If you are using Zuora's Direct Avalara Integration and transacting in Chicago, you may be affected by recent tax policy updates.
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The Chicago Personal Property Lease Transaction Tax applies to transactions dated July 1, 2024, and later. Effective January 1, 2025, the Personal Property Lease Transaction Tax on certain rental and leasing categories is increasing from 9% to 11%. See details in Avalara website: Chicago Personal Property Lease Transaction Tax.
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Effective Jan 1, 2025, Chicago, IL is increasing the tax on streaming amusements from 9% to 10.25%. See details in Avalara website: Change to Chicago Amusement Tax.
Please work with your tax team to determine if you're subject to this new tax before implementing the below changes.
If you are impacted, this policy requires configuration changes in Avalara to ensure accurate tax collection for Chicago-based transactions.
Context
Effective July 1, 2024, the sales tax in the Chicago Personal Property Lease Transaction (PPLT) Tax District expired and was reintroduced as the "Personal Property Lease Transaction Tax" within the City of Chicago. Effective Jan 1, 2025, the Personal Property Lease Transaction Tax on certain rental and leasing categories is increasing from 9% to 11%. See details on Avalara website Change to Chicago Personal Property Lease Transaction Tax.
Effective Jan 1, 2025, Chicago, IL is increasing the tax on streaming amusements from 9% to 10.25%. There is no change in tax rate for ticket sales. See details on Avalara website Change to Chicago Amusement Tax.
Zuora's Direct Avalara Integration is currently a SOAP API-Based integration, and to support the tax changes mentioned above, you'll need to make configuration updates in both Zuora and Avalara.
Who Is Impacted?
You can verify whether you are using Zuora's Direct Avalara Integration and transacting in Chicago through the following steps:
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To check if you're using Zuora's Direct Avalara Integration, log in to Zuora, go to Settings -> Billing -> Setup Tax Engine and Tax Date. If you see "Avalara" listed under the Tax Engine column in the Tax Engines section, then you're using Direct Avalara Integration.
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To check if your transactions are affected by Chicago tax codes, visit the Avalara website to find the impacted tax codes, and verify if you're using them. Avalara website: Change to Chicago Personal Property Lease Transaction Tax, Change to Chicago Amusement Tax.
We recommend you enable the "Support Multi-Tax in AvaTax SOAP" setting in Zuora and make configuration changes in Avalara accordingly:
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Customers haven't implemented custom tax rules: Customers using Zuora's Avalara Direct Integration who have not implemented Avalara's workaround of importing custom tax rules may face issues if they calculate the Chicago Personal Property Lease Transaction Tax or Chicago Amusement Tax. By enabling the "Support Multi-Tax in AvaTax SOAP" setting, customers can correctly support the Tax change of Chicago Personal Property Lease Transaction Tax and Chicago Amusement Tax.
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Customers have implemented custom tax rules: For customers who have already resolved the Tax issue of Chicago Personal Property Lease Transaction Tax and Chicago Amusement Tax by applying Avalara's custom tax rule, Zuora strongly recommends that all customers first disable the custom rules before enabling the "Support Multi-Tax in AvaTax SOAP" feature to avoid double taxation. Additionally, enabling "Support Multi-Tax in AvaTax SOAP" prepares customers for a seamless upgrade to the REST API-Based Direct Avalara Integration.
Notes:
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Zuora plans to release the REST API-based Direct Avalara Integration in 1H CY2025. Through this integration, multi-tax will be supported by default for users who have the appropriate configuration in Avalara and are passing the appropriate parameters for the specific tax type.
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This upgrade does not apply to customers using the AvaTax Sale Configurable Tax App.
How to Enable
The steps will vary depending on whether you've set up a custom tax rule for the Chicago Chicago Personal Property Lease Transaction (PPLT) Tax and Chicago Amusement Tax.
Note: We highly recommend testing this process in your sandbox environment before applying any changes to your production system.
For customers without custom tax rules for Chicago PPLT Tax and Chicago Amusement Tax in Avalara:
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Enable the Zuora feature: "Support Multi-Tax in AvaTax SOAP". To enable this feature, submit a request at Zuora Global Support.
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Enable the Chicago PPLT Tax and Chicago Amusement Tax in the Avalara AvaTax web portal. See details in Avalara website: Change to Chicago Personal Property Lease Transaction Tax and Change to Chicago Amusement Tax.. (If already enabled, you can skip this step.)
For customers with custom tax rules for Chicago PPLT Tax and Chicago Amusement Tax in Avalara:
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Make sure Nexus for RentalLeasing/Local TaxSubType for Chicago CIT and Amusement/Amusement Tax Sub Type for Chicago CIT are not selected (prevents double taxing in the cases where both custom rules and multi-tax are applied).
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Enable the Zuora feature "Support Multi-Tax in AvaTax SOAP". To enable this feature, submit a request at Zuora Global Support.
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Delete custom tax rules for Chicago Personal Property Lease Transaction (PPLT) Tax and Chicago Amusement Tax. Please note: Step 4 should be performed immediately after Step 3
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Enable Chicago Personal Property Lease Transaction Tax and Chicago Amusement Tax in AvaTax web portal. See details in Avalara website: Change to Chicago Personal Property Lease Transaction Tax and Change to Chicago Amusement Tax.
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Kevin Qu
Product Manager
Zuora
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