HomeMy WebLinkAbout2014-11-04 Ordinance 5291Ordinance No. 5291
Ordinance of the Council of the City of Palo Alto Amending Chapter 2.35
of Title 2 of the Palo Alto Municipal Code Relating to the Utility Users Tax
The People of the City of Palo Alto do ordain as follows:
SECTION 1. Chapter 2.35 of the Palo Alto Municipal Code is hereby amended by
amending Chapter 2.35 as follows:
2.35.010 Short title.
2.35.020 Tax imposed.
Chapter 2.35
UTILITY USERS TAX
2.35.030 Disposition of tax revenue.
2.35.040 Definitions.
2.35.050 Constitutional exemption.
2.35.060 Electricity users tax.
2.35.070 Gas users tax.
2.35.080 Water users tax.
2.35.090 Telecommunications users tax.
2.35.100 Tax rate for high volume service users.
2.35.110 Council authorization to suspend collection of a portion of tax for limited
periods of time.
2.35.120 Collection of tax.
2.35.130 Reporting and remitting.
2.35.140 Penalty for delinquency.
2.35.150 Records.
2.35.160 Failure to pay tax -Administrative remedy.
2.35.170 Actions to collect.
2.35.180 Administrative rules, regulations and agreements.
2.35.190 Refunds.
2.35.200 Bundling Taxable Items with Nontaxable Items.
2.35.010 Short title.
This chapter shall be known as the "Utility Users Tax."
(Ord. 3781 § 1 (part), 1987)
2.35.020 Tax imposed.
There is established and imposed, commencing on the effective date of the ordinance
codified in this chapter, a utility users tax at the rate set forth in this chapter.
(Ord. 3781 § 1 (part), 1987)
2.35.030 Disposition of tax revenue.
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The tax imposed by this chapter is for the purpose of raising revenues for the general
governmental purposes of the city. All of the proceeds from the tax imposed by this chapter
shall be placed in the city's general fund.
(Ord. 3781 § 1 (part), 1987)
2.35.040 Definitions.
(a) Except where context otherwise requires, the definitions given in this section govern the
construction of this chapter:
(1) "City" means the city of Palo Alto.
(2) "Month" means a calendar month.
(3) "Person" means any natural person, firm, association, joint venture, joint stock company,
partnership of any kind, club, Massachusetts business or common law trust or society,
organization, corporation (foreign and domestic), business trust of any kind, or the manager,
lessee, agent, servant, officer or employee of any of them.
(4) "Service supplier" means a person required to collect 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.
(5) "Service user" means a person required to pay a tax imposed by this chapter.
(6) "Utility tax year" means the period beginning on the effective date of the ordinance
codified in this chapter and ending June 30, 1988, for the initial utility tax year. Thereafter, the
utility tax year shall be the twelve-month period beginning July 1st and ending June 30th of the
next succeeding calendar year.
(Ord. 3781 § 1 (part), 1987)
2.35.050 Constitutional exemption.
Nothing in this chapter shall be construed as imposing a tax upon the city 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 or any other statute or
regulation that applies to charter cities. The City may adopt an administrative policy to
implement this provision.
(Ord. 3781 § 1 (part), 1987)
)
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 of the charges to a service 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
temporary services, demand charges, and annual and monthly charges.
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(c) As used in this section, the term "using electricity" shall not be construed to mean the
storage of such electricity 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 electricity by a governmental agency at a point within the city
for resale.
(Ord. 3781 § 1 (part), 1987)
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
percent 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
charges, 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.
(Ord. 3781 § 1 (part), 1987)
2.35.080 Water users tax.
(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
percent 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 customer charges, service charges, standby charges, 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 water which is to be resold and delivered through mains or pipes
and charges made for water used in the generation of electrical energy by a governmental
agency.
(Ord. 3781 § 1 (part), 1987)
2.35.090 Telecommunications users tax.
(a) There is imposed a tax upon every person in the city, using telephone communication
services in the city. The tax imposed by this section shall be at the rate of 4.75 percent of
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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.
(c) The tax imposed by this section 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.
(d) The term "telephone communication 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, including, but not limited to, traditional
telephone service, mobile telecommunications service, and broadband service (e.g., digital
subscriber line (DSL), fiber optic, coaxial cable, and wireless broadband, including Wi-Fi,
WiMAX, and Wireless MESH) to the extent not prohibited by Federal and/or State law, now or
in the future. "Telephone communication services" includes 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 service is referred to as voice over internet protocol (VoIP) services or is classified
by the Federal Communications Commission as enhanced or value added, and includes video
and/or data service that is functionally integrated with "telephone communication services."
(e) The tax i'mposed by this section applies to all telephone communication services however
charged or billed, including, but not limited to prepaid services, post-paid services, 800 services
(or any other toll-free numbers), or 900 services.
(f) The tax imposed by this section applies to ancillary telephone communication services,
which are those services that enable or enhance access to telephone communication services.
Ancillary telephone communication services include, but are not limited to, charges for
connection, reconnection, termination, movement, or change of telephone communication
services; 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; local number portability
charges; text and instant messaging; and conference calls.
