Chapter 9. Temporary Transactions and Use Tax

Sec. 8-9.01 Purpose and Operative Date.

(a) The purpose of this Chapter is to continue the retail transactions and use tax approved by the electorate at the June 5, 2012, special election and enacted pursuant to Ordinance 470, in accordance with the provisions of Part 1.6 (commencing with Section 7251) of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this tax if a majority of the qualified voters of the City vote to approve the imposition of the tax.

(b) “Operative date” means the first day of the first calendar quarter commencing more than one hundred ten (110) days after the later of the adoption of the ordinance codified in this Chapter, the date of such adoption being as set forth below.

(c) Prior to the operative date, the City shall contract with the State Board of Equalization to perform all functions incident to the administration and operation of this transactions and use tax chapter; provided, that if the City shall not have contracted with the State Board of Equalization prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.

(1) To adopt a retail transactions and use tax ordinance that incorporates provisions identical to those of the sales and use tax law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.

(2) To adopt a retail transactions and use tax ordinance that imposes a tax and provides a measure therefor that can be administered and collected by the State Board of Equalization in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the State Board of Equalization in administering and collecting the California State sales and use taxes.

(3) To adopt a retail transactions and use tax ordinance that can be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record keeping upon persons subject to taxation under the provisions of this Chapter.

(d) Commencing on the operative date, the previously enacted retail transactions and use tax approved by the voters in 2012 and enacted pursuant to Ordinance 470 is hereby continued until such time as the Finance Commission, created pursuant to Title 2, Chapter 2, Article 6, determines that the City has met its goal of achieving long term financial stability with adequate financial reserves. Upon a finding by a two-thirds (2/3) vote of the Council that the Finance Commission has adequately determined that the City has achieved long term financial stability with adequate financial reserves, the City Council shall enact legislation to terminate the temporary transactions and use tax, termination to be effective no later than one (1) year from date of passage. Notwithstanding this Section, the City Council retains independent authority to repeal this Chapter pursuant to Section 8-9.09(b). (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.02 Transactions Tax Rate.

Commencing on the operative date for the privilege of selling tangible personal property at retail, the previously enacted tax approved by the voters in 2012 and enacted pursuant to Ordinance 470 is hereby continued subject to termination pursuant to Section 8-9.01(d) upon all retailers in the incorporated territory of the City at a rate of fifty one-hundredths of one percent (0.50%) of the gross receipt of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of this Chapter. Such tax shall be in addition to any other transaction (sales) tax imposed by this Code or applicable State law. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.03 Place of Sale.

For the purposes of this Chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-State destination or to a common carrier for delivery to an out-of-State destination. The gross receipts from such sales shall include delivery charges when such charges are subject to the State sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the State or has more than one (1) place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the State Board of Equalization. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.04 Use Tax Rate.

Commencing on the operative date the previously enacted temporary retail transactions and use tax approved by the voters in 2012 and enacted pursuant to Ordinance 470 is hereby continued subject to termination pursuant to Section 8-9.01(d) on the storage, use or other consumption in the City of tangible personal property purchased from any retailer on or after the operative date of this Chapter for storage, use, or other consumption in the incorporated territory of the City at a rate of fifty one-hundredths of one percent (0.50%) of the sales price of the property. The sales price shall include delivery charges when such charges are subject to State sales or use tax, regardless of the place to which delivery is made. Such tax shall be in addition to any other use tax imposed by this Code or applicable to State law. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.05 Adoption of Provisions of State Law.

Except as otherwise provided in this Chapter, and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this Chapter as though fully set forth herein. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.06 Limitations on Adoption of State Law and Collection of Use Taxes.

In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:

(a) Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefor. However, the substitution shall not be made when:

(1) The word “State” is used as a part of the title of the State Controller, State Treasurer, State Board of Control, State Board of Equalization, State Treasury, or the Constitution of the State of California;

(2) The result of that substitution would require action to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the State Board of Equalization, in performing the functions incident to the administration or operation of this Chapter;

(3) In those sections, including, but not necessarily limited to, sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to:

A. Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code; or

B. Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the State under the said provision of that code;

(4) In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797, or 6828 of the Revenue and Taxation Code.

(b) The word “City” shall be substituted for the word “state” in the phrase “retailer engaged in business in this state” in Section 6203 and in the definition to that phrase in Section 6203. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.07 Permit Not Required.

