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HomeMy WebLinkAboutORD 3781• f -i\ ~ .· ·~ follows: ORDINANCE NO. 3781 ORDINANCE OF THE PEOPLE OF THE CITY OF PALO ALTO AMENDING THE PALO ALTO MUNICIPAL CODE BY ADDING CHAPTER 2.35 TO TITLE 2 THEREOF, ESTABLISHING A UTILITY USERS TAX AND PROVIDING FOR THE COLLECTION THEREOF The People of the City of Palo Alto do ORDAIN as SECTION 1. Article 2 of the Palo Alto Municipal Code is hereby amended by adding a new chapter thereto which shall read as follows: Sections: 2.35.010 2.35.020 2.35.030 2.35.040 2.35.050 2.35.060 2.35.070 2.35.080 2.35.090 2.35.100 2.35.110 2.35.120 2.35.130 2.35.140 2.35.150 2.35.160 2.35.170 2.35.180 2.35.190 Chapter 2.35 UTILITY USERS TAX Short Title. Tax Imposed. Disposition of Tax Revenue. Definitions. Constitutional Exemption. Electricity Users Tax. Gas Users Tax. Water Users Tax. Telephone Users Tax. Tax Rate for High Volume Service Users. Council Authorization to Suspend Collection of a Portion of Tax for Limited Periods of Time. Collection of Tax. Reporting and Remitting. Penalty for Delinquency. Records. Failure to Pay Tax -Administrative Remedy. Actions to Collect. Administrative Kules, Regulations and Agreements. Refunds. 2.35.010. Short Title. This chapter shall be known as the Utility Users Tax. 2.35.020. Tax Imposed. There is hereby established and imposed, commencing on the effective date of this chapter, a utility users tax at the rate set forth in this chapter. 2.35.030. Disposition Of Tax Revenue. The tax im­ posed by this chapter is for the purpose of raising revenues for the general governmental purposes of the City. All of the 1 • t I proceeds from the tax imposed by this chapter shall be placed in the City's General Fund. 2.35.040. Definitions. Except where context other­ wise requires, the definitions given in this section govern the construction of this chapter: A. "City" means the City of Palo Alto. B. "Month" means a calendar month. c. "Person" means any natural person, firm, associa­ tion, joint venture, joint stock company, partnership of any kind, club, Massachusetts business or common law trust or society, or­ ganization, corporation (foreign and domestic), business trust of any kind, or the manager, lessee, agent, servant, officer or em­ ployee of any of them. o. •service supplier" means a person required to col­ lect and remit a tax imposed by this chapter and includes the City's Utilities Department with respect to a tax imposed on the use of gas, electricity and water and any Telephone Corporation with respect to the tax imposed on the use of telephone services. E. "Service user" means a person required to pay a tax imposed by this chapter. F. "Utility Tax Year" means the period beginning on the effective date of this ordinance and ending June 30, 1988, for the initial utility tax year. Thereafter, the utility tax year shall be the 12-month period beginning July 1 and ending June 30 of the next succeeding calendar year. G. "Telephone Corporation" means the same as defined in Section 234 of the Public Utilities Code of the State. 2.35.050. Constitutional Exemption. Nothing in this chapter shall be construed as imposing a tax upon the ~ity of Palo Alto or any other person if imposition of such tax upon that person would be in violation of the Constitution of the United States or that of the State of California. 2.35.060. Electricity Users Tax. A. There is imposed a tax upon every person in the City using electricity in the City. The tax imposed by this section shall be at the rate of five percent (5%) of the charges to a ser­ vice user made for such electricity by a service supplier, except as provided in Section 2.35.100. Said tax shall be paid by the person paying for such electricity. B. "Charges," as used in this section, shall include charges made for metered energy and charges for service including customer charges, service charges, standby charges, charges for 2. .. . -~ . ' v temporary services, demand charges, and annual and monthly charges. C. As used in this section, the term "using electri­ city" shall not be construed to mean the storage of such electri­ city by a person in a battery owned or possessed by him for use in an automobile or other machinery or device apart from the premises upon which the electricity was received; provided, however, that the term shall include the receiving of such electricity for the purpose of using it in the charging of batteries; nor shall the term include the mere transmission or receiving of such electri­ city by a governmental agency at a point within the City for resale. 2.35.070. Gas Users Tax. A. There is imposed a tax upon every person in the City using gas in the City which is delivered through mains or pipes. The tax imposed by this section shall be at the rate of five per­ cent (5%) of the charges to a service user made for such gas by a service supplier, except as provided in Section 2.35.100. Said tax shall be paid by the person paying for such gas. B. "Charges," as used in this section, shall include charges made for metered gas and charges for service, including customer charges, service charges, demand charges, standby char­ ges, charges for temporary service, and annual and monthly charges. c. There shall be excluded from the base on which the tax imposed in this section is computed charges made for gas which is to be resold and delivered through mains or pipes and charges made for gas to be used in the generation of electrical energy by a governmental agency. 2.35.080. Water Users Taz. A. There is imposed a tax upon every person in the City using water which is delivered through mains or pipes in the City. The tax imposed by this section shall be at the rate of five per­ cent (5%) of the charges to a service user made for such water by a service supplier, except as provided in Section ·2.35.100. Said tax shall be paid by the person paying for such water. B. "Charges," as used in this section, shall include charges for metered water and charges for service, including cus­ tomer charges, service charges, standby charges, charges for tem­ porary service, and annual and monthly charges. c. There shall be excluded from the base on which the tax imposed in this section is computed charges made for water which is to be resold and delivered tnrough mains or pipes and 3. .. . . v charges made for water used in the generation of electrical energy by a governmental agency. 