Food & Beverage Tax

On April 17, 2018, the Vernon Hills Village Board enacted a one percent (1%) municipal Food and Beverage Tax, which will take effect on September 1, 2018.

Forms and Documents
Frequently Asked Questions

What is the tax? The Vernon Hills Food and Beverage Tax is a 1% tax on the purchase price of prepared food, alcoholic and non-alcoholic drinks that have been prepared for immediate consumption, and on alcoholic beverages sold in original container for consumption off premises.

Which businesses must pay this tax? Any establishment defined as a Retail Food Facility or Retail Liquor Facility under the Village of Vernon Hills Municipal Code. This definition includes any place at which food items or beverages are served and/or prepared for immediate consumption by a business which provides for on and/or off premise consumption of said food or beverages, whether or not such facility is conducted along with any other use(s) in a common premise or business establishment. In addition, this tax also applies to any establishment licensed under Chapter 3 of the Vernon Hills Municipal Code with respect to the sale of liquor.

Examples of businesses that must pay this tax include, but are not limited to:

· Restaurants or eating places, fast food outlets, drive-in restaurants, drive-through restaurants

· Cafes, lunch counters, catering service, delicatessens, sandwich shops, coffee shops, buffets

· Soft drink parlors, ice cream parlors, tearooms

· Hotels, motels or inns

· Grocery and Liquor stores

· Banquet facilities, catering facilities & services

· Bakeries and confectioners

· Movie theatres, bowling alleys, billiards halls, golf courses, tennis clubs, fitness clubs

· Convenience stores and gas stations

· Ice cream and food trucks

· Festival food & beverage vendors

On what sales is the Food and Beverage Tax assessed? You must collect and pay the Food and Beverage Tax if you make retail sales of prepared food, alcoholic and non-alcoholic drinks that have been prepared for immediate consumption, whether on or off the premises. The tax must also be collected on alcoholic beverages that are sold in original packaging for consumption off the premises. Examples of taxable sales include but are not limited to:

· All food and beverages (alcoholic and non-alcoholic) served in restaurants and by caterers; including carry out orders and delivery orders; and

· All restaurant style food sold at grocery stores, convenience stores and similar places of eating, such as prepared chicken, ice cream cones, hot dogs, donuts and hot soup; and

· All beverages served to diners in a restaurant and to patrons in a bar/tavern; and

· All alcoholic beverages sold in their original containers, such as bottles of wine or liquor, or a case of beer; and

· Brewed coffee, fountain drinks and other dispensed beverages sold for immediate consumption on or off premises in a grocery store and convenience store.

Are there any “Retail Food and Beverage Facilities” exempt from the tax? This tax is not imposed on the following:

· Vending machines; and

· Daycare centers and nursing homes providing food and beverages in a contractual agreement; and

· Other facilities of not-for-profit associations, corporations or school districts; and

· Complimentary food and beverage with a service.

What transactions are exempt from the Food and Beverage Tax? Food and non-alcoholic beverages that are prepared off-site in packages ready for retail sale and not for immediate consumption. Examples of products that are exempt from the Food and Beverage Tax include, but are not limited to:

· Pre-packed pizzas or other frozen food products sold in a grocery store or convenience store; and

· A can of soda or bottle of water from a cooler or convenience store; and

· General grocery items such as bread, milk, and eggs that are in their original packaging and not prepared for immediate consumption; and

· Items sold by a non-profit group (Provided that the group has received a sales tax exemption letter issued by the Illinois Department of Revenue). May include: Government entities, school districts, hospitals and medical treatment facilities.

Do I have to register my business as a prepared food facility subject to the tax? Yes. Every owner and operator of any Retail Food Facility or Retail Liquor Facility must register as a retailer before September 1, 2018, or before opening for business. This is a one-time registration that will remain effective unless there are changes of business ownership, management or location.

