HomeMy WebLinkAbout2008/07/15 Item 12
CITY COUNCIL
AGENDA STATEMENT
~\'f::.. (In' OF
~ (HULA VISTA
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
JULY 15,2008 Item ) Q
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ORDERING THE SUBMISSION TO THE
QUALIFIED ELECTORS OF THE CITY OF A MEASURE
RELATING TO THE CITY'S TELEC01vuvlliNTCATIONS USERS'
TA.X AT THE SPECIAL I'vlUNICIPAL ELECTION TO BE HELD
ON TUESDAY, NOVn,'ffiER 4, 2008; DECLARING THE
EXISTENCE OF A1'f EMERGENCY NECESSITATING SUCH
ACTION; AND DIRECTING THE CITY ATTORNEY TO
PREPARE A1'f I.,vlPARTLA.L ANALYSIS OF THE MEASlTRE
(UNANIMOUS VOTE REQUIRED)
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROPRIATING $105,000 FROM THE
A VAILABLE BALANCE OF THE GENERAL FUND TO THE
CITY CLERK'S AND NON-DEPARTMENTAL BUDGET TO
. )
COVER ANTICIPATED COSTS AND EXPENSES RELATED TO
ELECTION COSTS, AND PRINTING AND 1vLi-\ILING. COSTS
(4/5THS VOTE REQUIRED)
DIRECTOR OF FINANCE/TREASURE'Wn~
CITY 1vLA.NAGER <;' -S~ J) e ~
4/5THS VOTE: YES I X I NO D
SlJl\1ivlARY
Chula Vista's Utility Users' Tax (UUT) was adopted in 1970 as a means to help fund public
services and capital improvement projects through the City's General FLmd. The City receives
UUT based on the usage of natural gas, electricity and telecommunications. In fiscal year 2006-
07, the total UUT received was approximately $7.0 million, which represents 4.3% of General
Fund revenues. The current rates charged are .00919 per therm, .0025 per kilowatt, and 5% on
telephone. There are over 150 cities in California with a Utility Users Tax. City staff is
recommending that the UUT on telecommunications be updated. The resolutions presented for
the Council's consideration would (i) approve an ordinance to be submitted to the voters for this
purpose; and (ii) appropriate the nmds necessary to cover the related costs.
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ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance \oVith
the California Environmental Quality Act (CEQA) and has determined that the activity of calling
and giving notice of a special election for the purpose of updating the Utility Users Tax (UTT)
on telecommunications is not a "Project" as deftned under Section 15378 of the State CEQA
Guidelines because it will not result in a physical change to the environment; therefore, pursuant
to Section l5060(c)(3) of the State CEQA Guidelines the actions proposed are not subject to
CEQA.
RECOMMENDA nON
That Council adopts the resolutions.
BOARDS/COMMISSION RECOMMEl'l1)A nON
Not applicable.
DISCUSSION
In 1970, the City ftrst adopted a UUT that is applied to usage of natural gas, electricity and
telecommunications. The City's UUT ordinance (Chula Vista Municipal Code Chapter 3.44) is
outdated as it applies to telecommunications and needs to be amended to reflect recent changes
in Federal tax law and to modernize the deftnition of telecommunications so that it is technology
neutral. Presently, the City's ooT is imposed at a rate of 5% of the charges billed for telephone
communications services.
The City's tax has been historically applied in a similarrrtanner as the application of the Federal
Excise Tax (FET) upon local and long distance telecommunication services as the Internal
Revenue Service (IRS) interprets the FET. The FET statute deftnes long distance or "toll" calls
as those for which charges varied according to both the elapsed time of the call and the distance
between the persons on the call. Today, long distance calls are based on time only, or in the case
of cellular calls, they are based on a flat monthly rate.
On May 25, 2006, the IRS issued a Notice that it intended to stop applying the FET to nearly all
telephone communication services, except local exchange services, which leaves only about 25%
of all the telecommunication services as federally taxable. This IRS action came following many
federal court losses involving the outdated deftnition of "toll telephone service" (or long
distance) contained in the FET. Like the vast majority of California cities that have a liuT
ordinance, Chula Vista's ooT ordinance refers to the FET and some of its many exemptions, in
response to the telephone companies' request of many years ago to do so to achieve
administrative ease. The Treasury Department's May 25th Notice reversed its prior Revenue
Rulings and interpretation of the FET. The proposed Ordinance is an updated version of the
telecommunications portion of the City's existing (juT ordinance. It is intended to replace those
portions of the existing ordinance that apply to telecommunications.
The new ordinance would modernize the telecommunications tax deftnitions and other
provisions by, among other things, eliminating the reference to the FET and broadening the
scope of telecommunication services that already include intrastate services but will now
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JULY IS, 2008, Item~
Page 3 of 5
include: interstate, and international telecommunication services; private communication
services (e.g, T-l lines); paging; and VoIP and toll free numbers. Importantly, the new
definitions are teclmology-neutral and anticipate additional changes in teclmology, reflecting the
modem use of telecommunications. This updating of definitions closes "teclmology" loopholes,
and ensures that all taxpayers ~vill be treated equitably, regardless of the teclmology used. This
more equitable application broadens the tax base and allows the City to reduce the tax rate on
current taxpayers that make up approximately 80% of all wireless telecommunication customers
with no net loss of revenue anticipated. The reduction from a tax rate of 5% to 4.75% for
intrastate services amounts to $850,000 which is anticipated to be recovered through the 20% of
wireless customers who currently do not pay the ta,< and the application to interstate and
international calls. The broadening of the tax base will now include interstate and international
services for wireless and land line telecommunication customers. Telecommunication services
do not include cable or video programming services that are subject to a cable or video service
franchise fee.
The total fiscal year 2006/07 UUT
revenue received was approximately
$7.0. million for the General Fund,
representing approximately 4.3% of total
General Fund revenue. The
telecommunications related portion of
the UUT revenue is approximately $4.6
million. An estimated 75% or $3.4
million of these revenues are derived
from wireless telecommunications. The
loss of these revenues would have a
substantial impact on the City's ability to
provide essential services, including
public safety.
Electric
30%
Wired
25%
Wireless
~ 75%
$3.4M
Telecomm
eE%
Over twenty cities throughout the state have recently g<,me to ballot and successfully adopted a
modem UUT ordinance (see Attachment A - Proposed Ordinance) with only one initially failing
to pass their ballot measure (Covina's initial measure failed, but a subsequent initiative reinstated
the ordinance). Detailed information about each city's ballot process, challenges and results is
provided in Attachment B. Recently in April 2008, three more cities successfully passed their
UUT ballot measures.
The information below summarizes the data from both Attachment B and the results of the April
2008 election:
. Number of Cities that went to Ballot 22
. Number of Successful UUT Elections 21
. Number of Cities that Reduced Rate 14
0 Number of Cities that Maintained Rate 7
. Number of Cities that Increased Rate 1
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JUL Y 15, 2008, Item / (/
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An estimated twenty more cities are scheduled to go to ballot in November as there is predicted
to be a historic voter turnout for the presidential election. The following is a brief summary of
the proposed amendments/updates to the City's UUT relative to telecommunication services:
o Reduces the current ta, rate on telecommunications and video services from 5% to 4.75%
for approximately 80% of Chula Vista's wireless telecommunications customers and all land
line customers .
o Applies the reduced tax rate to interstate and international calls for wireless and land line
customers.
. Includes a modern, functional defInition of telecommunication services that is technology-
neutral, and now adds or specifIcally id~ntifies the following services: interstate and
international calls; wireless; VoIP, paging, private communication services (e.g., T-l lines
for providing data, video and voice services), toll free and public service numbers.
