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Guidance on the Chicago Checkout Bag Tax

Guidance on the Chicago Checkout Bag Tax
The Checkout Bag Tax (“Bag Tax”) is a $.07 per bag tax on the retail sale or use of paper and plastic checkout bags in Chicago, of which retail merchants retain $.02 and the remaining $.05 is remitted to the City.
This notice provides additional guidance on the Bag Tax to assist retail merchants and wholesalers in applying for Bag Tax credits on bags that are used to carry items purchased pursuant to the Supplemental Nutritional Assistance Program or a similar governmental food assistance program; determining the Bag Tax application to restaurants, and determining placement of the Bag Tax on receipts. See “Chicago Checkout Bag Tax – Frequently Asked Questions” published on the website of the Chicago Department of Finance (“Department”) at: https://www.cityofchicago.org/city/en/depts/fin/supp_info/revenue/tax_list/CheckoutBagTax.html
If further questions remain, please contact Customer Service at 312.747.4747 or by e-mail at RevenueDatabase@cityofchicago.org.
Guide to Bag Tax Credits on Purchases Made As Part Of Governmental Food Assistance Programs
The Bag Tax does not apply to bags that are used to carry items purchased pursuant to the Supplemental Nutritional Assistance Program (“SNAP”), the Illinois LINK card or a similar governmental food assistance program (Code Section 3-5-110).
Guidance for retailers:
Retailers paying the tax through their wholesaler: Retailers should take a credit for non-taxable bags on the next bill received from their wholesalers and provide supporting documentation to substantiate their claim for credit. The wholesaler in turn should claim a credit for the tax amount credited to their retailers on the next monthly remittance.
Retailers paying the tax directly to the City of Chicago: The Bag Tax must be paid on a monthly basis for bags used or sold in the prior month. Therefore, retailers should pay the tax due for taxable bags and be able to substantiate the use of non-taxable bags with supporting documentation.
Guidance for wholesalers:
Wholesalers remitting the tax to the City of Chicago: If retailers take a credit on bills received from the wholesaler, the wholesaler in turn should claim a credit for the tax amount credited to their retailers on the next monthly coupon remittance. This amount should be reflected on the total amount of deductions claimed throughout the year on line 2 of the Checkout Bag Tax return.
In all cases, retailers and wholesalers must keep records of all such transactions and provide supporting documentation to the Department upon request.
Guide to Determining Bag Tax Application to Restaurants
The Bag Tax Ordinance defines a taxable bag as one “that is provided by a store to a customer for the purpose of carrying goods out of the store.” Code Section 3-50-020. The tax does not apply to “bags provided by a dine-in or take-out restaurant to contain food or drink purchased by the restaurant’s customers.” Id.

In applying this provision (hereafter “the Restaurant Exclusion”), the Department will consider a given store location (hereafter “Store”) to be a “restaurant” if more than 50% of its sales of food and drink are
subject to the “high” sales tax rate provided by Section 2-10 of the Illinois Retailers’ Occupation Tax Act, 35 ILCS 120/2-10 (which applies to food prepared for immediate consumption), rather than the
“reduced” rate provided by that same section (which applies to “grocery” food).

If a Store has some operations that would qualify for the Restaurant Exclusion if considered separately, but that do not qualify for the Restaurant Exclusion if considered together with the Store’s other
operations, then the bags provided by the former operations will still qualify for the Restaurant Exclusion, so long as the Store utilizes a reliable means of documenting, recording and accounting for receipts that clearly separates its restaurant sales from its other sales, so that the amount of its tax liability can be correctly determined and confirmed. In the absence of such a reliable means of documenting, recording and accounting for receipts, it will be presumed that all of the Store’s sales of food and beverages are attributable to its non-restaurant operations, and that bags provided for carrying out such items are therefore taxable. This is similar to the “Mixed Facilities or Operations” rules set forth in the Chicago Restaurant And Other Places For Eating Tax Regulations.
For those stores that do not self-report, the Department will make available on its web site a form that may be provided to wholesalers for use in connection with the Restaurant Exclusion.
Guide to Placement of the Bag Tax on Receipts
If a business chooses to collect the Bag Tax from customers, Code Section 3-50-040 states that it shall “separately state the tax on the receipt provided to the customer at the time of sale ….” The Section also
states that the Bag Tax shall be identified as the “Checkout Bag Tax.”
Following multiple questions from customers and businesses, the Department is providing additional guidance to reduce customer confusion and help ensure businesses correctly state the Bag Tax on
receipts:
 The Bag Tax is a tax, not a fee. In order to reduce confusion among consumers, businesses collecting the tax from customers should identify the Bag Tax separately on receipts as the”Checkout Bag Tax” or “Bag Tax” if space does not permit the longer tax name.
 If a business sells checkout bags to customers and is collecting the Bag Tax from customers, the tax shall be separately stated on receipts. “It shall be a violation of this chapter for the store to fail to separately itemize the tax upon a customer’s purchase of such bag, or to otherwise absorb the tax on such sale.” Code Section 3-50-030. Businesses collecting the tax from customers should not combine the Bag Tax with any other charge on receipts. More specifically, if a business as part of
its business model charges for a checkout bag, it should not combine the Bag Tax with any of those charges.
 Certain point of sales systems do not allow for the Bag Tax to appear below the subtotal (i.e. the tax amount); therefore, to avoid confusion among customers, the Department suggests that such
businesses add “non-taxable” or “NT” or some other denotation next to the Bag Tax on receipts to clarify that the Bag Tax is not subject to sales tax, if the Bag Tax appears above the subtotal.
To further assist businesses in clearly placing the Bag Tax on receipts, below are examples of correct placement of the Bag Tax on receipts.

