City of Chicago v. Stubhub, Inc. (Amended Opinion)Annotate this Case
In this case, which came before the Illinois Supreme Court on a certified question, it was held that the City of Chicago went beyond its home rule powers in attempting to require electronic intermediaries to collect and remit amusement taxes on resold tickets.
In view of the emerging internet market in ticket resales, the General Assembly has set up a statutory scheme which requires internet auctioneers to register their resellers and implement consumer protections, while, at the same time, the former ban on “ticket scalping” is eliminated and internet auction listing services may opt out of local tax collection obligations if information on local taxes is provided.
In 2006, the City of Chicago revised its own approach to the taxation of amusement tickets by requiring “resellers’ agents,” i.e., internet auctioneers, to collect and remit the city’s amusement tax. In 2008, suit was filed against StubHub, seeking fines, unpaid taxes, interest and penalties. As a diversity matter, the suit was removed to the United States District Court for the Northern District of Illinois, which dismissed it. The city’s appeal to the United States Court of Appeals for the Seventh Circuit resulted in a certified question brought before the Supreme Court of Illinois. The federal court wanted to know if, as a mater of Illinois law, municipalities may require electronic intermediaries to collect and remit amusement taxes on resold tickets. In this decision, the supreme court held that the Illinois Constitution’s home rule authority of municipalities does not extend so far because of the statutory scheme which the legislature has already set up to regulate this emerging market and to protect consumers. This is an area in which the state has traditionally played a greater role and has a greater interest.