It's only day nine of the Cook County Sweetened Beverage Tax and already the county may suffer from it. This time the issue comes from the federal side as how the tax is being charged could end up costing the county $87 million.
Cook County did the right thing by informing retailers that purchases made with federal food stamp benefits are exempt from the soda tax under federal law, but it's also allowed retailers to tax those purchases and provide refunds as a workaround for stores that haven't been able to program their point-of-sale systems. Despite the immediate refund, that practice still violates the strict rules laid out by the U.S. Department of Agriculture's Food and Nutrition Services, the federal agency overseeing the food stamp program.
"It is FNS's strict interpretation that retailers may not charge the tax to SNAP recipients at any time and that providing an immediate subsequent refund at a customer service desk does not cure the problem or the violation of the law," said James Dimas, secretary of the state Department of Human Services, in a memo to Cook County President Toni Preckwinkle on Wednesday.
Preckwinkle spoke at the Cook County Democratic Party's slating event Thursday. Asked about the memo afterward, she declined to comment because she hadn't yet reviewed it.
To avoid "suspension or disallowance" of the federal money, the state human services department has until August 21 to submit a corrective action plan that either details how the county tax will be fixed or confirm a delay of the tax to allow retailers more time to program their point-of-sale systems.
Under federal law, SNAP purchases are exempt from state and local sales tax. Months ago, Cook County officials were hopeful that they'd be able to apply the tax universally by having retailers fold the cost of the tax into the selling price of the products, like overhead costs, instead of tacking it on at checkout.
But the state Department of Revenue advised in June that would constitute an "overcollection" because the higher selling price would then be subject to sales tax. On June 6 — less than a month from the planned July 1 start date — the county announced the tax could also be added at the point of sale, thus rendering SNAP purchases exempt.
Source: Chicago Tribune