Sample Bag Tax Receipts

4th Ward Street Sweeping Schedule For 2017

 

From April 1st through mid-November, bright orange temporary parking restrictions are posted the day before sweeping service is scheduled to begin on any street to ensure curb-to-curb cleaning.

Some arterial streets have permanently posted signs that specify a once-per-week period when parking is prohibited for street sweeping.

Please click here for the street sweeping schedule.

For the 4th Ward Street Sweeping Map, please click here.

Aldermanic Summer Internship Program for 2017.

 

 

The 4th Ward Service Office is pleased to announce the continuation of the Aldermanic Summer Internship Program for 2017.

The paid internship presents the unique opportunity of working in one of the most diverse and dynamic wards in Chicago. One selected intern will work at the 4th Ward office for 10 weeks this summer, from Monday, June 5, 2017 until Friday, August 11, 2017.

Interested applicants must:

  • Submit resume, along with cover letter/statement of interest
  • Have completed at least one semester or quarter of college during the spring of 2017 in an accredited program. (The selected intern will be asked to provide an official transcript.)
  • Be able to show proof of Chicago residency at the time of hire.
  • A resident of the 4th Ward would be preferable for local knowledge

The deadline for submission of materials is Thursday, April 20, 2017. Interested applicants can email the office directly at Ward04@cityofchicago.org.

One Summer Chicago 2017 – Youth Employment and Internship Program – Applications Are Now Open

One Summer Chicago brings together government institutions, community-based organizations and companies to offer over 31,000 employment and internship opportunities to youth and young adults ages 14 to 24.

Teens and young adults looking for a summer job or internship can apply online for one of the 30,000 positions offered through the One Summer Chicago program.

Teens and young adults ages 14-24 can apply online at onesummerchicago.org by May 15.

Residential FAQ Water-Sewer Tax

Beginning on March 1, 2017, all eligible utility bills (both residential and commercial) will now reflect charges for the water-sewer tax.

Residences and businesses will continue to be billed at the same frequency as their current billing cycle. Metered properties are billed for water and sewer services every other month for the previous two months of water and sewer usage. Current meter rates are $3.81 per 1,000 gallons, and sewer charges are 100 percent of the water bill.

To help ensure a smooth transition to this new charge, the City updated language on the back of all utility bills to help residents understand the water-sewer tax as well as all other charges included in the utility bill.

Sample Metered Bill
Sample Non-Metered Bill

If residents and businesses need assistance with their utility bill, the Chicago Department of Finance Utility Billing Customer Service is prepared to address questions and concerns. For more information 312-744-4426.

Why is the City adding this tax?

  • The Chicago City Council and Mayor Emanuel approved a four-year phase-in of a water and sewer tax to make certain mandated pension payments to the City’s largest pension fund – the Municipal Employees’ Annuity and Benefit Fund.
  • This pension fund supports the retirements of many municipal employees, including our snow plow drivers, our librarians, CPS’ non-teaching staff, such as classroom aides, among other staff.

How often are residents and businesses billed for water and sewer? And what are the current water and sewer rates?

  • Residences and businesses will continue to be billed at the same frequency as their current billing cycle.
  • Metered properties are billed for water and sewer services every other month for the previous two months of water and sewer usage. Current meter rates are $3.81 per 1,000 gallons, and sewer charges are 100 percent of the water bill.
  • Non-metered properties are billed for water and sewer service twice a year at a flat rate. Current non-metered rates are an estimate of water usage based on the lot size, number of fixtures, and other factors. Sewer charges are 100 percent of the water bill.

