General Tax Information

 

Where do I find a copy of the Sweetened Beverage Ordinance?

The Sweetened Beverage Tax Ordinance can be found on the Department’s website, in the Downloads section of the Sweetened Beverage Tax webpage, located at https://www.cookcountyil.gov/service/sweetened-beverage-tax. It may also be found at https://www.municode.com/library/il/cook_county.

 

What is the tax rate? 

The tax imposed will be at the rate of $0.01 per ounce on the retail sale of all sweetened beverages in Cook County.

 

How does the floor tax work?

All businesses must begin collecting the tax on August 2, 2017 (previously July 1, 2017). Because retailers may have inventory on that date that they obtained before the tax was in effect, they must remit the tax before collecting it from their customers. Accordingly, retailers must take inventory of bottled sweetened beverages, syrup and powder in their possession on August 1, 2017 and remit tax on those items directly to the Department by September 20, 2017 along with a floor tax return (will be posted on the DOR website). After August 2, 2017, retailers will submit the tax to registered distributors. Retailers who register and remit tax in the same manner as a distributor pursuant to Sweetened Beverage Tax Regulation 2017-1 (except for vending machine operators), are not subject to the floor tax on those products stored at a retail distribution center. They must remit tax on said products by the 20th of the month following the month in which they transport those products to the retail location. The floor tax still applies to any products already on the floor at the retail location.

Vending machine operators are not subject to the floor tax. They must register and remit tax in the same manner as a distributor, and tax must be remitted by the 20th of the month following the month in which the items in the vending machines are sold. See Sweetened Beverage Tax Regulation 2017-1.

Retailers who register as distributors pursuant to Sweetened Beverage Tax Regulation 2017-4, are not subject to the floor tax. They must register and remit tax in the same manner as a distributor, and tax must be remitted by the 20th of the month following the month in which the item are sold.

 

Do distributors have to pay the floor tax?

If a distributor is also a retailer, it would have to pay the floor tax on the product in its retail inventory.

 

Why has this tax been imposed now?

The tax was adopted by the Cook County Board of Commissioners to decrease the consumption of sweetened beverages and encourage the adoption of healthy beverage options due to the link between such beverages and obesity, diabetes and other health conditions.      

     

Does the Cook County Sweetened Beverage Tax apply in all of Cook County or just the Chicago Area?

The tax applies throughout the County.

 

 

Registration

 

What is the process for registering as a distributor?

The registration form is located on the Department of Revenue website. A distributor should complete the form and submit it to the Department according to the instructions on the form. Once the Department processes the registration, the distributor will receive pre-printed tax returns.

 

What are the guidelines/qualifications to be considered a distributor?

The ordinance defines distributor as “any person. . .who receives, stores, manufacturers, bottles or distributes bottled sweetened beverages, syrup or powder, for sale to retailers doing business in Cook County. . ..” However, some retailers must register with and remit to the Department in the same manner as distributors. For details, see Sweetened Beverage Tax Regulations 2017-1 and 2017-4.

 

If a business is both a distributor and a retailer, how do they pay the tax? Can they be considered only distributors?

A business can be both a distributor and a retailer. For tax purposes, such a business must segregate its product and remit taxes in two different ways. For the product the business purchases/sells as a distributor, the business must collect the tax from the retailer and remit said tax to the Department. For the product the business purchases/sells as a retailer, the business must pay the tax to the distributor it purchases product from or remit directly to the Department when purchasing untaxed products. This issue is further addressed in Sweetened Beverage Tax Regulation 2017-2.

 

How will I be able to find Registered Distributors? 

Once registration commences, registered distributors will be listed in a searchable and sortable table at the bottom of the Sweetened Beverage Tax webpage, located at https://www.cookcountyil.gov/service/sweetened-beverage-tax.

 

Do all distributors have to be based in Cook County?

No

 

Should vendors/distributors that conduct business both outside and inside Cook County be registered as a distributor?

Any business that meets the definition of a “distributor” in the ordinance and any retailer meeting the requirements set forth in Sweetened Beverage Tax Regulation 2017-1 must register with the County and remit the tax.

 

Can vending machine businesses be considered distributors when most of their products are placed out of the County for out-of-County sale and they would frequently have to ask distributors for refunds?

