Chicago Holds Off Collecting Taxes From Hotels, Restaurants Until June

Chicago Holds Off Collecting Taxes From Hotels, Restaurants Until June

Most of the City Has Been Shut Down Since Coronavirus Stay-at-Home Mandate

Chicago Mayor Lori Lightfoot said the city will not collect restaurant and hotel taxes until June 1. (Gian Lorenzo Ferretti/CoStar)Chicago Mayor Lori Lightfoot said the city will not collect restaurant and hotel taxes until June 1. (Gian Lorenzo Ferretti/CoStar)

The city of Chicago is postponing tax payment due dates for restaurants, hotels and other assorted levies for another month until June 1 in an effort to soften the blow many businesses have suffered after coronavirus-related mandates to shut down.

The deferral comes as Mayor Lori Lightfoot’s original April 30 deadline for February, March and April taxes nears.

The city’s more than 7,300 restaurants were ordered to halt in-store dining in early March as the coronavirus began to spread quickly in Chicago. Many restaurants are offering curbside pickup or delivery, but for most, it hasn’t been enough to cover all the operating costs. Some have even had to end those services because the costs were higher than the sales.

On Jan. 1, the city hiked its total sales tax on restaurants to 10.75% citywide and to 11.75% for restaurants located in boundaries set by the Metropolitan Pier and Exposition Authority, a municipal corporation that owns and operates McCormick Place, the largest U.S. convention center. Those borders basically covers the entire downtown area and adjacent neighborhoods north, south and west of the central business district.

Chicago’s roughly 750 hotels, meanwhile, were first slammed when major conventions and conferences at McCormick Place were canceled and, for the first time ever, saw their occupancy rate dip below 10% for four straight weeks. Average daily room rates, as of April 11, sank to $110.74, 51% lower than the year-ago rates, according STR, the hotel research subsidiary of CoStar.

Revenue per available room, a key industry metric known as RevPAR, has plunged to $8.54, a near 96% tumble compared with the same week last year.

“There’s no question that our businesses are hurting from the COVID-19 outbreak, as so many have had to reduce hours or change their service delivery model to stay afloat during this unprecedented crisis” Lightfoot said in a statement.

“Our local businesses are the backbone of our economy, which is why we will continue to look to ways we can support them — whether it’s helping them to pay rent, meet payroll or address other more urgent needs that will sustain their livelihood,” she added.

Retail and commercial businesses, most of which have been closed since mid-March, are still expected to collect sales taxes, of course. Besides deferments for restaurants and hotel taxes, the city is also holding off on collecting fees tied to bottled water, plastic checkout bags, ground transportation such as taxis, and parking- and amusement-related taxes.

Since Gov. J.B. Pritzker ordered Illinois residents to stay at home on March 21, there hasn’t been much activity to collect those taxes.

The city also is extending temporarily the suspension of late fees and defaults on payment plans that include city tickets, utility bills, parking and red-light citations. It’s also shelving debt collection efforts.

Motorists are still required to pay for metered parking, but the city isn’t collecting overdue parking-ticket debts and will not boot cars until June 1 either.

“By deferring tax payments until June 1, we hope to provide some breathing room to the business community as we look to recover from the financial strains the coronavirus has placed on our city,” Reshma Soni, the city’s comptroller, said in a statement.