Loading...
HomeMy WebLinkAbout2008/07/29 Item 1 CITY COUNCIL AGENDA STATEMENT ~\ff:. CITY OF ~ CHUIA VISTA JUL Y 29, 2008 Item ~ ITEM TITLE: A. 1. 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 TELECOMMUNICATIONS USERS' TAX AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 4, 2008; DECLARING THE EXISTENCE OF AN EMERGENCY NECESSITATING SUCH ACTION; AND DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS OF THE MEASURE (UNANIMOUS VOTE REQUIRED) SUBMITTED BY: OR 2. 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 SAFETY AND COMMUNITY ENHANCEMENT TELECOMMUNICATIONS USERS' TAX AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 4,2008; AND DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANAL YSlS OF THE MEASURE (3/5THS VOTE REQUIRED) B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $35,000 FROM THE GENERAL FUND TO COVER THE ANTICIPATED COSTS AND EXPENSES RELATED TO PLACING THE TELECOMMUNICATIONS USERS' TAX ORDINANCE ON THE NOVEMBER 2008 BALLOT (4/5THS VOTE REQUIRED) C. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $70,000 FROM. THE GENERAL FUND TO COVER ANTICIPATED COSTS AND EXPENSES RELATED TO PRINTING AND MAILING INFORMATION RELATED TO THE TELECOMMUNICATIONS USERS' TAX BALLOT MEASURE (4/5TJ-IS VOTE REQUIRED) DIRECTOR OF FINANCE/TREASURER---llt- '--I .IUL Y 29, 2008, Item~ Page 2 of 8 REVIEWED BY: CITY MANAGER ~ SUMMARY 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. 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 arc .00919 per therm, .0025 per kilowatt, and 5% on telephone. There are over ISO cities in California with a Utility Users Tax. City staff is recommending that the UUT on telccommunications be updated due to a rceent IRS decision, pending legal challenges, a perceived loophole in the current ordinance and changes in technology which have put this funding at risk. The legal challenges pose the most serious and immediate threats to existing UUT ordinances for cities taxing telecommunication services due to references to the Federal Excise Tax. The City of Los Angeles, Long Beach, County of Los Angeles and City of Sacramento arc currently in litigation over this issue. A trial court decision is expected in late 2008 or early 2009, and a possible appellate court decision in late 2009. An adverse ruling in any of thesc pending actions may further jeopardize the City's current UUT ordinance. As a result of these existing and immincnt threats to the telecommunications portion of the City's UUT ordinance, City staff is recommending that the Council approve submittal of a ncw ordinance to the voters at the November 2008 election as a general tax. If the Council does not approve it as a general tax measurc, staff would recommend that it be placed on the ballot as a special tax, designated for the following purposes: public safety, parks and libraries. 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 funds necessary to cover the related costs. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has revicwed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity of calling and giving notice of a spccial election for the purpose of updating the Utility Users Tax (UTT) on telccommunications is not a "Project" as defincd under Section 15378 of the State CEQA Guidclines because it will not result in a physical changc to thc environmcnt; thercfore, pursuant to Section 15060(c)(3) of thc State CEQA Guidelines the actions proposed are not subject to CEQA. . RECOMMENDA TION That Council adopts the rcsolutions. BOARDS/COMMISSION RECOMMENDATION Not applicable. . ...,.. JULY 29. 2008, Item \ . - Page 3 of 8 DISCUSSION In 1970, the City tirst 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 Fcderal tax law and to modernize the definition of telecommunications so that it is technology ncutraL Presently, the City's UUT is imposed at a rate of 5% of the charges billed for telcphone communications services. No changes are proposed to the ordinance for natural gas and electricity. Legal Challenge The City's tax has been applied historically in a similar manner as the application of thc Federal Excisc Tax (FET) upon local and long distance tclecommunication services as the Internal Revenue Service (IRS) interprets the FET The FET statutc defines long distance or "toll" calls as those for which charges varied according to both the elapsed time of the call and the distancc between the persons on the calL Today, long distance calls are based on time only, or in the case of "cellular or wircless" (Mobile) calls, thcy are based on a flat monthly rate. On May 25, 2006, the IRS issucd a Notice that it intcnded to stop applyillg thc FET to ncarly all telephone communication serviccs, except local exchange services, which lcavcs only approximately 25% of all thc telecommunication services as fcderally taxable. This IRS action came following many federal court losses involving the outdated dcfinition of "toll telephone service" (or long distance) contained in the FET Likc the vast majority of California cities that have a UUT ordinance, Chula Vista's UUT ordinance refers to the FET and somc of its many excmptions, in responsc 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 In addition, legislation (l-LR. 5793) has bcen introduced in thc United States Congress, which would impose a fivc-year moratorium on new local wirelcss taxes, and could limit the ability of the City to respond to possible future adverse court rulings regarding the City's existing utility users' tax on Mobile communications. Technological Challengcs The proposed ordinancc is an updatcd version of the telccommunications portion of thc City's existing UUT ordinance. It is intended to replace those portions of the cxisting ordinance that apply to telccommunications. The new ordinance would modernize the telccommunications tax definitions and other provisions by, among other things, eliminating thc refcrcnce to the FET and broadcning the scope of telccommunication scrvices that already tax intrastatc serviccs but will now tax: interstate, and international teleC0l11111Unication services; private COlnnlunication services (c.g., T-I lines); paging; and VolP and toll li'ee numbers. Importantly, the ncw definitions are technology-neutral and anticipate additional changes in technology, reflccting the modern use of telecommunications. Tclecommunication services do not include cable or vidco programming services that are subjcct to a cable or video scrvicc Ji'anchise fee. r-3 JULY 29, 2008, Item~ Page 4 of8 This updating of definitions eloses "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 Mobile telecommunication customers with no net loss of revenue anticipated. The loss in revcnues rclated to thc reduction of thc tax rate of 5% to 4.75% for intrastatc services is anticipatcd to be recovered through the 20% of- Mobile customers who currently do not pay the tax and the application of the reduced tax rate to interstate and international calls. The updated ordinancc proposcs to apply the tax for thc first time to interstate and international services for Mobile and land line telecommunication customers. Other cities that have eliminated this loophole have experienccd a small increase ranging from 5% to 10% in UUT revenues under the modernized deflnitions. The increase in revcnuc resulting from thc broadening of the tax basc to inelude international and interstate has been offset by thc rcduction in the tax rates also ranging from 5% to 10%. The language of thc proposed Ordinance follows "model" deflnitions that arc widely used in othcr statcs and by California cities that wish to modernize thcir ordinance. It is also written with the input of thc telecommunication companies and is intcnded to standardizc the language for uniform applications so that the companies are clear as to thcir responsibilitics in collecting the tax. This will ease the burden for thc telecommunication companics and ensure that within municipal authority, UUT is applied as fairly and consistently as possible to all applicable service providcrs as tcchnology continues to cvolve. Uniformity can offer protection against preemptive state or fedcrallaw attacks on individual ordinances, and will providc for centralized payment mcthods and coordinated audits. Thc total fiscal year 2006/07 UUT revenuc reccived was approximately $7.0 million for the Gencral Fund, representing approximately 4.3% of total General Fund revenue. Thc telecommunications related portion of the UUT revenue is approximately $4.6 million. An estimated 75% or $3.4 million of these revenues arc derived from Mobile telccommunications. The loss of these revenues wohld have a substantial impact on the City's ability to provide essential services, ineluding public safcty. Statewide Election Results Wireless ~ 75% Telecom m 65% Wired 25% Ovcr twenty cities/countics throughout thc state have recently gone to ballot and slIccessfully adopted a modern UUT ordinance with only one failing to pass their ballot measurc. Information /--4. JUL Y 29, 2008, Iteml Page 5 of8 about each city's ballot results is provided in Attachment I. Recently in June 2008, four more cities and one county succcssfully passed their UUT ballot measures. The information below summarizcs the data from Attachment 1 which includes the rcsults through the June 2008 clection: . Number ofCitics/Counties that went to Ballot . Number of Successful UUT Elcctions . Number of Cities/Counties that Rcduced Rate . Number of Cities/Counties that Maintained Rate . Number of Cities/Counties that Increased Rate . Number of Cities/Counties that Failed (New Tax) 24 23 14 8 I I 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. UUT cities also view this coming election as a "window of opportunity" to update their ordinances before adverse judicial decisions might be rendered. Summarv of Proposed Ordinance Amendments/Updates The following is a brief summary of the proposed amendments/updates to the City's UUT relative to telecommunication services: . Reduces the current tax rate on telecommunications and vidco services from 5% to 4.75% for approximately 80% of Chula Vista's Mobile telecommunications customers and all land line customers. . Applies the reduced tax rate to interstate and international calls for "cellular," (Mobile) and land line customers so that all taxpayers arc treated the same. . . Includes a modern, functional definition of telecommunication services that is teehnology- neutral, and now adds or speeiEeally identifies the following services: interstate and intemational calls; Mobile; VoIP, paging, private communication services (e.g., T-l lines for providing data, video and voice services), toll free and public service numbers. · Incorporates deEnitions of "ancillary telecommunication services" that are commonly recognized by the industry as being part of such services. . 