Places for Eating Tax
On December 20, 2018, the Village Board amended the Places for Eating Tax to the rate of 2.0%, effective April 1, 2019. This increase is part of a comprehensive funding plan to enable the building of a new Public Works facility. The decision to move forward with the new facility was based on existing facility conditions, state environmental regulations, and direction in the Village’s Strategic Plan.
On June 17, 2013, the Village Board approved a Places for Eating Tax. This is a mechanism provided by the State of Illinois that has been utilized by municipalities throughout the Chicagoland area to generate revenue for community programs, services and infrastructure improvements. In November of 2014, the Village Board approved an update to the Places for Eating Tax to provide clarification to various aspects of the ordinance.
In the Village of Westmont, the Place for Eating Tax was one of the primary revenue sources used to secure bonds that allowed the Village to move forward with the most extensive street resurfacing program in the history of Westmont.
Questions regarding this item and other budgetary matters should be forwarded to Jamie Cunningham via email.
Places for Eating Tax - Frequently Asked Questions
If restaurants cannot allow dining, do they pay the Tax?
- For a time during which restaurants are not allowed to have dining on premises, the restaurant may adjust their registers so that Places for Eating Tax is not charged. In this case, if they do not collect the tax from the customers, they do not need to pay the tax on those sales. On the tax return, they would still list the gross sales on line 1. Then on line 2 (Deduction of Sales not subject to the Tax), they would list the sales made during the time the restaurant was not open for dining. However, if a restaurant does charge the customers the tax, they must remit that tax to the Village.
How much is the Tax?
- Effective April 1, 2019, the tax is 2.0% of gross receipts on food sold at retail for immediate consumption. For example, on a $100 meal, the tax would be $2.00.
Who pays the tax?
- It works just like the state sales tax. Technically it is a tax on the owner, but in almost all cases the business passes the tax on to the customer.
Which businesses must comply with the Place for Eating Tax?
- The Places For Eating Tax applies to ALL businesses that: a) serve food and/or beverage, AND
b) have a dining area in which customers are intended to consume their food and/or beverage purchase
Does the tax apply to businesses that sell beverages only and/or alcohol?
- If a business has a dining area for customers, then the answer is YES, this tax applies to businesses that serve beverages, and YES, that does include alcohol.
Does this tax apply to businesses that sell pre-packaged foods such as chips, cookies, etc.?
- Once again, if a business has a dining area for customers, then the answer is YES. This tax applies to businesses that sell food to customers. This includes prepackaged foods such as chips, cookies, etc. HOWEVER, this tax does not apply to vending machines, nor does it apply to "qualifying food" which is subject to the lower state sales tax rate.
When did the Places for Eating Tax become effective?
- The Places for Eating Tax began September 1, 2013.
- The effective date of the rate change to 2.0% is April 1, 2019.
When should the tax be remitted to the Village?
- Tax payments to the Village should be remitted no later than the last day of the following month. For example, the return for January is due the last day of February. The return for February is due the last day of March.
- However, if the entity submits state sales tax less frequently than monthly (such as quarterly), the entity may submit to the Village on the same schedule.
How much does the business keep as a commission?
- If the business files in a timely manner, they are able to keep 1% of the tax as a commission. For example, if a business has sold $10,000 in a month, they would collect $150 ($200 effective April 1, 2019) from their customers on this tax. They would keep 1% of this amount, which is $1.50 ($2.00 effective April 1, 2019) as commission and remit the remaining $148.50 ($198.00 effective April 1, 2019) to the Village.
What is a Place for Eating?
- All premises where food is sold at retail, For immediate consumption on the premises, with seating provided.
- Includes but not limited to places typically called Restaurants, Eating place, Drive-in restaurant, Buffet, Bakery, Banquet facility, Cafeteria, Cafe, Lunch counter, Fast food outlet, Catering service, Coffee shop, Diner, Sandwich shop, Soda fountain, Bar, Cocktail lounge, Soft drink parlor, Ice cream parlor, Tea room, Delicatessen, Hotel, Motel, Club, or Any other establishment which sells at retail prepared food for immediate consumption.
Are tips/gratuities taxed?
- No, tips and gratuities are not included in gross receipts and are not taxed.
Are drinks taxed?
- Yes, gross receipts on any liquid (including both alcoholic and nonalcoholic) used or intended immediate consumption are subject to the tax.
Are places that sell food, but also sell other things taxed?
- Yes, if the location sells food for immediate consumption on the premises, they are taxed on the gross receipts of food to be consumed on the premises, regardless of whether or not they conduct any other business there.
Is food purchased through drive throughs, "to go", or takeout subject to the tax?
- Yes, regardless of whether or not the food is actually consumed on the premises, so long as it is sold so that it could be consumed on the premises, the gross receipts of the food is subject to the tax.
Is catering taxed?
- If catering is done from a place for eating, the food and drink is taxed. If catering is done from a location that is not a place for eating, then it is not taxed.
Is the sale of pre-packaged grocery items taxed?
- No, the tax is only on the sale of "prepared" food.
If the food is subject to the lower state sales tax rate, is it subject to the places for eating tax?
- The state sales tax has a lower rate for food that is not prepared. If an entity is paying the lower sales tax rate for "qualifying food", the food is not considered prepared, so it would not be subject to the places for eating tax.
Is Westmont the only community with this tax?
- No, in DuPage County there are at least 11 other communities with a similar tax. Additionally, some of these communities are Home Rule, which allows additional taxing opportunities that are not available to the Village of Westmont.
How much revenue does the Village anticipate receiving from the tax?
- From a 1.5% tax, the Village anticipates receiving approximately $1,100,000 annually.
- From a 2.0% tax the Village anticipates receiving approximately $1,500,000 annually.
How is the tax expected to help the Village?
- It is anticipated that the revenue from the tax would help the Village in several ways.
- The initial revenue helped offset the operating shortfall which occurred as a result of the loss of home rule revenues in 2013.
- This revenue, along with a few other other changes, will allow the Village to issue approximately $10 million in bonds for infrastructure improvement.
- Finally, the increase to 2.0% will also provide funding for a new Public Works Facility. For many years, the Village of Westmont has been discussing the need for a new Public Works Facility. The current Street Division on South Wilmette was actually built on a site that was previously the town garbage dump. Most of the structures on the site were intended to be temporary, and the Village of Westmont has the oldest municipal fueling pumps in DuPage County. In fact, these pumps will be out of EPA compliance within the next few years as it was mandated that newer, more efficient, more safe pumps be installed. As the Village of Westmont takes its fiduciary responsibility seriously, the Village reviewed several plans for a new Public Works facility and has chosen the least expensive of 3 proposals, which is estimated to be approximately $16 million. While this is quite a bit of money, it is $10 million less expensive than the next option that was proposed