. Incorporates defInitions of "ancillary telecommunication services" that are commonly
recognized by the industry as being part of such services.
o Anticipates the possibility of new technologies and services to provide telecommunication
and video services, so that rates and revenues are stabilized and all taxpayers will be treated
the same
. Provides other administrative tools for addressing telecommunication taxation issues
including administrati ve rulings and sourcing, bundling and nexus guidelines.
o Updates the local Municipal Code to be consistent with current Federal and State laws and
makes Chula Vista's ordinance consistent with the direction of other California cities with
UUT.
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Failure to modernize the City's UUT ordinance relative to telecommunication services could
result in a loss of 75% to 100% of the telecommunications related portion of the UUT or
upwards to approximately $3.4 million from the General Fund, which would have a substantial
impact on the City's ability to maintain current programs and provide essential services,
including public safety.
Staff recommends that the City Council adopt the attached Resolution calling for a measure to be
placed on the November 2008 ballot. This resolution requires a unanimous vote of the City
Council. The measure would need to be approved by a simple majority of voters. If approved
by voters the earliest implementation date will be February 1,2009.
To ensure that residents of the City are aware of the ballot measure receive factual and accurate
information about the measure, staff proposes to conduct an informational program with respect
to the measure. In order to minimize costs, it is proposed to use internal resources, rather than a
consultant, to conduct the program. The informational program will consist primarily of
speaking to various civic organizations in the city and sending out informational brochures to the
registered voters of Chula Vista. These informational brochures will also be made available at
the public counters and facilities of the City."
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DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site
specific and consequently the 500 foot rule found in California Code of Regulations section
18704.2(a)(l) is not applicable to this decision.
FISCAL IMPACT
The total fiscal year 2006/07 UUT revenue received was approximately $7.0 million for the
General Fund, representing approximately 4.3% of total General Fund revenue. The
telecommunications related portion of the UUT revenue is approximately $4.6 million. An
estimated 75% or $3.4 million of these revenues are derived from wireless telecommunications.
The loss of these revenues would have a substantial impact on the City's ability to provide
essential services, including public safety.
This updating of definitions closes "technology" loopholes, and ensures that all taxpayers will be
treated equitably, regardless of the technology used. This more equitable application broadens
the tax base and allows the City to reduce the tax rate on current taxpayers that make up
approximately 80% of all wireless telecommunication customers \v1th no net loss of revenue
anticipated. The reduction from a tax rate of 5% to 4.75% for intrastate services a'llounts to
$850,000 which is anticipated to be recovered through the application to interstate and
international calls, and the 20% of wireless customers who currently do not pay the tax. The
broadening of the tax base will now include interstate and international services for wireless and
land line customers. I
Approval of the appropriation willlmpact General Fund reserves by $105,000. In an effort to
minimize costs, staff proposes to manage the informational program internally and would request
an appropriation of $105,000 to cover the election costs (City Clerk $35,000) and printing and
mailing costs (Non-Departmental $70,000).
A TT ACHiYlENTS
Attachment A Proposed Ordinance
Attachment B Election Results from Other Cities
Prepared by: Phillip Davis, Assistant Director, Finance Department
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Attachment A
ORDINANCE NO.
AI"! ORDINA.NCE OF THE CITY OF CHULA VISTA ADDING CHAPTER
3.42 TO TITLE. 3 OF THE CHULA v1STA i\HJNICIPAL CODE
REGARDING A TELECOMMUNICATION USERS' TiL,(
THE PEOPLE OF THE CITY OF CHULA VISTA DO ORDAIN AS FOLLOWS:
SECTION 1: Chapter 3.42 is hereby added to Title 3 of the Chula Vista Municipal
Code, and it shall read as follows:
Chapter 3.42
TELECOlVL\1UNICATION USERS' TAX
3.42.010 Definitions.
3.42.020 Constitutional, Statutory, and Other Exemptions.
3.42.030 Exemptions - Senior Citizens
3.42.040 Telecommunication Users' Tax.
3.42.050 Bundling Taxable Items with Non-taxable Items.
3.42.060 Substantial Nexus / Minimum Contacts.
3.42.070 Duty to collect--Procedures.
3.42.080 Collection Penalties - Service Suppliers.
3.42.090 Actions to Collect.
3.42.100 Deficiency Determination and Assessment - Tax Application Errors.
3.42.110 Administrative Remedy - Non-Paying Service Users.
3.42.120 Additional powers and duties of the Tax Administrator.
3.42.130 Records.
3.42.140 Refunds.
3.42.150 Appeals.
3.42.160 Notice No InjunctionlWrit of Mandate.
3.42.170 Notice of Changes to Ordinance.
3.42.180 Effect of State and Federal Reference/Authorization.
3.42.190 Independent Audit of Tax Collection, Exemption, Remittance, and
Expenditure.
3.42.200 Interaction with Prior Tax.
3.42.210 Remedies Cumulative.
3.42.220 Violations deemed infractions.
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3.42.010 Definitions.
The following words and phrases whenever used in this Chapter shall be construed as
defmed in this section.
(a) "Ancillary telecommunication services" means services that are associated with or
incidental to the provision, use or enjoyment of telecommunications services, including but
not limited to the following services:
(I) "Conference bridging service" means an ancillary service that links two or
more participants of an audio or video conference call and may include the
provision of a telephone number. "Conference bridging service" does not include
the telecommunications services used to reach the conference bridge.
(2) "Detailed telecommunications billing service" means an ancillary service of
separately stating information pertaining to individual calls on a .customet's billing
statement.
(3) "Directory assistance" means an ancillary servIce of providing telephone
number information, and/or address information.
(4) "Vertical service" means an ancillary service that is offered in connection with
one or more telecommunications services, which offers advanced calling features
that allow customers to identify callers and I to manage multiple calls and call
connections, including conference bridging serl-ices.
(5) "V oicemail service" means an ancillary service that enables the customer to
store, send or receive recorded messages. "V oicemail service" does not include
any vertical services that the customer may be required to have in order to utilize
the voice mail service.
(b) "Billing Address" shall mea.'l the mailing address of the service user where the service
supplier submits invoices or bills for payment by the customer.
(c) "City" shill mean the City ofChula Vista.
(d) "Mobile Telecommunications Service" has the meaning and usage as set forth in the
Mobile Telecommunications Sourcing Act (4 U.S,c. Section 124) and the regulations
thereunder.
(e) "Month" shall mean a calendar month.
(f) "Paging service" means a "telecommunications service" that provides transmission of
coded radio signals for the purpose of activating specific pagers; such transmissions may
include messages and/or sounds.
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(g) "Person" shall mean, without limitation, any natural individual, firm, trust, common
law trust, estate, parmership of any kind, association, syndicate, club, joint stock company,
joint venture, limited liability company, corporation (including foreign, domestic, and non-
profit), municipal district or municipal corporation (other than the City) cooperative,
receiver, trustee, guardian, or other representative appointed by order of any court.
(h) "Place of Primary Use" means the street address representative of where the customer's
use of the telecommunications service primarily occurs, which must be the residential street
address or the primary business street address of the customer.
(i) "Post-paid telecommunication service" means the telecommunication service obtained
by making a payment on a telecommunication-by-telecommunication basis either through
the use of a credit card or payment mechanism such as a bank card, travel card, credit card,
or debit card, or by charge made to a service number which is not associated with the
origination or termination of the telecommunication service.
U) "Prepaid telecommunication service" means the right to access telecommunication
services, which must be paid for in advance and which enables the origination of
telecommunications using an access number or authorization code, whether manually or
electronically dialed, and that is sold in predetermined units or dollars of which the number
declines with use in a known amount.
(k) "Private telecommunication service" means a telecommunication service that entitles
the customer to exclusive or priority use of a telecpmmunications channel or group of
channels between or among termination poims, regardless of the manner in which such
channel or channels are connected, and includes switching capacity, extension lines,
stations, and any other associated services that are provided in connection with the use of
such channel or channels. A telecommunications channel is a physical or virtual path of
telecommunications over which signals are transmitted between or among customer
channel termination points (i.e., the location where the customer either inputs or receives
the telecommunications).