Vending machine businesses are required to register and remit as a distributor if they meet the criteria outlined in Sweetened Beverage Tax Regulation 2017-1.

 

 

Filing a Return and Payment Information

 

How often and when are returns due? 

Registered taxpayers shall file each month with the Department a tax return in such form as prescribed and furnished by the Department on or before the 20th day of the month following the month for which the return is due.

 

What will the tax return look like?

A sample tax return and schedules are available on our website at www.cookcountyil.gov/service/sweetened-beverage-tax.

 

Is there online filing and paying?

We anticipate filing to be conducted electronically in 2018. Immediately upon the tax effective date, payments can be made electronically via ACH or credit card.

 

When will a retailer remit the tax directly to the County?

A retailer must remit directly to the County anytime it obtains sweetened beverages on which tax was not previously paid (bought from an unregistered distributor or manufactured by the retailer). A self-remittance tax return for retailers who must remit will be provided on the Department website. The tax must be remitted by the 20th of the month following the month in which the product was acquired. Retailers who register as distributors pursuant to Sweetened Beverage Tax Regulations 2017-1 and 2017-4, must submit regular monthly returns and remit tax in the same manner as a distributor.

 

If the sales occur in Lake Zurich [or other out-of-county location] and we deliver to locations within Cook County, do we charge them the tax?

Assuming a distributor in Lake Zurich delivers their product to a retailer or consumer in Cook County, the tax applies.

 

 

Refunds and Overpayments

 

Please explain the refund process when a distributor gets returned products from a retailer?

Refunds – If the beverage tax is collected in error on a product and/or from a customer, from whom should the customer seek a refund – the distributor or the County – and how? Refunds are provided for in the Uniform Penalties, Interest and Procedures Ordinance, Chapter 34. Only the business who directly remits to the Department can request a refund from the Department. If the retailer paid tax to a distributor, the retailer must ask that distributor for a refund. The distributor can then apply for a refund with the Department. If the retailer paid the Department directly, the retailer can apply with the Department for a refund. For purchases made using SNAP benefits, the retailer must not charge the Sweetened Beverage Tax to the purchaser. Accordingly, no refunds should be provided or sought on such purchases. See Sweetened Beverage Tax Regulation 2017-3.

  1. What if tax was charged on a beverage that is actually exempt?

Only the business who directly remits to the Department can request a refund from the Department. If the retailer paid tax to a distributor, the retailer must ask that distributor for a refund. The distributor can then apply for a refund with the Department. If the retailer paid the Department directly, the retailer can apply with the Department for a refund. For purchases made using SNAP benefits, the retailer must not charge the Sweetened Beverage Tax to the purchaser. Accordingly, no refunds should be provided or sought on such purchases. See Sweetened Beverage Tax Regulation 2017-3.

  1. Is there any available refund for breakage (not spillage on syrup/powder)?

The refund section in UPIP would apply in cases of breakage.

 

Where would I find the refund form?

The Credit Refund Application Form can be found on the Department’s website, in the Downloads section, located at https://www.cookcountyil.gov/agency/department-revenue.

 

What is the allowable time period for filing a refund claim? 

Any claim for a credit or refund must be filed in writing on forms provided by the Department not later than four years from the date on which payment or remittance in error was made.

 

What is the frequency of reimbursements to customers?

Wholesalers cannot be in a position where they remit the tax to Cook County and are subsequently out of pocket due to reimbursements. The Department processes applications for refund as quickly as possible. Please feel free to contact the Department if you would like to know the status of your application.

 

 

Taxable Transaction and Enforcement

 

Will EBT (SNAP) purchases be exempt from tax? 

concern that business systems cannot remove the tax for certain purchases, especially when the tax is included in the shelf price The Sweetened Beverage Tax may be included in the selling price or added on at the point of sale; as such SNAP purchases will be exempt from the Sweetened Beverage Tax as required by federal law. The retailer must not charge the tax to purchasers using SNAP benefits. See Sweetened Beverage Tax Regulation 2017-3.

 

If I paid tax to a distributor and the retail transactions ends up being exempt under SNAP, how do I get a refund for that tax paid?

