC BY-SA 4.0], from Wikimedia Commons