(1) "Service Address" means either:
(1) The location of the service user's telecommunication equipment from which the
telecommunication originates or terminates, regardless of where the
telecommunication is billed or paid; or,
(2) If the location in subsection (1) of this definition is unknown (e.g., mobile
telecommunications service or VoIP service), the service address means the
location of the service user's place of primary use.
(3) For prepaid telecommunication service, "service address" means the location
associated with the service number.
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(m) "Service Supplier" shall mean any entity or person, including the City, that provides
telecommunication service to a user of such service within the City.
(n) "Service User" shall mean a person required to pay a tax imposed under the provisions
of this Chapter.
(0) "State" shall mean the State ofCalifomia.
(p) "Streamlined Sales and Use Tax Agreement" shall mean the multi-state agreement
commonly kno\vn and referred to as the Streamlined Sales and Use Tax Agreement, and as
it is amended from time to time.
(q) "Tax Administrator" means the Finance Director of the City or his or her designee.
(r) "Telecommunications services" means the transmission, conveyance, or routing of
voice, data, audio, video, or any other information or signals to a point, or between or
among points, whatever the technology used. The term "telecommunications services"
includes such transmission, conveyance, or routing in which computer processing
applications are used to act on the form, code or protocol of the content for purposes of
transmission, conveyance or routing without regard to whether such services are referred to
as voice over internet protocol (V oIP) services or are classified by the Federal
Telecommunications Commission as enhanced or value added, and includes video and/or
data services that is functionally integrated with "telecommunication services."
"Telecommunications services" include, but are not limited to the following services,
regardless of the manner or basis on which such serviqes are calculated or billed: intrastate,
interstate, and international telecommunication services; ancillary telecommunication
services; mobile telecommunications serVice; pre-paid telecommunication service; post-
paid telecommunication service; private telecommunication service; paging service; 800
service (or any other toll-free numbers designated by the Federal Telecommunications
Commission); 900 service (or any other similar numbers designated by the Federal
Telecommunications Commission for services whereby subscribers call in to pre-recorded
or live service). "Telecommunication services" does not include cable or video
programming services that are subject to a cable or video service franchise fee.
(s) "V oIP" (voice over internet protocol) means the digital process of making and
receiving real-time voice transmissions over any Internet Protocol network.
(t) "800 service" means a "telecommunications service" that allows a caller to dial a toll-
free number without incurring a charge for the call. The service is typically marketed
under the name "800," "855," "866," "877," and "888" toll-free calling, and any
subsequent numbers designated by the Federal Communications Commission.
(u) "900 service" means an inbound toll "telecommunications service" purchased by a
subscriber that allows the subscriber's customers to call in to the subscriber's prerecorded
announcement or live service. "900 service" does not include the charge lor: collection
services provided by the seller of the "telecommunications services" to the subscriber, or
service or product sold by the subscriber to the subscriber's customer. The service is
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typically marketed under the name "900" service, and any subsequent numbers
desimated bv the Federal Communications Commission.
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3.42.020 Constitutional, statutory, and other exemptions.
(a) Nothing in this Chapter shall be construed as imposing a tax upon any person or service
when the imposition of such tax upon such person or service would be in violation of a
federal or state statute, the Constitution of the United States or the Constitution of the State.
(b) Any service user that is exempt from the tax imposed by this Chapter pursuant to
subsection (a) of this section shall file an application with the Tax Administrator for an
exemption; provided, however, this requirement shall not apply to a service user that is a
state or federal agency or subdivision with a commonly recognized name for such service.
Said application shall be made upon a form approved by the Ta;, Administrator and shall
state those facts, declared under penalry of perjury, which qualify the applicant for an
exemption, and shall include the names of all telecommunication service suppliers serving
that service user. If deemed exempt by the Tax Administrator, such service user shall give
the Tax Administrator timely written notice of any change in telecommunication service
suppliers so that the Tax Administrator can properly notify the new telecommunication
service supplier of the service user's tax exempt status. A service user that fails to comply
with this section shall not be entitled to a refund of telecommunication users' taxes
collected and remitted to the Tax Administrator from such service user as a result of such
noncompliance. The decision of the Tax Administrator regarding an application may be
appealed pursuant to Section 3.42.150 of this Chapter) Filing an application with the Tax
Administrator and appeal to the Ciry Administrator pursuant to Section 3.42.150 of this
Chapter is a prerequisite to a suit thereon.
(c) The City Council may, by resolution, establish one or more classes of persons or one or
more classes of utility service otherwise subject to payment of a tax imposed by this
Chapter and provide that such classes of persons' or service shall be exempt, in whole or in
part from such tax for a specified period of time.
3.42.030 Exemptions - Senior citizens.
Any individual who qualifies for an exemption under Section 3.44.021 of Chapter 3.44
shall be exempt from the tax imposed by Section 3.42.040. The procedures for obtaining
such an exemption shall be followed as set forth in Section 3.44.021.
3.42.040 Telecommunication Users' Tax.
(a). There is hereby imposed a tax upon every person in the City using telecommunication
services. The tax imposed by this section shall be at the rate of four and 75/100 percent
(4.75 %) of the charges made for such services and shall be collected from the service user
by the telecommunication services supplier or its billing agent. Tnere is a rebuttable
presumption that telecommunication services, which are billed to a billing or service
address in the City, are used, in whole or in part, within the City's boundaries, and such
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services are subj ect to taxation under this Chapter. If the billing address of the service user
is different from the service address, the service address of the service user shall be used
for purposes of imposing the tax. As used in this Section, the term "charges" shall include
the value of any other services, credits, property of every kind or nature, or other
consideration provided by the service user in exchange for the telecommunication services.
(b) "Mobile Telecommunications Service" shall be sourced in accordance with the
sourcing rules set forth in the j'v/obile Telecommunications Sourcing Act (4 Us. C. Section
124). The Tax Administrator may issue and disseminate to telecommunication service
suppliers, which are subject to the tax collection requirements of this Chapter, sourcing
rules for the taxation of other telecommunication services, including but not limited to
post-paid telecommunication services, prepaid telecommunication services, and private
telecommunication services, provided that such rules are based upon custom and common
practice that further administrative efficiency and minimize multi-jurisdictional taxation
(e.g., Streamline Sales and Use Tax Agreement).
(c) The Tax Administrator may issue and disseminate to telecommunication service
suppliers, which are subject to the tax collection requirements of this Chapter, an
administrative ruling identifying those telecommunication services, or charges therefor,
that are subject to or not subject to the tax of subsection (a) above.
(d) As used in this section, the term "telecommunication services" shall include, but is not
limited to charges for: connection, reconnection, termination, movement, or change of
telecommunication services; late payment fees; detail,ed billing; central office and custom
calling features (including but not limited to caE waiting, call forwarding, caller
identification and three-way calling); voice mail and other messaging services; directory
assistance; access and line charges; upjversal service charges; regulatory, administrative
and other cost recovery charges; local number portability charges; and text and instant
messaging. "Telecommunication services" shall not include digital downloads that are not
"ancillary telecommunication services" such as, music, ringtones, games, and similar
digital products.
(e) To prevent actual multi-jurisdictional taxation of telecommunication services subject to
tax under this section, any service user, upon proof to the Tax Administrator that the
service user has previously paid the same tax in another state or local jurisdiction on such
telecommunication services, shall be allowed a credit against the tax imposed to the extent
of the amount of such tax legally imposed on, and paid by, the service user in such other
state or local jurisdiction; provided, however, the amount of credit shall not exceed the tax
owed to the City under this section.
