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ARTICLE · 28 SEPTEMBER 2020

Remote Work Could Reduce Chicago Lease Tax

Jones Day
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Facing historic budget shortfalls, Chicago looks to grow tax revenue from remote work locations.

United StatesTax
Michael Wynne
Michael Wynne
Jennifer C. Waryjas
Jennifer C. Waryjas
Douglas A. Wick
Douglas A. Wick
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In Short

The Situation: Facing historic budget shortfalls, Chicago looks to grow tax revenue from remote work locations.

The Result: Chicago may raise the lease tax rate applied to users of cloud computing.

Looking Ahead: Taxpayers can update and exclude non-Chicago work locations to reduce the tax on cloud computing.

On August 31, 2020, Chicago Mayor Lori Lightfoot voiced her interest in raising the tax rate on nonpossessory computer leases subject to the Chicago Personal Property Lease Transaction Tax ("lease tax"). Chicago taxes virtually all software as a service ("SaaS") and cloud computing services provided to users physically located in Chicago. It does so by deeming such arrangements "nonpossessory computer leases." See City of Chicago, Personal Property Lease Transaction Tax Ruling No. 12 (June 9, 2015).

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