Ordinance 778
ORDI NANCE NO. 778
AI-! ORDINAi~Ct: OF THE CITY OF GILROY ANENDING CHAPTE:1 22
OF THE GILROY CITY CODE BY ENACTH!G, ADOPTING, AND
ADD HJG TIiE;tt:TO A NEH ART I elE HH I CH SHAll BE NUMBERED
AND DESIG;lATED IIARTlCLE IV" PROVIDH!G FOR THE INPOSITION
OF A TAX LIP Ji'] THE PRIVILEGE OF DISTRIBUTING CIGARETTES
Ii! THE CITY OF GILROY, ESTABLI SH H!G THE RATE OF SA I D TAX,
PROVIDI:!G Fon THE COLlECTlm! Ai'lD EI~FORCENENT OF SAID TAX,
AND SEITI:lG An OPERATIVE DATE FOR SAID ARTICLE.
THE COUNCIL OF THE CITY OF Gll:10Y DOES HEREBY ORDAIN AS FOlLO\-/S:
Section I: That Chapter 22 of the Gilroy City Code is hereby amended by
enacting and adopting and adding thereto a new article to be numbered and to
read as follows:
Article IV. Ci~arette Tax
Sec. 22.21. Title and purpose.
(a) Title. This article shall be known as the cigarette tax ordinance
of the City of Gilroy.
(b) 'Purpose and intent. It is the purpose and intent of the Council
that there be a tax imposed on the privilege of distributing cigarettes
in the city for the purpose of raising revenue. The net revenue shall be
used to fund the operating expenses of the parks and recreation department,
the library department and a fund for the development of cultural and
civic activities.
Sec. 22.22. Definitions.
Except where the context otherwise requires, the definitions given in
the following sections 22.22(a) through 22.22(h) govern the construction
of this article.
Sec. 22.22(a) Cigarette.
IICigarettell means any roll for smoking, made wholly or in part of
tobacco, irrespective of size or shape and irrespective of whether the
tobacco is flavored, adulterated, or mixed with any other ingredient, where
such roll has a wrapper or cover made of paper or any other material,
except where such wrapper is wholly or in the greater part made of tobacco
and such roll weighs over three pounds per thousand.
Sec. 22.22(b) Director of finance.
As used in this article, IIDirector of financell shall mean the director
of finance of the City of Gilroy.
Sec. 22.22(c) Distribute; Distributing.
"Distribute" or "Distributingll means the act, by a distributor, of
transporting cigarettes to which he has title, or causing or allowing
such cigarettes to be transported to a retail outlet in the City.
See. 22.22(d) Distributor.
As used in this article, IIDistributorll means a person who having title
to cigarettes, transports them, or causes or allows them to be transported,
to a retail outlet in the city.
Sec. 22.22(e) Retail Outlet.
"Retail outletll means any place or premises in the city (including.
without limiting the generality of the foregoing, every kind of store,
business establishment, and club in the city) where cigarettes are trans-
ferred to the possession of the ultimate consumer thereof, irrespective of
how such transfer is consummated, whether through a natural person, by
means of a vending machine or other mechanical device, or otherwise.
Sec. 22.22(f) Ultimate consumer.
"Ultimate consumer" includes any person who acquires possession of
cigarettes for his own use or consumption.
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Sec. 22.22(g) Untaxed cigarette.
"Untaxed cigarette" means any cigarette which has not yet been distri-
buted in such manner as to result in a tax liability under this article.
Sec. 22.22(h) Use or consumption.
"Use or consumptionll includes the exercise of any right or power over
cigarettes incident to the ownership thereof, other than the sale of
cigarettes or the receiving, handling, or holding thereof for the purpose
of sale.
Sec. 22.23. Tax imposed.
An excise tax, at the rate of one mill ($0.001) per cigarette, is hereby
imposed upon the privilege of distributing cigarettes to retail outlets in
the city. Any cigarette with respect to which a tax has once been imposed
under this article shall not be subject upon a subsequent distribution to
the tax imposed by this article. Unless the contrary is established, it
shall be presumed that all cigarettes distributed in the city are untaxed
cigarettes. It shall be unlawful knowingly, to sell, transfer, distribute,
or give away untaxed cigarettes in the city.
Sec. 22.24. Registration.
Within 30 days after the operative date of this article, within 30
days after commencing business, or within 30 days after a change in owner-
ship of a business registered under this article, whichever is later, each
distributor of cigarettes shall register with the director of finance on a
form provided by him.
Sec. 22.25. Records and statements required.
