3-73-010 Title.

   This chapter shall be known and cited as the "Chicago Simplified Telecommunications Tax Ordinance". The tax imposed by this chapter shall be known as the "Chicago Simplified Telecommunications Tax" and is imposed in addition to all other taxes imposed by the City of Chicago, the State of Illinois or any other municipal corporation or political subdivision thereof.

(Added Coun. J. 6-19-02, p. 87159, § 6)

3-73-020 Definitions.

   When any of the following words or terms are used in this chapter, whether or not capitalized, they shall have the meaning or construction ascribed to them in this section:

   (A)   "Amount paid" means the amount charged to the taxpayer's service address located in the city regardless of where such amount is billed or paid.

   (B)   "Bad debt" means any portion of a debt that is related to a sale at retail for which gross charges are not otherwise deductible or excludable that has become worthless or uncollectible, as determined under applicable federal income tax standards; if the portion of the debt deemed to be bad is subsequently paid, the retailer shall report and pay the tax on that portion during the reporting period in which the payment is made.

   (C)   "City" means the City of Chicago, Illinois.

   (D)   "Department" means the department of finance of the city.

   (E)   [Reserved]

   (F)   "Gross charge" means the amount paid for the act or privilege of originating or receiving telecommunications in such municipality and for all services and equipment provided in connection therewith by a retailer, valued in money whether paid in money or otherwise, including cash, credits, services and property of every kind or nature, and shall be determined without any deduction on account of the cost of such telecommunications, the cost of the materials used, labor or service costs or any other expense whatsoever. In case credit is extended, the amount thereof shall be included only as and when paid. "Gross charges" for private line service shall include charges imposed at each channel point within the City, charges for the channel mileage between each channel point within the City, and charges for that portion of the interstate inter-office channel provided within the City. Charges for that portion of the inter-office channel connecting 2 or more channel termination points, one or more of which is located within the City, shall be determined by the retailer by multiplying an amount equal to the total charge for the inter-office channel by a fraction, the numerator of which is the number of channel termination points that are located within the City and the denominator of which is the total number of channel termination points connected by the inter-office channel. However, "gross charge" shall not include:

      (1)   any amounts added to a purchaser's bill because of a charge made pursuant to: (i) the tax imposed by this chapter, (ii) the tax imposed by the Telecommunications Excise Tax Act, (iii) the tax imposed by Section 4251 of the Internal Revenue Code, (iv) 911 surcharges, or (v) charges added to customers' bills pursuant to the provisions of Section 9-221 or 9-222 of the Public Utilities Act, as amended, or any similar charges added to customers' bills by retailers who are not subject to rate regulation by the Illinois Commerce Commission for the purpose of recovering any of the tax liabilities or other amounts specified in those provisions of the Public Utilities Act;

      (2)   charges for a sent collect telecommunication received outside of the city;

      (3)   charges for leased time on equipment or charges for the storage of data or information for subsequent retrieval or the processing of data or information intended to change its form or content. Such equipment includes, but is not limited to, the use of calculators, computers, data processing equipment, tabulating equipment or accounting equipment and also includes the usage of computers under a time-sharing agreement;

      (4)   charges for customer equipment, including such equipment that is leased or rented by the customer from any source, wherein such charges are disaggregated and separately identified from other charges;

      (5)   charges to business enterprises certified as exempt under Section 9-222.1 of the Public Utilities Act to the extent of such exemption and during the period of time specified by the Department of Commerce and Community Affairs;

      (6)   charges for telecommunications and all services and equipment provided in connection therewith between a parent corporation and its wholly owned subsidiaries or between wholly owned subsidiaries when the tax imposed under this chapter has already been paid to a retailer and only to the extent that the charges between the parent corporation and wholly owned subsidiaries or between wholly owned subsidiaries represent expense allocation between the corporations and not the generation of profit for the corporation rendering such service;

      (7)   bad debts;

      (8)   charges paid by inserting coins in coin-operated telecommunication devices;

      (9)   amounts paid by telecommunications retailers under the Telecommunications Infrastructure Maintenance Fee Act;

      (10)   charges for the inbound toll-free telecommunications service commonly known as "800", "877", "888" or for a similar service; or

      (11)   charges for nontaxable services or telecommunications if (i) those charges are aggregated with other charges for telecommunications that are taxable, (ii) those charges are not separately stated on the customer bill or invoice, and (iii) the retailer can reasonably identify the nontaxable charges on the retailer’s books and records kept in the regular course of business. If the nontaxable charges cannot reasonably be identified, the gross charge from the sale of both taxable and nontaxable services or telecommunications billed on a combined basis shall be attributed to the taxable services or telecommunications. The burden of proving nontaxable charges shall be on the retailer of the telecommunications.

