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Vending Industry Advocates To Shape Compliance Requirements For Cook County's Sugary Beverage Tax

Posted On: 1/26/2017

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TAGS: vending machine, Cook County Sweetened Beverage Tax, Cook County soda tax, Illinois Automatic Merchandising Council, National Automatic Merchandising Association, Cook County Department of Revenue, Zahra Ali

CHICAGO -- Illinois Automatic Merchandising Council leaders, along with National Automatic Merchandising Association legislative director Sheree Edwards, are continuing to advocate for the vending industry to help shape compliance requirements for Cook County's tax on sweetened beverages. The tax goes into effect July 1.

The second of two hearings on the issue will take place on Friday, Jan. 27 and NAMA representatives and IAMC leaders are scheduled to attend.

Leading the effort are Craig Hesch, AH Management (Rolling Meadows, IL); Linda Furlano of A.H. Management, treasurer and vice-president of the Illinois Automatic Merchandising Council; Donnie Anderson of Donny Boy Vending (Bedford Park, IL) and chair of the Illinois Committee of Blind Vendors; and Jennifer Fox of Fox Vending (Bridgeview, IL).

Ahead of the Jan. 27 hearing, NAMA sent the letter below to the Cook County Department of Revenue, signed by nearly 40 NAMA member companies, which is reprinted below.


Ms. Zahra Ali, Director
Cook County Department of Revenue
118 N Clark Street
Chicago, IL 60602

January 25, 2017

RE: Comments on the Cook County Penny-Per-Ounce Sweetened Beverage Tax

Dear Ms. Ali:

We, as members of the National Automatic Merchandising Association (NAMA) and the convenience services industry, are writing with regard to the 1 cent per ounce sweetened beverage tax (SBT) that is scheduled to go into effect July 1, 2017.

The regulatory burdens that this tax will place on the affected companies in our industry, many of which are small businesses, are nearly incalculable. This tax will apply to virtually all categories of non-alcoholic beverages except 100% juice, milk and beverages containing milk products, as well as syrup and powder products. The administrative provisions of the proposed regulations as currently written will make compliance with the tax extremely challenging for vending operators and distributors, which are two categories of our membership that stand to be directly impacted.

Further, the negative financial impact of this tax will reduce sales resulting in a decrease in local and state revenue at a time when Cook County is strapped for revenue, while concurrently forcing the County to undertake additional costs to administer the tax.

Applicability and Impact on Vending Machine Owners and Operators

Flexibility for remittance of tax requested for vending machine operators (retailers)

The vending channel is a unique distribution channel and needs flexibility for remittance of taxes due to the inability to collect this tax separately at the point of purchase, like other retailers like restaurants and grocery stores. Therefore, we would ask that vending operators be provided the flexibility to remit taxes, imposed on SBT's sold through vending machines, directly to Cook County themselves or through a distributor registered with the County.

Pursuant to the proposed regulations for remittance of the tax, the vending operator (retailer) is allowed to register with Cook County and remit the tax directly if they are purchasing the taxable beverage from an unregistered distributor.

"Any retailer who acquires sweetened beverages, syrup and/or powder from an unregistered distributor or on which tax was not previously paid, must file a tax return, in such form as prescribed and furnished by the Department, on or before the 20th day of the month following the month in which the sweetened beverages, syrup and/or powder were acquired. Each return must be accompanied by a remittance of the appropriate amount of applicable tax. The remittance shall be made payable to the County Collector. Failure of a retailer to file a return and remit applicable tax shall be considered a violation of this Article."

We would ask that this section be expanded to provide that vending operating company's (retailers) have the flexibility and option to remit the tax directly to Cook County even if purchasing the taxable beverage from a registered distributor. This would provide more certainty on tax calculations and less paperwork for the industry and the Cook County Revenue Department. The vending operator could merely inform the registered distributor that they are remitting the tax directly to the Cook County Revenue Department and that they would assume the liability for remittance of the tax.

Due to the already slim profit margins in the vending channel this flexibility is critical to protecting jobs in Cook County in the vending channel. Furthermore, with operators having to inform distributors on how many ounces of each taxable beverage will be sold in Cook County and the distributor submitting the tax, there is a high likelihood that there will be a tremendous amount of amended tax returns due to variations in sales that may not be anticipated. These amended returns will increase the workload and cost to Cook County. We believe this burden could be dramatically reduced by providing this flexibility in remitting the tax to the vending channel.

The tax could essentially be levied as a form of double or triple taxation

In order to comply with the SBT, retail operators will need to raise the prices of their products, a price increase that will invariably be passed on to their customers. The amount charged to the consumer is also subject to state, county, and local/municipal taxes as well, and should be reviewed to ensure that the SBT is not tantamount to illegal double or even triple taxation upon another tax.

Request the Department of Revenue visit the industry to better understand impacts

The proposed tax remittance regulation places a tremendous financial burden on the distributors to the vending channel. Many of the warehousing and product verification issues previously raised in these comments apply to distributors as well. Most important, Distributors will be required to file monthly tax returns reflecting sales of SBTs, even if there is no tax due, which is, again, an additional and unnecessary administrative obligation for them to have to undertake.

We would ask that the Department complete an on-site visit to a vending operator company to better understand the issues, intricacies, and business practices of the vending industry and why the creation of reasonable flexibility options for remittance of the tax is needed.

Lastly, we cannot overstate the tremendous challenge and financial burden of compliance with the proposed regulatory collection system and the need for flexibility for the vending industry.

Thank you for your consideration of the request for flexibility in tax remittance as we believe it will reduce the regulatory cost on the vending industry and the Cook County Revenue Department.

Sincerely,

The Illinois Automatic Merchandising Council (IAMC)
The Illinois Committee of Blind Vendors
The Illinois Enterprise Program for the Blind
365 Retail Markets
Ace Coffee Bar Inc.
Acme Vending Inc.
AH Management Group Inc.
AKE Inc.
Allen Sugar
Aramark
Avcoa Vending
Balon International Corp. (d/b/a RT Beverage)
BW Outfitters,LLC (d/b/a Truebrew Outfitters and Workwell Food & Beverage)
Canteen/Compass Group USA
Chris' Vending Inc.
Donny Boy Vending
E. Chas. Inc.
Edible Inc.
F. Patsson
Fox Vending Inc.
Gene's Snacks and Sundries Inc.
G&J Marketing and Sales
G.M.L. Inc.
Grab A Snack Co.
Hometown Suburban Vending Inc.
J&S Vending Inc.
JMOE Vending Inc.
Junction Vending Inc.
Kraft Heinz Inc.
Mark Vend Co.
McClurg Merchandise Sales Inc.
Ron's AllStar Vending Inc.
Saverino & Associates Inc.
Seaga Manufacturing Inc.
Vend Pro
Victory Vending
Vistar Corp.
Wittern Group

cc: Ms. Toni Preckwinkle, Cook County Commission President