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 trcated the same. . Provides other administrative tools for addressing telecommunication taxation issucs including administrative rulings and sourcing, bundling and nexus guidelines. . Updates the local Municipal Code to be consistent with current Federal and Statc laws and makes Chula Vista's ordinance consistent with the direction of other California cities with UUT. . The UUT tax does not apply to: o Email or othcr internet serviccs provided by internet scrvice providers ([Sl's) o Free Wi-FI ,.s JUL Y 29, 2008, Iteml Page 6 0 f 8 o Current federal laws prohibit taxation of internet services, including broadband services used for internet scrviccs. o Telecommunication services do not include cable or video programming services that are subject to a cable or video service franchise fee. The City has attempted to collect UUT from telecommunication companies who currently do not pay. Failure to modernize the UUT ordinance could perpetuate an inequity that encourages other providers who currently are paying to cease collections resulting in a loss of $3.4 million related to Mobile communication. Eventually with the continued technological changes and migration to Mobile the City is at risk of losing 100% of UUT revenucs representing up to approximately $4.6 million in the General Fund which would have a substantial impact on the City's ability to maintain current programs and provide cssential scrvices, including public safcty. Proposition 218 Requirements The proposed ordinancc contcmplates dccreasing the tax rate imposcd by thc existing Tclephone Uscrs' Tax (a part of thc City's Utility Users' Tax). A tax decrcase does not typically rcquire votcr approval. Howevcr, in this case, the tax base is also being amended because the definition of "telecommunications" is being updated to account for the vast technological changes that have taken place since the City adopted the UUT ordinance nearly forty years ago. Due to this update, certain services which are not currently taxed, would be taxed if the new ordinance is approved. Because this tax would be imposed on additional services, staff is recommending that the City comply with the requirements of Article XIIIC of the California Constitution, which was adopted by the voters in 1996 as a part of Proposition 218. Proposition 218 requires voter approval before a local government may impose, extend, or increase any tax. The tax may be a general tax, or a special tax. A general tax, requiring only a simple majority vote of the electorate for approval, is one that is imposed for general government purposes. A special tax is one that is imposed for a specific purpose, with the tax revenues earmarked for that purpose; such special taxes require approval by 2/3 of the electorate. To place a general tax on a special election ballot, the City Counci I must declare, by unanimous vote, that an emergency exists necessitating that the measure be placed on the ballot. A special tax can be placed on the ballot at any election, by direction of the City Couneil. For the City of Chula Vista, the November 2008 election is a special election. Thus, to place the proposed ordinance on the November ballot as a gencral tax measure, the Council would need to unanimously declare an emergency necessitating that the ordinance be placed on that ballot. Unlike a general tax, a special tax measure could be submitted to the voters at the special election in November, without the need for Council to declare an emergency. The Council could approve placing thc special tax on the November ballot by a vote of at lcast three mcmbcrs. City staff is recommending that the proposed ordinance be placed on the November 2008 ballot, as a general tax. If the Council does not approve it as a general tax measure, staff would recommend that it be placed on the ballot as a special tax, designated for the following purposes: public safety, parks and libraries. If approved by the voters the earliest implementation date will be February 1,2009. I-~ JULY 29, 2008, Item~ Page 7 of 8 Informational Program To ensure that residents of the City are aware of the ballot measure and 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 intemal 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 bc made available at the public counters and facilities of the City. 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)(1) is not applicable to this decision. FISCAL IMPACT The total fiscal year 2006/07 UUT revenue reccived was approximately $7.0 million for the Gencral Fund, representing approximately 4.3% of total General Fund revenue. The telecommunications related portion of the UUT revenue is approximately $4.6 million. At immediate risk is 100% or $3.4 million of existing Mobile telecommunication revenues. In the long term, the remaining telecommunications revenues are at risk due to continued changes in technology and the continued migration from wired to Mobile telecommunications. The loss of these revenues would have a substantial impact on the City's ability to provide essential services, including public safety. The updating of definitions eloses "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 Mobile telecommunication customers with no net loss of revenue anticipated. The reduction from a tax rate of 5% to 4.75% for intrastate services is anticipated to be recovered through the application of the tax to interstate and intemational calls, and the 20% of Mobile customers who currently do not pay the tax. Other cities who have eliminated this loophole have experienced a small increase ranging from 5% to 10% in their revenues under the modernized definition. The increase has been offset by the reduction in the tax rates also ranging from 5% to 10%. With the reduction of the tax rate and the broadening of the tax base to now tax interstate and international, the exact net impact to the General Fund in unknown due to unpredictable calling patterns of the consumer and evolving technology. The objective of the ballot measure is to secure the existing UUT revenue souree at current revenuc generating levels on an ongoing basis in order to preservc municipal services but not realize a significant revenue windfall. The rccommended ordinance includes the requirement for an annual review of the telecommunications users tax rate where the City Council may reduce, maintain or modify the rate in existence, but in no evcnt shall the rate be increased to exceed 4.75%. To assist in the annual review of the rate, the Finance Director will submit a Telecommunications Users Tax Rate Review Policy for Council consideration which will 1-7 JUL Y 29, 2008, Item~ Page 8 0 f 8 establish criteria/formula to determine if a rate adjustmcnt is warranted after taking into account population growth, CPI, telecommunication service increases and other relevant criteria. Due to a significant, and unexpected, deeline in revenue growth over the past 18 months, the City has undergone signi ficant 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 Five Year Forecast projects a $3.1 million budgetary gap in fiscal year 2009-10, which would be exaecrbated by any loss in UUT revenue. In an effort to minimize costs, staff proposes to manage the informational program internally and would request an appropriation of $105,000 li'om the General Fund to cover the election costs (City Clerk $35,000) and printing and mailing co~ts (Non-Departmental $70,000). ATTACHMENTS Attachment I Election Results from Other Cities Proposed Ordinance (General Tax) - Attached as "Exhibit A" to Resolution A. r. Proposed Ordinance (Special Tax) - Attached as "Exhibit A" to Resolution A.2. Prepared by: lv/aria Kachadoorian, Director a/Finance, Finance Department. Phil Davis, Assistant Director of Finance, Finance Department. J-<i Attachment 1 Summary of UUT Election Results June 2008 Oakland Passed 79% no change (7.5%) Winters Passed 70% 5 to 4.75% Covin a Passed 65% no change (6%) County of Alameda Passed 65% no change (6.5%) Torrance Passed 56% no change (6%) 'McFarland Failed 25% new 15% February 2008 San Bernardino Passed 80% 7.83 to 7.75% Huntington Park Passed 79% 7 to 6.5% .Richmond Passed 74% 10 to 9.5% Los Angeles Passed 65% 10to 9% Pasadena Passed. 58% no change (8.3%) November 2007 Emeryville Passed 86% no change (5.5%) Los Altos Passed 84% 3.5 to 3.2% Redwood City Passed 81% 5t04% Hermosa Beach Passed 72% 6 to 5.5% Benecia Passed 70% 4 to 3.5% Gilroy Passed 64% 5 to 4.5% EI Monte Passed 63% 7 to 6.5% Ventura Passed 63% 5 to 4.5% June 2007 Tulare Passed 86% 7t06% February 2007 **Covina Failed 41% no change (6%) November 2006 Compton Passed 89% 10 to 8.5% Daly City Passed 72% no change (5%) Eureka Passed 51% no change (3%) Menlo Park Passed 51% new 2.5% Total Jurisdictions gone to ballot since November 2006 24 Total that passed 23 Percent that passed 96% 'McFarland proposed new UUT tax at 15% rate and failed. "Covina failed first time out but was eventually approved by the voters. 1-' RESOLUTION NO. 2008- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY or A MEASURE RELATING TO THE CITY'S TELECOMMUNICATIONS USERS' TAX AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDA Y, NOVEMBER 4, 2008; DECLARING THE EXISTENCE OF AN EMERGENCY NECESSITATING SUCH ACTION; AND DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANAL YSIS OF THE MEASURE WHEREAS, pursuant to Chula Vista Municipal Code Chapter 3.44, the City currently levies a Utility Users' Tax ("UUT"); and WHEREAS, the City Council 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 othcr revisions to the method of calculating and collccting the tax to reflect tcchnological advances in telecommunications scrvices, and changes in federal law; and WHEREAS, the proposed ordinance, attached hereto and incorporated hcrein as Exhibit "A" would implement these proposed revisions to the tax (the "Ordinance"), and if approved by voters the earliest implemcntation date will be February I, 2009; and WHEREAS, by its Resolution No. 2008-016, adopted on January 15,2008, the City Council has called a Special Municipal Election for Tuesday, November 4, 2008; and WHEREAS, pursuant to Government Code section 53724 and California Elections Code section 9222, the City Council desires to submit the Ordinance to the electorate at the Special Municipal Election; and WHEREAS, the City council desires that if the Ordinance is adopted by the voters, staff will return for Council consideration a Rate Review Policy with respect to the proposed tax to establish criteria of formulas to be uscd by the City Council in its annual review of the tax. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista as follows: l.ehl-I SECTION 1. All of the foregoing recitals are true and correct. SECTION 2. That the City Council, pursuant to its right and authority, does order submitted to the voters at the Special Municipal Election on November 4, 2008, the following question: Shall an ordinance be adopted to: reduce the rate of the City of Chula Vista's Telecommunications Users' Tax YES (currently the Telephone Users' Tax) from 5% to 4.75%; ensure that Tax proceeds continue to be available for general municipal purposes, such as police, fire, streets and parks; revise the method for calculating and collecting the Tax to reflect technological advances and changes In NO federal law; and amend the tax base to include additional telecommunications services? 