Ordinance 2007-22
ORDINANCE NO. 2007-22
AN ORDINANCE OF THE CITY OF GILROY ADDING
CHAPTER 26C OF THE GILROY CITY CODE WITH RESPECT
TO A COMMUNICATION USERS' TAX.
THE PEOPLE OF THE CITY OF GILROY DO ORDAIN AS FOLLOWS:
SECTION 1: Chapter 26 of the Gilroy City Code is hereby amended by adding a new
Chapter 26C, which shall read as follows:
CHAPTER 26C
J
COMMUNICATION USERS' TAX
ARTICLE 1. GENERAL PROVISIONS
Sec.26C.1. Short Title
This Chapter shall be known as the "Communication Users' Tax Law" of the City.
Sec. 26C.2. Adoption; charter authority.
This Chapter is adopted pursuant to the powers of the City of Gilroy as authorized
by Section 6 of Article XI of the Constitution of the State of California.
Sec.26C.3. 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 the following services:
(1) "Conference bridging service" means an ancillary service that links two or
more participants of an audio or video conference 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) "Detailed 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.
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(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 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) "Ancillary video services" means services that are associated with or
incidental to the provision or delivery of video services, including but not limited to
electronic program guide services, search functions, or other interactive services or
communications that are associated with or incidental to the provision, use or enjoyment
of video programming.
(c). "Billing Address" shall mean the mailing address of the service user where the
service supplier submits invoices or bills for payment by the customer.
(d). "City" shall mean the City of Gilroy.
(e) "City Administrator" shall mean the City Administrator or his or her
designee.
(t). "Communication Services" means: "telecommunication services", "ancillary
telecommunication services", "video services" and "ancillary video services".
(g). "Mobile Telecommunications Service" has the same meaning and usage as set
forth in the Mobile Telecommunications Sourcing Act (4 U.S.c. Section 124) and the
regulations thereunder.
(h). "Month" shall mean a calendar month.
(i). "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.
0). "Place of Primary Use" means the street address representative of where the
customer's use of the communications service primarily occurs, which must be the
residential street address or the primary business street address of the customer.
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(k). "Post-paid telecommunication service" means the telecommunication service
obtained by making a payment on a communication-by-communication 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.
(1). "Prepaid telecommunication service" means the right to access
telecommunication services, which must be paid for in advance and which enables the
origination of communications 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.
(m). "Private telecommunication service" means a telecommunication service that
entitles the customer to exclusive or priority use of a communications 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 communications channel is a physical or virtual path of
communications over which signals are transmitted between or among customer channel
termination points (i.e., the location where the customer either inputs or receives the
communications).
(n). "Service Address" means either:
(1) The location of the service user's communication equipment from
which the communication originates or terminates, regardless of where the
communication is billed or paid; or,
(2) If the location in subsection (1) of this definition is unknown (e.g.,
mobile telecommunications service or V oIP 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.
(0). "Service Supplier" shall mean any entity or person, including the City, that
provides communication service to a user of such service within the City.
(P). "Service User" shall mean a person required to pay a tax imposed under the
provisions ofthis Chapter.
(q). "State" shall mean the State of California.
(r). "Tax Administrator" means the finance director of the city or his or her
designee.
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(s). "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, and includes broadband services
[e.g., T-l, digital subscriber line (eDSL), fiber optic, coaxial cable, and wireless
broadband, including Wi-Fi, WiMAX, and Wireless MESH] to the extent federal and/or
state law permits taxation of such broadband services, now or in the future. 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 (V oIP) services or
are classified by the Federal Communications Commission as enhanced or value added,
and includes video and/or data services that are 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: ancillary telecommunication services; broadband service
(to the extent federal and/or state law permits taxation of such service); mobile
telecommunications service; prepaid telecommunication service; post-paid
telecommunication service; private telecommunication service; paging service; 800
service (or any other toll-free numbers designated by the Federal Communications
Commission); 900 service (or any other similar numbers designated by the Federal
Communications Commission for services whereby subscribers who call in to pre-
recorded or live service); and value-added non-voice data service.
(t) "Value-added non-voice data service" means a service that otherwise meets
the definition of "telecommunications services" in which computer processing
applications are used to act on the form, content, code, or protocol of the information or
data primarily for a purpose other than transmission, conveyance or routing.
(u) "Video Programming" means those programming services commonly
provided to subscribers by a "video service supplier" including but not limited to basic
services, premium services, audio services, video games, pay-per-view services, video on
demand, origination programming, or any other similar services, regardless of the content
of such video programming, or the technology used to deliver such services, and
regardless of the manner or basis on which such services are calculated or billed.