Every distributor shall keep a complete and accurate record of all
cigarettes distributed by him in the City. Such records shall, with
respect to each separate distribution, include a written statement con-
taining the name and address of the retail outlet to which distribution
is made, the name of the persons who own or operate such retail outlet
and to whom title or possession of the distributed cigarettes is trans-
ferred, the date of delivery, the quantity of cigarettes, the sales price,
the amount of ta~~ imposed under this Article, and such other information
as the Director of Finance may reasonably require. All statements and
records required by this section shall be in a form satisfactory to the
Director of Finance. They shall be preserved for a period of three years
and shall be offered for inspection at any time upon oral or written
demand by the Director of Finance, or his authorized agent.
"The Director of Finance is hereby authorized and directed to offset
and deduct from the total amount of tax monies which may become owing and
payable by a distributor to the City under the provisions of this Article
IV for any calendar month an amount of money equal to two percent (2%)
of such total amount of tax monies owing and payable by such distribution
to the city for such month, if such distributor has complied
with, and done all things required of him by, the provisions of this
Section to the satisfaction of the Finance Director. Such offset and
deduction shall be deemed reimbursement to the distributor for costs and
expenses incurred by him in complying with and doing all things required of
him by this Section."
Sec. 22.26. Reporting and remitting.
The tax imposed under this article shall be due and payable monthly on
or before the last day of the calendar month following the calendar month
in which the distribution of cigarettes occurs.
Each distributor shall make a return to the Director of Finance on
forms provided by said director, of the total number of cigarettes distri-
buted to retail outlets in the city by the distributor during each calendar
month and the amount of tax due thereon. Each such return shall be filed
with the director of finance on or before the last day of the calendar
month following the close of the calendar month for which the return is
made.
At the time the return is filed, the full amount of the tax imposed by
this article shall be remitted to the director of finance. The director
of finance may establish a shorter reporting period for any distributor if
he deems it necessary in order to insure collection of the tax. Returns
and payments are due immediately upon cessation of business for any reason.
All returns and payments submitted by each distributor shall be treated
as confidential by the director of finance and shall not be released by
him except by order of a court of competent jurisdiction or to an
official or agent of the United States, the State of California, the County
of Santa Clara, or the city of Gilroy, for official use only.
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Sec. 22.27. Penalties and interest.
(a) Original delinquency period. Any distributor who fails to remit
any tax imposed by this article within the time required shall pay a
penalty of ten per cent (10%) of the amount of the tax in addition to the
amount of the tax.
(b) Continued delinquency. Any distributor who fails to remit any
delinquent remittance within one month following the date on which the
remittance first became deliquent shall pay a second delinquency penalty
of ten per cent (10%) of the amount of the tax in addition to the amount of
the tax and the ten per cent (10%) penalty first imposed.
(c) Fraud. If the director of finance determines that the non-payment
of any remittance due under this article is due to fraud, a payment of
twenty-five per cent (25%) of the amount of the tax shall be added thereto.
in addition to the penalties stated in subparagraphs (a) and (b) of this
sect ion.
(d) Interest. In addition to the penalties imposed, any distributor
who fails to remit any tax imposed by this article shall pay interest at
the rate of one-half of one per cent (.5%) per month or fraction thereof
on the amount of the tax, exclusive of penalties, from the date on which
the remittance first became delinquent until paid.
(e) Penalties merged with tax. Every penalty imposed with such
interest as accrues under the provisions of this section shall become a
part of the tax herein required to be paid.
(f) Penalties during pendency of hearing or appeal. No penalty
provided under the terms of this article shall be imposed during the
pendency of any hearing which is provided for in section 22.28 of this
article nor during the pendency of any appeal to the city council which is
provided for in section 22.28 of this article.
Sec. 22.28 Failures to collect and report tax; determination of tax by
director of finance.
If any distributor shall fail or refuse, within the time provided for
in this article, to make any report and remittance of said tax or any
portion thereof required by this article, the director of finance shall
proceed to obtain facts and information on which to base his estimate of
the tax due. As soon as the director of finance shall procure such facts
and information as he is able to obtain upon which to base the assessment
of any tax imposed by this article and payable by any distributor who has
failed or refused to make such report and remittance, he shall proceed to
determine and assess against such distributor the tax, interest, and penal-
ties provided for by this article. In case such determination is made,
the director of finance shall give a notice of the amount so assessed by
serving it personally or by depositing it in the United States mail,
postage prepaid, addressed to the distributor so assessed at his last
known place of address. Such distributor may within ten days after the
service of mailing of such notice make application in writing to the
director of finance for a hearing on such amount assessed. If application
by the distributor for a hearing is not made within the time prescribed,
the tax, interest, and penalties, if any, determined by the director of
finance shall become final and conclusive and immediately due and payable.
