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Ord 2001 - Adding Article V, Chapter 25 (Utility User Tax) to the Town CodeORDINANCE 2001 ORDINANCE OF THE TOWN OF LOS GATOS ADDING ARTICLE V, CHAPTER 25 (UTILITY USERS TAX) TO THE TOWN CODE THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES ORDAIN AS FOLLOWS: SECTION I A new Article V is added to Chapter 25 of the Town Code as follows: ARTICLE V. UTILITY USERS TAX Sec. 25.50.010 Tax Imposed There is hereby established and imposed, commencing September 15, 1995, a utility users tax in the amounts provided for in this article. Sec. 25.50.015 Disposition of Tax Revenue The tax imposed by this article is for the purpose of raising revenues for the general governmental purposes of the Town. All of the proceeds from the tax imposed by this article shall be placed in the Town's General Fund. Sec. 25.50.020 Definitions For the purposes of this article, unless otherwise apparent from the context, certain words and phrases used in this article are defined as follows: (a) "Administrator" shall mean the Finance Director of the Town. (b) "Cable television corporation ", "electrical corporation ", "gas corporation ", "telephone corporation", and "water corporation" shall have the same meanings as defined in Sections 215.5, 218, 222, 234, and 241, respectively, of the Public Utilities Code of the State. (c) "Supplier" shall mean a person required to bill and remit a tax imposed under this article and actually received from a user. (d) "User" shall mean a person required to pay the tax imposed under this article. Sec. 25.50.025 Exemptions Nothing contained in this article shall be construed as imposing a tax upon any public agency or any religious organization exempt from Federal income tax by subsection (3) of subsection (c) of Section 501 of the Internal Revenue Code, or upon any person exempt from such a tax pursuant to the State Constitution. Sec. 25.50.025 Conflicts Nothing contained in this article is intended to conflict with the applicable rules, regulations, and tariffs of any supplier subject to the jurisdiction of the Public Utilities Commission of the State. In the event of any conflict, the provisions of said rules, regulations, and tariffs shall control. Sec. 25.50.030 Telephone users tax There is hereby imposed a tax upon every person in the Town, other than a telephone corporation, using intrastate telephone communication services in the Town at a rate of two percent (2 %) of the charges made for such services, which tax shall be paid by the person paying for such services. Sec. 25.50.035 Electrical energy users tax There is hereby imposed a tax upon every person in the Town, other than an electrical corporation or a gas corporation, using electrical energy in the Town. The tax imposed by this section shall be at a rate of two percent (2%) of the charges made for such energy, including minimum charges for such services, which tax shall be paid by the person paying for such energy. Sec. 25.50.040 Electrical energy users tax: Exclusions As used in Section 25.50.035 of this chapter, the words "using electrical energy" shall not mean: (a) The storage of such energy 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 energy was received; provided, however, the term shall include the receiving of such energy for the purpose of using it in the charging of batteries; or (b) The receiving of such energy by an electrical corporation or governmental agency at a point within the Town for resale to service users. Sec. 25.50.045 Gas users tax There is hereby imposed a tax upon every person in the Town, other than a gas corporation or an electrical corporation, using gas in the Town which is delivered through mains or pipes. The tax imposed by this section shall be at a rate of two percent (2 %) of the charges made for such gas, including minimum charges for such services, which tax shall be paid by the person paying for such tax. Sec. 25.50.050 Gas users tax: Exclusions As used in Section 25.50.050 of this article, the term "charges" shall not: (a) Include charges made for gas used in the generation of electrical energy by a public utility or a governmental agency; or (b) Be construed to mean the receiving of such gas by a gas corporation or governmental agency at a point within the Town for resale to service users. Sec. 25.50.055 Water users tax There is hereby imposed a tax upon every person in the Town, other than a water corporation, using water in the Town which is delivered through mains or pipes. The tax imposed by this section shall be at a rate of two percent (2 %) of the charges made for such water, which tax shall be paid by the person paying for such water. Sec. 25.50.060 Cable television users tax There is hereby imposed a tax upon every person in the Town using cable television services in the Town. The tax imposed by this section shall be at a rate of two percent (2 %) of the charges made for such service, which tax shall be paid by the person paying for such service. Sec. 25.50.065 Collection Each tax imposed by this article shall be collected from