(v) "Video Services" means any and all services related to the providing or
delivering of "video programming" (including origination programming and
programming using Internet Protocol, e.g., IP- TV and IP- Video) using one or more
channels by a "video service supplier", regardless of the technology used to deliver or
provide such services, and regardless of the manner or basis on which such services are
calculated or billed, and includes data services, "telecommunication services", or
interactive communication services that are functionally integrated with "video services".
(w) "Video Service Supplier" means any person, company, or service which
provides or sells one or more channels of video programming, or provides or sells the
capability to receive one or more channels of video programming, including any
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communications that are ancillary, necessary or common to the prOVlSlon, use or
enjoyment of the video programming, to or from a business or residential address in the
City, where some fee is paid, whether directly or included in dues or rental charges for
that service, whether or not public rights-of-way are utilized in the delivery of the video
programming or communications. A "video service supplier" includes, but is not limited
to, multichannel video programming distributors [as defined in 47 U.S.C.A. Section
522(13)]; open video systems (OVS) suppliers; and suppliers of cable television; master
antenna television; satellite master antenna television; multichannel multipoint
distribution services (MMDS); video services using internet protocol (e.g., IP-TV and IP-
Video, which provide, among other things, broadcasting and video on demand), direct
broadcast satellite to the extent federal law permits taxation of its video services, now or
in the future; and other suppliers of video programming or communications (including
two-way communications), whatever their technology.
Sec.26C.4. 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 peIjury, which qualify the applicant
for an exemption, and shall include the names of all utility 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 utility service suppliers so that
the Tax Administrator can properly notify the new utility 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 utility 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 may be appealed pursuant to Section 26C.16 of
this Chapter. Filing an application with the Tax Administrator and appeal to the City
Administrator pursuant to Section 26C.16 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.
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(d). The Tax Administrator shall prepare a list of the persons exempt from the provisions
of this chapter by virtue of this section and furnish a copy thereof to each service
supplier.
ARTICLE 2. COMMUNICATION USERS' TAX
Sec.26C.S. Communication Users' Tax.
(a). There is hereby imposed a tax upon every person in the City using
communication services. The maximum tax imposed by this section shall be at the rate
of four and one-half percent (4.5%) of the charges made for such services and shall be
collected from the service user by the communication services supplier or its billing
agent. There is a rebuttable presumption that communication 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 are subject to taxation under 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
communication services.
(b). "Mobile Telecommunications Service" shall be sourced in accordance
with the sourcing rules set forth in the Mobile Telecommunications Sourcing Act (4
Us. C. Section 124). The Tax Administrator may issue and disseminate to
communication service suppliers, which are subject to the tax collection requirements of
this Chapter, sourcing rules for the taxation of other communication services, including
but not limited to post-paid communication services, prepaid communication services,
and private communication services, provided that such rules are based upon custom and
common practice that further administrative efficiency and minimize multi-jurisdictional
taxation.
(c). The Tax Administrator may issue and disseminate to communication
service suppliers, which are subject to the tax collection requirements of this Chapter, an
administrative ruling identifying those communication services, or charges therefor, 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 are 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
messagmg.
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(e) Charges for communication services (video) shall include, but are not limited
to, charges for the following:
(1) franchise fees and access fees (PEG);
(2) initial installation of equipment necessary for provIsIon and receipt of
communication services;
(3) late fees, collection fees, bad debt recoveries, and return check fees;
(4) activation fees, reactivation fees, and reconnection fees;
(5) all video programming services (e.g., basic services, premium services, audio
services, video games, pay-per-view services, or on demand programming);
(6) ancillary programming services (e.g., electronic program guide services,
search functions, or other interactive services or communications that are
ancillary, necessary or common to the use or enjoyment of the video
programming);
(7) equipment leases (e.g., converters, remote devices); and,
(8) service calls, service protection plans, name changes, changes of services, and
special services.
(t). To prevent actual multi-jurisdictional taxation of communication 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 city on such
communication services, shall be allowed a credit against the tax imposed to the extent of
the amount of such tax legally imposed in such other state or city; provided, however, the
amount of credit shall not exceed the tax owed to the City under this section.
(g). The tax on communication services imposed by this section shall be collected
from the 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 received by the Tax
Administrator on or before the twentieth (20th) day of the following month.
ARTICLE 3. BUNDLING RULE AND NEXUS
Sec.26C.6. Bundling Taxable Items with Non-Taxable Items.
Except as otherwise provided by applicable federal or state law, if any nontaxable
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 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. The service
supplier has the burden of proving the proper apportionment of taxable and non-taxable
charges.
