Here’s everything you need to know about the Chicago Lease Tax.
What’s the Chicago Lease Tax?
A Lease Tax is like a sales tax, but instead of applying to items you purchase like clothes and electronics, the Lease Tax applies to your use of software that is accessed through cloud services. As of January 1, 2016, The City of Chicago has imposed a Lease Tax on Chicago customers who use cloud-based software.
Do I have to pay this tax?
All City of Chicago customers are required to pay this tax.
How did Basecamp decide if I am a City of Chicago customer?
We used Chicago-area billing zip codes to determine who should be charged the tax.
How does Basecamp calculate this tax?
Basecamp is using the City of Chicago required rate of 5.25% to calculate the tax. So, if your invoice is for $79, the tax is ($79 × .0525) or $4.15. So the total due is ($79 + 4.15) or $83.15.
What should I do if I think I should be exempt from this tax?
The City of Chicago has provided this information bulletin which may help you determine if you should apply for an exemption. The legal ruling cites the specific code sections. There is a small business application for exemptions. If you believe you should be exempt, please contact our support team and they will be able to assist you.
When did this tax start?
Basecamp began collecting this tax in January 2016. If you are a Chicago customer, you will see a separate line item on your invoice.
Will other companies charge this tax?
Yes, all cloud-based software companies with customers in Chicago will be required to collect this tax from their customers.
What does Basecamp do with the tax it collects?
Basecamp remits all of the taxes it collects directly to the City of Chicago.