   (G)   "Interstate telecommunications" means all telecommunications that either originate or terminate outside the State of Illinois.

   (H)   "Intrastate telecommunications" means all telecommunications that originate and terminate within the State of Illinois.

   (I)   "Person" means any natural individual, firm, trust, estate, partnership, association, joint stock company, joint venture, corporation, limited liability company, or a receiver, trustee, guardian, or other representative appointed by order of any court, the federal and state governments, including State universities created by statute, or any city, town, county, or other political subdivision of the State of Illinois.

   (J)   "Prepaid telephone calling arrangements" have the meaning set forth in Section 2-27 of the Retailers' Occupation Tax Act, 35 ILCS 120/2-27, as amended from time to time. As of January 1, 2003, "prepaid telephone calling arrangements" mean the right to exclusively purchase telephone or telecommunications services that must be paid for in advance and enable the origination of one or more intrastate, interstate or international telephone calls or other telecommunications using an access number, an authorization code, or both, whether manually or electronically dialed, for which payment to a retailer must be made in advance, provided that, unless recharged, no further service is provided once that prepaid amount of service has been consumed. Prepaid telephone calling arrangements include the recharge of a prepaid calling arrangement. For purposes of this section, "recharge" means the purchase of additional prepaid telephone or telecommunications services whether or not the purchaser acquires a different access number or authorization code. "Prepaid telephone calling arrangement" does not include an arrangement whereby the service provider reflects the amount of the purchase as a credit on an account for a customer under an existing subscription plan.

   (K)   "Purchase at retail" means the acquisition, consumption or use of telecommunications through a sale at retail.

   (L)   "Retailer" means and includes every person engaged in the business of making sales at retail as defined in subsection (N) of this section.

   (M)   "Retailer maintaining a place of business in this state", or any like term, means and includes any retailer having or maintaining within the State of Illinois, directly or by a subsidiary, an office, distribution facilities, transmission facilities, sales office, warehouse or other place of business, or any agent or other representative operating within the State of Illinois under the authority of the retailer or its subsidiary, irrespective of whether such place of business, agent or other representative is located in the State of Illinois permanently or temporarily, or whether such retailer or subsidiary is licensed to do business in Illinois.

   (N)   "Sale at retail" means the transmitting, supplying or furnishing of telecommunications and all services and equipment provided in connection therewith for consideration: (1) to persons other than the City, federal government, state governments and state universities created by statue; and (2) other than between a parent corporation and its wholly owned subsidiaries for their use or consumption and not for resale.

   (O)   "Service address" means the location of telecommunications equipment from which telecommunications services are originated or at which telecommunications services are received by a taxpayer. In the event this may not be a defined location, as in the case of mobile phones, paging systems, and maritime systems, service address means the customer's place of primary use as defined in the Mobile Telecommunications Sourcing Conformity Act, Public Law 106-252, as amended from time to time, which as of January 1, 2003 provides that the "place of primary use" means the street address representative of where the customer's use of the mobile telecommunications service primarily occurs, and which further provides that this means the residential street address or the primary business street address of the customer within the licensed service area of the home service provider. For air-to-ground systems and the like, "service address" shall mean the location of a taxpayer's primary use of the telecommunications equipment as defined by telephone number, authorization code, or location in Illinois where bills are sent.

   (P)   "Taxpayer" means a person that individually, or through its agents, employees or permittees, engages in the act or privilege of originating in the city or receiving in the city telecommunications and that incurs a tax liability under this chapter.

