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appealtrialsummary judgmentappellant
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Mr. B’s, Inc. v. City of Chicago, 302 Ill.App.3d 930, 706 N.E.2d 1001, 236 Ill.Dec. 127

Facts

In November 1995, the City of Chicago amended its amusement tax ordinance to include ticket resellers, imposing a 7% tax on the price above face value. The appellants, ticket brokers operating in and around Chicago, filed for declaratory and injunctive relief against the city, arguing that the tax was unconstitutional as it constituted an unauthorized occupation tax and was an extraterritorial exercise of home rule authority. The trial court granted summary judgment in favor of the city, leading to the appeal.

On November 15, 1995, the City of Chicago passed an ordinance that applied its existing amusement tax to the charges that ticket brokers charge on the resale of sports and entertainment tickets, effective January 1, 1996.

Issue

The main legal issues were whether the amended amusement tax constituted an unauthorized occupation tax and whether its application resulted in unconstitutional extraterritorial taxation.

Appellants first argue that the amendment to the City of Chicago amusement tax ordinance constitutes an unauthorized occupation tax in violation of article VII, section 6(e), of the Illinois Constitution of 1970.

Rule

A home rule unit may not impose a tax on an occupation or income without specific legislative authorization. The court must analyze the practical operation and effect of the tax to determine its nature.

Absent specific authorization from the General Assembly, a home rule unit may not impose a tax upon an occupation or income.

Analysis

The court determined that the amusement tax was not an occupation tax but rather a tax on the sale of tangible personal property, as the primary transaction involved the sale of tickets. The court noted that the services provided by ticket brokers were incidental to the sale of tickets, which were deemed tangible goods. The court also found that the tax was authorized under Illinois law, specifically referencing sections of the Illinois Municipal Code that allowed municipalities to tax ticket sales.

Here, Chicago's amended amusement tax ordinance, as applied to ticket brokers, constitutes a sales transaction of a tangible good.

Conclusion

The court affirmed the trial court's ruling that the amusement tax was constitutional and not an unauthorized occupation tax, but reversed and remanded the case for further examination of the extraterritorial application of the tax.

Thus, the circuit court's grant of summary judgment is affirmed as to the occupational tax issue and as to the court's ruling that Chicago's ordinance is constitutional, but is reversed and remanded for the purpose of resolving the material issue of whether the ordinance is being extraterritorially applied to appellants.

Who won?

The City of Chicago prevailed in the case, as the court upheld the constitutionality of the amusement tax, finding it was authorized by state law and did not constitute an occupation tax.

The court below correctly ruled that the substance of the transaction is the purchase of an admission ticket and that any other services rendered are only incidental.

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