the user by the person selling the particular commodity or services. The amount collected in one month shall be remitted to the Administrator on or before the last day of the following month. The amount of the tax so collected shall be held to be a special fund in trust for the Town of Los Gatos and shall be deemed to be public monies upon collection. Upon proper notice, the Town may require the person collecting the tax to deposit such amount in a separate account in a federally or state chartered bank located in California and keep the amount of such taxes in that account until payment over to the Town; however, whether the collected taxes are placed in a separate account or not shall have no effect on the trust obligation of the person collecting the tax to hold and remit the taxes to the Town. Sec. 25.50.070 Suits by the Town (a) Any tax required to be paid by a user pursuant to this Article shall be deemed a debt owed by the user to the Town. (b) The Town may bring an action for any such tax collected from a user which has not been remitted to the Administrator against the person required to collect and remit. (c) Any person owing or holding money due to the Town pursuant to the provisions of this article shall be liable in an action brought in the name of the Town for the recovery of such amount, and judgment therefor shall include an award for administrative and collection costs at the rate of Fifty and no/100ths ($50.00) Dollars per hour actually expended by officers and employees of the Town to collect such sum due and owing. Such administrative and collection costs shall also be awarded to the Town in any action or proceeding wherein any provision of this article or any decision thereunder is successfully defended by the Town. Administrative and collection costs shall not be deemed to include attorney's fees. Sec. 25.50.075 Duty to collect: Procedures The duty to collect and remit the taxes imposed by this article shall be performed as follows: (a) The tax shall be collected insofar as practicable at the same time as and along with the charges made in accordance with the regular billing practices of the supplier. Except in those cases where a user pays the full amount of such charges but does not pay any portion of the tax imposed by this article, or where a user has notified a supplier that he is refusing to pay the tax imposed by this article which the supplier is required to collect, if the amount paid by the 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 the tax shall be deemed to have been paid. (b) The duty to collect the tax from a user shall commence with the beginning of the first regular billing period applicable to the person which starts on or after September 15, 1995. Where a person 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. (c) The duty of a supplier to collect the tax from the user shall generally be limited to computing the amount of the tax, regularly billing the amount of such tax, accounting for taxes received, and segregating such taxes for remittance to the Town. No enforcement action to recover billed and unpaid taxes from a user is required of a supplier. Sec. 25.50.080 Administrative regulations The Administrator may adopt regulations to carry out, interpret, or facilitate the operation of this article and may make administrative agreements to vary the strict requirements of this article so that the collection of any tax imposed by this article may be made in conformance with the billing procedures of a particular supplier so long as the overall result of such agreements is that the collection of the tax occurs in conformance with the general purpose and scope of this article. A copy of each such agreement shall be on file and available for public examination in Town Hall. Sec. 25.50.085 Delinquent taxes Taxes collected from a user which are not remitted to the Administrator on or before the due dates provided in this article shall be delinquent. Sec. 25.50.090 Suppliers: Failure to make timely remittances: Penalties In addition to remitting the amount of the tax actually received by the supplier from a user, any supplier who fails to remit the tax imposed by this article within the time required shall pay a penalty of ten percent (10 %) of the amount of the tax which shall be added on the last day of each month following the date on which the remittance was due until the tax and penalties are remitted. The total amount of the monthly penalties provided for in this section shall not exceed double the total amount of the tax due. Sec. 25.50.095 Suppliers: Fraud: Penalties If the Administrator determines that the nonpayment by any supplier of any remittance due under this article is willful, or is due to fraud, a penalty of twenty -five percent (25%) of the amount of the tax shall be added thereto, in addition to the penalties set forth in Section 25.50.090 of this article. Sec. 25.50.100 Suppliers: Interest In addition to the penalties imposed by Sections 25.50.090 and 25.50.095 of this article, any supplier who fails to remit any tax imposed by this article shall pay interest at the rate of one percent (1 %) 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. Sec. 25.50.105 Suppliers: Penalties and interest part of tax Every penalty imposed upon a supplier and such interest as accrues pursuant to the provisions of Section 25.50.095 and Section 25.50. 