On Tuesday, July 18, 2017, the Village Council adopted a 1% Food and Beverage Tax, effective January 1, 2018. The tax is expected to generate $1.5 million per year to fill the gap created by recent declines in both sales and income tax revenue. The tax applies to the purchase price of prepared foods and non-alcoholic and alcoholic beverages for immediate consumption, as well as packaged alcohol sales.
The Village, along with many other municipalities, has experienced declining sales and income tax revenues. Sales and income taxes are a large portion of the Village's General Fund revenue base, 35% in 2016. The total decline represented by the loss of revenues in both sales and income tax is estimated at $1.4 million for fiscal year 2017. Actions have been taken in both the short and long-term to address these declines. In the short term, the Village has implemented $1.4 million in expense reductions for 2017 in order to maintain a balanced General Fund budget. These expense reductions if continued will eventually affect the Village's financial sustainability. In the long-term to achieve General Fund sustainability, the 1% Food and Beverage tax was adopted.
Frequently Asked Questions
What is the tax?
The Downers Grove Food and Beverage Tax is a 1% tax on the purchase price of alcohol, packaged liquor, prepared foods and non-alcoholic beverages for immediate consumption.
Are there any exceptions?
This tax is not imposed on the following:
- Food and beverages that are exempt from tax under the provisions of the retailers' occupation tax.
- Churches, hospitals, nursing home facilities and other medical treatment facilities.
- Daycare establishments
- Schools, residential halls, sororities and fraternities
- Government entities
- Ice Cream and Food trucks
- Festival vendors
- Vending machines
- Employee cafeterias
Where are these items sold?
Any establishment licensed under Chapter 3 of the Downers Grove Municipal Code with respect to the sale of liquor. Additionally:
- Restaurant or eating place, drive-in restaurant, fast food outlet
- Cafeteria (open to the public), cafe, lunch counter, delicatessen, sandwich shop, coffee shop, buffet
- Soft drink parlor, ice cream parlor, tearoom
- Inn, hotel or motel
- Grocery 'eat-in' and prepared take-out
- Banquet facilities, catering facilities
- Bakeries and confectioners
- Movie theatres, bowling alleys, billiards halls
- Convenience store/gas station 'take-out'
How will the businesses selling these items be notified?
The Village will send businesses a registration form which will require the following information:
- Name of business
- Address and ownership information (Owner Name and address, Driver's License number)
How will payment be submitted?
Collections will be submitted to the Village on a monthly basis via the Food and Beverage Tax form, plus additional ST1 documents (State tax filing form).
Will there be penalties for late-payment?
Yes, a 1% penalty will be issued for late-payments.
The Village will apply a 2% discount to all businesses which pay on time (on or before the 25th of the subsequent month.) This discount will serve as a service fee to reimburse businesses for expenses incurred in keeping of records, data, billing, preparing and filing returns and submitting data to the Village.
When will this tax take effect?
January 1, 2018.
How will this tax be applied to a food or beverage purchase?
Below are three examples of some common transactions in the Village where the food and beverage tax would apply:
- A purchase of $50 is made at a restaurant: $0.50 is added to the total bill
- A cup of coffee is purchased for $3.00 at a coffee shop: $0.03 is added to the total bill
- A case of beer is purchased for $15.00 at a liquor store: $0.15 is added to the total bill
The following are fillable forms.