SB1240 101ST GENERAL ASSEMBLY

LRB101 08782 HLH 53869 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB1240

Introduced 2/6/2019, by Sen. Terry Link

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.891 new
55 ILCS 5/5-1184 new
65 ILCS 5/11-42-17 new

Creates the Checkout Bag Tax Act. Imposes a tax of $0.07 on each checkout bag used by a customer at a retail establishment in the State. Provides that the term "checkout bag" means a single use plastic, paper, or compostable bag provided by a retail establishment at the checkout, cash register, point of sale, or other point of departure to a customer for the purpose of transporting goods out of the retail establishment. Sets forth certain exceptions. Provides that the proceeds from the tax shall be distributed as follows: (1) the retailer shall retain $0.02 per bag; (2) the wholesaler shall retain $0.02 per bag; and (3) $0.03 per bag shall be deposited into the Checkout Bag Tax Fund. Amends the State Finance Act to create the Checkout Bag Tax Fund. Provides that moneys in the Fund shall be remitted to counties and municipal joint action agencies. Amends the Counties Code and the Illinois Municipal Code to preempt certain actions by counties and municipalities concerning auxiliary containers or checkout bags.

FISCAL NOTE ACT MAY APPLY

HOME RULE NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Checkout Bag Tax Act.

Section 5. Definitions. As used in this Act:

"Agency" means the Illinois Environmental Protection Agency.

"Auxiliary container" means, but is not limited to, a bag, cup, bottle, lid, or other packaging that is:

(1) designed to be reusable or for single use;

(2) made of cloth, paper, plastic, cardboard, corrugated material, aluminum, glass, extruded polystyrene, postconsumer recycled material, or similar material or substrates, including coated, laminated, or multi-layer substrates;

(3) designed for transporting, containing, or protecting merchandise, food, or beverages from a retail establishment or restaurant;

(4) used to package bulk items such as fruit, vegetables, nuts, grains, or candy;

(5) used for greeting cards or small hardware items such as nails and bolts;

(6) used to contain or wrap frozen foods, meat, or fish whether prepackaged or not;

(7) used to contain or wrap flowers or potted plants or other items where dampness may be a problem;

(8) used to contain unwrapped prepared foods or bakery goods;

(9) used to contain prescription drugs;

(10) used to safeguard public health and safety during the transportation of prepared take-out foods and prepared liquids intended for consumption away from a retail establishment or restaurant; or

(11) a newspaper bag, door-hanger bag, laundry cleaning bag, garment bag, or a bag of any type that customers bring to a retail establishment for their own use or to carry away from the retail establishment goods that are not placed in a bag provided by the retail establishment.

"Checkout bag" means a single use plastic, paper, or compostable bag that is provided by a retail establishment at the checkout, cash register, point of sale, or other point of departure to a customer for the purpose of transporting goods out of the retail establishment. The term "checkout bag" does not include auxiliary containers.

"Department" means the Department of Revenue.

"Restaurant" means any business having sales of ready-to-eat food for immediate consumption comprising at least 51% of total sales excluding the sale of liquor.

"Retail establishment" means any person, corporation, partnership, business venture, public sports or entertainment facility, government agency, or organization that sells or provides merchandise, goods, or materials, including, but not limited to, clothing, food, beverages, household goods, or personal items of any kind directly to a customer. "Retail establishment" includes, but is not limited to, department stores, clothing stores, jewelry stores, grocery stores, pharmacies, home improvement stores, liquor stores, convenience stores, gas stations, restaurants, mobile food delivery, and farmers markets. The term "retail establishment" does not include food banks or other food assistance programs.

"Wholesaler" means any person who engages in the business of selling or supplying checkout bags to any retail establishment for use in the State and includes any such person who makes or fabricates checkout bags or packs and sells checkout bags in packages.

Section 10. Checkout Bag Tax Fund.

(a) The Checkout Bag Tax Fund is created as a special fund in the State treasury. Moneys in the Fund shall be used as provided in this Act.

(b) Notwithstanding any other provision of law, the Checkout Bag Tax Fund is not subject to sweeps, administrative charges or chargebacks, or any other fiscal or budgetary maneuver that would in any way transfer any funds from the Checkout Bag Tax Fund into any other fund of the State.