100 of this article shall become a part of the tax required to be remitted. Sec. 25.50.110 Users: Failure to make timely or correct remittances: Penalties In addition to paying the amount of the tax, any user who fails to pay any tax imposed by this article within thirty (30) days after the date of the receipt of a notice of the amount of tax due from the supplier, or who uses an exemption therefrom belonging to another person, shall pay a penalty of ten percent (10 %) of the amount of the tax which shall be added on the last day of each month following the date on which the payment was due until the tax and penalties are paid. The total amount of the monthly penalties shall not exceed double the total amount of the tax due. Sec. 25.50.115 Users: Fraud: Penalties If the Administrator determines that the nonpayment by any user of any tax imposed by this article is willful, or is due to fraud, a penalty of twenty -five percent (25 %) of the amount of the tax shall be added thereto, in addition to the penalties set forth in Section 25.50. 110 of this article. Sec. 25.50.120 Users: Interest In addition to the penalties imposed by Section 25.50. 110 and 25.50.115 of this article, any user who fails to pay any tax imposed by this article shall pay interest at the rate of one percent (1 %) per month, or fraction thereof, exclusive of penalties, from the date on which the remittance first became delinquent until paid and a collection charge of Ten and no/100ths ($10.00) Dollars for each delinquent account. Sec. 25.50.125 Users: Penalties and interest part of tax Every penalty imposed and such interest as accrues upon a user pursuant to Sections 25.50.115 and 25.50.120 of this article shall become a part of the tax required to be paid. Sec. 25.50.130 Users: Penalties and interest collected by the Town The penalties, interest, and collection charges imposed by Sections 25.50. 110 through 25.50.125 of this article shall not be collected by the supplier, but by the Town. Sec. 25.50.135 Determinations of tax by the Administrator: Notices If any supplier fails to make, within the time provided in this article, any report and remittance of the tax, or any portion thereof, required by this article, the Administrator shall proceed in such manner as he /she may deem best to obtain the facts and information on which to base his estimate of the tax due. As soon as the Administrator shall procure such facts and information as he /she is able to obtain upon which to base the assessment of any tax imposed under this article and payable by any supplier who has failed or refused to make such report and remittance, the Administrator shall proceed to determine and assess against such supplier the tax, interest, and penalties provided for by this article. In case such a determination is made, the Administrator 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 supplier so assessed at its last known address. Sec. 25.50.140 Determinations of tax: Hearings The supplier, within ten (10) days after the serving or mailing of the notice referred to in Section 25.50.135 of this article, may make an application in writing to the Administrator for a hearing on the amount assessed. If an application by the supplier for a hearing is not made within the time prescribed, the tax, interest, and penalties, if any, determined by the Administrator shall become final and conclusive and immediately due and payable. If such an application is made, the Administrator shall give not less than five (5) days' written notice, in the manner prescribed in Section 25.50.135 of this article, to the supplier to sow cause at a time and place fixed in the notice why the amount specified therein should not be fixed for such tax, interest, and penalties. At such hearing, the supplier may appear and offer evidence why such specified tax, interest, and penalties should not be so fixed. Sec. 25.50.145 Determinations of tax following hearings After a hearing on the amount of tax assessed, the Administrator shall determine the proper tax to be remitted and shall thereafter give written notice to the supplier in the manner prescribed in Section 25.50.135 of this article of such determination and the amount of such tax, interest, and penalties. The amount determined to be due shall be payable after fifteen (15) days, unless an appeal is taken as provided in this article. Sec. 25.50.150 Collection of tax from users by the Town Whenever the Administrator determines that a user has deliberately withheld the amount of any tax imposed on him by this article from the amounts remitted to a supplier required to collect the tax, or that a user has failed to pay the amount of the tax to such supplier for a period of two (2) or more billing periods, or whenever the Administrator deems it in the best