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Sec.26C.7. 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 utility 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 communication service (including V oIP)
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 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 with 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.
The City shall make available, upon request, an accurate description of its jurisdictional
boundaries based on street addresses and/or ZIP Plus Four, in an electronic format. If a
service supplier relies upon such information provided by City, it shall not be responsible
for any errors in taxation that may result.
ARTICLE 4. DUTY TO COLLECT - PROCEDURES
Sec.26C.8. 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:
(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
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 charges, Section 26C.12 shall apply.
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(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 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 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 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, the Tax Administrator, and its agents, shall maintain such filing
returns as confidential information that is exempt from the disclosure provisions of the
Public Records Act.
ARTICLE S. COLLECTION PENAL TIES - SERVICE SUPPLIERS
Sec.26C.9. 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
between financial accounts, made by a service supplier in satisfaction of its obligations
under this subsection 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 utility 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 remit the tax collected on or before the due date, the Tax
Administrator shall attach a penalty for such delinquencies 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 75/100ths (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 first 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 of fifteen (15%) percent of
the amount of the tax collected and/or required to be remitted, or as recomputed by the
Tax Administrator.
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(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 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.
ARTICLE 6. ACTIONS TO COLLECT
Sec.26C.I0. 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.C.A. Section 507(a)(8)(C).
ARTICLE 7. DEFICIENCY DETERMINATION AND ASSESSMENT
Sec.26C.ll. Deficiency Determination and Assessment - Tax Application Errors.
(a) The Tax Administrator shall make a deficiency determination ifhe or she determines
that any person 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 or failing
to apply the tax to one or more taxable services or charges.
(b) The Tax Administrator shall mail a notice of such deficiency determination to the
person required to payor remit the tax, which notice shall refer briefly 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 may request in writing to the Tax Administrator for a hearing on
the matter.
(c) If the person 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 the person requests a hearing, the Tax Administrator
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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 evidence. 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 deficiency
determination, and shall mail a copy of such final assessment to person owing the tax.
The decision of the Tax Administrator may be appealed pursuant to Section 26C.16 of
this Chapter. Filing an application with the Tax Administrator and appeal to the City
Administrator pursuant to Section 26C.16 of this Chapter is a prerequisite to a suit
thereon.
(e) Payment of the final 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, until 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 delinquency as provided in this subsection (e).
(t) 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.
ARTICLE 8. ADMINISTRATIVE REMEDY - NON-PAYING SERVICE
USERS
Sec.26C.12. 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 service supplier shall provide the City with the names and
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addresses of such service users and the amounts of taxes owed under the provisions of
this Chapter.
(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
75/l00ths (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 stated
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 percent (15%) of the amount of the total tax
that is owed.
ARTICLE 9. ADDITIONAL POWERS AND DUTIES OF TAX
ADMINISTRATOR
Sec.26C.13. Additional Powers and Duties of the Tax Administrator.
(a) The Tax Administrator shall have the power and duty, and is hereby directed, to
enforce each and all ofthe 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, collection and remittance of the taxes herein imposed. A copy of
such administrative rules and regulations shall be on file in the Tax Administrator's
office.
(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: (1) 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
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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 next 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
5.74.110 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 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/l00ths (0.75%) percent per month, prorated for any
portion thereof.
(f) The Tax Administrator shall determine the eligibility of any person who asserts a right
to exemption from, or a refund of, 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.
ARTICLE 10. RECORDS
Sec.26C.14. 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 or 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, copies of all records deemed 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 the due date, provided that such person shall reimburse the City for all
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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 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 telephone 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.
ARTICLE 11. REFUNDS
Sec.26C.1S. 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 refunded 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 taxpayers unless each member of the class has submitted a
written claim under penalty of peIjury 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.
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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 deemed 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.
ARTICLE 12. APPEALS
Sec.26C.16. Appeals.
(a) The provisions ofthis section apply to any decision (other than a decision relating to a
refund pursuant to Section 26C.15 of this Chapter), deficiency determination, assessment,
or administrative ruling of the Tax Administrator. Any person aggrieved by any decision
(other than a decision relating to a refund pursuant to Section 26C.15 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(b)]. 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 26C.15 of this Chapter), deficiency determination, assessment, or
administrative ruling of the Tax Administrator; he or she may appeal to the City
Administrator 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
selected by the City Administrator, 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 files, 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.
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( 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.
ARTICLE 13. NO INJUNCTION/WRIT OF MANDATE
Sec.26C.17. 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.
ARTICLE 14. NOTICE OF CHANGES TO ORDINANCE
Sec.26C.18. 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 California
Public Utilities Code Section 799.