For purchases made using SNAP benefits, the retailer must not charge the Sweetened Beverage Tax to the purchaser. Accordingly, no refunds should be provided or sought on such purchases. See Sweetened Beverage Tax Regulation 2017-3.

 

Are any beverage categories not eligible to be purchased with SNAP benefits?

The Department does not determine what products qualify for SNAP benefits. Please inquire with the Illinois Department of Human Services and/or the USDA Food and Nutrition Service.

 

Can we have a separate line item for tax on receipt or invoice? consider distributors who sell in other counties and states and the difficulty in programming, time, costs and reporting when creating new pricing for Cook

Yes, a separate line item for the Sweetened Beverage Tax may be provided on the receipt or invoice. All businesses must begin collecting and remitting tax on August 2, 2017.

  1. Can we separately list the tax on the sales tags on the shelves, menu, price tag?

Per the ordinance, the tax must be included in the selling price. The manner in which the business displays or advertises that price is at the discretion of the business as long as the advertised or posted price includes the tax.  See Sweetened Beverage Tax Regulation 2017-2.

  1. Do both distributors and retailers have to include the tax in the sale price?

The tax should be advertised in the sale price but may be separately stated on the invoice or receipt.

  1. Can the Cook County beverage tax and Chicago syrup tax be added together and presented as a single line item on invoice (distributor)?

The ordinance indicates the tax must be included in the selling price. See Sweetened Beverage Tax Regulation 2017-2.

 

I believe the County stated that it will assume the article’s sales price includes the SBT as long as it is $.01 more than the SBT on the article. I.e., if the SBT for an article is $.15, Cook County will assume the SBT is included in the sales price of an article if the amount charged to the customer is $.16.  Will Cook County’s analysis be this straight-forward? 

We want to be mindful of the law and Cook County’s regulations as we set our prices for July 1st. Provided the tax has been remitted to the Department by the registered distributor or retailer, absent evidence to the contrary, the County will assume tax is included as long as the shelf price is greater than the applicable tax amount. While the advertised price shall include the Sweetened Beverage Tax, the tax itself may be separately stated on the receipt or invoice.

 

Should ounces be rounded to the nearest ounce? I.e. Should 16.9 ounces be taxed at 16 ounces or 17 ounces?

The ordinance states that the rate of tax is $0.01 per ounce. Accordingly, only full ounces should be taxed. In determining how a distributor would charge taxes on large quantities of items, tax should be charged based on the amount that will be sold at retail. For example, if a distributor delivers a case of 16.9 oz bottles that will be sold individually, the tax should be charged on each individual bottle ($0.16 per bottle). If they will be sold as a 6-pack of 16.9 oz bottles, the total number of ounces should be calculated before rounding to determine tax (16.9 oz x 6 bottles = 101.4 oz – tax is $1.01).

 

Is specialty coffee taxable? Why is a Starbucks [or like brands] bottled cappuccino taxed but not if you order it at the counter?

Any item that meets the definition of sweetened beverage in the ordinance is taxable. In general, the ordinance taxes ready-to-drink beverages.

 

How does the 5% syrup spillage work on the tax return?

When paying a distributor, a retailer is allowed to retain 5% of the calculated tax for spillage. Tax is calculated first, and then 5% of that tax amount is taken off for the retailer. This 5% will be reported by the distributor on the tax return.

 

The ordinance says the 5% is for "product preparation." What does that mean?

Product preparation refers to the installation of a new syrup bag/box in the fountain dispenser. Amounts of syrup maybe used for brixing purposes, or run-offs to check if syrup is dispensing properly.

 

Are donated beverages taxable? Will beverages taken off the shelf for samples or self-use (use by the business itself) be taxable?

The business that opens the beverages for self-use or samples or donates the beverages is the end user. If a manufacturer uses product for samples or self-use or donates beverages, those beverages are not taxable. If a distributor is in Cook County and opens or donates sweetened beverages it purchased from a manufacturer, those beverages are taxable against the distributor as the end purchaser. If a retailer is in Cook County and opens or donates sweetened beverages it purchased from a manufacturer or distributor, those beverages are taxable against the retailer as the end purchaser.