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 ofthc election, in time, form and manner as required by law. SECTION 5. That pursuant to California Elections Code 99280, the City Clerk is directed to transmit a copy of the measure to the City Attorney. The City Attorney 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 existing 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 XllIC 92(b), the City Council declares, by a unanimous vote of its membership, that a fiscal emergency exists necessitating that the Ordinance be submitted 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 l1nancial ability to provide essential municipal services such as police, fire, street repair, parks and libraries. 8. Lawsuits have been filed against other jurisdictions challenging the application of the utility users tax to certain telecommunication services based upon definitions contained in the ordinances governing such taxes and/or references to allegedly inapplicable federal Jaws. I-A~ J- 2. C. Legislation (1-l.R. 5793) has been introduced in the United States Congress, which would impose a five-year moratorium on new local wireless taxes, and could limit the ability of the City to respond to possible future adverse court rulings regarding the City's existing utility users' tax on wireless communications. D. Due to a signilicant, and unexpected, decline in revenue growth over the past 18 months, the City has undergone significant 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 UUT revenue. E. General fund operating reserves arc 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 significant 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 UUT ordinance until June 8, 2010, which is the date of the next Municipal 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 Maria Kachadoorian Finance Director J~A-I-3 ORDINANCE NO. AN ORDINANCE OF THE CITY OF CHULA VISTA ADDING CHAPTER 3.42 TO TITLE 3 OF THE CHULA VISTA MUNICIPAL CODE REGARDING A TELECOMMUNICATION USERS' TAX 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 TELECOMMUNICATION 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. 1 f/A -, ~'Ir 3.42.010 Definitions. The following words and phrases whenever used in this Chapter shall be construed as defined 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 thc following scrvices: (I) "Conference bridging service" means an ancillary servicc that links two or more participants of an audio or video confercnce 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) "Dctailed telecommunications billing service" means an ancillary service of separately stating information pertaining to individual calls on a customer'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 identi fy callers and to manage multiple calls and call connections, including conference bridging services. (5) "Voice mail service" means an ancillary service that enables the customer to store, send or receive recordcd 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 mean the mailing addrcss of the service user wherc the service supplier submits invoices or bills for payment by the customer. (c) "City" shall mcan the City ofChula Vista. (d) "Mobile Telecommunications Service" has the meaning and usage as sct 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 servicc" 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. 2 ~A-/~~ (g) "Person" shall mean, without limitation, any natural individual, firm, trust, common law trust, estate, partnership 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-telccommunication 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 ofthe 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 telecommunieations channel or group of channels between or among termination points, 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). (I) "Service Address" means either: (I) 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 (I) 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. 3 /Al- I-iq (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 of California. (p) "Streamlined Sales and Use Tax Agreement" shall mean the multi-state agreement commonly known 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 (VoIP) services or are classified by the Federal Tclecommunications 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 services 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 fce. (s) "VoIP" (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 namc "800," "855," "866," "877," and "888" toll-free calling, and any subscquent numbers designatcd by the Federal Communications Commission. (u) "900 service" means an inbound toll "telecommunications service" purchascd by a subscriber that allows the subscriber's customers to call in to the subscriber's prerecordcd announccment or live servicc. "900 service" docs not include the chargc for: collection services providcd by the seller of the "telecommunications services" to thc subscriber, or service or product sold by the subscriber to the subscriber's customer. The service is 4 l"A- ,-'1 typically marketed under the name "900" service, and any subsequent numbers designated by the Federal Communications Commission. 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 ofthe 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 nmne for such service. Said application shall be made upon a form approved by the Tax Administrator and shall state those facts, declared under penalty of perjury, which qualify the applicant for an exemption, and shall incl ude the nmnes 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 tclecommunication 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. I 50 of this Chapter. Filing an application with the Tax Administrator and appeal to the City Administrator pursuant to Section 3.42. I 50 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. There 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 "A\~/-g 5 services are subject to taxation undcr 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 Mobile Telecommunications Sourcing Act (4 U.S.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 limitcd to post-paid telecommunication services, prepaid telecommunication services, and privatc telecommunication services, provided that such rules are based upon custom and common practice that furthcr administrative efficiency and minimize multi-jurisdictional taxation (e.g., Streamline Sales and Use Tax Agreement). (c) Thc Tax Administrator may issue and disseminate to telecommunication servicc suppliers, which are subject to the tax collection requircments of this Chapter, an administrative ruling identifying those telecommunication serviccs, or charges thcrefor, 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 limitcd to charges for: connection, reconnection, termination, movement, or change of telecommunication services; late payment fees; detailed billing; central office and custom calling features (including but not limited to call waiting, call forwarding, caller identification and three-way calling); voice mail and other messaging services; directory assistance; access and line charges; universal 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, ringtoncs, 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 scrvices imposed by this section shall be collected from thc service user by the service supplier. The amount of tax collected in one (1) month shall be remitted to the Tax Administrator, and must be reccived by the Tax Administrator on or before the twentieth (20th) day of the following month. /1) _. /.Jj 6 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 scrvice supplicr identifies, by reasonable and verifiable standards, the portions of the combined charge that are non-taxable 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 servicc supplier has the burden of proving the proper apportionment of taxable and non-taxable charges. If the service supplier offers a combination of taxable 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 tax purposes. The service supplier has the burden of proving the proper valuation of the taxable and non-taxable services. 3.42.060 Substantial Nexus / Minimum 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 remittance of the telecommunication users' tax to the fullest extent permitted 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 V olP) 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 tax, 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 following: maintains or has within the City, directly or through an agent or subsidiary, a place of business of auy 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 transmitter with 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 arc 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. 3.42.070 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: 7 fA-I-IO (1) The tax 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 chargc and the tax 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 pcriod applicable to the service user where all charges normally included in such regular billing are subject to the provisions of this Chapter. Where 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 file 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 collectcd 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 deternline if the tax is being levied, collected, and remitted 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 and are exempt from the disclosurc provisions of the Public Records Act. 3.42.080 Collection Penalties - Service Suppliers. (a) Taxes collected from a service user are delinquent if not received by the Tax 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 following the weekend or legal holiday. A direct deposit, including electronic fund transfers and other similar methods of electronically exchanging monies bctween financial accounts, made by a service supplier in satisfaction of its obligations under this subsection shall be considercd timely if the transter is initiated on or before the due date, and the transfer settles into the City's account on the following business day. (b) If the person required to collect and/or rcmit the telecommunication users' tax fails to collcct the tax (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 collected on or before the due date, the Tax Administrator shall attach a penalty for such dclinquencies 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 751100ths (0.75%) percent per month, or any traction thereat: on the amount of the tax, exclusive of penalties, tram the date on which the remittance first bccame delinquent, until paid. 8 It~'J~lI (c) The Tax Administrator shall have the power to impose additional penalties upon persons required to collect and remit taxes pursuant to the provisions of this Chapter for fraud or gross negligence in reporting or remitting at the rate oftitteen (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 01' this section shall become a part of the tax herein required to be paid. (e) Notwithstanding the foregoing, the Tax Administrator may, in his or her discretion, modify the due dates of this Chapter to be consistent with any uniform standards or procedures that are mutually agreed upon by other public agencies imposing a utility users' tax, or otherwise legally established, to create a central payment location or mechanism. 