(f) The tax on telecommunication services imposed by this section shall be collected from
the service user by the service supplier. The amount of tax collected in one (I) month shall
be remitted to the Tax Administrator. and must be received bv the Tax Administrator on or
before the twentieth (20th) day of the following month. ' I
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3.42.050 Bundling Taxable Items with Non-Taxable Items.
If any non-taxable charges are combined with and not separately stated from taxable
service charges on the customer bill or invoice of a service supplier, the combined charge is
subject to tax unless the service supplier identities, by reasonable and veritiable standards,
the portions of the combined charge that are non-ta'(able and taxable through the service
supplier's books and records kept in the regular course of business, and in accordance with
generally accepted accounting principles, and not created and maintained for tax purposes.
The service supplier has the burden of proving the proper apportionment of taxable and
non-ta'(able charges. If the service supplier offers a combination of ta'(able and non-
taxable services, and the charges are separately stated, then for taxation purposes, the
values assigned the taxable and non-taxable services shall be based on its books and
records kept in the regular course of business and in accordance with generally accepted
accounting principles, and not created and maintained for ta'( purposes. The service
supplier has the burden of proving the proper valuation of the taxable and non-taxable
services.
3.42.060 Substantial Nexns / Minimnm Contacts.
For purposes of imposing a tax or establishing a duty to collect and remit a tax under this
Chapter, "substantial nexus" and "minimum contacts" shall be construed broadly in favor
of the imposition, collection and/or reminance of the telecommunication users' ta'( to the
fullest extent permined by state and federal law, and as it may change from time to time by
judicial interpretation or by statutory enactment., Any telecommunication service
(including VoIP) used by a person with a service address in the City, which service is
capable of terminating a call to another person on the general telephone network, shall be
subject to a rebuttable presumption that "substantial nexus/minimum contacts" exists for
purposes of imposing a ta'(, or establishing a duty to collect and remit a tax, under this
Chapter. A service supplier shall be deemed to have sufficient activity in the City for tax
collection and remittance purposes if its activities include, but are not limited to, any of the
follo\Ning: maintains or has \Nithin the City, directly or through an agent or subsidiary, a
place of business of any nature; solicits business in the City by employees, independent
contractors, resellers, agents or other representatives; solicits business in the City on a
continuous, regular, seasonal or systematic basis by means of advertising that is broadcast
or relayed from a transminer ,,,ith the City or distributed from a location within the City; or
advertises in newspapers or other periodicals printed and published within the City or
through materials distributed in the City by means other than the United States mail; or if
there are activities performed in the City on behalf of the service supplier that are
significantly associated with the service supplier's ability to establish and maintain a
market in the City for the provision of services that are subject to a tax under this Chapter.
3.42.370 Duty to Collect--Procedures.
(a) Collection by Service Suppliers. The duty of service suppliers to collect and remit the
taxes imposed by the provisions of this Chapter shall be performed as follows:
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(1) The ta'i: shall be collected by service suppliers insofar as practicable at the same
time as, and along 'With, the collection of the charges made in accordance with the
regular billing practice of the service supplier. Where the amount paid by a service
user to a service supplier is less than the full amount of the charge and tax which
was accrued for the billing period, a proportionate share of both the charge and the
ta'i: shall be deemed to have been paid. In those cases where a service user has
notified the service supplier of refusal to pay the tax imposed on said charges,
Section 3.42.110 shall apply.
(2) The duty of a service supplier to collect the tax from a service user shall
commence with the beginning of the first regular billing period applicable to the
service user where all charges normally included in such regular billing are subject
to the provisions of this Chapter. \Vhere a service user receives more than one
billing, one or more being for different periods than another, the duty to collect
shall arise separately for each billing period.
(b) Filing Return and Payment. Each person required by this Chapter to remit a tax shall
tile a return to the Tax Administrator, on forms approved by the Tax Administrator, on or
before the due date. The full amount of the tax collected shall be included with the return
and filed with the Tax Administrator. The Tax Administrator is authorized to require such
additional information as he or she deems necessary to determine if the tax is being levied,
collected, and remined in accordance 'With this Chapter. Returns are due immediately upon
cessation of business for any reason. Pursuant to Revenue and Tax Code Section 7284.6,
such filing returns are confidential information anf! are exempt from the disclosure
provisions of the Public Records Act.'
3.42.080 Collection Penalties - Service Suppliers.
(a) Ta'(es collected from a service user are delinquent if not received by the Ta'(
Administrator on or before the due date. Should the due date occur on a weekend or legal
holiday, the return must be received by the Tax Administrator on the first regular working
day follomng the weekend or legal holiday. A direct deposit, including electronic fund
transfers and other similar methods of electronically exchanging monies between financial
accounts, made by a service supplier in satisfaction of its obligations under this subsection
shall be considered timely if the transfer is ipjtiated on or before the due date, and the
transfer settles into the City's account on the follomng business day.
(b) If the person required to collect and/or remit the telecommunication users' tax fails to
collect the ta'( (by failing to properly assess the tax on one or more services or charges on
the customer's billing) or fails to remit the tax collectedon or before the due date, the Ta'(
Administrator shall attach a penalty for such delinquencies or deficiencies at the rate of
fifteen (15%) percent of the total tax that is delinquent or deficient in the remittance, and
shall pay interest at the rate of and 75/l00ths (0.75%) percent per month, or any fraction
thereof, on the amount of the ta'(, exclusive of penalties, from the date on which the
remittance first became delinquent, until paid.
8
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(c) The Tax Administrator shall have the power to impose additional penalties upon
persons required to collect and remit ta;-ces pursuant to the provisions of this Chapter for
fraud or gross negligence in reporting or remining at the rate of fifteen (15%) percent of the
amount of the tax collected and/or required to be remitted, or as recomputed by the Tax
Administrator.
(d) For collection purposes only, every penalty imposed and such interest that is accrued
under the provisions of this section shall become a part of the ta"C herein required to be
paid.
(e) Notwithstanding the foregoing, the Ta"C Administrator may, in his or her discretion,
modify the due dates of this Chapter to be consistent INith any uniform standards or
procedures that are mutually agreed upon by other public agencies imposing a utility users'
ta"C, or otherwise legally established, to create a central payment location or mechanism.
3.42.090 Actions to Collect.
A.ny tax required to be paid by a service user under the provisions of this Chapter shall be
deemed a debt owed by the service user to the City. Any such ta"C collected from a service
user which has not been remitted to the Tax Administrator shall be deemed a debt owed to
the City by the person required to collect and remit and shall no longer be a debt of the
service user. Any person owing money to the City under the provisions of this Chapter
shall be liable to an action brought in the name of the City for the recovery of such amount,
including penalties and interest as provided for in thi;; Chapter, along with any collection
costs incurred by the City as a result of the person's noncompliance INith this Chapter,
including, but not limited to, reasonable attorneys' fees. Any tax required to be collected
by a service supplier or owed by a service user is an unsecured priority excise tax
obligation under 11 USCA. Section 507(a)(8)(C).
3.42.100 Deficiency Determination and Assessment - Tax Application Errors.
(a) The Tax Administrator shall make a deficiency determination if he or she determines
that any service user or service supplier required to payor collect taxes pursuant to the
provisions of this Chapter has failed to pay, collect, and/or remit the proper amount of ta"C
by improperly applying, or failing to apply, the tax to one or more ta"Cable services or
charges. Nothing herein shall require that the Tax Administrator institute proceedings
under this Section 3.42.100.
(b) The Tax Administrator shall mail a notice of such deficiency determination to the
person or entity allegedly owing the ta"C, wpjch notice shall refer briefly to the amount of
the taxes owed, plus interest at the rate of 75/l OOths (0.75%) percent per month, or any
fraction thereof, on the amount of the tax from the date on which the tax should have been
received by the City. Within fourteen (14) calendar days after the date of service of such
notice, the person or entity allegedly oINing the tax may request in writing to the Tax
Administrator for a hearing on the matter.
