The City of Chicago Department of Finance (“the Department”) has extended its deadline to obtain a voluntary disclosure agreement for tax liabilities related to non-possessory computer leases to June 30, 2016. This specifically includes cloud-based services, where a charge is made to a customer for the customer’s remote access and use of software, data or computer hardware by that customer over the Internet, when the terminal or device used for such remote access and use is located in the City of Chicago.

Under the program, as discussed in a previous Duane Morris Alert, any provider or customer not under audit review or investigation by the Department, as well as not currently paying the tax, that files a voluntary disclosure form with the Department will receive either a full abatement of all tax, interest and penalties for past years or be required to pay only one year of back taxes, without interest and penalties, depending on the type of lease transaction at issue.

For businesses (especially intellectual property-based technology businesses) that have not yet  taken advantage  of the Chicago Voluntary Disclosure Program for taxes owed on licenses or remote uses of Internet accessed or cloud-based products, the program (which is open to both the providers of such products and their users) can potentially save a business significant taxes due.