On July 28, 2017, the Cook County Circuit Court (court) dismissed a lawsuit¹ filed by the Illinois Retail Merchants Association challenging the constitutionality of the Cook County, IL (County) Sweetened Beverage Tax, which was slated go into effect July 1, 2017. The court also dissolved the order it had issued temporarily enjoining the collection of the tax.

While the injunction was in place, retailers were to refrain from collecting the tax until the court issued its final ruling. Retailers were also advised not to file the floor tax return, which was initially due on July 1, 2017.

Following the case's dismissal, the County posted guidance on its website advising distributors and retailers to collect the tax beginning August 2, 2017, and advising retailers to take inventory beginning August 1, 2017, for purposes of determining the floor tax.

The tax applies at a rate of $0.01 per ounce on retail sales in the County of all sweetened beverages, including, but not limited to, bottled or un-bottled: soda, sports drinks, flavored water, energy drinks and pre-made sweetened coffee/tea with less than 50% milk content. Distributors of bottled beverages, and any syrup and/or powder used to produce a sweetened beverage, must collect the tax from any retailer that purchases such products.

Retailers must only include the tax in the sales price of the sweetened beverages. Going forward, distributors will collect the tax from retailers and remit it to the County. Retailers will be required to collect it from consumers, but will treat the collection as a reimbursement of the tax paid to the distributor.

Implications

Distributors and retailers of beverages should evaluate whether their products fall within the scope of what the County considers a "sweetened beverage." To the extent a business determines it is selling a taxable beverage, it should contact the County in order to properly register, if it has not already been contacted by the County and directed to do so.

Returns and tax payments, including the floor tax, are due by the 20th day of the following month. Thus, returns and tax payments for August 2017 are due to the Cook County Department of Revenue by September 20, 2017.

Additional guidance will be posted on the County's website.

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ENDNOTES

¹ Illinois Retail Merchants Ass'n et al v. Cook Cnty. Dept. of Rev., No. 17 L 50596 (Cir. Ct. of Cook Cnty., Ill. July 28, 2017).