The so-called “cloud tax” hitting Chicago is leaving many deeply disturbed, and may well do more damage to Chicago in the long run.

Perhaps the biggest problem so far is that no one’s a hundred percent sure just what the cloud tax is, just who it will affect, or to what extent. New reports suggest that there may be one class of business left alone in this: the startups.

The cloud tax, as it’s known, is really an extension of two taxes already in place: the city amusement tax, which is now extended to include streaming video like Netflix, and the city personal property lease transaction tax, geared toward cloud-based storage systems and the like.

The last one is actually causing more confusion than the first, as it hinges on the interpretation of “nonpossessory computer leases,” which is in a sense kind of a general assessment of what any cloud-based system really is.

Basically, a “nonpossessory computer lease” extends to accessing services or information from a computer that a user doesn’t specifically own. This didn’t mean so much back in 1989, when the law was first put in place—it basically applied to LexisNexis terminals operating within city limits—but like so much of technology, it’s expanded, and in a big way.

Now, the nonpossessory computer lease concept is expanding to include access to “remote computers,” regardless of how it’s accessed. That’s got some mobile payment operations, and others, concerned.

Perhaps realizing that it’s poised to tax itself out of some major new industries, Chicago has been seen to backpedal just a bit, with tech hub 1871 saying a proposal is in the works that will “…basically exempt startups from paying the tax,” and there will almost certainly be legal challenges for the city to face down relating to this.

But some of the old exemptions are running out too. An exemption in place for leases entered into outside of Chicago is no longer valid, such that a company in New York with a handful of Chicago employees that enters into an agreement in New York now faces taxes on its Chicago use.

Plus, regular consumers will be responsible for filing taxes for subscriptions to services from businesses outside of Chicago, which sounds like a guarantee that Chicago will never see a dime of that.

If it sounds like bad news, it probably should. Not only is this a patchwork of disasters, it’s also likely to have an impact on mobile payments. Firms operating in Chicago will likely fall under the tax, and it’s entirely possible that there will be some tax liability for use.

I’m not a lawyer, and there’s a likelihood that a lot of this law is going to be changed as confusion rains down on Chicago authorities, but it’s entirely possible that this law will force users of mobile payment systems to render a tax to the city of Chicago, should it stay.

If that actually comes to pass, it’s likely that this tax will end up largely ignored, since its ability to track will likely be minimal.

But if something is developed to make tracking easier, the end result is that a lot of business will likely flow into cities around Chicago, like Elgin, Aurora and Schaumburg. It may do a number on mobile payments, which could have a serious effect on local retailers, and the impact to the startup business community—especially given how much of it is cloud-based these days—could be looking to areas outside of Chicago.