3.42.090 Actions to Collect. Any 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 tax 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 this Chapter, along with any collection costs incurred by the City as a result of the person's noncompliance with 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 II US. CA. 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 tax by improperly applying, or failing to apply, the tax to one or more taxable 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 tax, which notice shall refer briet1y to the amount of the taxes owed, plus interest at the rate of 75/100ths (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 owing the tax may request in writing to the Tax Administrator for a hearing on the matter. 9 (lite t .~ I,.. (c) If thc 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 dcsignate the records requestcd to be produced. (d) At the time Jixed for the hcaring, 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 final assessment (or non- assessment), thereafter, by conJirming, modifying or rejecting the original deJicicncy determination, and shall mail a copy of such final 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 Jinal assessment shall become delinquent if not received by the Tax Administrator on or before the thirtieth (30th) day following 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, lmtil paid.. The applicable statute of limitations regarding a claim by the City seeking payment of a tax assessed under this Chapter shall commence from the date of dclinquency as provided in this subsection (e). (0 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 0 I' mailing. 3.42.110 Administrative Remedy - Non-Paying Service Users. (a) Whenever the Tax Administrator determines that a service user has deliberately withheld the amount of the tax owed by the service user from the amounts remitted to a person required to collect the tax, or whenever the Tax 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 tax owed for a period of two (2) or more billing periods, the service supplier shall be relieved of the obligation to collect taxes due. The serviee 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 /r(./J ~ I., (!J 10 herein shall require that the Tax Administrator institute proceedings under this Section 3.42.110. (b) In addition to thc tax owed, the service user shall pay a delinqucncy penalty at the ratc of fifteen percent (15%) of the total tax that is owed, and shall pay interest at the rate of 751100ths (0.75%) pcrcent per month, or any fraction thcreof; 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 pcriods and demand paymcnt of such taxes, including penalties and interest. The notice shall be scrved on the service user by personal delivery or by deposit of the notice in the United States mail, postage prcpaid, addressed to the service user at thc address to which billing was made by the person required to collect the tax; or, should the service uscr 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 and duty to enforce each and all of the provisions of this Chapter. (b) The Tax Administrator may adopt administrative mles and regulations consistent with provisions of this Chaptcr for the purpose of interpreting, clarifying, carrying out and enforcing the payment, collection and remittance of the taxes herein imposed. The administrative mles 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 mles and regulations shall be on file in the Tax Administrator's oflice. 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 scrvice supplier or service user, that determination shall be considered an exercise of the Tax Administrator's discretion to settle 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 mlings 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: (I) conform to the billing procedures of a particular service supplier so long as said agreements result in the collection of the tax in conformance with the 11 ItAe,,'4 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 agrccment shall be on file in the Tax Administrator's oftice, 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 rcquired to collect and/or remit a tax pursuant to this Chapter. The Tax Administrator shall notify said person of the initiation of an audit in writing. In the absence of fraud or other intentional misconduct, thc audit period of review shall not exceed a period of three (3) years immediately preceding the date of receipt of the writtcn notice by said person from the Tax Administrator. Upon completion of the audit, the Tax Administrator may make a deticiency 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 Tax Administrator. If said person is unable or unwilling 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 written 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 cxceed 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 extension. Interest shall accrue during said extension at the rate of 75/1 OOths (0.75%) percent pcr month, proratcd for any portion thereof (t) The Tax 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 rcquired to collect and/or remit for failure to collcct the tax imposed by this Chapter if the non-collection occurred in good faith. In determining whether thc 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 evcry person required to collect and/or remit to the City any tax imposed by this Chapter to keep and preserve, for a period of at least three (3) ycars, 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 Tax Administrator, which 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, copics of all records decmed necessary by thc Tax Administrator to 12 fA- I-II~ 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 Tax 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 See/ions 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 tclephone 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 unreasonably 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 Tax 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 reti.ll1ded 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 Tax Administrator under this Chapter from a person or service supplier, provided that no refund shall be paid under the provisions of this section unless the claimant or his or her guardian, conservator, executor, or administrator has submitted a written 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 written records showing entitlement thereto. Nothing herein shall permit the filing of a claim on behalf of a class or group of fA,/-Il6 13 taxpayers unless each member of the class has submitted a written claim under penalty of perjury as provided by this subsection. (b) The Iiling of a written 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 Government Code Sections 945.6 and 946. The Tax Administrator, or the City Council where thc claim is in exccss 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 pcriod within 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 noticc provisions of subsection (a) of this Section, the Tax Administrator may, at his or hcr discretion, give written permission to a service supplier, who has collccted and remitted any amount of tax in exccss of the amount of tax imposcd by this Chapter, to claim credit for such overpayment against the amount of tax which is due the City upon a subsequent monthly rcturn(s) to the Tax Administrator, provided that: i) such credit is claimed in a return dated no later (han one year from the date of overpayment or erroneous collection of said tax; ii) thc Tax Administrator is satisfied that the underlying basis and amount of such credit has been reasonably cstablished; 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 receivcd proof: 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 crcdit. (d) Notwithstanding subsections (a) through (c) above, a scrvice supplier shall be entitlcd to takc any overpaymcnt as a credit against an underpaymcnt whenever such overpayment has becn received by the City within the three (3) years immediatcly preceding a deficiency determination or assessment by the Tax Administrator in conncetion with an audit instituted by the Tax Administrator pursuant to Section 3.42.120(d). A servicc 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 this subsection qualify a service supplier for a refund to which it would not otherwise be cntitled under the one-year written claim requircmcnt of this section. 3.42.150 Appeals. (a) The provisions of this scction apply to any decision (other than a decision relating to a refund pursuant to Section 3.42.140 of this Chapter), deficiency dctcrmination, asscssment, or administrative ruling of thc Tax Administrator. Any person aggrieved by any dccision (other than a decision relating to a refund pursuant to Section 3.42.140 of this Chapter), deficiency dctermination, assessment, or administrative ruling of the Tax Administrator, 14 tl{;J.'" fi-f1 shall be rcquired to comply with the appcals proccdure of this section. Compliance with this section shall be a prcrequisitc to a suit thereon. [See Government Code Section 935(b).] Nothing herein shall permit the filing of a claim or action on bchalf of a class or group of taxpayers. (b) If any person is aggrievcd by any decision (other than a decision relating to a refund pursuant to Section 3.42.140 of this Chapter), deficiency determination, assessment, or administrativc ruling of the Tax Administrator; he or she may appeal to the City Manager by filing a noticc of appeal with the City Clerk within fourteen (14) days of the date of the decision, deficicncy determination, assessment, or administrative ruling of the Tax Administrator which aggricvcd the scrvice 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 hcaring, as wcll as any relevant materials, at least Jive (5) calendar days prior to thc 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 interestcd person may present such relevant cvidence as he or she may have relating to the determination from which the appeal is taken. (d) Based upon the submission of such evidence and the revicw of the City's files, the hearing ot1iccr shall issue a written notice and order upholding, modifying or reversing the determination from which the appeal is taken. Thc notice shall bc given within fourteen (14) days after the conclusion of the hcaring and shall state the reasons for the dccision. Thc notice shall specify that the decision is final and that any petition for judicial rcview shall be filed within ninety (90) days from thc 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 thc City, all costs of the hcaring shall bc 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 InjunctionlWrit of Mandate. No injunction or writ of mandate or other legal or cquitable process shall issue in any suit, action, or procecding in any court against this City or against any oflicer of the City to prevent or enjoin thc collection under this Chapter of any tax or any amount of tax rcquired to be collccted and/or remitted. 