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Cook County beverage tax on hold

 Cook County soda tax crushed, at least for now.

Update 8.2.2017: The lawsuit that was preventing the Cook County Sweetened Beverage Tax from taking effect has been dismissed. Retailers must begin collecting the tax as of August 2, 2017. Additional information.

A penny-per-ounce tax on sweetened beverages was set to go into effect in Cook County, Illinois, on July 1, 2017. At the last moment, however, the tax was stayed by a Cook County Circuit Court. It will remain under a temporary restraining order (TRO) until further notice.

The Illinois Retail Merchants Association and others argue that the tax is both unconstitutional and too vague. They also say the penalties for non-compliance are too extreme: those who fail to collect and remit it will be fined $1,000 for the first offense, and $2,000 for all subsequent offenses.

Cook County Board President Toni Preckwinkle maintains “revenue from the tax is critical” to a balanced budget. She expressed disappointment with the ruling, saying, “We must immediately look at holdbacks, efficiencies, and … a substantial number of position reductions each month that collection of the tax is delayed.” The board will “aggressively defend" the ordinance.

What will and won’t be taxed?

Soda taxes can be notoriously complex. Months after Vermont started taxing sweet beverages, retailers and consumers still found themselves puzzling over whether black cherry-flavored Schweppes was taxable or exempt. To determine the taxability of a sweetened beverage, it’s often necessary to read its label carefully. Close reading of the tax ordinance is also advised.

According to the Chicago Tribune, an attorney for the plaintiffs told Judge Daniel Kubasiak that the county had revised the regulation “no less than four or five time” prior to July 1, suggesting the county wasn’t ready to administer the tax. He also said there should be a system in place to offer refunds in the event the tax is eventually found unconstitutional.

Assistant State Attorney Sisavanh Baker refuted that claim, saying the tax was “essentially unchanged since it was enacted in November 2016.” She maintained the tax is lawful.

The court will next hear arguments for and against the tax on July 12. Learn more about the Cook County Sweetened Beverage Tax here.

No matter what the product, when taxability changes, compliance is complicated for those who sell affected items. Tax automation software helps ease such transitions, facilitating compliance. Learn more.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.