9
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(c) If the person or entity allegedly owing the tax fails to request a hearing within the
prescribed time period, the amount of the deficiency determination shall become a final
assessment, and shall immediately be due and owing to the City. If such person or entity
requests a hearing, the Tax Administrator shall cause the matter to be set for hearing, which
shall be scheduled within thirty (30) days after receipt of the written request for hearing.
Notice of the time and place of the hearing shall be mailed by the Tax Administrator to
such person at least ten (10) calendar days prior to the hearing, and, if the Tax
Administrator desires said person to produce specific records at such hearing, such notice
may designate the records requested to be produced.
(d) At the time fixed for the hearing, the Tax Administrator shall hear all relevant
testimony and evidence, including that of any other interested parties. At the discretion of
the Tax Administrator, the hearing may be continued from time to time for the purpose of
allowing the presentation of additional evidence. Within a reasonable time following the
conclusion of the hearing, the Tax Administrator shall issue a [mal assessment (or non-
assessment), thereafter, by confirming, modifying or rejecting the original deficiency
determination, and shall mail a copy of such [mal assessment to the person or entity owing
the tax. The decision of the Tax Administrator may be appealed pursuant to Section
3.42.150 of this Chapter. Filing an application with the Tax Administrator and appeal to
the City Manager pursuant to Section 3.42.150 of this Chapter is a prerequisite to a suit
thereon.
(e) Payment of the [mal assessment shall become delinquent if not received by the Tax
Administrator on or before the thirtieth (30th) day 1ollowing the date of receipt of the
notice of final assessment. The penalty for delinquency shall be fifteen percent (15%) on
the total amount of the assessment, along with interest at the rate of 75/100ths (0.75%)
percent per month, or any fraction thereof, on the amount of the tax, exclusive of penalties,
from the date of delinquency, until paid. The applicable statute of limitations regarding a
claim by the City seeking payment of a ta'\: assessed under this Chapter shall commence
from the date of delinquency as provided in this subsection (e).
(f) All notices under this section may be sent by regular mail, postage prepaid, and shall be
deemed received on the third calendar day following the date of mailing, as established by
a proof of mailing.
3.42.110 Administrative Remedy - Non-Paying Service Users.
(a) Whenever the Ta'\: Administrator determines that a service user has deliberately
withheld the amount of the ta'\: owed by the service user from the amounts remitted to a
person required to collect the tax, or whenever the Ta'\: Administrator deems it in the best
interest of the City, he or she may relieve such person of the obligation to collect the taxes
due under this Chapter from certain named service users for specific billing periods. To the
extent the service user has failed to pay the amount of ta'\: owed for a period of two (2) or
more billing periods, the service supplier shall be relieved of the obligation to collect ta'\:es
due. The service supplier shall provide the City with the names and addresses of such
service users and the amounts of taxes owed under the provisions of this Chapter. Nothing
12-15
10
herein shall requue that the Tax Administrator institute proceedings under this Section
3.42.110.
(b) In addition to the tax owed, the service user shall pay a delinquency penalty at the rate
of fifteen percent (15%) of the total tax that is owed, and shall pay interest at the rate of
75/100ths (0.75%) percent per month, or any fraction thereof, on the amount of the tax,
exclusive of penalties, from the due date, until paid.
(c) The Tax Administrator shall notify the non-paying service user that the Tax
Administrator has assumed the responsibility to collect the taxes due for the stated periods
and demand payment of such taxes, including penalties and interest. The notice shall be
served on the service user by personal delivery or by deposit of the notice in the United
States mail, postage prepaid, addressed to the service user at the address to which billing
was made by the person required to collect the tax; or, should the service user have a
change of address, to his or her last known address.
(d) If the service user fails to remit the tax to the Tax Administrator within thirty (30) days
from the date of the service of the notice upon him or her, the Tax Administrator may
impose an additional penalty of fifteen percent (15%) of the amount of the total tax that is
owed.
3.42.120 Additional Powers and Duties of the Tax Administrator.
(a) The Tax Administrator shall have the power anp ,duty to enforce each and all of the
provisions of this Chapter. '
(b) The Tax Administrator may adopt administrative rules and regulations consistent with
provisions of this Chapter for the purpose of interpreting, clarifying, carrying out and
enforcing the payment, collection and reminance of the taxes herein imposed. The
administrative rules and regulations shall not impose a new tax, revise an existing tax
methodology as stated in this Section, or increase an existing tax, except as allowed by
California Government Code Section 53750(h)(2). A copy of such administrative rules and
regulations shall be on file in the Tax Administrator's office. To the extent that the Tax
Administrator determines that the tax imposed under this Chapter shall not be collected in
full for any period of time from any particular service supplier or service user, ti}at
determination shall be considered an exercise of the Tax Administrator's discretion to senle
disputes and shall not constitute a change in taxing methodology for purposes of
Government Code Section 53750 or otherwise. The Tax Administrator is not authorized to
amend the City's methodology for purposes of Government Code Section 53750 and the
City does not waive or abrogate its ability to impose the communication users' tax in full as
a result of promulgating administrative rulings or entering into agreements.
(c) Upon a proper showing of good cause, the Tax Administrator may make administrative
agreements, with appropriate conditions, to vary from the strict requirements of this
Chapter and thereby: (1) conform to the billing procedures of a particular service supplier
so long as said agreements result in the collection of the ta"X in conformance with the
11
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general purpose and scope of this Chapter; or, (2) to avoid a hardship where the
administrative costs of collection and remittance greatly outweigh the tax benefit. A copy
of each such agreement shall be on file in the Tax Administrator's office, and are voidable
by the Tax Administrator or the City at any time.
(d) The Tax Administrator may conduct an audit, to ensure proper compliance with the
requirements of this Chapter, of any person required to collect and/or remit a tax pursuant
to this Chapter. The T a,< Administrator shall notify said person of the initiation of an audit
in writing. In the absence of fraud or other intentional misconduct, the audit period of
review shall not exceed a period of three (3) years immediately preceding the date of
receipt of the "'Titten notice by said person from the T a,< Administrator. Upon completion
of the audit, the Tax Administrator may make a deficiency determination pursuant to
Section 3.42.100(d) of this Chapter for all taxes (and applicable penalties and interest)
owed and not paid, as evidenced by information provided by such person to the Ta,<
Administrator. If said person is unable or un",illing to provide sufficient records to enable
the Tax Administrator to verify compliance with this Chapter, the Tax Administrator is
authorized to make a reasonable estimate of the deficiency. Said reasonable estimate shall
be entitled to a rebuttable presumption of correctness.
(e) Upon receipt of a ",ntten request of a taxpayer, and for good cause, the Tax
Administrator may extend the time for filing any statement required pursuant to this
Chapter for a period of not to exceed forty-five (45) days, provided that the time for filing
the required statement has not already passed when the request is received. No penalty for
delinquent payment shall accrue by reason of such eXlension. Interest shall accrue during
said extension at the rate of 75/l OOths (0.75%) percent per month, prorated for any portion
thereo f.
(f) The Ta,< Administrator shall determine the eligibility of any person who asserts a right
to exemption from, or a refund ot: the tax imposed by this Chapter.
(g) Notwithstanding any provision in this Chapter to the contrary, the Tax Administrator
may waive any penalty or interest imposed upon a person required to collect and/or remit
for failure to collect the tax imposed by this Chapter if the non-collection occurred in good
faith. In determining whether the non-collection was in good faith, the Tax Administrator
shall take into consideration industry practice or other precedence.
3.42.130 Records.
(a) It shall be the duty of every person required to collect and/or remit to the City any ta,<
imposed by this Chapter to keep and preserve, for a period of at least three (3) years, all
records as may be necessary to determine the amount of such tax as he/she may have been
liable for the collection of and remittance to the Ta,< Administrator, wpich records the Tax
Administrator shall have the right to inspect at a reasonable time.