How will Chicago’s water-sewer rate compare to other large cities water and sewer fees and the surrounding suburbs?

  • Chicago’s water and sewer rates will continue to compare favorably to those of other major cities in the Great Lakes region and nationally.
  • Further, assuming Chicago’s suburban neighbors do not raise water rates over the next five years, Chicago’s water rate in 2021 will still be comparatively lower than 104 of 126 suburban customers’ residential rates. This is based on 2015 suburban rates.

Water rates in surrounding suburbs:

Harvey: $7.60 per 1,000 gallons of water

Maywood: $14.53 per 1,000 gallons of water

Oak Park: $8.37 per 1,000 gallons of water

Berwyn: $7.98 per 1,000 gallons of water

  • The charts below compare the single family residence cost per 7,500 gallons of water in Chicago to the rates charged for the same level of usage in other U.S. cities.

Water Consumption Chart 2

What will metered properties be charged?

  • Properties with a water meter are billed based on the amount of water used in the billing period.  The current water rate for metered accounts is $28.52 per 1,000 cubic feet or approximately $3.81 per 1,000 gallons.
  • Sewer charges are 100 percent of water charges.
  • The water-sewer tax is charged based on consumption.
  • The tax will be phased-in over four years, starting in March 2017 through 2020 and stay at the same tax rate in 2021.
  • Beginning in March 2017, the water-sewer tax will be assessed at a rate of $.295 per 1,000 gallons of water and $.295 per 1,000 gallons of sewer or a total of $.59 per 1,000 gallons of water-sewer use.
Rate per 1,000 gallons  (approximately)  
Year Tax (Water Portion) Tax (Sewer Portion) Total Tax (Water & Sewer Portion) Y-O-Y Tax Rate Increase
2017 $0.295 $0.295 $.59 7.7%
2018 $0.640 $0.640 $1.28 8.4%
2019 $1.005 $1.005 $2.01 8.2%
2020 $1.255 $1.255 $2.51 5.2%
2021 $1.255 $1.255 $2.51 0.0%

 

What will happen to MeterSave accounts that go above their MeterSave cap?  Will the tax be charged on the total water/sewer use or just what the residence was billed for?

  • For MeterSave residences, the water-sewer tax will only be assessed on the amount of water-sewer for which you are billed, not your total usage.

What will non-metered properties be charged?

  • Per the Municipal Code of Chicago, water usage is assessed based on factors including building size, lot size and other fixtures – such as, sinks, toilets, etc.  The water charge is calculated by assuming usage based on these factors.
  • Sewer charges are 100 percent of water charges.
  • Non-metered properties are charged the water-sewer tax based on the same method used to calculate water and sewer charges.
  • The tax will be phased-in over four years, starting in March 2017 through 2020 and stay at the same tax rate in 2021.
  • Beginning in March 2017, the water-sewer tax will be assessed at a rate $.295 per 1,000 gallons of water and $.295 per 1,000 gallons of sewer or a total of $.59 per 1,000 gallons of water-sewer use.
Rate per 1,000 gallons  (approximately)  
Year Tax (Water Portion) Tax (Sewer Portion) Total Tax (Water & Sewer Portion) Y-O-Y Tax Rate Increase
2017 $0.295 $0.295 $.59 7.7%
2018 $0.640 $0.640 $1.28 8.4%
2019 $1.005 $1.005 $2.01 8.2%
2020 $1.255 $1.255 $2.51 5.2%
2021 $1.255 $1.255 $2.51 0.0%


I’m a non-metered account.  How do I sign up for a meter?

  • Chicago’s MeterSave program installs residential water meters free of charge to promote water conservation and save customers as much as 40 percent on their water and sewer costs.
  • Homeowners participating in MeterSave are eligible for seven-year guarantee that their home water bill will be no higher than it would have been if the meter had not been installed.
  • To learn more about the program, call 3-1-1 or visit www.metersave.org.

I’m a senior. Will I receive any reduction in the tax?

  • Seniors who receive the senior citizen sewer exemption (seniors who live in their own home and are individually metered) will continue to receive the exemption.
  • This exemption reduces eligible senior’s total water and sewer bill by 50 percent by removing sewer charges. With this exemption, seniors will also see a 50 percent reduction in the tax on water-sewer usage as the tax will only be charged to the water portion of a senior’s bill.

What happens if I do not pay the water-sewer tax?

  • A penalty accrues at a rate of 1.25 percent per month on late balances, including tax charges.
  • A property owner may have their water shut off for failure to pay their unified utility bill after multiple notifications.
  • There are multiple payment plan options for residents to pay their utility bills.