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

Source/Bigstock

Source/Bigstock

In a major win for REALTORS®, the city of Chicago has agreed to exempt MLS information from falling under a proposed tax on data.

The so-called “Cloud Tax” went into effect Jan. 1, 2016 and applies to cloud software and Web hosting. It was of particular concern for REALTORS® who often upload and maintain listing data online.

The tax was proposed to be nine percent, a number that alarmed REALTORS® and others who manage online data.

Negotiations by a coalition of groups including the Chicago Association of REALTORS®, Midwest Real Estate Data LLC and other local REALTOR® associations yielded a letter from the city providing the exemption, according to a release form CAR.

Estimates were that the Cloud Tax would have added $250,000 in costs to the real estate industry. Additional costs to maintain records and manage the tax payments would have pushed that number higher, said Brian Bernardoni, IAR’s government affairs director working with CAR.
“A prime concern for all impacted was once the initial tax rate was established, the likelihood was strong the tax would increase over time”, said CAR President Dan Wagner. “Aggressive and thoughtful advocacy has prevented our members from being taxed on data they clearly need”
The Cloud Tax attained national notice when it was proposed as a way for Chicago to close a budget gap. Because so much data flows through cloud-based services, communities reportedly are watching to see how Chicago’s model works.

Bernardoni said the exemption for REALTOR® MLS data could provide a model for other associations which might find themselves facing similar taxation schemes.

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

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About Jon Broadbooks

Jon Broadbooks is Vice President/Communications for Illinois REALTORS®. He serves as editor of online and print content for the association's communications including the Illinois REALTOR® magazine and e-newsletters. He conducts spokesperson training seminars and oversees website development for the Association.

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