ARTICLE 15. FUTURE AMENDMENT TO CITED STATUTE
Sec.26C.19. Future Amendment to Cited Statute.
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.
ARTICLE 16. NO INCREASE IN TAX PERCENTAGE OR CHANGE IN
METHODOLOGY WITHOUT VOTER APPROVAL
Sec.26C.20. No Increase in Tax Percentage or Change in Methodology Without
Voter Approval.
(a) Regarding Sec.26C.5, the City may not increase the tax percentage or change a
methodology for calculating the tax so as to result in an increase in a tax imposed on a
person, without voter approval.
(b) Notwithstanding (a), pursuant to Government Code Section 53750, the City may
make the following changes without voter approval:
1) reduce the percentage rate, and at any time thereafter increase such percentage
rate, so long as the subsequent increase does not exceed the rate previously
approved by the voters in the enactment of this Ordinance;
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2) change the methodology so as to reduce the amount of the tax being levied, and
at any time thereafter change the methodology, so long as the subsequent change
in methodology does not result in an increase in the amount being levied under
the methodology previously approved by the voters in the enactment of this
Ordinance;
3) change a methodology or definition so as to avoid or eliminate a discriminatory
tax on taxpayers that are similarly situated, so long as the change does not result
in an increase in the amount levied on such class of similarly situated taxpayers
under the methodology or definition previously approved by the voters in the
enactment of this Ordinance;
4) establish a class of persons that is exempt or excepted from one or more taxes
hereunder, and at any time thereafter, discontinue such exemption or exception;
5) decide that all or a part of a tax imposed under Sec.26C.5 should not be
enforced for administrative reasons, and at any time thereafter, decide to enforce
the full amount of such tax as previously approved by the voters in the enactment
of this Ordinance; or,
6) establish, and at any time thereafter change, the value and/or apportionment
(including a "safe harbor" percentage) of taxable and nontaxable services that are
bundled or packaged under a combined charge, in response to changes in the
marketing of combined services and the components thereof, or in reevaluating
the values thereof [See Section 26C.6].
ARTICLE 17. INDEPENDENT AUDIT
Sec.26C.20. Independent Audit of Tax Collection, Exemption, Remittance, and
Expenditure.
The City shall annually 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.
ARTICLE 18. INTERACTION WITH PRIOR TAX
Sec.26C.21. Interaction with Prior Tax
(a). Satisfaction of Tax Obligation by Service Users. Any person who pays the tax
levied pursuant to Section 26C.5 of this Code with respect to any charge for a
communication service shall be deemed to have satisfied his or her obligation to pay the
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tax levied pursuant to Sections 26B. 7 and 26B.17 of this Code with respect to that
charge. Likewise, prior to April 1, 2008, any person who pays the tax levied pursuant to
Sections 26B. 7 and 26B.17 of this Code with respect to any charge for a service shall be
deemed to have satisfied his or her obligation to pay the tax levied pursuant to Section
26C.5 of this Code 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 telephone and video users' tax to the new communication users' tax
(which transition period ends April 1, 2008) and to permit communications 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 of the Chapter, but
in no event later than permitted by Section 799 of the California Public Utilities Code.
ARTICLE 19. REMEDIES CUMULATIVE
Sec. 26C.22 Remedies Cumulative.
All remedies and penalties prescribed by this Chapter or which are available under any
other provision of law or equity, including but not limited to the California False Claims
Act (Government Code Section 12650 et seq.) and the California Unfair Practices Act
(Business and Professions Code Section 17070 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 purpose of
enforcing the provisions ofthis Chapter.
SECTION 2. Effective Date. This Chapter shall become effective immediately
upon the date that this Ordinance is confirmed and approved by the voters of Gilroy at the
Municipal General Election of November 6,2007.
SECTION 3. Amendment or Repeal. Chapter 26C of the Gilroy City Code
may be repealed or amended by the City Council without a vote of the people. However,
as required by Article 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.
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
have 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 S. Ratification of Prior Tax. The voters of the City of Gilroy hereby
ratify and approve the past collection of the Telephone and Video Users Tax under
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Chapter 26B of the Gilroy Municipal Code as it existed prior to the effective date of this
Ordinance.
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 Gilroy voting on the 6th day of November, 2007.
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I, SHA WNA FREELS, City Clerk of the City of Gilroy, do hereby certify that the
attached Ordinance No. 2007-22 is an original ordinance, or true and correct copy of a city
ordinance, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council
held on the 3rd day of December, 2007, at which meeting a quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of
the City of Gilroy this 19th day of December, 2007.
(Seal)