 

Does it matter if the beverages are donated to an exempt entity? consider 501(c)(3) entities, public schools, state and local governments, military, County jail, not-for profit food bank, for-profit business.

Since the manufacturer/distributor/retailer is the end user, tax applies as stated in the preceding answer.

 

If they are not, how should it be handled when a distributor charged tax to the retailer and the retailer then donated some of the beverages?

Products donated by a retailer are taxable.

 

If they are not, how should a distributor record or keep records for products the distributor donates?

Products donated by a distributor are taxable, unless the distributor is also the manufacturer.

 

Which organizations/businesses/entities are exempt from the tax as sellers? considerations here are 501(c)(3) entities, public schools, state and local governments, military, County jail.

All exemptions or tax free sales are listed in the ordinance.

 

Which organizations/businesses/entities are exempt from the tax as purchasers?

Exemptions and tax free sales are listed in the ordinance. Additionally, the federal government is exempt. Exempt status for sales and use tax issued by the State of Illinois is not applicable to this tax.

Please clarify what is meant by "exempt under Federal law" and provide examples. Should a federal law prohibit imposition of the tax in certain circumstances, the tax should not apply.

 

If some of the entities are exempt, what documentation should the distributor retain to show proof of this?

The Department cannot list every type of documentary proof. Books and records should include whatever documentation necessary to show the entity is exempt.

 

Are other distributors exempt?

It is considered a tax free sale if a distributor registered with the County sells beverages to another distributor who is registered with the County.

 

Will mixers produced to be mixed with alcohol be taxed?

If the mixer itself meets the definition of sweetened beverage in the ordinance, it is subject to tax. This includes soda that is added to drinks (i.e. Coke, Pepsi, Sprite, Ginger Ale, etc.). The tax should be charged for the number of ounces of that sweetened beverage that are added to an alcoholic beverage.

 

Are drinks such has horchata, slurpees, and other specialty recipe drinks taxable?

If the drink meets the definition of sweetened beverage in the ordinance, it is subject to the tax.

 

The tax folded into selling price may violate the City of Chicago's requirements on what must be included on labels/receipts. Is the County working with the City on this?

We have looked at the City requirements and do not believe this violates their labeling requirements.  While the tax should be included within the shelf price, the tax may be separately stated on the receipt or invoice.        

       

If retailers do not follow the manufacturer’s instruction on syrup mixing, how do they calculate the tax?

Per the ordinance, this must be calculated for tax purposes using the manufacturer’s instructions.

  1. What if there are no manufacturer's instructions? Manufacturer should be contacted directly to obtain their instructions.
  2. What if the beverage is produced by the retailer? Then retailer acts as manufacturer and then knows the ounces produced.
  3. Can reasonable estimates be used? No
  4. What if the retailer mixes differently than the manufacturer's instructions recommend? Can that be reconciled with the distributor and a refund be given to the retailer, if appropriate? No
  5. What if fewer ounces are actually given to the customer because of ice in the cup? Per the ordinance, the retailer should charge tax on the ounces sold. The addition of ice is at the discretion of the retailer/customer and does not affect the amount of tax due.

 

Are only ready-to-drink beverages taxable?

All beverages that meet the definitions in the ordinance are taxable.  

 

Should the invoice/receipt include any particular language/descriptions with reference to the beverage tax?

The ordinance does not require any specific language be included on the receipt/invoice.

 

Are the below products subject to the beverage tax and how should the tax be calculated, if so?

Calculation of tax should be on per ounce basis.

  1. Dietary Supplements Taxable unless they are specifically exempted by the ordinance. See Section 74-851 definitions for beverage for medical use and sweetened beverage.
  1. Liquid Nutritional Products – i.e. Ensure Taxable unless they are specifically exempted by the ordinance. See Section 74-851 definitions for beverage for medical use and sweetened beverage.
  2. Thickened Beverages – i.e. Thickened juice or flavored water generally consumed by people with a medical condition i.e. dysphagia, etc. Taxable unless they are specifically exempted by the ordinance. See Section 74-851 definitions for beverage for medical use and sweetened beverage.
  3. Flavored Syrups added to a beverage by a retailer – i.e. Cherry syrup added to a Coke since the cherry flavoring is not a beverage by itself but simply an additive to a beverage These syrups are not taxable under the ordinance.
  4. Creamers added to a beverage – i.e. Hazelnut, sweetened, creamer intended to be added to coffee Not taxable under the ordinance.
  5. Mixers for alcoholic beverages -If the mixer itself meets the definition of sweetened beverage in the ordinance, it is subject to tax. This includes soda that is added to drinks (i.e. Coke, Pepsi, Sprite, Ginger Ale, etc.). The tax should be charged for the number of ounces of that sweetened beverage that are added to an alcoholic beverage.
  6. Flavored water, seltzer water, and other unsweetened beverages – If the product does not contain any caloric or non-caloric sweeteners as defined in the ordinance, it is not taxable. 