interests of the Town, he /she may relieve such supplier of the obligation to collect the taxes due under this article from certain named users for specified billing periods. The Administrator shall notify the user that he /she has assumed responsibility to collect the taxes due for the stated periods and demand the payment of such taxes, plus any penalty imposed and such interest as may be due pursuant to the provisions of Sections 25.50.140 and 25.50.145 of this article. The notice shall be served on the user by handing it to him personally or by the deposit of the notice in the United States mail, postage prepaid thereon, addressed to the user at the address to which the billing was made by the supplier required to collect the tax or, should the user have changed his address, to his last known address. Sec. 25.50.155 Appeals Any person aggrieved by, and having a direct financial interest in, any decision of the Administrator pursuant to this article may appeal to the Town Manager by filing a written notice of appeal with the Town Manager within fifteen (15) days after the serving or mailing of the decision. Sec. 25.50.160 Appeals: Hearings: Notices The Town Manager shall fix a time and place for hearing such appeals. The Town Manager shall give notice thereof in writing to such person by serving it personally or be depositing it in the United States mail, postage prepaid, addressed to such person at his last known address. Sec. 25.50.165 Appeals: Hearings: Determinations The Town Manager shall have the authority to determine all questions raised on such appeal at the time of the hearing. No determination so made by the Town Manager shall conflict with any substantive provision of this article. The decision of the Town Manager shall be final, subject to the provisions of Section 1094.5 of the Code of Civil Procedure of the State. Sec. 25.50.170 Records It shall be the duty of every supplier required to collect and remit to the Town any tax imposed by this article to keep and preserve, for a period of five (5) years, all records as may be necessary to determine the amount of such tax as such supplier may have been required to collect and remit to the Town, which records the Administrator shall have the right t inspect at all reasonable times. Sec. 25.50.175 Procedure for refunds Whenever the amount of any tax, interest, or penalty has been overpaid or paid more than once, or has been erroneously collected or received by the Town under this article, such amount may be refunded as provided in this section and Sections 25.50.180 and 25.50.185 of this article, provided a claim in writing therefor, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the Administrator within thirty (30) days after the date of payment or the date upon which oral or written notice was given to the user that the supplier would not refund or credit the amount claimed, whichever is later. The claim shall be on forms furnished by the Administrator. Sec. 25.50.180 Supplier refunds A supplier may claim a refund or take as credit against taxes collected and remitted an amount overpaid, paid more than once, or erroneously collected or received when it is established in a manner prescribed by the Administrator that the person from whom the tax has been collected was not a user or is otherwise entitled to such refund or credit. Sec. 25.50.185 User refunds Any user may obtain a refund of taxes overpaid, or paid more than once, or erroneously collected or received by the Town by filing a claim in the manner provided in Section 25.50.175 of this article but only when the user having paid the tax to the supplier establishes to the satisfaction of the Administrator that the user has been unable to obtain a refund or credit from the supplier who collected the tax. Sec. 25.50.190 Proof required for claims for refunds No refund shall be credited or paid by the Town pursuant to Sections 25.50.175 through 25.50.185 of this article unless the claimant establishes his right thereto by written records and other evidence satisfactory to the Administrator showing entitlement thereto. No refund or credit shall bear interest. Sec. 25.50.195 Exemptions for low income persons (a) Every person shall be exempt from each tax imposed by this article who: (1) Resides in a household where the total gross annual income of all residents of the household is twenty six thousand three hundred and no /100ths ($26,300) dollars or less; and (2) Is responsible to pay, and pays, the charges for service for which an exemption is sought; and (3) Is not having all, or any portion, of the charges for service and /or the tax for which an exemption is claimed paid by any public agency or for which the supplier receives any funds from any public agency for the charges for services and /or the tax imposed by this article; and (4) Complies with, and continues to meet, the provisions of this section. (b) Every person claiming an exemption shall file an application therefor, under penalty of perjury, with the Administrator. The Administrator may require such information as will enable him/her to