2.35.090. Telephone Users Tax. A. There is imposed a tax upon every person in the City, using intrastate telephone communication services in the City, other than a telephone corporation. The tax imposed by this section shall be at the rate of five percent (5%) of the charges made to a service user for such services by a service supplier and shall be paid by the person paying for such services. B. As used in this section, the term "charges" shall not include charges for services paid for by inserting coins in a coin-operated telephone except that where such coin-operated services are furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; nor shall the term "telephone communications services" include land mobile services or maritime mobile services as defined in Section 2.1 of Title 47 of the Code of Federal Regulations, or any amendment or replacement thereof. The term "telephone communication services" refers to that service which provides access to a telephone system and the privilege of telephonic quality communication with substantially all persons having telephone stations which are part of such telephone system. The term "telephone communication services" also refers to that service which provides access .to a telephone system for data and/or video to the extent permitted by law. The telephone users tax is intended to, and does, apply to all charges billed to a telephone account having a situs in the City, irrespective of whether a particular communication service originates and/or terminates within the City. The situs shall be the service address if known; otherwise the billing address. c. Notwithstanding the provisions of subsection A of this section, the tax imposed under this section shall not be imposed upon any persons for using intrastate telephone communica­ tion services to the extent that the amounts paid for such ser­ vices are exempt from or not subject to the tax imposed under Division 2, Part 20 of the California Revenue and Taxation Code, or the tax imposed under Section 4251 of the Internal Revenue Code, or any amendment or replacement thereof. 2.35.100. Tax Rate for High Volume Service Users. A. The tax rate imposed on electricity, gas and water users in Sections 2.35.060, 2.35.070 and 2.35.080 respectively shall be three percent (3%) on all utility charges to a service user exceeding the cumulative amount of $800,000 for water, gas and electricity or any combination thereof during any utility tax year and shall be two percent (2%) of the amount of utility charges exceeding the cumulative amount of $2,400,000 4. .. ~· for water, gas or electricity or any combination thereof during any utility tax year. B. Commencing on July 1, 1988, and every July 1 there­ after, the Director of Finance shall annually adjust the three percent (3%) and two percent (2%) tax rate thresholds specified in subsection A of this section by the annual change in the Consumer Price Index, All Urban Consumers, for the San Francisco-Oakland­ San Jose Metropolitan Area published by the Bureau of Labor Sta­ tistics or any replacement Index published by said Bureau ("In­ dexn) for the preceding year as illustrated by the following formula: NT = T(A) (B) NT = New threshold for the upcoming utility tax year T = Current threshold A = The Index for April preceding the upcoming utility tax year B = The Index for the previous April. For example, on July 1, 1988, the thresholds shall be adjusted by multiplying them by the April 1988 Index divided by the April 1987 Index. c. Where any person can establish to the satisfaction of the Director of Finance that he is a person responsible for the payment of one or more taxes under this chapter, he may aggregate charges for gas, electricity or water or any combination thereof for purposes of determining the application of the reduced rate pursuant to this section. The City Manager shall develop and publish written regulations for determining which person(s) is a service user for the purposes of implementing the lower rates authorized by this section. Such regulations may be amended from time to time. 2.35.110. Council Authorization to Suspend Collection of A Portion of Tax For Limited Periods of Time. The City Coun­ cil may from time to time determine to collect less than the five percent (5%) tax imposed by Sections 2.35.060, 2.35.070, 2.35.080, and 2.35.090 from all service users and may suspend a portion of the maximum rates by passage of an ordinance stating: 1. The Council's intention to suspend collection of a portion of said tax. 2. The duration of the suspension, which in no event shall exceed one year. 3. The exact portion of the tax, collection of which is being suspended. 5. This rate suspension shall apply to all service users across the board and shall be in effect for one year from the effective date of said ordinance. 2.35.120. Collection of Tax. A. Every service supplier shall collect the amount of tax imposed by this Chapter from the service user. B. The tax shall be collected insofar as practicable at the same time as, and along with, the collection of charges made in accordance with the regular billing practice of the service supplier. Except in those cases where a service user pays the full amount of said charges but does not pay any portion of a tax imposed by this chapter, or where a service user has notified a service supplier that he is refusing to pay a tax imposed by this chapter whicn said service supplier is required to collect, if the amount paid by a service user is less than the full amount of the charge and tax which has accrued for the billing period, a proportionate share of both the charge and tax shall be deemed to have been paid. c. The duty to collect the tax from a service user shall commence thirty (30) days after the effective date of this chapter. If a person receives more than one billing, one or more being for a different period than another, the duty to collect shall arise separately for each billing period. 