Cook County Sweetened Beverage Tax Basics for Restaurants, Bars, Retail Stores and other Retail Purveyors

Now that the Cook County Sweetened Beverage Tax has gone through the court system and been approved, we are receiving many questions from our clients. Whether you agree with the tax, or not, it is the law. Protecting your business’ profit margins and complying with the law is now the only reasonable path.

At Accounting Solutions Ltd., we have spent the last 27 years protecting our clients. The following is a synopsis of the rules and regulations as put forth on the Cook County Website. Like most new taxes, this one will probably change over time. Further information about this tax can be found here.
As always, please don’t hesitate to contact our offices for additional information. Here is what we know so far…

General Information

The tax is a .01 cents per ounce on all sweetened beverages sold inside Cook County, Illinois.

Who collects the tax?

Your distributors are responsible for collecting and remitting the tax to Cook County. This means that as a retail point of sale, you only have two responsibilities.
1 – To collect the tax from your customers to compensate you for the tax that you have already paid or are currently responsible for.
2 – To pay a Floor Tax on all current inventory subject to the tax which is on your floor as of August 1, 2017. This tax return is due on or before September 20, 2017.

How is the tax applied?

1 – Bottled sweetened beverages are taxed at a rate of .01 cents per ounce. In other words an eight ounce can of soda will have .08 cents of additional beverage tax.
2 – Sweetened beverages produced from syrup are not based upon the syrup weight, but rather on the total ounces that the syrup will produce once it goes through a beverage dispensing machine. The same concept is true of powders mixed by machine or hand. An example would be a five pound bag of syrup which will ultimately make 3,840 ounces of soda. The tax at .01 cents is $38.40. A reduction of 5% of the calculated tax will be applied to account for spillage, etc.

What products are excluded?

100% natural fruit/vegetable juice, syrup and powder with no added sweetener
Milk, soy, rice, or similar milk substitutes that are the primary ingredient (more than 50%)
Unsweetened drinks to which a purchaser can add, or can request that a retailer add, sugar, at the point of sale
Infant formula
Beverages for medical use
Weight reduction/therapeutic nutritional meal replacements
Any syrup or powder that the consumer himself or herself combines with other ingredients to create a beverage

What dates are important?

August 1, 2017 – Retailer Floor Tax Inventory Date
You must take your inventory as of this date for the Floor Tax Return.
August 2, 2017 – Sweetened Beverage Tax Goes Into Effect
You should begin collecting the beverage tax from your consumers on this date.
September 20, 2017
Retailers must remit their Floor Tax Returns and payments by this date. Distributors must begin remitting the tax on this date as well.

Can I show this additional tax on my invoices?

No. According to the law you are not supposed to add another tax line item on your receipts. The additional tax is simply to be included in the price of your beverages.
Are any of my customers exempt from the tax?
Are there any non-taxable transactions?
There are only two.
First, if the product is sold to another registered distributor.
Second, if product is sold to an unregistered distributor, a retailer or a purchaser when the selling distributor, or its agent, delivers the sweetened beverages, syrup and/or powder to a location outside of Cook County.
Under the law, you the retailer are the customer. Not your customer, but you. If you sell a sweetened beverage to a charitable organization, or other exempt organization such as the government itself, you still have to pay the the tax. As such, in order to protect yourself, you need to collect it as well.
We at Accounting Solutions Ltd. have specialized in the accounting, tax preparation, and tax planning needs of small businesses for the past 27 years. If you have any questions in reference to this tax or any other accounting needs, we would be happy to provide a complimentary consultation with a senior partner. We can be reached at (773) 267-7500 or through the contact page listed on our website. We would love to help.
Chris Amundson