What Was the Illinois Soft Drink Tax?
A complete guide to the repealed Cook County Sweetened Beverage Tax. Learn how the short-lived 2017 tax operated, affecting both consumers and businesses.
The “Illinois soft drink tax” is a common term for what was officially the Cook County Sweetened Beverage Tax. This local tax was enacted by the Cook County Board of Commissioners and was intended to apply to a wide range of sweetened drinks. Its existence was brief; after a legal challenge delayed its start, the tax went into effect on August 2, 2017.
Facing significant public and political opposition, the ordinance was repealed by the board on October 11, 2017. The tax was officially eliminated as of December 1, 2017, making its effective lifespan only four months. The tax is no longer in effect, and all related compliance requirements have ceased.
Defining Taxable Beverages
Included Beverages
The Cook County ordinance defined a taxable “sweetened beverage” as any non-alcoholic drink, carbonated or non-carbonated, that was sweetened with either sugar or an artificial sweetener. The tax applied to beverages sold in a bottle or can, as well as those produced from syrups or powders. Examples of taxed beverages included regular and diet sodas, fruit drinks that were not 100% juice, sports drinks, and energy drinks. The ordinance also covered sweetened iced teas and pre-made coffees, provided they contained less than 50% milk by volume.
For fountain drinks, the tax calculation was based on the final volume of the beverage that a syrup or powder was intended to produce. To account for waste, the ordinance allowed for a 5% reduction from the calculated tax on syrups to cover spillage and preparation.
Excluded Beverages
The ordinance created several specific exemptions from the tax. The primary exclusion was for beverages consisting of 100% natural fruit or vegetable juice. This meant that a bottle of pure apple juice was not taxed, while a fruit “punch” with added sugar was.
Other exemptions included milk, milk substitute products, and infant formula. Milk products encompassed traditional dairy as well as alternatives like soy or almond milk.
The ordinance also did not apply to unsweetened beverages to which a customer could add sugar themselves, such as a plain coffee or tea.
Tax Application at Point of Sale
The Sweetened Beverage Tax was levied at a rate of one cent per fluid ounce. This tax was applied to the total number of ounces in a sealed container. The legal liability for paying the tax fell on the consumer, and the ordinance required retailers to collect the tax at the moment of purchase.
Retailers had two options for displaying the tax. The first method was to add the tax as a separate line item on the sales receipt, identifying the amount charged for the Sweetened Beverage Tax.
The second option allowed a retailer to include the tax within the shelf price of the beverage. If a business chose this method, they were required to post a visible notice for customers stating that the Cook County tax was included in the item’s price.
Retailer Compliance and Remittance
To comply with the ordinance, retailers were required to register their business with the Cook County Department of Revenue. Businesses were responsible for tracking all sales of taxable products to accurately calculate their tax liability.
The primary instrument for reporting was the Cook County Form SBT-1, the Sweetened Beverage Tax Return. On this form, retailers had to report the total ounces of taxable bottled beverages sold and separately report the total ounces of beverages produced from syrups and powders.
The filing and payment deadline was the 20th day of the month following the month in which the sales occurred. Retailers could submit their completed Form SBT-1 and payment either electronically or by mail.
Exempt Purchases and Tax Refunds
An exemption existed for purchases made with benefits from the Supplemental Nutrition Assistance Program (SNAP), as federal law prohibits state and local taxes on these items. Retailers were required to have a system in place to ensure the tax was not charged on these transactions. Point-of-sale systems needed to be programmed to identify SNAP payments and automatically exclude the tax.
The U.S. Department of Agriculture strictly enforced this rule, deeming it non-compliant to charge the tax and then provide an immediate cash refund. The only acceptable method was to prevent the tax from being applied at the point of sale, either through automated system logic or a manual override by the cashier.
Retailers could also seek a credit or refund for taxes paid on products that could not be sold, such as beverages that were spoiled, stolen, or destroyed. If a retailer had already paid the tax to a distributor, they had to request a refund directly from that distributor. For retailers who remitted tax directly to the county, they could file a refund claim for tax paid on goods that were later documented as unsalable.