(b) The City may issue an administrative subpoena to compel a person to deliver, to the
Tax Administrator, copies of all records deemed necessary by the Ta,< Administrator to
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establish compliance with this Chapter, including the delivery of records in a common
electronic format on readily available media if such records are kept electronically by the
person in the usual and ordinary course of business. As an alternative to delivering the
subpoenaed records to the Tax Administrator on or before the due date provided in the
administrative subpoena, such person may provide access to such records outside the City
on or before the due date, provided that such person shall reimburse the City for all
reasonable travel expenses incurred by the City to inspect those records, including travel,
lodging, meals, and other similar expenses, but excluding the normal salary or hourly
wages of those persons designated by the City to conduct the inspection.
(c) The Ta'{ Administrator is authorized to execute a non-disclosure agreement approved
by the City Attorney to protect the confidentiality of customer information pursuant to
California Revenue and Tax Code Sections 7284.6 and 7284.7.
(d) If a service supplier uses a billing agent or billing aggregator to bill, collect, and/or
remit the tax, the service supplier shall: i) provide to the Tax Administrator the name,
address and telephone number of each billing agent and billing aggregator currently
authorized by the service supplier to bill, collect, and/or remit the tax to the City; and, ii)
upon request of the Tax Administrator, deliver, or effect the delivery of, any information or
records in the possession of such billing agent or billing aggregator that, in the opinion of
the Tax Administrator, is necessary to verify the proper application, calculation, collection
and/or remittance of such tax to the City.
(e) If any person subject to record-keeping under this ,section umeasonably denies the Tax
Administrator access to such records, or fails to produce the information requested in an
administrative subpoena within the time specified, then the Ta'{ Administrator may impose
a penalty of $500 on such person for each day following: i) the initial date that the person
refuses to provide such access; or, ii) the due date for production of records as set forth in
the administrative subpoena. This penalty shall be in addition to any other penalty imposed
under this Chapter.
3.42.140 Refunds.
Whenever the amount of any tax has been overpaid or paid more than once or has been
erroneously or illegally collected or received by the Tax Administrator under this Chapter
from a person or service supplier, it may be refunded as provided in this section:
(a) The Tax Administrator may refund any tax that has been overpaid or paid more than
once or has been erroneously or illegally collected or received by the Ta'{ Administrator
under this Chapter from a person or service supplier, provided that no refund shall be paid
under the provisions of tl;1js section unless the claimant or his or her guardian, conservator,
executor, or administrator has submitted a wTitten claim to the Tax Administrator within
one year of the overpayment or erroneous or illegal collection of said tax. Such claim must
clearly establish claimant's right to the refund by WTitten records showing entitlement
thereto. Nothing herein shall permit the filing of a claim on behalf of a class or group of
13
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taxpayers unless each member of the class has submitted a written claim under penalty of
perjury as provided by this subsection.
(b) The filing of a "'Titten claim pursuant to Government Code Section 935 is a prerequisite
to any suit thereon. Any action brought against the City pursuant to this section shall be
subject to the provisions of Governmenr Code Sections 945.6 and 946. The Tax
Administrator, or the City Council where the claim is in excess of five thousand dollars
($5,000), shall act upon the refund claim within the time period set forth in Government
Code SecTion 912.4. If the Tax Administrator/City Council fails or refuses to act on a
refund claim within the time prescribed by Government Section 912.4, the claim shall be
deemed to have been rejected by the City Council on the last day of the period ",ithin
which the City Council was required to act upon the claim as provided in Government
Code Section 912.4. The Tax Administrator shall give notice of the action in a form which
substantially complies with that set forth in Government Code Section 913.
(c). Notwithstanding the notice provisions of subsection (a) of this Section, the Tax
Administrator may, at his or her discretion, give written permission to a service supplier,
who has collected and remitted any amount of tax in excess of the amount of tax imposed
by this Chapter, to claim credit for such overpayment against the amount of tax which is
due the City upon a subsequent monthly retum(s) to the Tax Administrator, provided that:
i) such credit is claimed in a return dated no later. than one year from the date of
overpayment or erroneous collection of said tax; ii) the Tax Administrator is satisfi.ed that
the underlying basis and amount of such credit has been reasonably established; and, iii) in
the case of an overpayment by a service user to the service supplier that has been remitted
to the City, the Tax Administrator has received prock, to his or her satisfaction, that the
overpayment has been refunded by the service supplier to the service user in an amount
equal to the requested credit.
(d) Notwithstanding subsections (a) through (c) above, a service supplier shall be entitled
to take any overpayment as a credit against an underpayment whenever such overpayment
has been received by the City within the three (3) years immediately preceding a deficiency
determination or assessment by the Tax Administrator in connection with an audit
instituted by the Tax Administrator pursuant to Section 3.42.120(d). A service supplier
shall not be entitled to said credit unless it first clearly establishes, to the satisfaction of the
Tax Administrator, the right to the credit by written records showing entitlement thereto.
Under no circumstances shall an overpayment taken as a credit against an underpayment
pursuant to Lhis subsection qualify a service supplier for a refund to which it would not
other",ise be entitled under the one-year written claim requirement ofthis section.
3.42.150 Appeals.
(a) The provisions of this section apply to any decision (other than a decision relating to a
refund pursuant to Section 3.42.140 of this Chapter), deficiency determination, assessment,
or administrative ruliIlg of the Tax Administrator. Any person aggrieved by any decision
(other than a decision relating to a refund pursuant to Section 3.42.140 of this Chapter),
defi.ciency determination, assessment, or administrative ruling of the Tax Administrator,
14
12-19
shall be required to comply with the appeals procedure of this section. Compliance with
this section shall be a prerequisite to a suit thereon. [See Government Code Section
935(b).] Nothing herein shall permit the tiling of a claim or action on behalf of a class or
group of ta\:payers.
(b) If atlY person is aggrieved by any decision (other than a decision relating to a refund
pursuant to Section 3.42.140 of this Chapter), deficiency determination, assessment, or
administrative ruling of the Tax Administrator; he or she may appeal to the City Manager
by filing a notice of appeal with the City Clerk within fourteen (14) days of the date of the
decision, deticiency determination, assessment, or administrative ruling of the Tax
Administrator which aggrieved the service user or service supplier.
(c) The matter shall be scheduled for hearing before an independent hearing officer selected
by the City Manager, no more than thirty (30) days from the receipt of the appeal. The
appellant shall be served with notice of the time and place of the hearing, as well as any
relevant materials, at least five (5) calendar days prior to the hearing. The hearing may be
continued from time to time upon mutual consent. At the time of the hearing, the appealing
party, the Tax Administrator, and any other interested person may present such relevant
evidence as he or she may have relating to the determination from which the appeal is
taleen.
(d) Based upon the submission of such evidence and the review of the City's files, the
hearing officer shall issue a wrinen notice and order upholding, modifying or reversing the
determination from which the appeal is taleen. The notice shall be given within fourteen
. ,
(14) days after the conclusion of the hearing and shall state the reasons for t\-je decision.
The notice shall specify that the decision is final and that any petition for judicial review
shall be filed within ninety (90) days from the date of the decision in accordance with Code
of Civil Procedure Section 1094.6. In the event the hearing officer's decision is in favor of
the City, all costs of the hearing shall be borne by the appellant.
(e) All notices under this section may be sent by regular mail, postage prepaid, and shall be
deemed received on the third calendar day following the date of mailing, as established by
a proof of mailing.
3.42.160 No InjunctionIWrit of Mandate.
No injunction or writ of mandate or other legal or equitable process shall issue in any suit,
action, or proceeding in any court against this City or against any officer of the City to
prevent or enjoin the collection under this Chapter of any ta\: or a.TlY amount ofta\: required
to be collected and/or remitted.