Section 15. Payment of checkout bag tax required. A checkout bag tax of $0.07 is imposed on each checkout bag used by a customer at retail establishments located in the State, except for a retail establishment located in a municipality that passed a bag fee or bag tax ordinance on or before February 1, 2018. The fee shall be paid by the customer. The ultimate incidence and liability for payment of the tax is to be borne by the customer. The tax shall be separately stated on the receipt provided to the customer at the time of sale and shall be identified as the Checkout Bag Tax. It is a violation of this Section for the retail establishment to fail to separately itemize the tax on a customer's purchase of such a bag or to otherwise absorb the tax on such sale. The tax shall be collected by each wholesaler who sells checkout bags to a retail establishment in Illinois. Any wholesaler required to pay the tax shall collect the tax from each retail establishment in the State to whom the sales of checkout bags are made. The retail establishment shall retain $0.02 of the tax. The retail establishment shall remit the remaining $0.05 of the tax to the wholesaler. The wholesaler receiving such remittance or payment from a retail establishment shall be required to remit to the Department, on form ST-1 or any successor form, the net amount of $0.05 per checkout bag sold or used. If a wholesaler sells checkout bags to a purchaser other than a retail establishment for use or consumption by such person in the State, then the wholesaler shall collect the tax from such purchaser and remit it to the Department in the same manner as applies to its sales to retail establishments. The wholesaler shall be eligible to retain $0.02 per checkout bag sold to such purchaser. The Department shall deposit $0.03 per bag into the Checkout Bag Tax Fund and $0.02 per bag into the General Revenue Fund. The Department shall monthly remit the $0.03 per bag of the tax from the Checkout Bag Tax Fund to the county where the retail establishment is located, except that, if a municipal joint action agency is located within the county where the retail establishment is located, then the Department shall monthly remit to the municipal joint action agency a portion of the tax to the municipal joint action agency based on the location of retail establishments within the municipal joint action agency.

The Department shall publish an annual report detailing the amount of taxes remitted to each individual county or municipal joint action agency from the Checkout Bag Tax Fund. The report may be published electronically.

Section 20. Use of tax proceeds by counties and municipal joint action agencies. A county or municipal joint action agency shall use the revenue received from the checkout bag tax in the following manner:

(1) At least 50% of the funds shall be used to collect items that include auxiliary containers, checkout bags, oil-based paints, latex paints, paint thinners, herbicides, insecticides, pesticides, gasoline, pool chemicals, packaging, plastic film, prescription drugs, non-prescription drugs, cleaning products, mercury, household batteries, used motor oil, oil filters, drain cleaners, lawn chemicals, solvents, antifreeze, carpet, mattresses, sharps, needles, fluorescent lamps, aerosol products, adhesives, glues, acids, caustics, flammable liquids, and any other products collected at residential household hazardous waste events funded by the Agency. A county or municipal joint action agency or county may contract with a governmental entity whose primary function is environmental protection and operates permanent and temporary household waste facilities or a private vendor whose primary function is to collect and process permanent and temporary household hazardous waste to collect materials in this Section that are considered hazardous.

(2) The remainder of the funds shall be used for:

(A) education programs to reduce contamination and increase participation in recycling and composting programs;

(B) programs to increase the collection and recycling or composting of auxiliary containers;

(C) programs or grants to encourage infrastructure development for and market development or recycling and composting; or

(D) the implementation of solid waste management plans developed pursuant to the Solid Waste Planning and Recycling Act.

Section 25. Recordkeeping. Each county or municipal joint action agency that receives revenue from the Checkout Bag Tax Fund shall provide an annual report to the Agency detailing how the revenues received from the Checkout Bag Tax Fund were spent or distributed pursuant to Section 20 by no later than March 15 of each year. The report shall include but not be limited to itemized amounts for each individual program, grant, plan, event or any other disbursement made pursuant to Section 20; the percentage of the revenue distributed to item (1) of Section 20 and the enumerated categories in item (2) of Section 20; the category of products collected, the aggregate weight of each product collected, and the amount of fund spent on collecting each product.

The Agency shall publish an annual report that includes each municipal joint action agency and county report.

Section 30. Exemption. The tax imposed under this Act does not apply to the retail sale or use of checkout bags that are used to carry items purchased pursuant to the Supplemental Nutrition Assistance Program or a similar governmental food assistance program.