 

Beverages for medical use, therapeutic nutritional meal replacements, oral rehydration solutions to prevent or treat dehydration due to illness and weight reduction meal replacements are not considered sweetened beverages under the ordinance. In order to qualify as a beverage for medical use or therapeutic nutritional meal replacement, at a minimum, the product must meet the following criteria: (1) the product is food for oral or tube feeding; (2) the product is labeled for the dietary management of a medical disorder disease or condition; and (3) the product is labeled to be used for under medical supervision, and is primarily obtained through hospitals, clinics, and other medical and long term care facilities. Weight reduction meal replacements should meet the Dietary Reference Intakes (DRI) and Dietary Guidelines for Americans (DGA) for macronutrients (carbohydrates protein and fat) as well as micronutrients (vitamins and minerals). Oral rehydration solutions to prevent or treat dehydration due to illness should meet the guidelines set out by the World Health Organization and the United Nations International Children’s Emergency Fund. Non-exhaustive lists of these items are provided at the end of this FAQ document.

 

Is the beverage tax subject to sales tax if it is included in the price? Does listing the beverage tax separately affect whether it is subject to sales tax?

The applicability of the Sweetened Beverage Tax is not dependent upon the applicability of any other taxes, including, by way of example, the Illinois Retailers Occupation Tax which is commonly referred to as a “sales tax.”   Questions regarding the applicability of the Illinois Retailers Occupation Tax should be directed to the Illinois Department of Revenue.  While the County requires the tax to be advertised in the selling price, the tax may be separately stated on the receipt or invoice.

 

How should the tax be imposed when the retailer offers unlimited refills and does not know if a customer gets no refills or multiple refills?

The ordinance requires the tax to be applied to each ounce sold. The retailer has the discretion to offer refills, but must assure tax is remitted per ounce sold. If a 20oz beverage is sold, the tax is $0.20. The addition of ice is at the discretion of the retailer/customer. If the business uses cups with an ice fill line, where they have already determined the number of ounces that fill the cup, the business can submit that information to the Department as proof of the number of ounces sold.

 

Should the tax be charged by the distributor to the retailer and again by the retailer to the end user? Isn't this double taxation?

This is exactly how the tax should be charged. It is not double taxation. The tax is imposed on the end user; therefore, the end user reimburses the retailer who reimbursed the distributor for the tax.         

 

If a restaurant buys syrup from a distributor and then sells fountain drinks to its customers, how will the retail tax or reimbursement be calculated? Will it be based on ounces of finished beverage the cup can hold, which may end up differing slightly from the tax paid on the syrup due to differences in the amount of ice added to the beverage or customers partially filling or refilling their cups, for example?

For sweetened beverages produced through the use of syrup, the tax should be calculated based on the number of ounces of beverage that syrup will produce according to the manufacturer’s instructions. The ordinance requires the tax be applied to each ounce sold. Whether ice is used or free refills are offered is at the discretion of the retailer as long as the tax is applied to each ounce of sweetened beverage. If a business uses cups with an ice fill line, where they have already determined the number of ounces that fill the cup, the business can submit that information to the Department as proof of the number of ounces sold.

 

The ordinance exempts sales of powder to consumers in stores when they mix them at home. What about juice concentrates?

Juice concentrates do not meet the definition of sweetened beverage and, accordingly, are not taxable.

 

The ordinance taxes powders that are mixed by hand, but does not include "by hand" for syrups. Are syrups mixed by hand to create a beverage taxable?

