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7th Circuit curbs Chicago’s suits against eBay and StubHub

Cash-strapped city seeking to collect amusement taxes from website transactions

If only the city could sell its parking meters again… Last Wednesday, the 7th Circuit upheld a lower court decision to dismiss the City of Chicago’s lawsuits against online ticket reseller StubHub! Inc. and its parent company, auction site eBay Inc. The city was looking to wet its beak by collecting amusement taxes on website transactions.

The city leveled lawsuits at the companies in 2008 based on a municipal law that requires ticket resellers and agents to collect and remit a tax on the difference between the ticket’s face value and the resale price. When a federal district court nixed the case in 2009, the city appealed.

The 7th Circuit initially asked the Illinois Supreme Court to review the decision to determine whether state law prevented the City of Chicago from imposing the tax on online ticket resellers. The Illinois Supreme Court ruled in October that the city cannot collect taxes because only the state of Illinois has the authority to levy such a tax. Additionally, the court found that the state legislature intended for online auction listing services to not be subject to local taxes.

Following the Illinois Supreme Court’s decision, the 7th Circuit affirmed the decision and refused the city’s request for a rehearing.

“Chicago has asked us to extend the time for its position statement,” the 7th Circuit’s three-judge panel wrote. “Its motion says that it plans to ask the Supreme Court of Illinois for extra time to file a petition for rehearing. Chicago has not informed us why it needs extra time, how much it wants, or why it believes that there is even a tiny chance that the Supreme Court of Illinois will do a volte face on its unanimous opinion. The request strikes us as pointless stalling. This litigation has been pending long enough.”

Reuters reports that the City of Chicago’s law department are still reviewing the decision and cannot yet comment if they will take further action.

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