SALT Report 1244 – The U.S. Court of Appeals for the Seventh Circuit determined that Illinois sales and use tax law does not permit cities to collect local amusement tax from Internet auction listing services that resell tickets to entertainment events.
In the specific case cited, the taxpayer is a registered internet auction listing service that describes itself as “the world’s largest online ticket marketplace.” The taxpayer owns and operates a website where users can buy and sell tickets to various events around the country. The taxpayer argued that they should not be required to collect and remit the state’s amusement tax since they are not a reseller’s agent. Rather, the taxpayer claims they merely provide a marketplace that allows ticket owners a place to list and sell their unwanted tickets, and a place for potential buyers to find and purchase the tickets they want. In return for these services, the taxpayer collects a fee from both the buyer and the seller.
The appeals court affirmed the judgment of the Illinois Supreme Court based on Illinois House Bill 873 – The Ticket Sale and Resale Act, and the Auction License Act. The Acts create an exception for online auction listing services and impose many of the same registration and certification requirements that apply to ticket brokers. Further, the Acts require online auction listing services to register with the state, to make provisions for consumer protection, and that they must inform any users of their obligation to collect and remit amusement tax to the state. In exchange, online auction listing services were given immunity from the laws that ban scalping and most importantly the tax collection requirements placed on ticket brokers.
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