3.42.170 Notice of Changes to Ordinance.
If a ta.x under this Chapter is added repealed, increased, reduced, or the tax base is changed,
the Ta\: Administrator shall follow the notice requirements of California Public Utilities
Code Section 799.
15
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3.42.180 Effect of State and Federal Reference/Authorization.
Unless specifically provided otherwise, any reference to a state or federal statute in this
Chapter shall mean such statute as it may be amended from time to time, provided that such
reference to a statute herein shall not include any subsequent amendment thereto, or to any
subsequent change of interpretation thereto by a state or federal agency or court of law with
the duty to interpret such law, to the extent that such amendment or change of
interpretation would require voter approval under California law, or to the extent that such
change would result in a tax decrease (as a result of excluding all or a part of a
communication service, or charge therefor, from taxation). Only to the extent voter
approval would otherwise be required or a tax decrease would result, the prior version of
the statute (or interpretation) shall remain applicable; for any application or situation that
would not require voter approval or result in a decrease of a tax, provisions of the amended
statute (or new interpretation) shall be applicable to the maximum possible extent.
To the extent that the City's authorization to collect or impose any tax imposed under this
Chapter is expanded or limited as a result of changes in state or federal law, no amendment
or modification of this Chapter shall be required to conform the tax to those changes, and
the ta.'i: shall be imposed and collected to the full extent of the authorization up to the full
amount of the tax imposed under this Chapter.
3.42.190 Independent
Expenditure.
Audit of Tax Collection, Exemption, Remittance, and
.' l
The City may periodically verify that the ta'i:es owed under this Chapter have been properly
applied, exempted, collected, and remitted in accordance with this Chapter, and properly
expended according to applicable municipal law. The annual verification shall be
performed by a qualified independent third party and the review shall employ reasonable,
cost-effective steps to assure compliance, including the use of sampling audits. The
verification shall not be required of tax remitters where the cost of the verification may
exceed the tax revenues to be reviewed.
3.42.200 Interaction with Prior Tax.
(a) Satisfaction of Tax Obligation by Service Users. Any person who pays the tax levied
pursuant to Section 3.42.040 of this Chapter with respect to any charge for a
telecommunication service shall be deemed to have satisfied his or her obligation to pay the
ta.x levied pursuant to Section 3.44.030 of this Code with respect to that charge. Likewise,
prior to April 1,2009, any person who pays the ta'i: levied pursuant to Section 3.44.030 of
this Code with respect to any charge for a service subject to ta'i:ation pursuant to this
Chapter shall be deemed to have satisfied his or her obligation to pay the tax levied
pursuant to Section 3.42.040 of this Chapter with respect to that charge. The intent of this
paragraph is to prevent the imposition of multiple ta'i:es upon a single utility charge during
the transition period from the prior telecommunication users' tax to the new
16
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telecommunication users' tax (which transition period ends April 1, 2009) and to permit
telecommunication service providers, during that transition period, to satisfy their
collection obligations by collecting either tax.
(b) Collection of Tax by Service Providers. Service providers shall begin to collect the tax
imposed by this Chapter as soon as feasible after the effective date of the Chapter, but in no
event later than permitted by Section 799 of the California Public Utilities Code.
(c) In the event that a final court order should determine that the election enacting this
Chapter 3.42 is invalid for whatever reason, or that any tax imposed under this Chapter
3.42 is invalid in whole or in part, then the tax imposed under Sections 3.44.030 (unless
repealed) shall automatically continue to apply \vith respect to any service for which the tax
levied pursuant to this Chapter has been determined to be invalid. Such automatic
continuation shall be effective beginning as of the first date of service (or billing date) for
which the tax imposed by this Chapter is not valid. However, in the event of an
invalidation, any tax (other than a tax ti'1at is ordered refunded by the court or is otherwise
refunded by the City) paid by a person with respect to a service and calculated pursuant to
this Chapter shall be deemed to satisfy the tax imposed under Section 3.44.030 on that
service, so long as the tax is paid with respect to a service provided no later than six months
subsequent to the date on which the final court order is published.
3.42.210 Remedies Cumulative.
All remedies and penalties prescribed by this Chapter or which are available under any
other provision of law or equity, including but not li.rb.ited to the California False Claims
Act (Government Code Section 12650 et seq.) and the California Unfair Practices Act
(Business and Professions Code Section 17000 et seq.), are cumulative. The use of one or
more remedies by the City shall not bar the use of any other remedy for the purpose of
enforcing the provisions of this Chapter.
3.42.220 Violations Deemed Infractions. i\ny person who willfully attempts in any
manner to avoid or defeat the tax imposed by this Chapter or the payment of all or any part
thereof, or any person required by this Chapter to pay the ta'(, to make a return, to keep any
records, or to supply any information who willfully fails to pay all or any part of such tax,
make such return, keep such records, or supply such information at the time or times
required by this Chapter, shall be guilty of an infraction.
SECTION 2. Effective Date. This Chapter shall become effective immediately upon the
date that this Ordinance is comirmed and approved by the voters of Chula Vista at the
Municipal Election of November 4, 2008. Service Suppliers will not be required to
implement the provisions of this ordinance prior to February 1,2009.
SECTION 3. Amendment or Repeal. Chapter 3.42 of i\rticle XIII of the Chula Vista
Municipal Code may be repealed or amended by the City Council without a vote of the
people. However, as required by Chapter XIIIC of the California Constitution, voter
17
12-22
approval is required for any amendment provision that would increase the rate of any t<LX
. levied pursuant to this Ordinance. The People of the City of Chula Vista affinn that the
following actions shall not constitute an increase of the rate of a t<LX:
I. The restoration of the rate of the tax to a rate that is no higher than that set by this
Ordinance, if the City Council has acted to reduce the rate of the t<LX;
2. An action that interprets or clarifies the methodology of the t<LX, or any definition
applicable to the t<LX, so long as interpretation or clarification (even if contrary to
some prior interpretation or clarification) is not inconsistent with the language of
this Ordinance.
3. The establishment of a class of person that is exempt or excepted from the t<LX or
the discontinuation of any such exemption or exception (other than the
discontinuation of an exemption or exception specifically set forth in this
Ordinance); and
4. The collection of the t<LX imposed by this Ordinance, even if the City had, for
some period oftime, failed to collect the t<LX.
SECTION 4. Severability. If any section, subsection, sentence, clause, phrase, or portion
of this Ordinance is for any reason held to be invalid or unenforceable by a court of
competent jurisdiction, the remaining portions of this, Ordinance shall nonetheless remain
in full force and effect. The people hereby declares' that they would have adopted each
section, subsection, sentence, clause, phrase, or portion of this Ordinance, irrespective of
the fact that anyone or more sections, subsections, sentences, clauses, phrases, or ponions
of this Ordinance be declared invalid or unenforceable.
SECTION 5. Execution. The Mayor is hereby authorized to attest to the adoption of this
Ordinance by the voters of the City by signing where indicated below.
18
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I hereby certify that the foregoing Ordinance was PASSED, APPROVED and ADOPTED
by t\1e people of the City of Chula Vista voting on the day of ,2008.
Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Atto~~
~PROVED AS TO FOR,vf:
"
,
12-24
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'N. A ~'ew ijL)T ,:r:iin.'1ce for :;.ii '.ltilities.
