* Tribune…

Cook County’s sweetened beverage tax could land the state in hot water with the feds, resulting in roughly $87 million in federal food stamp money being withheld if the problem isn’t fixed, Illinois officials said Thursday.

The problem: While Cook County has informed retailers that purchases made with federal food stamp benefits are exempt from the soda tax under federal law, it’s also allowed retailers to tax those purchases and provide refunds as a workaround for stores that haven’t been able to properly update their point-of-sale systems.

As a result, the U.S. Department of Agriculture’s Food and Nutrition Services, the federal agency overseeing the food stamp program — officially known as the Supplemental Nutrition Assistance Program, or SNAP — earlier this week warned the Illinois Department of Human Services that federal money could be withheld. The state passed along that warning to the county on Wednesday.

The full letter is here.

*** UPDATE 1 ***  The US Department of Agriculture’s letter to IDHS reveals that it “advised Cook County via phone call on on June 28, 2017 that this option for managing the tax was unacceptable.” Click here to read the letter.

A spokesman for the Illinois Retail Merchants Association says IRMA also told the county this same thing and used it as part of its lawsuit.

*** UPDATE 2 *** From the county president’s office…

The Cook County Department of Revenue has been in collaboration with the retail community since the approval of the Sweetened Beverage Tax last November. We have worked with the retail community to address their concerns and have implemented regulations to provide further guidance.

The regulation addressing Sweetened Beverage purchases made with SNAP benefits was put in place to further address the tax-exempt nature of sweetened beverage purchases made with SNAP benefits. In drafting the regulation, the Department of Revenue discussed the regulation changes with the USDA on June 27th. After speaking with USDA on June 27th, the County was not aware that Regulation 2017-3 was unacceptable. We believed that USDA was taking our regulations under consideration and would communicate back with the County if there was a concern.

If we were specifically told that the Regulation 2017-3 was unacceptable, we would have worked with USDA, just as we had been doing since January, to further modify as needed. It was never our intention in drafting the sweetened beverage regulations to put federal SNAP funding for the state in jeopardy, nor do we think Regulation 2017-3 jeopardizes the State’s participation in SNAP. At this time, we believe we are in compliance with existing SNAP rules. We do however recognize that USDA’s powers against the State in this regard are substantial and we will work collaboratively with both the State and USDA to address USDA’s concerns.

* Related…

* Rep. Wheeler files bill to prohibit governments from retaliation lawsuits

* Cook Co Commissioners file pop tax repeal after taxpayers revolt

* Editorial: Madam President, abolish the soda tax