United States

Illinois: Cook County Hearing on Sweetened Beverage Tax Restraining Order Extended until July 21, 2017

Jul 17, 2017
From KPMG TaxWatch

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In November 2016, the Cook County Board of Commissioners passed the Cook County Sweetened Beverage Tax Ordinance. Effective July 1, 2017, this ordinance imposes a $0.01 per ounce tax on the retail sale of bottled, sweetened beverages in Cook County.  The tax, which is collected and remitted by the distributor of the product must be passed through by the retailer and shown as a separate line item on the customer’s receipt, is based on the number of whole ounces stated on a sealed container. The tax also extends to the sale of syrup and/or powder used to produce a sweetened beverage and is imposed at a rate of $0.01 per ounce of sweetened beverage produced from that syrup or powder.

The tax has been the subject of much controversy and shortly before it was scheduled to become effective on July 1, 2017, the Illinois Retail Merchants Association and several grocery stores filed suit seeking to restrain Cook County from enforcing the tax. The plaintiffs alleged that the beverage tax was unconstitutional because it created classes of taxable sweetened beverages in violation of the Uniformity Clause of the Illinois Constitution. The plaintiffs also argued that the tax was impermissibly vague. On June 30, 2017, a circuit court judge temporarily restrained Cook County from requiring collection of the tax. The parties were scheduled to return to court on July 12, 2017 to determine whether the restraining order should be continued or whether the County’s motion to dismiss should be granted. However, that hearing was continued until July 21, 2017. Retailers required to collect the Sweetened Beverage Tax should hold off until after the ruling on July 21. In the interim, it has been reported that Cook County will be laying off 1,000 workers due to the delay in implementing the Sweetened Beverage Tax. Please stay tuned to TWIST for further updates.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.