6-5
UTILITY USERS TAX

6-5.1 Findings:

The council of the city of Lynwood finds and declares:

a. The city is facing a current budget crisis and must reduce police and fire service, maintenance of the streets, sidewalks, alleys, trees and other property open to the public as well as other community services vital to the preservation of the public peace, health and safety.

b. The cost of supplies, materials and other services required to provide necessary city services, increases substantially each year.

c. It is the intention and understanding of the people that this measure shall be deemed a “general tax” and that it is not a “special tax” within the meaning of section 4 of article XIII A of the California constitution by virtue of the fact that the proceeds of this tax are to be deposited in the general fund of the city and are to be available to be used for any general governmental purpose that the city council shall determine. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.2 Purpose:

The purpose of this section is to establish the methods for calculating a utility users tax on users of water, telephone, gas, electricity and cable television services in the city and to establish standards for administration of the taxes. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.3 Definitions:

The following words and phrases whenever used in this section shall be construed as defined in this subsection:

a. Person shall mean any domestic or foreign corporation, firm, association, syndicate, joint stock company, partnership of any kind, joint venture, club, business or common law trust, society, or individuals.

b. City shall mean the city of Lynwood.

c. Gas shall mean natural or manufactured gas or any alternate hydrocarbon fuel which may be substituted therefor.

d. Telephone corporation, electrical corporation, gas corporation, water corporation, and cable television corporation shall have the same meanings as defined in sections 234, 218, 222, 241, and 215-5, respectively, of the California Public Utilities Code except, “electrical corporation”, “gas corporation” and “water corporation” shall also be construed to include any municipality, public agency or person engaged in the selling or supplying of electrical power or gas or water to a service user.

e. Tax administrator shall mean the finance director of the city of Lynwood.

f. Service supplier shall mean any entity required to collect or self-impose and remit a tax as imposed by this section.

g. Service user shall mean a person required to pay a tax imposed by this section.

h. Month shall mean a calendar month.

i. Nonutility supplier shall mean: 1) a service supplier, other than an electrical corporation serving within the city, which generates electrical energy in capacities of at least fifty (50) kilowatts for its own use or for sale to others; or 2) a gas supplier other than a gas corporation, that sells or supplies gas to users within the city. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.4 Exemptions:

a. Nothing in this section shall be construed as imposing a tax upon any person when imposition of such tax upon that person would be in violation of the constitution of the United States or that of the state of California.

b. The city council may, be order or 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 section and provide that such classes of persons or service shall be exempt, in whole or in part from such tax.

c. The tax administrator shall prepare a list of the persons exempt from the provisions of this section by virtue of this subsection and furnish a copy thereof to each service supplier (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.5 Telephone Users Tax:

a.    There is hereby imposed a tax on the amounts paid for any intrastate or interstate telephone communication services by every person in the city using such services, including commercial mobile radio services. The tax imposed by this subsection shall be at the rate of not more than nine percent (9%) of the charges made for such services and shall be paid by the person paying for such services.

b.    As used in this subsection, the term "charges" shall not include charges for services paid for by inserting coins in coin-operated telephones except that where such coin-operated service is furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; nor shall the term "charges" include charges for any type of service or equipment furnished by a service supplier subject to public utility regulations during any period in which the same or similar services or equipment are also available for sale or lease from persons other than a service supplier subject to public utility regulation; nor shall the words "telephone communication services" include maritime mobile services as defined in Section 2.1 of Title 47 of the Code of Federal Regulations, as said section existed on January 1, 1970. The term "telephone communication services" refers to those services which provide access to a telephone system and the privilege of telephone quality communication with substantially all persons having telephone stations which are part of such telephone system. The telephone users’ tax is intended to, and does, apply to all charges billed to a telephone account having a situs in the city, irrespective of whether a particular communication service originates and/or terminates within the city.

c.    The tax imposed by this subsection shall be collected from the service user by the person providing the intrastate or interstate telephone communication services, or the person receiving payment for such services. The amount of the tax collected in one month shall be remitted to the tax administrator on or before the last day of the following month or, at the option of the person required to collect and remit the tax, an estimated amount of tax collected, measured by the tax bill in the previous month, shall be remitted to the tax administrator on or before the last day of each month.

d.    The tax administrator may issue and disseminate to telephone communication service suppliers which are subject to the tax collection requirements of this chapter an administrative ruling: (1) identifying those telephone communication services, or charges therefor, that are subject to or not subject to the tax of subsection 6-5.5a, and in rendering such a ruling, the tax administrator may consider the common rules, guidelines and definitions promulgated by other taxing jurisdictions in California that impose a tax on intrastate and interstate telephone communications services; and (2) establishing sourcing rules for the taxation of telephone communication services, including but not limited to commercial mobile radio service, post-paid telephone communication services, prepaid telephone communication services, and VoIP; provided, that such rules are based upon custom and common practice that further administrative efficiency and minimize multi-jurisdictional taxation.

e.    Notwithstanding the provisions of subsection 6-5.5a, the tax imposed under this subsection shall not be imposed upon any person for using intrastate or interstate telephone communication services to the extent that the amounts paid for such services are exempt from the tax imposed under Division 2, Part 20, of the California Revenue and Taxation Code, or the tax imposed under Section 4251 of the Internal Revenue Code. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008); Ord. #1631, §1)

