A Cloud Tax Win for REALTORS® | Chicago Association of REALTORS®

 

 

We’re pleased to announce that coordinated efforts between the Chicago Association of REALTORS®, our fellow local REALTOR® Associations, IAR and MRED were successful in attaining a positive Private Letter Ruling from the City of Chicago, exempting REALTOR® data from being assessed a cloud tax based on exemption 11 (the de minimus use and transfer of proprietary information exemption). The coalition was able to prove the business model utilized to provide MLS data to REALTORS® fit within existing exemptions. As a result, REALTORS® will not have to pay the cloud tax for MLS data.

C.A.R. thanks all who were involved in this critical effort as well as the City of Chicago for their careful review and favorable ruling.

C.A.R. first identified REALTORS®’ potential exposure to the cloud tax in mid-summer 2015. We began working with local AEs and MRED on coalition-building efforts; the coalition then identified and drafted a private letter requesting an exemption. These efforts were coordinated in a compressed timeline, working with multiple interests between Associations and MRED, in conjunction with both tax and regulatory attorneys. The coalition also developed strategies for a number of backup plans.

The net savings of this favorable ruling is over $250,000 a year for members, as well as hundreds of hours of staff time in achieving messaging and billing. This regulatory win also sets a benchmark for other Associations nation-wide who may find themselves in similar situations.

While we are pleased with this ruling, we want to advise REALTORS® that they may be impacted by other industries who utilize cloud services in transactions, including appraisers, attorneys and lenders. REALTORS® should check with their tax professionals to identify areas of exposure.

This is a major win for our industry, for REALTORS® and their proprietary data. And, it is indicative of the importance of coordination and collaboration between MRED and REALTOR® Associations.

“A prime concern for all impacted was once the initial tax rate was established, the likelihood was strong the tax would increase over time,” Dan Wagner, President of C.A.R., said. “Aggressive and thoughtful advocacy has prevented our members from being taxed on data they clearly need.”

If you have questions, please contact  Brian A. Bernardoni, Senior Director of Government Affairs.

Resources

C.A.R. Field Guide to the Personal Property Lease Transaction Tax

Chicago Cloud Tax exemption could save more than $250,000 for REALTORS®