3.42.170 Notice of Changes to Ordinance. If a tax under this Chaptcr is added rcpealed, increased, rcduced, or thc tax basc is changcd, the Tax Administrator shall follow the notice requirements of California Public Utilities Code Section 799. fA .,I-/i' 15 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 inelude any subsequent amendment thereto, or to any subsequent change of interpretation thereto by a state or federal agency or court oflaw 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 exeluding 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 tax shall be imposed and collected to the full extent of the authorization up to the full amount of the tax imposed uuder this Chapter. 3.42.190 Independent Audit of Tax Collection, Exemption, Remittance, and Expenditure. The City may periodically verify that the taxes 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 tax levied pursuant to Section 3.44.030 of this Code with respect to that charge. Likewise, prior to April I, 2009, any person who pays the tax levied pursuant to Section 3.44.030 of this Code with respect to any charge for a service subject to taxation 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 taxes upon a single utility charge during the transition period from the prior telecommunication users' tax to the new 16 IAI-'/- 1'1 telecommunication users' tax (which transition period ends April I, 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 ofthe Chapter, but in no event later than permitted by Section 799 of the California Public Utilities Code. ( c) Tn 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, thcn the tax imposed under Sections 3.44.030 (unless repealed) shall automatically continue to apply with respect to any service for which the tax levicd 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 that is ordered refunded by the court or is otherwise refunded by the City) paid by a pcrson with respect to a service and calculatcd 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 Rcmedies Cumulative. All remedics and penalties prescribed by this Chapter or which are available undcr any other provision of law or equity, ineluding but not limited to the CalifiJrnia 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 purposc of enforcing the provisions of this Chaptcr. 3.42.220 Violations Deemed Infractions. Any 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 tax, to make a return, to keep any records, or to supply any infonnation 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. 3.42.230 Annual Review. (a) The revenues received from the Telecommunications Users' Tax imposed by this Chapter shall be reviewed by the City Council annually. This review shall begin in 2010 and shall take place at a City Council meeting to be held before June 30th of each fiscal year. The review shall be conducted as part of the annual budget process. Prior to the review, the Finance Director shall provide the City Council with the following information: 17 fA '10!!- 2JO (i) the total tax revenue received by the City as a result of the Telecommunications Users' Tax, as of December 31 st of the calendar year preceding the date of the meeting; and (ii) the Finance Director's recommendation as to whether an adjustment to the rate of any tax approved and levied under this Chapter is indicated in light of the financial condition of the City. (b) Based on the City Council's review, it may modify the rate imposed by section 3.42.040 of this Chapter. The City Council may reduce, maintain or modify the rate in existence at the time of the annual review, but in no event shall the rate exceed 4.75%. If the City Council determines to change the tax rate pursuant to this Section 3.42.230, it shall do so by adopting a resolution amending Section 3.42.040(a) to reHeet the new rate. ( c) If the City Council determines to terminate the levy of taxes under this Chapter, that termination shall not affect the obligation to pay taxes levied on services used prior to the date of termination. Taxes levied prior to that date shall remain a debt payable to the City. All provisions in this Chapter, except those relating to the levy of taxes, shall continue with full force and effect after such date. (d) Nothing in this Chapter is intended to constitute an extension or an increase in a tax requiring voter approval under California Constitution Article XllIC; and to the extent that this Section 3.42.230 is found to invoke such a requirement, this Section 3.42.230 shall be ~~~~~~~ I SECTION 2. Effective Date. This Chapter shall become effective immediately upon the date that this Ordinance is confirmed 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 Title 3 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 approval is required for any amendment provision that would increase the rate of any tax levied pursuant to this Ordinance. The People of the City of Chula Vista affirm that the following actions shall not constitute an increase of the rate of a tax: 1. 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 tax; 2. An action that interprets or clarifies the methodology of the tax, or any definition applicable to the tax, 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 tax or the discontinuation of any such exemption or exception (other than the 18 fA,/~~I' discontinuation of an exemption or exception specifically set forth m this Ordinance); and 4. The collection of the tax imposed by this Ordinance, even if the City had, for some period of time, failed to collect the tax. I 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 havc 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 portions 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. I hereby certify that the foregoing Ordinance was PASSED, APPROVED and ADOPTED by the people of the City ofChula Vista voting on the day of ,2008. Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney APPROVED AS TO FORM: 14,,1}- ~ 19 RESOLUTION NO. 2008- 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 TI-lE CITY'S SAFETY AND COMMUNITY ENHANCEMENT TELECOMMUNICATIONS USERS' TAX AT TI-IE SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 4, 2008 AND DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS OF THE MEASURE WHEREAS, pursuant to Chula Vista Municipal Codc Chapter 3.44, the City currently levies a Utility Uscrs' Tax ("UUr); and WHEREAS, the City Council desires to adjust the rate of the Telephone Users' Tax (a component of the UUT) from 5% to 4.75%; to rename the Telephone Users' Tax as the Tclecommunications Users' Tax; to modernize the tax base so that differcnt telecommunications technologies are treated similarly; to apply the tax to interstate and international calls for all customers; to require that all proceeds of the Telecommunications Users' Tax be used exelusively for public safety, park and library purposes; and to make other revisions to the method of calculating and collecting the tax to reflect technological advances in telecommunications services, and changes in applicable law; and WHEREAS, the proposed ordinance, attached hereto and incorporated herein as Exhibit "A," would implement these proposed revisions to the tax (the "Ordinance"), and if approved by voters the earliest implementation date will be February 1,2009; and WHEREAS, by its Resolution No. 2008-016, adopted on January 15,2008, the City Council has called a Special Municipal Election for Tuesday, November 4, 2008; and WHEREAS, pursuant to Government Code section 53724 and California Elections Code section 9222, the City Council desires to submit the Ordinance to the electorate at the Special Municipal Election; and WHEREAS, the City Council desires that if the Ordinance is adopted by the voters, staff will return for Council consideration a Rate Review Policy with respect to the proposed tax to establish criteria or formulas to be used by the City Council in its annual review of the tax. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula- Vista as follows: '~4-r~ SECTION I. All of the foregoing recitals are true and correct. SECTION 2. That the City Council, pursuant to its right and authority, does order submitted to the voters at the Special Municipal Election on November 4, 2008, the following question: Shall an ordinance be adopted to: reduce the rate of the City ofChula Vista's Safety and Community Enhancement YES Telecommunications Users' Tax (currently the Telephone Users' Tax) from 5% to 4.75% while maintaining exemptions for low-income senior citizens; dedicate Tax proceeds exclusively to public safety, park and library purposes; establish accountability provisions; revise the NO method of Tax calculation and collection to reflect technological advances and changes in law; and include additional telecommunications services in thc tax base? This measure requires a two-thirds vote of the electorate for adoption. 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 !i9280, the City Clerk is directed to transmit a copy of the measure to the City Attorney. The City Attorney 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 existing 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 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 Maria Kachadoorian Finance Director }..../J} .",):"- '20- ~~~ ~t~J/1 >>fr fi~ '\---A~-~-3. ORDINANCE NO. AN ORDINANCE OF THE CITY OF CHULA VISTA ADDING CHAPTER 3.42 TO TITLE 3 OF THE CHULA VISTA MUNICIPAL CODE REGARDING THE CITY OF CHULA VISTA SAFETY AND COMMUNITY ENHANCEMENT TELECOMMUNICATION USERS' TAX THE PEOPLE OF THE CITY OF CHULA VISTA DO ORDAIN AS FOLLOWS: SECTION]: Chapter 3.42 is hereby added to Title 3 of the Chula Vista Municipal Code, and it shall read as follows: Chapter 3.42 SAFETY AND COMMUNITY ENHANCEMENT TELECOMMUNICATION USERS' TAX 3.42.010 Definitions. 3.42.020 Constitutional, Statutory, and Other Exemptions. 3.42.030 Exemptions - Senior Citizens 3.42.040 Special 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.] 00 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 Injunction/Writ of Mandate. 