(g) "Mobile telecommunication service" means commercial mobile radio service, as defined
in Section 20.3 of Title 47 of the Code of Federal Regulations and as set forth in the Mobile
Telecommunications Sourcing Act (4 U.S.C. Section 124) and the regulations thereunder.
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(h) "Place of primary use" means the street address representative of where the customer's
use ofthe telephone communications service primarily occurs, which must be the residential
street address or the primary business street address of the customer.
(i) "Service address" means either (1) the location of the service user's telephone
communication equipment from which the communication originates or terminates, regardless
of where the communication is billed or paid; or (2) if the location of the equipment is unknown
(e.g., mobile telecommunication service or VoIP service), the service address means the
location of the service user's place of primary use; or (3) for prepaid telephone communication
service "service address" means the point of sale of the services where the point of sale is
within the city, or if unknown, the known address of the service user (e.g., billing address or
location associated with the service number), which locations shall be presumed to be the place
of primary use.
(j) There is a rebuttable presumption that a telephone communication service, which is billed
to a billing or service address in the city, is used, in whole or in part, within the city's
boundaries, and such service is subject to taxation under this section. There is also a rebuttable
presumption that a prepaid telephone communication service sold within the city is primarily
used, in whole or in part, within the city and is therefore subject to taxation under this section.
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
telephone communication service.
(Ord. 3781 § 1 (part), 1987)
2.35.110 Council authorization to suspend collection of a portion of tax for limited periods of
time.
The city council may from time to time determine to collect less than the five percent 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:
(a) The council's intention to suspend collection of a portion of said tax;
(b) The duration ofthe suspension, which in no event shall exceed one year;
(c) The exact portion of the tax, collection of which is being suspended.
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.
(Ord. 3781 § 1 (part), 1987)
2.35.120 Collection of tax.
(a) Every service supplier shall collect the amount of tax imposed by this chapter from the
service user.
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(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 which 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 days after the
effective date ofthe ordinance codified in 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.
(Ord. 3781 § 1 (part), 1987)
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, stating 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 cessation
of business for any reason.
{Ord. 3781 § 1 (part), 1987)
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 provided 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 ofthe total tax collected or imposed herein.
(c) The director 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 of the 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.
{Ord. 3781 § 1 (part), 1987)
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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 three 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.
(Ord. 3781 § 1 (part), 1987)
2.35.160 Failure to pay tax -Administrative remedy.
Whenever the director of finance determines that a service 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 or four 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 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 of the amount of the tax set forth in the notice shall be
imposed, but not less than $5.00. The penalty shall become part of the tax herein required to
be paid.
(Ord. 3781 § 1 (part), 1987)
2.35.bO 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.
(Ord. 3781 § 1 (part), 1987)
2.35.180 Administrative rules, regulations and agreements.
The city manager has the authority to adopt rules and regulations not inconsistent with the
provisions 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
imposed herein may be made in conformance with the billing procedures of a particular service
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supplier so long as the overall results of such agreements result in collection of the tax in
conformance with the general purpose and scope of this chapter. A copy of such rules and
regulations and a copy of any such agreement shall be on file and available for public
examination in the office of the city clerk. Failure or refusal to comply with any such rules,
regulations or agreements promulgated under this section shall be deemed a violation of this
chapter.
{Ord. 3781 § 1 {part), 1987)
2.35.190 Refunds.
{a) Claim Required. Prior to seeking judicial relief with respect to a dispute regarding
whether the amount of any tax has been overpaid, paid more than once or erroneously
or illegally collected ·or received by the city under this chapter, an aggrieved taxpayer, fee
payer, service supplier, service user or any other person must comply with the provisions
of section 2.28.230 of this code.
{b) Service Suppliers. 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.
{Ord. 5078 § 5, 2010: Ord. 3781 § 1 {part), 1987)
2.35.200 Bundling Taxable Items with Nontaxable Items ..
If any nontaxable charges are combined with and not separately stated from taxable service
charges on the customer's bill or invoice of a service supplier, the combined charges are subject
to tax unless the service supplier identifies, by reasonable and verifiable standards, the portions
of the combined charges that are nontaxable 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. 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 and apportionment of taxable
and non-taxable charges.
SECTION 2. General Tax. Proceeds of the tax imposed by this Ordinance shall be
deposited in the general fund of the City and shall be available for any legal purpose.
SECTION 3. Amendment or Repeal. The City Council may repeal Chapter 2.35 of the
Palo Alto Municipal Code or amend that Chapter without a vote of the people except that any
amendment to Chapter 2.35 that increases the amount or rate of tax due from any Person
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beyond the inflatio,n-adjusted amounts and rates authorized by this Ordinance may not take
effect unless approved by a vote of the people.
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 declare that they would have adopted each section,
subsection, sentence, clause, phrase, or portion of this Ordinance, irrespective of the fact that
any one or more sections, subsections, sentences, clauses, phrases, or portions of this
Ordinance be declared invalid or unenforceable.
SECTION 5. Effective Date. This ordinance shall be effective only if approved by a
majority of the voters and shall go into effect immediately after the vote is declared by the City
Council and the duty of service providers to collect the tax shall commence as provided in
California Public Utilities Code Section 799.
SECTION 6. 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 of Palo Alto voting on the 4th day of November, 2014.
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