   (Q)   (1)   "Telecommunications", in addition to the meaning ordinarily and popularly ascribed to it, includes, without limitation, messages or information transmitted through use of local, toll, and wide area telephone service, private line services, channel services, telegraph services, teletypewriter, computer exchange services, cellular mobile telecommunications service, specialized mobile radio, stationary two-way radio, paging service, or any other form of mobile and portable one-way or two-way communications, or any other transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber optics, laser, microwave, radio, satellite, or similar facilities. As used in this chapter, "private line" means a dedicated non-traffic sensitive service for a single customer, that entitles the customer to exclusive or priority use of a communications channel or group of channels, from one or more specified locations to one or more other specified locations.

      (2)   The definition of "telecommunications" shall not include value added services in which computer processing applications are used to act on the form, content, code, and protocol of the information for purposes other than transmission. "Telecommunications" shall not include purchases of telecommunications by a telecommunications service provider for use as a component part of the service provided by such provider to the ultimate retail consumer who originates or terminates the taxable end- to-end communications. Carrier access charges, right of access charges, charges for use of inter-company facilities, and all telecommunications resold in the subsequent provision of, used as a component of, or integrated into, end-to-end telecommunications service shall be non-taxable as sales for resale. Prepaid telephone calling arrangements shall not be considered "telecommunications" subject to the tax imposed under this chapter.

(Added Coun. J. 6-19-02, p. 87159, § 6; Amend Coun. J. 11-16-11, p. 13798, Art. I, § 3; Amend Coun. J. 11-14-18, p. 90376, Art. VI, § 2)

3-73-030 Tax imposed.

   (A)   A tax is hereby imposed upon:

      (1)   The act or privilege of originating in the City or receiving in the City intrastate telecommunications by a person at a rate of seven percent of the gross charge for such telecommunications purchased at retail; and

      (2)   The act or privilege of originating in the City or receiving in the City interstate telecommunications by a person at a rate of seven percent of the gross charge for such telecommunications purchased at retail.

   (B)   To prevent actual multi-state or multi-municipal taxation of the act or privilege that is subject to taxation under subsection (A)(1) or (A)(2) of this section, any taxpayer, upon proof that the taxpayer has paid a tax in another municipality or state on the same event, shall be allowed a credit against the tax authorized by subsection (A)(1) or (A)(2) to the extent of the amount of such tax properly due and paid in such other state or municipality which was not previously allowed as a credit against any other state or local tax in this state.

   (C)   The tax imposed by this chapter is not imposed on any act or privilege to the extent that such act or privilege may not, under the Constitution or Statutes of the United States, be made the subject of taxation by the City.

(Added Coun. J. 6-19-02, p. 87159, § 6; Amend Coun. J. 11-14-18, p. 90376, Art. VI, § 2)

3-73-040 Collection of tax by retailers.

   (A)   (1)   Any retailer maintaining a place of business in this state and making or effectuating a sale at retail shall collect the tax imposed by this chapter from the taxpayer and remit it to the department as provided by Section 3-73-050 of this chapter.

      (2)   Any tax required to be collected pursuant to this chapter and any tax collected by the retailer shall constitute a debt owed by the retailer to the city.

      (3)   The retailer shall collect the tax from the taxpayer by adding the tax to the gross charge for the act or privilege of originating or receiving telecommunications when sold for use in the manner prescribed by this chapter.

      (4)   The tax imposed by this chapter shall constitute a debt of the taxpayer to the retailer providing taxable services until paid and, if unpaid, is recoverable at law in the same manner as the original charge for taxable services.

   (B)   The comptroller shall, upon application, authorize the collection of this tax by any retailer not maintaining a place of business in this state who, to the satisfaction of the comptroller, furnishes adequate security to ensure collection and payment of the tax. Such retailer shall be issued, without charge, a permit to collect the tax imposed by this chapter. When so authorized, it shall be the duty of the retailer to collect the tax upon all of the gross charges for telecommunications originated in the city in the same manner, and subject to the same requirements, as a retailer maintaining a place of business in this state.

   (C)   The tax authorized by this chapter shall, when collected, be stated as a distinct item separate and apart from the gross charge for telecommunications.

   (D)   Retailers may retain 1.0 percent of the tax they collect to reimburse them for expenses incurred in connection with collecting and remitting the tax, less any charge allowed by the Illinois Commerce Commission that permits them to recover such expenses. This commission shall not be allowed for taxes not timely remitted to the department.

(Added Coun. J. 6-19-02, p. 87159, § 6; Amend Coun. J. 11-16-11, p. 13798, Art. I, § 3)