3.42.170 Notice of Changes to Ordinance. 3.42.]80 Effect of State and Federal Reference/Authorization. 3.42.190 Creation of Fund and Use of Tax Proceeds. 3.42.200 Interaction with Prior Tax. 3.42.2]0 Remedies Cumulative. 3.42.220 Violations deemed infractions. 3.42.230 Annual Review. 3.42.240 Accountability Measures. I~JJ.~~lf 1 3.42.01 0 Definitions. The following words and phrascs whenever used in this Chapter shall bc construed as defined in this scction. (a) "Ancillary telecommunication services" means serviccs 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 scrvice" means an ancillary service that links two or more participants of an audio or video conference call and may include the provision of a telephonc number. "Conference bridging service" does not include the tclecommunications serviccs used to reach the conference bridge. (2) "Detailed telecommunications billing scrvice" means an ancillary service of separately stating information pertaining to individual calls on a customer's billing statement. (3) "Directory assistancc" means an ancillary serVlce of providing telephone number information, and/or address information. (4) "Vertical service" means an ancillary service that is offercd in connection with one or more telecommunications scrvices, which olTers advanced calling fcatures that allow customers to identify callers and to manage multiple calls and call connections, including conference bridging services. (5) "Voice mail 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 mean the mailing address of the service user where the scrvice supplier submits invoices or bills for payment by thc customer. (c) "City" shall mcan 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 thc rcgulations thcreunder. (e) "Month" shall mcan a calendar month. I ~A,,-,~~ e; 2 (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. (g) "Person" shall mean, without limitation, any natural individual, Ilrm, trust, common law trust, estate, partnership 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-tclccommunication 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. (j) "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 telecommunications channel or group of channels between or among termination points, 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). (I) "Service Address" means either: (I) 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 (I) 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. I~A,~J..~ , 3 (3) For prepaid telecommunication service, "service address" means the location associated with the service number. (m) "Servicc 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 of Cali fornia. (p) "Streamlined Sales and Use Tax Agreement" shall mean the multi-state agreement commonly known 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 forn1, 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 (VoIP) 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 services 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) "VoIP" (voice over intemet protocol) means the digital process of making and receiving real-time voicc 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 '-A.-~1 4 announcement or livc service. "900 service" does not include the charge for: 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 typically marketed under the name "900" service, and any subsequent numbers designated by the Federal Communications Commission. 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 Tax Administrator and shall state those facts, declared under penalty of peI:jury, 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 tclecommunication 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 City Administrator pursuant to Section 3.42. I 50 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 3.44.02 I. 3.42.040 Special Telecommunication Users' Tax. (a). There is hereby imposed a special 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 '-4"c I) 5 from the service user by the telecommunication services supplier or its billing agent. There 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 services arc subject to taxation under this Chapter. If the billing address of the service user is different from the service address, the serviee address of the service user shall be used for purposes 01' imposing the tax. As used in this Section, the term "charges" shall inelude the value of any other services, credits, property of every kind or nature, or othcr 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 Mobile Telecommunications Sourcing Act (4 u.s.e. 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 othcr telecommunication scrvices, 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 issuc and disseminate to telecommunication service suppliers, which are subject to the tax collection requirements of this Chapter, an administrative ruling identilying those telecommunication services, or charges therefore, that are subject to or not subject to the tax of subsection (a) above. (d) As used in this section, thc tcrm "telecommunication services" shall inelude, but is not limited to charges for: connection, reconnection, termination, movement, or change of telecommunication services; late payment fees; detailed billing; central office and custom calling features (including but not limited to call waiting, call forwarding, caller identification and three-way calling); voice mail and other messaging services; directory assistance; access and line charges; universal service charges; regulatory, administrative and other cost recovery charges; local number portability charges; and text and instant messaging. "Telecommunication services" shall not inelude 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 extcnt 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. (I) 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 1-4"2- , 6 be remitted to the Tax Administrator, and must be received by the Tax Administrator on or before the twentieth (20th) day ofthe following month. 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 identifies, by reasonable and verifiable standards, the portions of the combined charge that are non-taxable 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-taxable charges. If the service supplier offers a combination of taxable and non- taxable services, and the charges are separately stated, then for taxation purposes, the values assigned thc 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 tax purposes. The service supplier has the burden of proving the proper valuation of the taxable and non-taxable servIces. 3.42.060 Substantial Nexus / Minimum Contacts. For purposes of imposing a tax or establishing a duty to collect and rcmit a tax under this Chapter, "substantial nexus" and "minimum contacts" shall be construed broadly in favor of the imposition, collection and/or remittance of the tclecommunication users' tax to the fullest extent permitted 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 VolP) 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 rcbuttable presumption that "substantial nexus/minimum contacts" exists for purposes of imposing a tax, or establishing a duty to collect and remit a tax, under this Chapter. A service supplier shall be deemed to have suflicient activity in the City for tax collection and remittance purposes if its activities include, but are not limited to, any of the following: maintains or has within 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 transmitter with 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 associatcd 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. 3.42.070 Duty to Collect--Procedures. I-A.-"",Io 7 (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: (I) The tax shall be collected by service suppliers insofar as practicable at the samc time as, and along with, the collection of the charges made in accordance with the regular billing practice of thc service supplier. Whcre the amount paid by a scrvice user to a service supplier is less than the full amount of the charge and tax which was accrued for thc billing period, a proportionate share of both the charge and the tax 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 chargcs, 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 thc 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. Where a service user reccives 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 file a rcturn 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 remitted 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 and are exempt from the disclosure provisions of the Public Records Act. 3.42.080 Collection Penalties - Service Suppliers. (a) Taxes collected from a service user are delinquent if not received by the Tax 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 following the weekend or legal holiday. A direct deposit, including electronic fund transfers and other similar methods of electronically exchanging monies betwcen financial accounts, made by a service supplier in satisfaction of its obligations under this subscction shall be considered timely if the transfer is initiated on or before the due date, and the transfer settles into the City's account on the following business day. (b) If the person required to collect and/or remit the telecommunication users' tax fails to collect the tax (by failing to properly assess the tax on one or more services or charges on the customer's billing) or fails to rcmit the tax collected on or before the duc date, the Tax Administrator shall attach a penalty lor such delinquencies or deficiencies at thc rate of fifteen (15%) percent of the total tax that is delinquent or deficicnt in the remittance, and I-A~~'1.-'U 8 shall pay interest at the rate of and 75/1 OOths (0.75%) percent per month, or any fraction thereof, on the amount of the tax, exclusive of penalties, from the date on which the remittance tirst became delinquent, until paid. (c) The Tax Administrator shall have the power to impose additional penalties upon persons required to collect and remit taxes pursuant to the provisions of this Chapter for fraud or gross negligence in reporting or remitting at the rate oftifteen (15%) percent ofthe 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 tax herein required to be paid. (e) Notwithstanding the foregoing, the Tax Administrator may, in his or her discretion, modify the due dates of this Chapter to be consistent with any uniform standards or procedures that arc mutually agreed upon by other public agencies imposing a utility users' tax, or otherwise legally established, to create a central payment location or mechanism. 