Beverages made by mixing syrup by hand are taxable if served through the use of a beverage dispensing machine.

 

The ordinance definition for "beverage dispensing machine" seems to only apply to chilled beverages. Is that correct?

Consider teas that are dispensed at room temperature. Per the ordinance, sweetened beverages served via a fountain drink machine are taxable regardless of whether they are cold. However, sweetened beverages produced via “a device that combines syrup or syrup concentrate and carbon dioxide with chilled and purified water, or other refrigerated beverage machine used to serve non-carbonated or carbonated drinks” must be cold to be taxable.

 

If a distributor delivers beverages to a retail warehouse that then sends product to the County but also to other jurisdictions, how does the distributor know what products to collect taxes on?

Unless the distributor knows the product is being ultimately sold outside the County or is selling the beverages to another registered distributor, tax must be collected. If tax is collected and remitted on product that ends up being sold outside the County, the refund process should be followed.

 

The tax does not apply to milk, which is defined as a beverage in which milk is either the first ingredient or more than 50% of the beverage. For a bottled beverage, would you look strictly at the ingredient list, on the assumption that ingredients are required to be listed in descending order?

If the beverage meets the exemption definition in the ordinance, it is exempt.

 

If a distributor located in the County delivers beverages to a customer outside of the County, is that sale taxable?

No

 

For coffee shops, are the syrups that are added to a beverage behind the counter taxable?

No

 

Can I absorb the tax rather than pass it on to my customer?

The tax must be passed onto the consumer.

 

When are teas taxable?

Teas that are premade with sweetener (ready-to drink) are taxable.    

    

If a customer orders a cup of coffee with sugar, is that taxable?

No

 

Is there a minimum number of ounces for the beverage to be taxable?

It must be 1 ounce to be taxable.   

 

Can we get a list of all the items that are taxable?

Because new beverages are introduced in the market daily, it is impossible to keep a current list. Any beverage that meets the definition of a sweetened beverage per the ordinance is subject to the tax.

 

Are internet purchases taxable?

If the business is located in Cook County and delivers/ships product to a location outside of the County, the transaction is not taxable. If product is delivered/shipped into Cook County, regardless of where the business is located, that transaction is taxable.

 

 

Record Keeping

 

What records do Distributors have to keep?

A business should retain all books and records that can show the tax has been paid. This may include any tax returns, invoices, sales receipts, cancelled checks, etc. that will provide this information.

 

What records do retailers have to keep?

 A business should retain all books and records that can show the tax has been paid. This may include any tax returns, invoices, sales receipts, cancelled checks, etc. that will provide this information.

 

How long do I have to retain records related to the Cook County Sweetened Beverage Tax?

Records must be kept for the time period listed in the statute of limitations section of the Cook County Uniform Penalties, Interest and Procedures Ordinance, Chapter 34 of the Code of Ordinances. As of the date of this writing (March 1, 2017), that time period is seven years.

 

What types of support documents should retailers provide to wholesalers to receive reimbursement? Should the information be maintained in ounces sold or units sold as some retailers can sell individual cans, but not have the ability to track that back in their internal systems?

The information should be maintained in the same manner it is billed by the wholesaler to the retailer, ounces by product type. The UPC code on the product sold defines the product type and ounces.

 

Certain customers are not provided credit (due to collection risks). In these situations, will wholesalers be allowed to process check payments rather than issue credits?

Distributors can manage credits/refunds to retailers as they see fit. Refunds requested from the Department must include all necessary documentation as required by the Uniform Penalties, Interest and Procedures Ordinance and the application for refund.

 

 

Exempted Products (Beverages for Medical Use and /or Meal Replacement).

Note: This list is not meant to be exhaustive. There may be other products that meet the definitions of beverages for medical use, therapeutic nutritional meal replacements and weight reduction meal replacements. The Department of Revenue in no way endorses any of the products listed herein.

Other Misc. Questions

I do not see my question listed, how can I obtain help? 

Additional questions can be submitted by emailing the Department of Revenue directly at revenuecompliance@cookcountyil.gov.

How do we effectively market our products when customers can purchase them from another county for less?         

This is a business decision on which the Department cannot provide advice.

 

posted as of August 17, 2017.