Feds: Cook County's Soda Tax Collection Violates Food Stamp Rules

Cook County's sweetened beverage tax has landed the state in hot water with the feds, potentially causing roughly $87 million in federal food stamp money to be withheld, Illinois officials said Thursday.

The problem: Purchases made with federal food stamp benefits are exempt from the soda tax under federal law, but Cook County has allowed retailers to tax those purchases and provide refunds as a workaround for stores that haven't been able to program their point-of-sale systems.

Earlier this week, the U.S. Department of Agriculture's Food and Nutrition Services, the federal agency overseeing the SNAP food stamp program -- officially known as the Supplemental Nutrition Assistance Program -- warned Illinois that federal money could be withheld if the problem isn't fixed.

USDA officials told the county the regulation was "unacceptable" in a phone call in late June, according to its memo to the state.

"It is (Food and Nutrition Services') strict interpretation that retailers may not charge the tax to SNAP recipients at any time and that providing an immediate subsequent refund at a customer service does not cure the problem or the violation of the law," said James Dimas, secretary of the Illinois state Department of Human Services, in his memo relaying the message to Cook County President Toni Preckwinkle on Wednesday.

Preckwinkle spoke at the Cook County Democratic Party's slating event Thursday. Asked about the memo afterward, she declined to comment because she hadn't yet reviewed it.

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