3.42.090 Actions to Collect. Any 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 tax 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 this Chapter, along with any collection costs incurred by the City as a result of the person's noncompliance with 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 US.CA. See/ion 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 detennincs 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 tax by improperly applying, or failing to apply, the tax to one or more taxable 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 deticiency determination to the person or entity allegedly owing the tax, which notice shall refer briet1y to the amount of the taxes owed, plus interest at the rate of 75/1 OOths (0.75%) percent per month, or any fraction thereot~ on the amount of the tax from the date on which the tax should have been , -)l. -2:-'2.. 9 received by the City. Within fourtcen (14) calendar days after the date of service of such notice, the person or entity allegedly owing thc tax may request in writing to the Tax Administrator for a hearing on the matter. (c) If the person or entity allegedly owing the tax fails to requcst a hearing within thc 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 evidenee. Within a reasonable time following the conclusion of the hearing, the Tax Administrator shall issue a final assessment (or non- assessment), thereafter, by confirming, modifying or rejecting the original defieiency determination, and shall mail a copy of such final assessment to the person or cntity 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 final assessment shall become delinquent if not reccived by the Tax Administrator on or before the thirtieth (30th) day following the date of receipt of the notice of final assessment. The penalty for delinquency shall be fifteen perccnt (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 thereot: on the amount of the tax, exclusive of penalties, from the date of dclinquency, until paid. The applieable statute of limitations regarding a claim by the City seeking payment of a tax assessed under this Chapter shall commence from the date of delinqueney as provided in this subsection (e). (t) All notices under this seetion may be sent by regular mail, postage prepaid, and shall be deemed received on the third ealendar 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 Tax Administrator determines that a service user has deliberately withheld the amount of the tax owed by the service user from the amounts remitted to a person required to collcct the tax, or whencver the Tax 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 ccrtain namcd service users for specitic billing periods. To the 1-1);-71:- ,B 10 extent the service user has failed to pay the amount of tax owed for a period of two (2) or more billing periods, the service supplier shall be relieved of the obligation to collect taxes 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 herein shall require 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 751l00ths (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 statcd 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 pcrcent (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 and 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, collcction and remittance of the taxes hcrein 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 rcgulations shall be on file in the Tax Administrator's ottice. To the extent that thc Tax Administrator determincs that the tax imposed under this Chapter shall not be collected in full for any period of timc from any particular service supplier or service user, that determination shall be considered an exercise of the Tax Administrator's discretion to settle disputes and shall not constitute a change in taxing methodology for purposes of Govemment Code Section 53750 or otherwise. The Tax Administrator is not authorized to amend the City's mcthodology for purposcs 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. I'I+-~-"If 11 (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: (l) conform to the billing procedures of a particular service supplier so long as said agreements result in the collection of the tax in conformance with the 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 Tax 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 written notice by said person from the Tax Administrator. Upon completion of the audit, the Tax Administrator may make a deficiency determination pursuant to Section 3.42.1 OO(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 Tax Administrator. If said person is unable or unwilling 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 written request of a taxpayer, and for good cause, the Tax Administrator may extend the time for tiling 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 extension. Interest shall accrue during said extension at the rate of 75/1 OOths (0.75%) percent per month, prorated for any portion thereof. (t) The Tax 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 tax 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 ,l-A....~~/S 12 liable for the collection of and remittance to the Tax Administrator, which 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 deemcd necessary by the Tax Administrator to 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 thc 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 thc normal salary or hourly wages of those persons designated by the City to conduct the inspection. (c) The Tax Administrator is authorized to executc a non-disclosure agreement approvcd by the City Attorney to protect the confidentiality of customer information pursuant to CalifiJrnia 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 telephonc number of each billing agent and billing aggregator currently authorized by the service supplier to bill, collect, and/or remit the tax to thc 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 thc proper application, calculation, collection and/or remittance of such tax to the City. (e) If any person subject to record-keeping under this section unreasonably denies thc Tax Administrator access to such records, or fails to produce the information requested in an administrativc subpoena within the time specified, thcn the Tax Administrator may impose a penalty of $500 on such person for each day following: i) the initial datc that the person refuscs to provide such access; or, ii) the due date for production of records as sct forth in the administrative subpoena. This penalty shall be in addition to any other penalty imposcd under this Chapter. 3.42.140 Refunds. Whenever the amount of any tax has been overpaid or paid more than once or has been erroncously or illegally collected or received by thc 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 bcen overpaid or paid more than once or has been erroncously or illegally collccted or received by the Tax Administrator under this Chapter from a person or service supplicr, provided that no refund shall bc paid under the provisions of this section unless the claimant or his or her guardian, conservator, ,_.~ "~-I'- 13 executor, or administrator has submitted a written 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 written records showing entitlement thereto. Nothing herein shall permit the filing of a claim on behalf of a class or group of taxpayers unless each member of the class has submitted a written claim under pcnalty of perjury as provided by this subsection. (b) The filing of a written 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 Government 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 deemcd to have been rejected by the City Council on the last day of the period within 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 rcmitted 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 return(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 satisfied that the underlying basis and amount of such credit has been reasonably cstablished; 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 proof: 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 this subsection qualify a service supplier for a refund to which it would not otherwise be entitled under the one-year written claim requirement of this section. 3.42.150 Appeals. l"A."~-fl 14 (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 ruling of the Tax Administrator. Any pcrson 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, 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(h).] Nothing herein shall permit the filing of a claim or action on behalf of a class or group of taxpayers. (b) If any 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 administrativc 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, deficiency 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 selccted 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 taken. (d) Based upon the submission of such evidence and the review of the City's Jiles, the hearing officer shall issue a written notice and order upholding, modifying or reversing the determination from which the appeal is taken. The notice shall be given within fourteen (14) days after the conclusion of the hearing and shall state the reasons for the 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. Tn the event the hearing officcr'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 cstablished by a proof of mailing. 3.42.160 No Injunction/Writ 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 tax or any amount of tax required to be collected and/or remitted. I-A,--~-16 15 3.42.170 Notice of Changes to Ordinance. If a tax under this Chapter is added repealed, increased, reduced, or the tax base is changed, the Tax Administrator shall follow the notice requirements of CalifiJrnia Public Utilities Code Section 799. 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 tax 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 Creation of Fund and Use of Tax Proceeds. (a) Proceeds of the tax imposed under this Chapter shall be deposited into a special fund designated "Safety and Community Enhancement Special Tax Fund," which is hereby created. Monies in the fund shall be separately accounted for from the other funds of the City, and interest earned on fund balances shall accrue to the fund upon which such interest was earned. (b) Tax proceeds, and interest thereon, in the "Safety and Community Enhancement Special Tax Fund" may be used only to fund (i) parks, (ii) libraries, and (iii) police, fire and other public safety programs and for no other purposes. (c) This Section shall constitute the statement indicating the specific purposes of a special tax as required by Government Code Section 50075.1 (a). Proceeds of the tax imposed by this Chapter, and the interest thereon, shall be expended only as set forth in this Section. 1-4-2.