RESOLUTION NO. 2008-
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CHULA VISTA ORDERING THE SlJBMISSION TO
THE QUALIFIED ELECTORS OF THE CITY OF A-
MEASlTRE RELATING TO THE CITY'S
TELECOMMUNICATIONS USERS' TAX AT THE
SPECIAL MlJ'NICIP AL ELECTION TO BE HELD ON
HJESDA Y, NOVEMBER 4, 2008; DECLARING THE
EXISTENCE OF AI" EMERGENCY NECESSITATING
SUCH ACTION; AND DIRECTING THE CITY
ATTORNEY TO PREPARE AN IMPARTlAL
ANAL YSIS OF THE MEASURE
WHEREAS, pursuant to Chula Vista MlUlicipal Code Chapter 3.44, the City
currently levies a Utility Users' Tax ("UUT'); and
WHEREAS, the City COlUlcil desires to adjust the rate of the Telephone Users'
Tax (a component of the Utility Users' Tax) from 5% to 4.75%; to rename the Telephone
Users' Tax as the Telecommunications Users' Tax; to modernize the tax base so that
different telecommunications technologies are treated similarly; to apply the tax to
interstate and international calls for all customers; and to make other revisions to the
method of calculating and collecting the tax to ret1ect technological advances in
telecommunications services, and changes in federalla'w; and
WHEREAS, the proposed ordinance, attached hereto and incorporated herein as
Exhibit "A" would implement these proposed revisions to the ta'C (the "Ordinance"), and
if approved by voters the earliest implementation date will be Febmary 1,2009; and
WHEREAS, by its Resolution No. 2008-016, adopted on January 15,2008, the
City Council has called a Special MlUlicipal Election for Tuesday, November 4, 2008;
and
WHEREAS, pursuant to Government Code section 53724 and California
Elections Code section 9222, the City COlUlcil desires to submit the Ordinance to the
electorate at the Special Municipal Election.
NOW, THEREFORE, BE IT RESOLVED by the City COlUlcil of the City of
Chula Vista as follows:
SECTION I. All of the foregoing recitals are tme and correct.
SECTION 2. That the City COlUlcil, pursuant to its right and authority, does
order submitted to the voters at the Special Municipal Election on November 4, 2008, the
following question:
12-26
Shall an ordinance be adopted to reduce the rate of the City
of Chula Vista's Telecommunications Users' Ta"( YES
(currently the Telephone Users' Tax) from 5% to 4.75%
while maintaining exemptions for low-income sem or
citizens; to ensure that Tax proceeds continue to be
available for general municipal purposes, such as police,
tire, streets and parks; and to revise the method for NO
calculating and collecting the Tax to reflect technological
advances and changes in federal law?
SECTION 3. That the proposed Ordinance to be submitted to the voters IS
attached as Exhibit "A."
SECTION 4. That notice of the time and place of holding the election is given
and the City Clerk is authorized, instructed, and directed to give further or additional
notice of the election, in time, form and manner as required by law.
SECTION 5. That pursuant to California Elections Code S9280, the City Clerk
is directed to transmit a copy of the measure to the City Attorney. The City Anorney is
directed to prepare an impartial analysis of the measure, not to exceed 500 words in
length, showing the effect of the measure on the exi~ting law and the operation of the
measure, and transmit such impartial analysis to the City Clerk within ten days of the
adoption of this Resolution.
SECTION 6. That pursuant to California Constitution Article XIIIC S2(b), the
City Council declares, by a. unanimous vote of its membership, that a fiscal emergency
exists necessitating that the Ordinance be submined to the voters at the November 4,
2008 Special Election. The circumstances giving rise to this emergency are as follows:
A. The City currently receives $4.6 million a year in UUT proceeds from
telecommunication services, and such tax revenues are critical to the public welfare and
the City's financial ability to provide essential municipal services such as police, tire,
street repair, parks and libraries.
B. Lawsuits have been filed against other jurisdictions challenging the
application of the utility users ta"( to certain telecommunication services based upon
definitions contained in the ordinances governing such ta"(es and/or references to
allegedly inapplicable federal laws.
C. Legislation (H.R. 5793) has been introduced in the United States
Congress, which would impose a five-year moratorium on new local wireless ta"(es, and
could limit the ability of the City to respond to possible future adverse court rulings
regarding the City's existing utility users' ta"( on wireless communications.
12-27
D. Due to a signitlcant, and unexpected, decline in revenue growth over the
past 18 months, the City has undergone signitlcant budgetary cuts in order to balance the
Fiscal Year 2008-09 general fund operating budget, which assumes the continued
collection of Utility Users Tax. The Fiscal Year 2009-10 budgetary gap is projected to be
$3.1 million, this gap would be exacerbated by any loss in OUT revenue.
E. General fund operating reserves are projected at 4.8% for the fiscal year
ending June 30, 2008. This is below the 8% reserve goal established by the City Council,
and makes the City finances especially sensitive to a loss of substantial expected
revenues.
F. Additional budgetary cuts resulting from a loss of the Utility Users Tax
would likely have a signiiicant impact upon the City's ability to provide essential public
services including public safety.
G. Therefore, it is urgently important that the City amend its UUT ordinance
to reduce the legal and legislative risks that currently endanger this critical funding
stream.
H. These circumstances are such that it would be imprudent to delay the
revision of the OUT ordinance until June 8, 20 I 0, which is the date of the next General
Municipal Election.
. ,
SECTION 7. That the City Clerk shall certify to the adoption of this resolution,
and file it with the City's original resolutions.
Presented by
Approved as to form by
\l~
.0, Bart Miesteld
'(qImerim City Attorney
Maria Kachadoorian
Finance Director
12-28
RESOLUTION NO. 2008-
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CHULA VISTA APPROPRlATING $105,000 FROM
THE A V AILABLE BALA1"fCE OF THE GENERAL
FONTI TO THE CITY CLERK'S AND NON-
DEPA.RHvIENTAL BUDGET TO COVER
ANTICIP A TED COSTS M-iD EXPENSES RELATED TO
ELECTION COSTS, AND PRINTING A1"fD MA1LING
COSTS
WHEREAS, Chula Vista's Utility Users' Tax (UUT) was adopted in 1970 as a
means to help fund public services and capital improvement projects through the City's
General Fund; and
\VHEREAS, the City receives UUT based on the usage of natural gas, electricity
and telecommunications; and
WHEREAS, in fiscal year 2006-2007, the total {JUT received was approximately
$7.0 million, which represents 5% of General Fund revenues; and
WHEREAS, the current rates charged are .00919 per therm, .0025 per kilowatt,
and 5% on telephone; and . i
WHEREAS, there are over 150 cities in California with a {jlJT; and
WHEREAS, city staff is recommending that the City's ulJT ordinance, as it
applies to telecommunications, be updated to reflect recent changes in Federal tax law
and to modernize the detinition of "telecommunications" to make it technology neutral;
and
WHEREAS, the City Council desires to adjust the rate of the Utility Users' Tax
from 5% to 4.75%, apply the tax to interstate and international calls for all customers;
and to make other revisions to the method of calculating and collecting the tax to reflect
technological advances and changes in state and federal law; and
WHEREAS, failure to modernize the City's UUT ordinance relative to
telecommunication services could result in a loss of 75% to 100% of the
telecommunications related portion of the UlJT, or upwards to approximately $3.4
million from the General Fund, which would have a substantial impact on the City's
ability to maintain current programs and provide essential services, including public
safety; and
12-29
WHEREAS, updating the UUT ordinance requires a measure be placed on the
ballot and approval by a majority of the voters; and
WHEREAS, City staff is recommending that the proposed UUT ordinance
relating to telecommunications be placed on the November 2008 ballot; and
WHEREAS, in an effort to minimize costs, staff proposes to manage the
informational program internally and requests an appropriation of $105,000 to cover the
election costs (City Clerk $35,000) and printing and mailing costs (Non-Departmental
$70,000).
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Chula Vista appropriates $105,000 from the available balance of the General Fund to the
City Clerk's and non-departmental budgets to cover anticipated costs and expenses
telated to election costs, and printing and mailing costs.
Presented by
Approved as to form by
",(8'" Nli~~~
Interim City Attorney
Maria Kachadoorian
Finance Director
J
,
12-30