News & Insights

Chicago Releases Economic Nexus Guidance

Tax Development Jan 28, 2021

Chicago Releases Economic Nexus Guidance

The city of Chicago has provided guidance for economic nexus thresholds and safe harbor nexus provisions effective July 1, 2021, with respect to Chicago’s amusement tax and personal property lease transaction tax.1 The amusement tax safe harbor applies to amusements that are delivered electronically, such as video streaming, audio streaming, and online games. Further, Chicago’s personal property lease transaction tax safe harbor applies to nonpossessory computer leases, which also generally includes qualifying software licenses that are not subject to Illinois sales tax.2

Effective July 1, 2021, out-of-state businesses making sales subject to Chicago’s amusement tax and personal property lease transaction tax will establish economic nexus with the city and a responsibility to collect and remit the taxes if revenue from Chicago customers from the most recent four consecutive calendar quarters reaches $100,000. If during the most recent consecutive four calendar quarters an out-of-state business has received less than $100,000 in revenue from Chicago customers from sales subject to the amusement tax or lease transaction tax, the out-of-state business will not be responsible to collect such taxes under the following parameters:

  1. The entity cannot have any other significant contacts with Chicago (please see below).
  2. The safe harbor will apply beginning July 1, 2021 without any refunds or credits for taxes paid or remitted before that date.
  3. Once the out-of-state business falls outside the safe harbor by meeting the $100,000 threshold, the business must within:
    • 60 days - register with the city’s Department of Finance within 60 days, and
    • 90 days - collect Chicago taxes for at least 12 months (even if it falls back within the safe harbor during that period).
  4. The safe harbor does not affect the issue of whether a customer has a duty to pay those taxes.3

Other Significant Contacts

Outside of an economic nexus analysis and if the safe harbor does not apply, other factors that the City may consider in determining nexus include:

  • agreements that the entity has with other businesses in Chicago;
  • activities that the entity’s employees or other agents perform on the entity’s behalf in Chicago;
  • any physical presence that the entity has in Chicago;
  • advertising directed at Chicago customers; and
  • any other facts that support or oppose the conclusion that the entity has purposefully availed itself of the privilege of carrying on business in Chicago.4

For more information on Chicago’s safe harbor or economic nexus provisions, please contact a Ryan National Tax professional to assist you. For information on all things Wayfair, please refer to Ryan’s Wayfair page.

1 City of Chicago Information Bulletin - Nexus and Safe Harbor (January 21, 2021). The City of Chicago Tax Information Bulletins are located at

2 Id.

3 Id.

4 Id.


Brian Stromen

Lindsay Higgins

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at