As the lawsuit against Cook County has been dismissed, the Cook County Sweetened Beverage Tax must be collected from consumers beginning August 2, 2017. Furthermore, all Cook County retailers of Sweetened Beverages will be required to identify and calculate a “Floor Tax” based on their Sweetened Beverage inventory as of the close of business on Tuesday, August 1, 2017. (See Floor Tax Implementation section below).
Effective August 2, 2017, a tax at the rate of $0.01 per ounce is imposed on the retail sale of all sweetened beverages in Cook County.
- “Sweetened Beverage” means any non-alcoholic beverage, carbonated or non-carbonated, which is intended for human consumption and contains any caloric sweetener or non-caloric sweetener. The beverage must be “ready to drink”, such as bottled or canned, or produced for sale through the use of syrup and/or powder. Sweetened Beverages do NOT INCLUDE:
- Beverages consisting of 100% natural fruit or vegetable juice
- Beverages in which milk, or soy, rice, or similar milk substitute, makes up 50% of the beverage or is listed as the first ingredient on the label of the beverage
- Beverages to which a purchaser can add, or can request that the retailer add, caloric sweetener or non-caloric sweetener
- Infant formula
- Beverages for medical use
- Any liquid sold as therapeutic nutritional meal replacement or for use for weight reduction as a meal replacement
- Any syrup or powder that the purchaser him or herself combines with other ingredients to create a beverage
Floor Tax Implementation:
On or before September 20, 2017, every retailer of Sweetened Beverages shall file a tax return reporting the inventory of Sweetened Beverages, as well as the inventory of syrup and/or powder in its possession or control as of August 1, 2017. The Floor Tax return must reflect the retailer’s inventory on which tax was not previously paid, that was in the retailer’s possession on August 1, 2017. The retailer shall in turn collect the tax from its customers when the products are sold.
A retailer can avoid the August 1, 2017 inventory reporting and tax payment and be considered a “Distributor” if they have five or more retail locations within Cook County OR if they accept SNAP/LINK (food stamps).
Example – Retailer “X” has five locations in Cook County with 100,000 oz. of Sweetened Beverages in inventory at the close of business on August 1, 2017.
- If Retailer “X” does NOT elect to be considered a “Distributor” by September 20, 2017, Retailer “X” must self-report inventory to the Cook County Department of Revenue and remit $1,000 Floor Tax payment, regardless of when this inventory is sold. No future reporting to the Cook County Department of Revenue is required.
- If Retailer “X” elects to be considered a “Distributor,” the inventory reporting as of August 1, 2017 is NOT required but as a “Distributor” Retailer “X” must file a monthly tax return to the Cook County Department of Revenue as products are sold to consumers.
An advantage of electing to become a “Distributor” is that there is no tax due on the inventory held on August 1st but the disadvantage is that monthly returns will need to be filed beginning September 20th, which may be quite burdensome.
- For retailers who have syrup and powder in inventory, the calculation of tax is based on the amount of syrup and/or powder used to produce a Sweetened Beverage: the tax shall be $0.01 per ounce of Sweetened Beverage produced from that syrup or powder. The tax shall be calculated based upon the largest volume, based on the manufacturer’s instructions, of Sweetened Beverage that could be produced from the syrup or powder with a 5% reduction of the calculated tax to account for spillage and product preparation.
- Distributors who sell Sweetened Beverages must register with the Cook County Department of Revenue within 30 days of the effective date of the Ordinance.
- Distributors will file monthly tax returns reflecting sales of Sweetened Beverages on or before the 20th day of the month following the month for which the return is due.
For more information, please go to the Cook County website or contact your Miller Cooper professional or Marci Butler.