2.35.130. Reporting and Remitting. Each service supplier, shall, on or before the last day of each month, make a return to the Director of Finance, on forms provided by him, stat­ ing the amount of taxes billed by the service supplier during the preceding month. At the time the return is filed, the full amount of the tax collected shall be remitted to the Director of Finance. The Director of Finance may require further information in the return. Returns and remittances are due immediately upon cessa­ tion of business for any reason. 2.35.140. Penalty for Delinquency. A. Taxes collected from a service user which are not remitted to the tax administrator on or before the due dates pro­ vided in this chapter are delinquent. B. Penalties for delinquency in remittance of any tax collected or any deficiency in remittance, shall attach and be paid by the person required to collect and remit at the rate of ten percent (10%) of the total tax collected or imposed herein. c. The Uirector of Finance shall have power to impose additional penalties upon persons required to collect and remit taxes under the provisions of this chapter for fraud or negligence in reporting or remitting at the rate of ten percent (10%) of the 6. ' . . v v amount of the tax collected or as recomputed by the Director of Finance. D. Every.penalty imposed under the provisions of this section shall become a part of the tax required to be remitted. 2.35.150. Records. It shall be the duty of every service supplier required to collect and remit to the City any tax imposed by this chapter to keep and preserve, for a period of th~ee (3) years, all records as may be necessary to determine the amount of such tax as such service supplier may have been required to collect and remit to the City, which records the Director of Finance shall have the right to inspect at all reasonable times. 2.35.160. Failure to Pay Tax -Administrative Remedy. Whenever the Director of Finance determines that a ser­ vice user has deliberately withheld the amount of the tax owed by him from the amounts remitted to a service supplier, or that a service user has failed to pay the amount of the tax for a period of four (4) or more billing periods, or whenever the Director of Finance deems it in the best interest of the City, he shall relieve the service supplier of the obligation to collect taxes due under this chapter from certain named service users for specified billing periods. The Director of Finance shall notify the service user that he has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes. The notice shall be served on the service user by handing it to him personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to the service user at the address to which billing was made by the service supplier; or, should the service user have changed his address, to his last known address. If a service user fails to remit the tax to the Director of Finance within fifteen (15) days from the date of the service of the notice upon him, which shall be the date of mailing if service is not accomplished in person, a penalty of twenty-five percent (25%) of the amount of the tax set forth in the notice shall be imposed, but not less than $5. The penalty shall become part of the tax herein required to be paid. 2.35.170. Actions to Collect. Any tax required to be paid by a service user under the provisions of this chapter shall be 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 Director of Finance shall be deemed a debt owed to the City by the person required to collect and remit. 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 applicable penalties and attorneys fees. 2.35.180. Administrative Rules, Regulations and Agreements. The City Manager shall have the authority to adopt 7. l ' v rules and regulations not inconsistent with the prov1s1ons of this chapter for the purpose of carrying out and enforcing the payment, collection and remittance of any tax herein imposed, and the City Manager may also make administrative agreements to vary the strict requirements of this chapter so that the collection of any tax im­ posed herein may be made in conformance with the billing proced­ ures of a particular service supplier so long as the over-all results of such agreements result in collection of the tax in con­ formance with the general purpose and scope of this chapter. A copy of such rules and regulations and a copy of any such agree­ ment shall be on file and available for public examination in the Off ice of the City Clerk. Failure or refusal to comply with any such rules, regulations or agreements promulgated under this sec­ tion shall be deemed a violation of this chapter. 2.35.190. Refunds. A. 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 Director of Finance under this chapter, it may be refunded as provided in this section. B. A service supplier may claim a refund or take as credit against taxes collected and remitted, the amount overpaid, paid more than once, or erroneously or illegally collected or received when it is established in a manner prescribed by the Director of Finance that the service user from whom the tax has been collected did not owe the tax; provided however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charges subsequently payable by the service user to the service supplier. c. No refund shall be paid under the prov1s1ons of this section unless the claimant establishes his right thereto by writ­ ten records showing entitlement thereto. SECTION 2. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this ordi­ nance or any part thereof is for any reason held to be unconstitu­ tional, such decision shall not affect the validity of the remain­ ing portion of this ordinance or any part thereof. PASSED BY VOTE OF THE PEOPLE: November 3, 1987 I HEREBY CERTIFY THAT THIS ORDINANCE WAS PASS~D BY VOTE OF THE PEOPLE ON NOVEMBER 3, 1987, AND ADOPTED ON NOVEMBER~' 1987. N / THIS DOCUMcNT IS CERTIFIED !?,_l3E ~ 1 ORDii-Jf-\;"!Cl.? DULY PASSED BY 1 He COLll\CIL m TH'.~ CITY OF PA!..0 ALTO AND n-:r.:Rr::.·~· 1rn POSTED IN THE COUNCIL n Cl-;;,r.icc;<S ')N (~JITHIN 15 rnws Oi" ITS PASS.l\GE) .. 1 c:.:-tify(cr r:!ec'.::rcl under per.nlty 01 pcri:..:rv tho• <he foicgoing is true anc'l .;or~ccl."