determine the eligibility of the applicant for such exemption. Failure to supply the information requested shall be sufficient grounds for the denial of the application. The Administrator shall determine, within fifteen (15) days after the receipt of a complete application and all requested information, the eligibility of the applicant for an exemption. No exemption shall become effective for seventy -five (75) days following the date of the receipt of an application therefor, and all information requested by the Administrator, unless the supplier is able to adjust its billing procedures to so provide therefor at an earlier time. No claim for a credit or refund due to an exemption for any period prior to the end of said seventy -five (75) day period shall be paid. (c) Promptly upon the determination of such an exemption, the Administrator shall notify each supplier for which the exemption is granted, furnishing to such supplier the name of the user, the address to which the service is being supplied, the account number, if any, and such other information as the Administrator deems necessary to enable the supplier to remove the tax from billing for such service or services. (d) The supplier shall discontinue billing for the tax upon the service it supplies as soon as possible, but not later than forty -five (45) days after receipt of a notice from the Administrator. Any tax collected following the filing of an application for an exemption, up to the cessation of billing therefor under this section, shall be remitted to the Administrator and shall not be subject to a refund. (e) Every person shall report promptly to the Administrator any change in facts or circumstances which would be cause for the termination of such exemption. Failure to report shall be subject to Sections 25.50. 110 through 25.50.130 of this article. (f) Every supplier shall commence to bill, collect, and remit the taxes imposed by this article whenever the name on any account changes, or the billing address of the exempt person changes, or any other information, fact, or circumstance becomes known to, or should have become known to, a supplier that such person no longer qualifies for such exemption for any reason. (g) The Administrator is empowered to demand evidence of the continued eligibility for an exemption from any exempt person. Failure to provide satisfactory evidence to the Administrator within twenty (20) days after a demand therefor shall be cause for the Administrator to terminate and cancel the exemption, and to otherwise proceed as if such person was not exempt from the tax imposed by this article, including, but not limited to, direction to the supplier to commence the collection of the tax at the commencement of the next billing cycle. (h) The income limit set forth in subsection (2) of subsection (a) of this section shall be adjusted by the Town Manager, effective July 1 of each year, by the following process: the Town Manager shall annually obtain the Consumer Price Index from the United States Department of Labor, Bureau of Labor Statistics, for the San Francisco - Oakland Metropolitan Area for the year ending February 28 within said area and shall determine the "mean average percentage change" (MAPC) in said Consumer Price Index for the categories of "All Urban Consumers" and "Urban Wage Earners and Clerical Workers" from said Consumer Price Index. The Town Manager shall calculate an adjustment in the income limit, rounded to the nearest one hundred and no /100ths ($100.00) dollars, for the next fiscal year by multiplying the then current income limit by the adjustment factor. Sec. 25.50.200 Ceiling on amount of tax: Refunds If, in any calendar year, any licensed business user has paid a total amount of tax on any of the utilities, excluding penalties and interest, of at least five thousand and no /100ths ($5,000) dollars, such user shall be entitled to a refund of the tax paid over five thousand and no /100ths ($5,000) dollars provided such user complies with Section Sec. 25.50.175 and 25.50.190 of this article. See. 25.50.205 Sunset This article shall expire by operation of law for purposes of taxes on any utility service regular billing period beginning on or after September 15, 2000. Following that date, this article shall only be effective for purposes of collecting and disbursing taxes imposed on utility services provided before that date. SECTION II This ordinance was introduced at a regular meeting of the Town Council of the Town of Los Gatos on June 19, 1995 and adopted by the following vote as an ordinance of the Town of Los Gatos at a regular meeting of the Town Council of the Town of Los Gatos on July 17, 1995. This ordinance takes effect 30 days after it is adopted, and the tax shall apply to utility service regular billing periods beginning on or after September 15, 1995. COUNCIL MEMBERS: AYES: Randy Attaway, Linda Lubeck, Mayor Patrick O'Laughlin NAYS: Steven Blanton ABSENT: Joanne Benjamin ABSTAIN: None SIGNED: M YOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK OF THE TOWN OF GATOS LOS GATOS, CALIFORNIA