If such application is made, the director of finance shall give not less
than five days written notice in the manner prescribed herein to the
distributor to show cause at a time and place fixed in said notice why
said amount specified therein should not be fixed for such tax, interest
and penalties. At such hearing, the distributor may appear and offer
evidence why such specified tax, interest and penalties should not be so
fixed. After such hearing, the director of finance shall determine the
proper tax to be remitted and shall thereafter give written notice to the
distributor in the manner prescribed herein of such determination and
the amount of such tax, interest and penalties. The amount determined to
be due shall be payable after fifteen days unless an appeal is taken as
provided in Section 22.29.
Section 22.29. Appeal.
Any distributor aggrieved by any decision of the director of finance
with respect to the amount of such tax, interest and penalties, if any,
may appeal to the council by filing a notice of appeal with the city
clerk within fifteen days of the serving or mailing of the determination
of tax due. The council shall fix a time and place for hearing such appeal
and the city clerk shall give notice in writing to such distributor at his
last known place of address. The findIngs of the council shall be final
and conclusive and shall be served upon the appellant in the manner pre-
scribed above in the service of notice of hearing. Any amount found to
be due shall be immediately due and payable upon the service of notice.
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Section 22.30 Refund.
(a> ~~enever the amount of any tax, interest, or penalty has been over-
paid or paid more than once or has been erroneously or illegally collected
or received by the city under this article, it may be refunded as provided
in subparagraph (b) of this section provided a claim in writing thereof,
stating under penalty of perjury the specific ground upon which the claim
is founded, is filed with the director of finance within three years of
the date of payment. The claim shall be on forms furnished by the director
of finance.
(b) A distributor may claim a refund or take as credit against taxes
due but never remitted the amount overpaid, paid more than once, or erron-
eouslyor illegally collected or received when it is established in a
manner prescribed by the director of finance that the amount claimed has
been overpaid or paid more than once or has been erroneously or illegally
collected or received by the city.
(c) no refund shall be paid under the provisions of this section unless
the claimant establishes by written records entitlement thereto.
Section 22.31. Actions to Collect.
Any tax required to be paid by a distributor under the provisions of
this article shall be deemed a debt owed to the city. Any person owing
taxes under the provisions of this article shall be liable to an action
brought in the name of the city of Gilroy for the recovery of such amount.
Section 22.32. Violations; misdemeanor.
Any person violating any provision of this article shall be guilty of
iHRlsdemeanor and shall be punishable by a fine of not more than five
hundred dollars ($500.00) or by imprisonment for not more than six months
or by both such fine and imprisonment.
Any distributor who fails or refuses to register as required herein,
or to furnish any return required to be made, or who fails to furnish
other data required by the director of finance, or who renders a false or
fraudulent return of claim, is guilty of a misdemeanor, and is punishable
as aforesaid. Any person required to make~ render, sign, or verify and
report or claim who makes a false or fraudulent report or claim with intent
to defeat or evade the determination of any amount due under this article
is guilty of a misdemeanor and is puniShable as afor~said.
Section II: Severability. If any section, subsection, subdivision, para-
graph, sentence, clause, or phrase of this article or any part thereof is for
any reason held to be unconstitutional, such decision shall not affect the validity
of the remaining portions of this article or any part thereof. The city council
hereby declares that it would have passed each section, subsection, subdivision,
paragraph, sentence, clause, or phrase thereof, irrespective of the fact that any
one or more sections, subsections, subdivisions, paragraphs, sentences, clauses,
or phrases be declared unconstitutional.
Section III: Effective date; operative date. This ordinance shall take
effect thirty days from and after the date of its final adoption, and shall become
operative on the first day of the calendar month immediately following said
effective date.
This ordinance was introduced at a regular meeting of the Council held
and was ordered published by title and summary at least
three days prior to its adoption in accordance with the Charter of the City of
G i 1 roy .
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Flt~LLY PASSED AND ADOPTED by the Council of the City of Gilroy on
this 15th day of August, 1966 by the following vote:
NOES:
Council Members: Duffin, Eckard, Goodrich, Quartiroli, Vent-
worth, and Petersen.
COUNCIL MEMBERS: None
AYES:
ABSENT: COUNCIL MEMBERS: Allemand
)
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APPROVEO:,_,//~// _::/
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Mayor
ATTEST:
SUSANNE E. PAYNE
City Clerk
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I, SUSANNE E. PAYNE ,City Clerk of
the City of Gilroy, do hereby certify that the attached Ordinance
No. 778 is an original ordinance, duly adopted by the Council
of the City of Gilroy at a regular meeting of said Council held on
the 15th day of August, 19 66 , at which meeting
a quorum was present.
further certify that the said ordinance has been pub.
lished in accordance with the charter of the City of Gilroy.
IN WITNESS WHEREOF, I have hereunto set my hand and af-
fixed City of Gilroy, this 17th day of