apple will start collecting 'netflix tax' in september

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Apple will begin collecting taxes on Apple TV+ subscriptions within Chicago as part of its settlement relating to the city’s 2015 Amusement Tax.

In July, Apple gave up its four-year fight against Chicago’s so-called “Netflix Tax.” The tax requires the tech giant to pay a 9% tax on streaming service income earned from Chicago subscribers.

According to Bloomberg Law, Apple has agreed to collect the tax, starting September 15, from customers in Chicago. As part of the settlement, Apple will not need to pay back taxes.

In 2015, Chicago introduced a change to its Amusement Tax that placed a 9% tax on streaming entertainment services. Also referred to as a “Netflix Tax” and impacting services like Netflix, Spotify, and Apple’s own Apple TV+.

Three years later, Apple filed a lawsuit against the city, arguing the tax violated the federal Internet Tax Freedom Act and the U.S. Constitution’s commerce and due process laws. The case hung in courts for more than two years.

Eventually, Chicago won the trial. Afterward, Apple amended its complaint to say that case was a “facial challenge” to the tax program but that Apple was challenging how the tax was applied to its own services.

Cook County Circuit Court Judge Daniel Duffy dismissed the lawsuit. He declared that Apple’s filing was an insufficient challenge and gave Apple leave to file an amended complaint.

Apple chose to settle rather than file an amended complaint.

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