Can You Tax The “Cloud”?

As advances in technology are continually made, there will always be those that look for ways to profit. In today’s society, most children and young adults have never heard of or seen a rotary dial phone, and life without a smartphone seems unthinkable. The ability to access the internet from your phone, pad, or even your watch is commonplace among everyone from teens to seasoned workers. It almost makes one wonder how anyone survived without backing up their data to the “cloud”, or having access to things like the Words With Friends app or Netflix.


All of these uses are well and good, that is, unless you have to pay. Many apps are free, but if you want to avoid disruptive advertisements, you will have to pay to play. Now, at least in Chicago, you may also be taxed for some of these things. The most recent target of taxation is the use of Netflix. A Forbes report on the issue outlines the tax as follows:


  • Use of Netflix is now being taxed in Chicago, and this tax is on top of what users pay each month for access.
  • The tax is appropriately being labeled a “cloud” tax.
  • The tax is high, at 9% for the enjoyment of streaming a video from a service you already pay a monthly fee to use.


When the windy city came under fire for the tax, it was quick to point out that the tax isn’t new. Instead, city officials, state the tax is simply a new interpretation of an already existing tax scheme. The problem with this type of tax comes in how it is assessed; the owners are responsible for adding the tax to a user’s bill, but the user is responsible for reporting and filing the tax. This is causing confusion, and could mean some users face penalties for failing to comply with the “cloud tax”. Figuring out this issue, much like many tax issues, requires the skill of a knowledgeable tax professional. Our team at the Nielsen Law Group, has experience with tax matters of all types. Call us today for an in depth analysis of the specifics of your tax related matters.


If you have questions about taxes, let the professionals at Nielsen Law Group help you today. Call (480) 888-7111 or submit a web request here. We work with you for satisfactory and timely results.