-1'1 16 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 tax 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 tax levicd pursuant to Section 3.44.030 of this Code with respcct to any chargc for a service subjcct to taxation pursuant to this Chapter shall be deemcd to have satisficd his or her obligation to pay the tax Icvied 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 taxcs upon a single utility charge during the transition period from the prior telecommunication users' tax to the new telecommunication users' tax (which transition period ends April I, 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 datc of the Chapter, but in no event later than permitted by Section 799 a/the CalifiJrnia Puhlic 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 with 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 that 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 remedics and penalties prescribed by this Chapter or which are available under any other provision of law or equity, including but not limited to the Califim?ia False Claims Act (Government Code Section 12650 et seq.) and the California Un/air Practices Act (Business and Professions Code Section 17000 et seq.), are cumulative. The use of one or more remedies by thc City shall not bar thc use of any other remedy for the purpose of enforcing the provisions of this Chapter. 3.42.220 Violations Deemed Infractions. Any person who willflllly 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 '1'-1+,,-2,,,2-0 17 pay the tax, to make a return, to keep any records, or to supply any inforn1ation 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. 3.42.230 Annual Review. (a) As part of the annual budget process, the City Council shall annually revicw the amount of revenues derived by the City from the tax imposed by this Chapter. The first review shall occur no later than June 30, 201 0, and cach subsequent review shall occur no later than June 30 of each fiscal year. Prior to the review, the Finance Director shall provide the City Council with the following information: (i) the total tax revenue received by the City as proceeds of the tax imposed by this Chapter, as of December 31st of the calendar year preceding the date of the meeting; and (ii) the Finance Director's recommendation as to whether an adjustment to the rate of the tax imposed by this Chapter is indicated in light of the financial condition of the City. (b) Following its review, the City Council may adopt an ordinance modifying (either indefinitely or for a fixed period) the rate of the tax imposed by the Chapter or terminating or suspending imposition of the tax. The City Council may reduce, maintain or modify the rate in existence at the time of the annual review, but in no event shall the rate be increased to exceed 4.75%. . (c) If the City Council adopts an ordinance terminating the tax" that termination shall not affect the obligation to pay taxes levied on services used prior to the date of termination. Taxes levied prior to that date shall rcmain a debt payable to the City. All provisions in this Chapter, except those relating to the levy of taxes, shall continue with full force and effect after such date. (d) Nothing in this Chapter is intended to constitute an extension or an increase in a tax requiring voter approval under CalifiJrnia Constitution Article xurc; and to the extent that this Section 3.42.230 is found to invoke such a requirement, this Section 3.42.230 shall be deemed null and void ab initio. 3.42.240 Accountability Measures. (a) The City's expenditure of the proceeds of the taxes imposed by this Chapter, and the interest thereon, shall be reviewed annually by an independent auditor in conjunction with, and as part of, the City's usual annual financial audit, and the results of such review shall be made available for inspection by the public. (b) The City's Finance Director shall at least once a year file with the City Council the annual rcport required by Governn1cnt Code Section 50075.I(d), which report shall set J "Jf,,,'2-21, 18 forth both: (1) the amount of funds collected and expended and (2) the status of any projects required or authorized to be funded as identified in Section 3.42.190 of this Chapter. The report required by this Scction may be incorporated into the report required by Section 3.42.230(a) of this Chapter. SECTION 2. Effective Date. This Chapter shall bccome effective immediately upon the date that this Ordinancc is confirmed 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 Title 3 of the Chula Vista Municipal Code, except for Section 3.42.190 thereof, may be repcalcd or amended by the City Council without a vote of the people. However, as required by Chapter XTTlC of the California Constitution, voter approval is required for any amendment provision that would increase thc rate of any tax levied pursuant to this Ordinance. The People of the City of Chula Vista aflirm that the following actions shall not constitute an increase of the rate of a tax: 1. The restoration of the rate ofthc 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 tax; 2. An action that interprets or clarifics the methodology of the tax, or any definition applicable to the tax, so long as interpretation or clari fication (even if contrary to some prior intcrpretation or clarification) is not inconsistent with the language of this Ordinance. 3. The establishment of a class of person that is exempt or exccpted from the tax or the discontinuation of any such exemption or exception (othcr than the discontinuation of an exemption or exception specifically set forth in this Ordinance); and 4. The collection of the tax imposed by this Ordinancc, even if the City had, for some period of time, failed to collect the tax. SECTION 4. Severability. If any section, subsection, sentence, clausc, 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 nonctheless remain in full forcc and effect. The people hereby declares that they would have adopted each section, subsection, sentence, clause, phrase, or portion of this Ordinance, irrespcctive of the fact that any onc or more sections, subsections, sentenccs, clauses, phrases, or portions of this Ordinancc be declared invalid or unenfOrceablc. 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. 1..P)\....~..z.~ 19 I hereby certify that the foregoing Ordinance was PASSED, APPROVED and ADOPTED by the people ofthe City ofChula Vista voting on the day of ,2008. Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney APPROVED AS TO FORM: J~4-~-~~ 20 RESOLUTION NO. 2008- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $35,000 FROM TI-IE GENERAL FUND TO COVER ANTICIPATED COSTS AND EXPENSES RELATED TO PLACING THE TELECOMMUNICATIONS USERS' TAX ORDINANCE ON THE NOVEMBER 2008 BALLOT WHEREAS, Chula Vista's Utility Users' Tax (UUT) was adopted in 1970 as a means to help tlmd public scrvices and capital improvemcnt projects through the City's General Fund; and WHEREAS, the City receives UUT based on the usagc of natural gas, electricity and telecommunications; and WHEREAS, in I1scal year 2006-2007, the total UUT received was approximately $7.0 million, which represents 4.3% of Gcneral Fund revenucs; and WHEREAS, thc current rates charged are .00919 pcr therm, .0025 per kilowatt, and 5% on telephone; and WHEREAS, there are over 150 cities in California with a UUT; and WHEREAS, city statJ is recommending that the City's UUT ordinance, as it applies to telecommunications, be updated to reneet recent changes in Federal tax law and to modernize the definition of "telecommunications" to make it technology neutral; and WHEREAS, the City Council desires to adjust the rate of the telephone portion of the Utility Users' 'fax 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 renect technological advances and changes in state and federal law; and WHEREAS, failure to modernize the City's UUT ordinance rclative to telecommunication services could result in a loss of 75% to 100% of the telecommunications related portion of the UUT, or upwards to approximately $4.6 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 WHEREAS, updating the UUT ordinance requires a measure be placed on the ballot and approval by the voters; and frr.e-I WHEREAS, City staff is recommending that the proposed Telecommunications' Users' Tax ordinance be placed on the November 2008 ballot; and WHEREAS, City staff requests appropriation of $35,000 to cover the anticipated election costs and expenses for placing the Telecommunications Users' Tax on the November 2008 ballot. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista appropriates $35,000 from the General Fund to the City Clerk's budget to cover anticipated costs and expenses related to placing the Telecommunications Users' Tax on the November 2008 ballot. Presented by Approved as to form by Maria Kachadoorian Finance Director 1-19" ;l.. RESOLUTION NO. 2008- RESOLUTION OF THE CITY COUNCIL OF TI-IE CITY OF CHULA VISTA APPROPRIATING $70,000 FROM THE GENERAL FUND TO COVER ANTICIPATED COSTS AND EXPENSES RELATED TO PRINTING AND MAILING INFORMATION RELATED TO THE TELECOMMUNICATIONS USERS' TAX BALLOT MEASURE WHEREAS, Chula Vista's Utility Users' Tax (UUT) was adopted in 1970 as a mcans to help fund public serviccs and capital improvement projccts through the City's Gcncral Fund; and WHEREAS, the City rcceives UUT based on the usage of natural gas, clcctricity and telecommunications; and WHEREAS, in fiscal year 2006-2007, the total UUT received was approximately $7.0 million, which represents 4.3% of General Fund rcvcnues; and WHEREAS, the current rates charged arc .00919 per therm, .0025 per kilowatt, and 5% on telephone; and WHEREAS, there are over 150 cities in California with a UUT; and WHEREAS, city staff is recommending that the City's UUT ordinance, as it applies to telecommunications, be updated to reflect recent changes in Federal tax law and to modernize the definition of "telecommunications" to make it technology neutral; and WHEREAS, the City Council desires to adjust the rate of the telephone portion 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 relatcd portion of the UUT, or upwards to approximately $4.6 million from the General Fund, which would have a substantial impact on the City's ability to maintain currcnt programs and provide essential services, including public safety; and I-c.-I WHEREAS, updating the UUT ordinance requires a mcasure be placed on the ballot and approval by the voters; and WHEREAS, City staff is recommcnding that the proposed Telecommunications Users' Tax be placcd on the November 2008 ballot; and WHEREAS, in an effort to minimize costs, staff proposes to manage thc informational program internally and requests an approval of $70,000 to covcr anticipated printing and mailing costs associated with the informational program. NOW, THEREFORE, BE IT RESOLVED that the City Council of thc City of Chula Vista appropriates $70,000 from the Gcncral Fund to thc non-departmental budget cover anticipated printing and mailing costs associated with the informational program for the Telecommunications Users' Tax ballot measure. Presented by o~~~~ f'~aryK11esfel \;:;/ fntt;\:ffi1 City Attorney Maria Kachadoorian Finance Director '.-e-- :A