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HomeMy WebLinkAboutStaff Report 2504-4472CITY OF PALO ALTO CITY COUNCIL Monday, April 14, 2025 Council Chambers & Hybrid 5:30 PM     Agenda Item     10.SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter 2.32 (Sales and Use Tax) and Chapter 4.10 (Solicitors, Peddlers, Pawnbrokers, Secondhand Dealers, and Other Businesses Regulated by Police) of the Municipal Code to Delete Obsolete References to the California Board of Equalization and Replace Them with References to the California Department of Tax and Fee Administration (FIRST READING: March 24, 2025; PASSED: 6-0-1, Veenker absent) City Council Staff Report Report Type: CONSENT CALENDAR Lead Department: City Clerk Meeting Date: April 14, 2025 Report #:2504-4472 TITLE SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Chapter 2.32 (Sales and Use Tax) and Chapter 4.10 (Solicitors, Peddlers, Pawnbrokers, Secondhand Dealers, and Other Businesses Regulated by Police) of the Municipal Code to Delete Obsolete References to the California Board of Equalization and Replace Them with References to the California Department of Tax and Fee Administration (FIRST READING: March 24, 2025; PASSED: 6-0-1, Veenker absent) BACKGROUND The City Council heard this item on March 24, 2025 for a first reading and approved it on a 6-0- 1, Veenker absent vote. No changes were made to the ordinance, and it is now before the City Council for a second reading. ATTACHMENTS Attachment A - Ordinance of the Council of the City of Palo Alto Amending Chapter 2.32 (Sales and Use Tax) and Chapter 4.10 (Solicitors, Peddlers, Pawnbrokers, Secondhand Dealers, and Other Businesses Regulated by Police) of the Municipal Code to Delete Obsolete References to the California Board of Equalization and Replace Them with References to the California Department of Tax and Fee Administration APPROVED BY: Mahealani Ah Yun, City Clerk NOT YET APPROVED 1 20250305_kb Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Amending Chapter 2.32 (Sales and Use Tax) and Chapter 4.10 (Solicitors, Peddlers, Pawnbrokers, Secondhand Dealers, and Other Businesses Regulated by Police) of the Municipal Code to Delete Obsolete References to the California Board of Equalization and Replace Them with References to the California Department of Tax and Fee Administration The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. Historically, the California Board of Equalization (BOE) was the state agency responsible for collecting sales and use tax and other taxes, auditing taxpayers, and hearing tax appeals. In 2017, the Legislature adopted the Taxpayer Transparency and Fairness Act, which created the California Department of Tax and Fee Administration (CDTFA) and assigned most of BOE’s former responsibilities for tax collection and administration to the new agency. B. The Palo Alto Municipal Code includes local provisions implementing sales and use tax responsibilities and recognizing state-issued sellers permits required by the Revenue and Taxation Code. Effective July 1, 2017, these responsibilities were reassigned from BOE to CDTFA. This ordinance amends the update the Municipal Code to show the correct state agency. SECTION 2. The following sections of Chapter 2.32 (Sales and Use Tax) of the Municipal Code are amended to read as follows: 2.32.040 Purpose. . . . (c) To adopt a sales and use tax ordinance which imposes a tax and provides a measure therefor that can be administered and collected by the State Board of Equalization California Department of Tax and Fee Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the State Board of Equalization California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes; . . . 2.32.050 Contract with state. Prior to the operative date the city shall contract with the State Board of Equalization California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of this chapter, provided, that if the city shall not have contracted with the State Board of Equalization California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date NOT YET APPROVED 2 shall be the first day of the first calendar quarter following the execution of such a contract rather than the first day of the first calendar quarter following the adoption of this chapter. 2.32.070 Place of sale. For the purposes of this chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the state or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the State Board of Equalization California Department of Tax and Fee Administration. 2.32.100 Limitations on adoption of state law. In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, wherever the state of California is named or referred to as the taxing agency, the name of the city of Palo Alto shall be substituted therefor. The substitution, however, shall not be made when the word "state" is used as part of the title of the State Controller, the State Treasurer, the State Board of Control, the State Board of Equalization California Department of Tax and Fee Administration, the State Treasury, or the Constitution of the State of California; the substitution shall not be made when the result of that substitution would require action to be taken by or against the city of Palo Alto, or any agency thereof rather than by or against the State Board of Equalization California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this chapter; the substitution shall not be made in those sections, including, but not necessarily limited to, sections referring to the exterior boundaries of the state of California, where the result of the substitution would be to provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the state under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or to impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provisions of that Code; the substitution shall not be made in Sections 6701, 6702 (except in the last sentence thereof), 671 l, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code; and the substitution shall not be made for the word "State" in the phrase "retailer engaged in business in this State" in Section 6203 or in the definition of that phrase in Section 6203. 2.32.140 Application of provisions relating to exclusions and exemptions. (a) Section 232.130 shall become operative on January 1st of the year following the year in which the State Board of Equalization California Department of Tax and Fee Administration adopts an assessment ratio for state-assessed property which is identical to the ratio which is required for local assessments by Section 401 of the Revenue and Taxation Code, at which time Section 2.32.120 shall become operative. (b) In the event that Section 232.130 becomes inoperative and the State Board of Equalization California Department of Tax and Fee Administration subsequently adopts an assessment ratio for the state-assessed property which is higher than the ratio which is NOT YET APPROVED 3 required for local assessments by Section 401 of the Revenue and Taxation Code, Section 2.32.120 shall become operative on the first day of the month next following the month in which such higher ratio is adopted, at which time Section 232.130 shall be inoperative until the first day of the month following the month in which the board again adopts an assessment ratio for state-assessed property which is identical to the ratio required for local assessments by Section 401 of the Revenue and Taxation Code, at which time Section 232.130 shall again become operative and Section 2.32.120 shall become inoperative. SECTION 3. Section 4.10.280 of Chapter 4.10 (Solicitors, Peddlers, Pawnbrokers, Secondhand Dealers, and Other Businesses Regulated by Police) of the Municipal Code is amended to read as follows: 4.10.280 Exemptions. (a) The provisions of this chapter shall not apply to secondhand goods, wares and merchandise: (1) Purchased at a public sale or auction; (2) Purchased from any person holding a State Board of Equalization California Department of Tax and Fee Administration permit number as a seller; (3) Accepted in trade on the purchase of new merchandise; (4) Received or purchased by any religious, charitable, civic or fraternal organization for purposes of resale. SECTION 4. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid, such invalidity shall not affect the other provisions of this Ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this Ordinance are hereby declared to be severable. SECTION 5. Effective Date. This ordinance shall be effective on the thirty-first date after the date of its adoption. // // // // // NOT YET APPROVED 4 SECTION 6. CEQA. The City Council finds and determines that this Ordinance is not a project within the meaning of section 15378 of the California Environmental Quality Act (“CEQA”) because it has no potential for resulting in physical change in the environment, either directly or ultimately. In the event that this Ordinance is found to be a project under CEQA, it is subject to the CEQA exemption contained in CEQA Guidelines section 15061(b)(3) because it can be seen with certainty to have no possibility of a significant effect on the environment in that this Ordinance simply clarifies existing local regulations. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: ______________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: ____________________________ City Manager ______________________________ City Attorney ____________________________ Director of Administrative Services