Does the Cook County Sweetened Beverage Tax become part of the selling price used to calculate Illinois Retailers' Occupation Tax liability?

Plain-English summary

A taxpayer asked the Illinois Department of Revenue whether the Cook County Sweetened Beverage Tax ("CCSBT") counts as part of the "selling price" of a beverage when figuring out how much Illinois Retailers' Occupation Tax (the state's sales tax on retailers) is owed. The Department answered no: the CCSBT does not become part of the tax base used to calculate Retailers' Occupation Tax liability.

The Department explained the underlying rule from its own regulations at 86 Ill. Adm. Code 130.435: when a tax is imposed directly on the consumer, it does not become part of the selling price of the item. But when a tax is instead imposed at the wholesaler or importer level, it does become part of the selling price, because it gets passed along to retailers as one of their costs of doing business — and costs of doing business can never be excluded from the selling price for sales-tax purposes. The Department gave a direct comparison: the Cook County Liquor Gallonage Tax (imposed on consumers) is excluded from the selling price, while taxes imposed under the State Liquor Control Act of 1934 (imposed on wholesalers/importers) are included.

Applying that framework, the Department concluded the CCSBT works the same way as the Cook County Liquor Gallonage Tax — it is imposed on consumers — so it must be excluded from the sales tax base when calculating Retailers' Occupation Tax liability. The letter also warns that including the CCSBT in the tax base would be an "overcollection," which carries specific penalties under Section 13 of the Retailers' Occupation Tax Act.

Finally, the Department notes that the CCSBT itself is administered by Cook County, not the Illinois Department of Revenue, so any questions about the CCSBT specifically should go to the County.

What this means for you

If you sell sweetened beverages in Cook County

When calculating the Retailers' Occupation Tax due on a sweetened beverage sale, do not include the Cook County Sweetened Beverage Tax amount in your selling price/tax base. Doing so overcollects Retailers' Occupation Tax and can trigger penalties under Section 13 of the Retailers' Occupation Tax Act.

If you're trying to figure out whether some other local or special tax belongs in your selling price

Look at who the tax is legally imposed on. Under 86 Ill. Adm. Code 130.435, a tax imposed on the consumer is excluded from the selling price; a tax imposed on the wholesaler or importer is included (because it becomes a retailer cost of doing business that cannot be carved out). This letter treats the Cook County Liquor Gallonage Tax as the consumer-level example and taxes under the State Liquor Control Act of 1934 as the wholesaler/importer-level example.

Common questions

Does the Cook County Sweetened Beverage Tax get added to the price before figuring Illinois sales tax?
No. It is excluded from the selling price used to calculate Retailers' Occupation Tax because it is imposed on the consumer, not the wholesaler or importer.

What happens if a retailer mistakenly includes the CCSBT in the tax base?
The letter states that would be an overcollection, which carries specific penalties under Section 13 of the Retailers' Occupation Tax Act.

Who do I contact with questions about the CCSBT itself?
Cook County, not the Illinois Department of Revenue — the letter directs taxpayers to Cook County's Sweetened Beverage Tax Regulation 2017-2.

Is this letter binding on the Department?
No. It is a General Information Letter (GIL), which directs taxpayers to relevant regulations but is not a statement of Department policy and is not binding on the Department, per 2 Ill. Adm. Code 1200.120.

Citations and references

• 2 Ill. Adm. Code 1200.110 — procedures for Private Letter Rulings (PLRs)
• 2 Ill. Adm. Code 1200.120 — General Information Letters (GILs) are not binding Department policy
• 86 Ill. Adm. Code 130.435 — whether a tax imposed on consumers vs. wholesalers/importers is part of the selling price
• Retailers' Occupation Tax Act, Section 13 — penalties for overcollection

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2017.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2017/st-17-0019-gil.pdf

Original ruling text

ST 17-0019-GIL 06/08/2017 GROSS RECEIPTS
When the incidence of a tax is imposed upon consumers, it does not become part of the
selling price of an item subject to Retailers’ Occupation Tax. (See Section 130.435)
(This is a GIL.)

June 8, 2017

Dear Xxxxx:
This letter is in response to your recent inquiry requesting information. The Department issues
two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the Department in
response to specific taxpayer inquiries concerning the application of a tax statute or rule to a
particular fact situation. A PLR is binding on the Department, but only as to the taxpayer who is
the subject of the request for ruling and only to the extent the facts recited in the PLR are correct
and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information
Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department
policy and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access
our website at www.tax.illinois.gov to review regulations, letter rulings and other types of
information relevant to your inquiry.
The nature of your inquiry requires that we respond with a GIL.
You have asked
whether the Cook County Sweetened Beverage Tax (“CCSBT”) becomes part of the selling price
of the beverage for purposes of properly calculating liability under the Retailers’ Occupation Tax
Act.
Please be advised that for purposes of calculating Retailers’ Occupation Tax liability, the
CCSBT is not part of the selling price of a beverage subject to Retailers’ Occupation Tax. In
other words, the CCSBT does not become part of the tax base used to calculate Retailers’
Occupation Tax liability.
Under the Retailers’ Occupation Tax Act, tax is imposed upon the selling price of
tangible personal property. Department regulations at 86 Ill. Adm. Code 130.435 provide that
when the incidence of a tax is imposed upon consumers, it does not become part of the selling
price of an item. However, when a tax is imposed at the wholesaler/importer level, it becomes
part of the selling price of an item. Taxes imposed at the wholesaler/importer level are generally
passed on to retailers and become part of a retailer’s costs of doing business. Under the sales
taxes, costs of doing business can never be excluded from the selling price of an item. The
examples found in Section 130.435 are instructive. For instance, because the Cook County
Liquor Gallonage Tax is imposed upon consumers, it does not become part of the selling price
subject to Retailers’ Occupation Tax. In contrast, taxes imposed under the State Liquor Control

ST 17-0019-GIL
Page 2

Act of 1934 are imposed at the wholesaler/importer level and are included in the selling price
subject to Retailers’ Occupation Tax.
The CCSBT is imposed in the same manner as the Cook County Liquor Gallonage Tax.
Because it is imposed upon consumers, it must be excluded from the sales tax base for purposes
of calculating liability under the Retailers’ Occupation Tax Act.
Please be advised that
inclusion of the CCSBT in the sales tax base constitutes an overcollection, for which there are
specific penalties in Section 13 of the Retailers’ Occupation Tax Act.
The CCSBT is administered and enforced by Cook County, not by the Illinois
Department of Revenue. For questions concerning the CCSBT, we suggest that you contact
Cook County or review the County’s Sweetened Beverage Tax Regulation 2017-2 at
https://www.cookcountyil.gov/service/sweetened-beverage-tax.

Very truly yours,

Jerilynn Troxell Gorden
Deputy General Counsel

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