Who is liable for payment? The ultimate incidence and liability for payment of the tax is borne by the purchaser of prepared food and beverages at a prepared food and beverage facility. However, the owner and operator of each prepared food facility has the duty to collect, secure and account for the tax at the time of purchase. Any Retail Food Facility or Retail Liquor Facility found to be violating or refusing to comply with the tax is subject to penalties and will not be released from the payment of the tax.

Is gratuity to be included in the cost of the meal? No. The tax is calculated on purchase price. Purchase price does not include amounts paid as gratuities for the employees.

How do I show this tax on my retail receipts?  You may either separately state this tax, or state this tax in combination with other taxes on the receipts you give your customers.

What form must I use to report the Food and Beverage Tax? A sample form has been included with this packet, but will also be available on the Village of Vernon Hills’ website: www.vernonhills.org.

Where do I file my return? You should mail or deliver your Food and Beverage Tax Return and payment to:
Village of Vernon Hills
Food and Beverage Tax Returns
290 Evergreen Drive
Vernon Hills, Illinois 60061

When is my monthly Food and Beverage Tax Return and tax payment due? The returns and tax payments shall be due and owing as of the twentieth (20th) day of the month following the month covered by said return (i.e. taxes from September sales are due by October 20th). The signed food and beverage tax returns must also be accompanied by a copy of the Form ST-1 or ST-2 that is required to be filed with the Illinois Department of Revenue covering the same reporting period.

How will payment be submitted? Food & Beverage Tax will be submitted to the Village by check, money order, or cash on a monthly basis along with the Food and Beverage Tax form, plus additional ST-1 and ST-2 documents.

How do I file if I have more than one site? If you make retail sales from more than one site you must file a separate Food and Beverage Tax Return for each site.

Must I file the Food and Beverage Tax Return even if I have no sales to report? Yes. You must file a signed return form for each monthly reporting period regardless of whether or not there are receipts to report. You may file a “zero” return.

What if I do not file and pay by the due date? If a tax return is not filed by the due date, a late payment penalty equal to two percent (2%) of the unpaid tax shall be added each month, or any portion thereof, that the tax remains unpaid and the late payment penalty shall be paid along with the tax imposed. Each owner and/or operator of a Retail Food Facility and/or Retail Liquor Facility within the Village failing or omitting to pay the tax when due may also be fined not less than two hundred dollars ($200) nor more than one thousand dollars ($1,000) for each offense, and for each day a violation continues shall be considered a separate violation.

Do caterers have to pay the Food and Beverage Tax? Yes. Catering for all events held within the Village limits is subject to the Food and Beverage Tax, regardless of where the caterer’s place of business is located. Events catered by Vernon Hills’ caterers OUTSIDE the Village limits are not subject to the tax. Events inside the Village limits are subject to the tax, even if the caterer’s location is outside of the Village of Vernon Hills. The tax does not apply to goods associated with the event, such as linens, china, etc. if those items are distinctly priced separately in the event contract.

When a caterer has a dinner at a not-for-profit facility, is the Food and Beverage Tax charged on the meal? Yes. Catering for all events held in the Village is subject to the Food and Beverage Tax, regardless of where the caterer’s place of business is located. However, if the event is sponsored by and is an event of the not-for-profit agency, and the not-for-profit agency is sales tax exempt, then the Food and Beverage Tax does not apply.

What other communities impose a Food and Beverage Tax? Numerous communities throughout the State of Illinois impose a Food and Beverage Tax, typically at a rate between 1 and 2%. Communities proximate to the Village of Vernon Hills with a Food and Beverage Tax include: Bannockburn (1%), Buffalo Grove (1%), Deerfield (1%), Highland Park (1%), Lake Bluff (1%), Libertyville (1%), Lincolnshire (1%), Palatine (1%) and Wheeling (1%).

If I have questions, who should I contact? Please call Nikki Larson, Finance Director, at 847-918-3552 or nikkil@vhills.org, or Brian Bourdeau, Assistant to the Finance Director, at 847-918-3554, or brianb@vhills.org.