Sales Tax Confusion for Chicago Restaurants

by Brian Costin A recent Chicago Reader article highlights confusion among Chicago’s restaurants in regards to the recent Cook County sales tax reduction, and a myriad of different taxing districts within the city. Every retail establishment in Chicago must collect and turn over to the Illinois Department of Revenue a 9.75 percent “retailers’ occupation tax”—or sales tax. This...

by Brian Costin

A recent Chicago Reader article highlights confusion among Chicago’s restaurants in regards to the recent Cook County sales tax reduction, and a myriad of different taxing districts within the city.

Every retail establishment in Chicago must collect and turn over to the Illinois Department of Revenue a 9.75 percent “retailers’ occupation tax”—or sales tax. This tax breaks is then divided up accordingly:

• 6.25% State of Illinois
• 1.25% to Chicago
• 1.25% Cook County
• 1% Regional Transportation Authority

Chicago’s sales tax is the highest of any big city in the U.S.

Also, Chicago restaurants are to separately collect an additional .25% and turn it over directly to the city.

Additionally, a special restaurant taxing zone bounded by the Stevenson Expressway, Ashland, Diversey (also O’Hare & Midway Airport) has an additional 1% “McPier tax” that helps fund the Metropolitan Pier and Exposition Authority (Navy Pier & McCormick Place).

Confused by so many different tax rates? Apparently so are many area businesses. The Chicago Reader article “The sales tax went down, but did your favorite restaurant get the memo?” documented a number of Chicago restaurants charging incorrect sales tax rates.

One resource business owners should be able to turn to is the State of Illinois sales tax rate finder. Unfortunately the rate finder isn’t always accurate. For example, it doesn’t include the additional .25% Chicago restaurant tax.

Not only are taxes high in Illinois, in many cases it is hard to find accurate information about what sales taxes businesses should collect.