If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor’s permit shall not be required by this Chapter. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.08 Exemptions and Exclusions.

(a) There shall be excluded from the measure of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any State-administered transactions or use tax.

(b) There are exempted from the computation of the amount of transactions tax and gross receipts from:

(1) Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government.

(2) Sales of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this subsection, delivery to a point outside the City shall be satisfied:

A. With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Chapter 2 of Division 3.5 (commencing with Section 9840) of the Vehicle Code by registration to an out-of-City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and

B. With respect to commercial vehicles, by registration to a place of business out of City and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address.

(3) The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of this Chapter.

(4) A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date of this Chapter.

(5) For the purposes of subsections (b)(3) and (4) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.

(c) There are exempted from the use tax imposed by this Chapter the storage, use or other consumption in this City of tangible personal property:

(1) The gross receipts from the sale of which have been subject to a transactions tax under any State-administered transactions and use tax article.

(2) Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California.

(3) If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of this Chapter.

(4) If the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date of this Chapter.

(5) For the purposes of subsections (c)(3) and (4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice whether or not such right is exercised.

(6) Except as provided in subsection (c)(7) of this section, a retailer engaged in business in the City shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the City under the authority of the retailer.

(7) “A retailer engaged in business in the City” shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Chapter 2 of Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City.

(d) Any person subject to use tax under this Chapter may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use, or other consumption of which is subject to the use tax. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.09 Amendments.

(a) All amendments subsequent to the effective date of this Chapter to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Parts 1.6 and 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Parts 1.6 and 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this Chapter; provided, however, that no such amendment shall operate so as to affect the rate of tax imposed by this Chapter.

(b) The City Council of the City of Hercules may make amendments to this Chapter that do not affect the rate or duration of tax imposed without approval of the voters of the City. The City Council of the City of Hercules may repeal this Chapter by a two-thirds (2/3) vote of the Council without approval of the voters of the City, provided all indebtedness secured by the tax has been satisfied. The City Council may amend the rate of tax imposed herein (increase or decrease) or extend the term of the tax only upon two-thirds (2/3) vote of the Council and with approval of the voters of the City. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.10 Enjoining Collection Forbidden.

No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the State or the City, or against any officer of the State or the City, to prevent or enjoin the collection under this Chapter, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.11 Severability.

If any provision of this Chapter or the application thereof to any person or circumstance is held invalid, the remainder of the Chapter and the application of such provision to other persons or circumstances shall not be affected thereby. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.12 Use of Tax Proceeds.

All proceeds of the tax levied and imposed under this Chapter shall be paid into the general fund for use by the City of Hercules. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.13 Finance Commission Oversight.

The Finance Commission, created pursuant to Title 2, Chapter 2, Article 6, shall meet monthly to oversee expenditures of the revenues received by the City from the sales and use taxes imposed pursuant to this Chapter, and to ensure that tax revenues are spent by the City in a manner consistent with the voter approved measure adopting this Chapter as well as any voter approved or Council approved priorities adopted to implement the provisions of this Chapter. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012)

Sec. 8-9.14 Duties.

(a) The Commission is charged with the following responsibilities: (1) reviewing all appropriations of revenues received by the City from the sales and use taxes imposed pursuant to the provisions of this Chapter to determine whether such funds are to be used as provided for in this Chapter and the voter approved measure that adopted this Chapter; (2) reviewing the audit prepared by an independent auditor retained by the City to perform the City’s Comprehensive Annual Financial Report to determine whether such funds have been spent as provided for in this Chapter and the voter approved measure; (3) prepare and issue the Commission’s own annual report setting forth their findings in regard to the foregoing; and (4) determining when the City has met its goal of achieving long term financial stability with adequate financial reserves, and issuing a report to Council detailing such findings, pursuant to Sec. 8-9.01(d).

(b) The Commission shall, for the purpose of fulfilling oversight responsibilities pursuant to Measure O, confine itself specifically to funds received by the City from the sales and use taxes imposed pursuant to the provisions of this Chapter.

(c) In order to preserve the integrity and independence of the oversight process, Commission members will not play a formal role in decision-making on spending priorities, financing plans, or tax rate projections or assumptions. (Ord. 488 § 1 (part), 2015: Ord. 481 § 3 (part), 2014: Ord. 470 § 2 (part), 2012. Formerly 8-9.17)