Section 35. Illinois False Claims Act. No acts or omissions by the employee or retailer regarding the charging of taxes under this Act shall be the basis for filing an action by a private person under the Illinois False Claims Act.

The Department of Revenue shall have the sole authority to bring an administrative action resulting from information provided by any person alleging a false claim, statement or record, as defined in Section 3 of the Illinois False Claims Act pertaining to any tax administered by the Department of Revenue under this Act.

Section 40. Incorporation by reference. All of the provisions of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5j, 6, 6a, 6b, 6c, 7, 8, 9, 10, 11, 11, 12, and 13 of the Retailers' Occupation Tax Act that are not inconsistent with this Act, and all provisions of the Uniform Penalty and Interest Act shall apply, as far as practicable, to the subject matter of this Act to the same extent as if such provisions were included in this Act.

Section 45. Repealer. This Act is repealed on January 1, 2030.

Section 900. The State Finance Act is amended by adding Section 5.891 as follows:

(30 ILCS 105/5.891 new)

Sec. 5.891. The Checkout Bag Tax Fund.

Section 905. The Counties Code is amended by adding Section 5-1184 as follows:

(55 ILCS 5/5-1184 new)

Sec. 5-1184. Auxiliary containers and checkout bags.

(a) As used in this Section:

"Auxiliary container" has the meaning given to that term in Section 5 of the Checkout Bag Tax Act.

"Checkout bag" has the meaning given to that term in Section 5 of the Checkout Bag Tax Act.

(b) Except as otherwise provided in this Section, a county may not ban, place a fee or tax on, or regulate in any other manner the use, disposition, content, taxation, or sale of auxiliary containers or checkout bags.

(c) Except for the prohibition on taxing or placing a fee on auxiliary containers and checkout bags, Subsection (b) may not be construed to prohibit or restrict any of the following:

(1) a curbside recycling program;

(2) a designated residential or commercial recycling location;

(3) a commercial recycling program; or

(4) the use or sale of auxiliary containers on property owned or operated by a unit of local government.

(d) A home rule county may not ban, place a fee or tax on, or regulate in any other manner the use, disposition, content, taxation, or sale of auxiliary containers or checkout bags, except as provided for in this Section. This Section is a denial and limitation of home rule powers and functions under subsection (g) of Section 6 of Article VII of the Illinois Constitution.

Section 910. The Illinois Municipal Code is amended by adding Section 11-42-17 as follows:

(65 ILCS 5/11-42-17 new)

Sec. 11-42-17. Auxiliary containers and checkout bags.

(a) As used in this Section:

"Auxiliary container" has the meaning given to that term in Section 5 of the Checkout Bag Tax Act.

"Checkout bag" has the meaning given to that term in Section 5 of the Checkout Bag Tax Act.

(b) Except as otherwise provided in this Section, a municipality may not ban, place a fee or tax on, or regulate in any other manner the use, disposition, content, taxation, or sale of auxiliary containers or checkout bags.

(c) Except for the prohibition on taxing or placing a fee on auxiliary containers and checkout bags, Subsection (b) may not be construed to prohibit or restrict any of the following:

(1) a curbside recycling program;

(2) a designated residential or commercial recycling location;

(3) a commercial recycling program; or

(4) the use or sale of auxiliary containers on property owned or operated by a unit of local government.

(d) A municipality that charged a fee or tax on checkout bags as defined by the municipality's ordinance on or before February 1, 2018 may continue to charge the fee or tax as existed on that date. The municipality is prohibited from further regulating auxiliary containers or checkout bags and from making further changes to the bag fee or bag tax ordinance in effect on or before February 1, 2018. However, the municipality may change its regulations to be consistent with this Section, the Checkout Bag Tax Act, or eliminate the tax or fee altogether.

(e) Except in municipalities with a population greater than 2,500,000, that charged a fee or tax on checkout bags as defined by the municipality's ordinance on February 1, 2018, a home rule municipality may not ban, place a fee or tax on, or regulate in any other manner the use, disposition, content, taxation, or sale of auxiliary containers and Checkout bags, except as provided for in this Section. This Section is a denial and limitation of home rule powers and functions under subsection (g) of Section 6 of Article VII of the Illinois Constitution.