Chicago SSB Tax May Cause State to Lose Federal Funding, USDA Warns

According to a warning letter from the U.S. Department of
Agriculture (USDA), the sugar-sweetened beverage (SSB) tax that
took effect in the Chicago metropolitan area on August 2, 2017,
violates the federal Food and Nutrition Act, putting Illinois at risk
of losing its food-stamp funds.

Some retailers could not update point-of-sale systems to exempt
SSB purchases made with Supplemental Nutrition Assistance
Program (SNAP) funds before the tax went into effect, so Cook
County Department of Revenue officials told retailers they could
refund the taxes at a customer service desk or other location on
the premises. However, USDA told the Illinois Department of
Human Services (IDHS) in an August 7 letter that retailers cannot
charge tax to SNAP recipients at any time and that providing an
immediate refund does not cure the violation of federal law.
USDA also stated that it notified Cook County officials that the
workaround was “unacceptable” as early as June 28, although a
Cook County spokesperson reportedly said that the county board
of commissioners did not know about the objection until it
received a memo from IDHS about the August 7 warning letter.
Additional details about the Cook County tax appear in Issues 640
and 642 of this Update. See Chicago Tribune, August 10, 2017.

Issue 644