The number of things to watch on TV right now is overwhelming. And that’s not an accident.

Networks have been indulging their audiences, over the past decade or so, in a golden age of television; producing more and more scripted content to deliver to awaiting eyeballs. Then came the streaming services, that allowed a vast library of binge-watching, revisiting, and discovering all from the comfort of your couch. Soon those same services started producing their own scripted content, and the boom of an expected 400 scripted, original series coming to screens near you this year. And that’s all in addition to those shows you always meant to start or finish that are now in their entirety on Netflix and Amazon.

Given all that, do those services deserve to be taxed like other amusements?

Chicago definitely thinks so: New rules now draw software as a service (SaaS), platform as a service (PaaS), and streaming media into the city’s expanded interpretation of “amusement services,” and the taxes that govern them. Called one of the nation’s most comprehensive attempts at taxing the cloud, the move extends an existing tax law and levies an extra nine percent tax on certain types of online services—like Spotify or Netflix.

Photo Credit: Shardayyy  cc
Photo Credit: Shardayyy cc

No surprise, that doesn’t please consumers. Businesses like Netflix made little attempt to hide their discontent either, with Netflix adding the tax onto the bills of Chicago-customers. And as of last week it seems some consumers have reached their breaking point, with subscribers from Netflix, Hulu, Amazon Prime, Spotify, and Xbox Live have filed a lawsuit claiming the new tax violated city policy and unfairly punishes customers of those sites.

In their complaint, the plaintiffs argue that the city illegally implemented the tax through its Finance Department, instead of appropriately submitting the policy to a city council vote. But they also accuse Chicago of violating the Internet Tax Freedom Act, which bans “discriminatory” online taxes.

“The Amusement Tax, as interpreted and applied by the Ruling, also unlawfully discriminates against electronic commerce because it imposes a higher tax rate on theatrical, musical, and cultural performances that are delivered through an online streaming service than it imposes on those same performances if they are consumed in person,” said the lawsuit.

As Reed Smith attorneys wrote in a legal alert back in June, concerns about the legality of the tax aren’t new:

Nonetheless, there are strong arguments that both rulings run afoul of provisions in the Federal Telecommunications Act, the Internet Tax Freedom Act, and federal and Illinois constitutional limits on taxation. In addition, the rulings gloss over many details of applicable federal law and how telecommunications and computer networks operate, and assume the simplest factual scenarios that do not realistically comport with how many providers and their customers transact business. As a consequence, the time to look at the impact of these rulings is now, before mounting exposure and interest accrual makes challenging these positions economically infeasible.

If that were true, Chicago could continue taxing Netflix’s video-by-mail service, but not the online streaming service. And if the Illinois state court sides with the plaintiffs, this could be a major precedent for how local municipalities can tax Internet companies—a subject that has little to no guidance in the U.S. so far.

But, as The Verge writes, while it may be unpopular it’s kind of what the city was going for:

But while the law may seem onerous, it’s also a response to an increasingly difficult reality for cash-strapped cities, particularly as online services start to take a bite out of the businesses in the urban center. Twenty years ago, the same albums and movies were consumed at video rental outlets and music stores — which paid local property taxes, potentially paired with municipal sales taxes and other brick-and-mortar duties. But as online subscription services take over more and more of our music and video budgets, that money ends up disappearing from the traditional municipal tax base. By 2015, the people of Chicago are being entertained by corporations outside of the reach of the city government, leaving it scrambling to make up the difference. Facing a severe budget shortfall, it’s easy to see how a city might look toward online services to fill the gap.

Only time will tell how the court shakes out on this one, and in what way other local governments will follow suit. In the meantime, there’s plenty to watch.