6-5.6 Electricity Users Tax:

a. There is hereby imposed a tax upon every person other than an electric or gas corporation using electrical energy in the city. The tax imposed by this subsection shall be at the rate of not more than nine percent (9%) of the charges made for such energy by an electrical corporation providing service in the city and shall be billed to and paid by the person using the energy. The tax applicable to electrical energy provided by a nonutility supplier shall be determined by applying the tax rate to the equivalent charge the service user would have incurred if the energy used had been provided by the electrical corporation serving the residents of the city. Rate schedules for this purpose shall be available from the city. Nonutility suppliers shall install, maintain and use an appropriate utility type metering system which will enable compliance with this subsection. “Charges”, as used in this subsection, shall include charges made for: 1) metered energy and 2) minimum charges for service, including customer charges, service charges, demand charges, standby charges and all other annual and monthly charges, fuel or other costs adjustments, authorized by the California public utilities commission or the federal energy regulatory commission.

b. As used in this subsection, the term “using electrical energy” shall not be construed to mean the storage of such energy by a person in a battery owned or possessed by him or her for use in an automobile or other machinery device apart from the premises upon which the energy was received, provided, however, that the term shall include the receiving of such energy for the purpose of using it in the charging of batteries; nor shall the term include electricity used and consumed by an electric utility supplier in the conduct of its business; nor shall the term include the mere receiving of such energy by an electric corporation or governmental agency at a point within the city of Lynwood for resale; nor shall the term include the use of such energy in the production or distribution of water by a water utility or a governmental agency.

c. The tax imposed in this subsection shall be collected from the service user by the service supplier or nonutility supplier. The tax imposed in this subsection on use supplied by self-generation or from a nonutility supplier not subject to the jurisdiction of this section, shall be collected and remitted to the tax administrator in the manner set forth in subsection 6-5.8 of this section. The amount of tax collected by a service supplier or a nonutility supplier in one month shall be remitted by U.S. mail to the tax administrator, postmarked on or before the last day of the following month; or at the option of the person required to collect and remit the tax, an estimated amount of tax measured by the tax billed in the previous month, shall be remitted by U.S. mail, to the tax administrator, postmarked on or before the last day of each month. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.7 Gas Users Tax:

a. There is hereby imposed a tax upon every person in the city other than a gas corporation or electrical corporation, using, in the city, gas which is transported through mains or pipes or by mobile transport. The tax imposed by this subsection shall be at the rate of not more than nine percent (9%) of the charges made for the gas and shall be billed to and paid by the person using the gas. The tax applicable to gas or gas transportation provided by nonutility suppliers shall be determined by applying the tax rate to the equivalent charges the service user would have incurred if the gas or gas transportation has been provided by the gas corporation franchised by the city. “Charges” as used in this subsection shall include: 1) that billed for gas which is delivered through mains or pipes; 2) gas transportation charges; and 3) demand charges, service charges, customer charges, minimum charges, annual and monthly charges, and any other charge authorized by the California public utilities commission or the federal energy regulatory commission.

b. The tax otherwise imposed by this subsection is not applicable to: 1) charges made for gas which is to be resold and delivered through mains and pipes; 2) charges made for gas used and consumed by a public utility or governmental agency in the conduct of its business; or 3) charges made by a gas public utility or gas used and consumed in the course of its public utility business; and 4) charges made for gas used in the propulsion of a motor vehicle, as authorized in the vehicle code of the state of California.

c. The tax imposed in this subsection shall be collected from the service user by the person selling or transporting the gas. A person selling only transportation services to a user for delivery of gas through mains or pipes shall collect the tax from the service user based on the transportation charges. The person selling or transporting the gas shall, on or before the twentieth of each month after the effective date hereof, make a return to the tax administrator stating the amount of taxes billed during the preceding calendar month. At the time such returns are filed, the person selling or transporting the gas shall remit tax payments to the tax administrator in accordance with schedules established or approved by the tax administrator. The tax imposed by this subsection on use supplied by self-production or a nonutility supplier not subject to the jurisdiction of this section shall be collected and remitted to the tax administrator in the manner set forth in subsection 6-5.8 of this section. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.8 Service Users Receiving Direct Purchase Of Gas Or Electricity:

a. Notwithstanding any other provision of this section, a service user receiving gas or electricity directly from a nonutility supplier not under the jurisdiction of this section, or otherwise not having the full tax due on the use of gas or electricity in the city directly billed and collected by the service supplier, shall report said fact to the tax administrator within thirty (30) days of said use and shall directly remit to the city the amount of tax due.

b. The tax administrator may require said service user to provide, subject to audit, filed tax returns or other satisfactory evidence documenting the quantity of gas or electricity used and the price thereof. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.9 Water Users Tax:

a. There is hereby imposed a tax upon every person in the city using water which is delivered through mains or pipes. The tax imposed by this subsection shall be at the rate of not more than nine percent (9%) of the charges made for such water and shall be paid by the person paying for such water.

b. There shall be excluded from the base on which the tax imposed in this subsection is computed charges made for water which is to be resold and delivered through mains or pipes; and charges made by a municipal water department, public utility or a city or municipal water district for water used and consumed by such department, utility or district.

c. The tax imposed in this subsection shall be collected from the service user by the person supplying the water. The amount collected in one month shall be remitted to the tax administrator on or before the last day of the following month. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.10 Cable Television Users Tax:

a. There is hereby imposed a tax upon every person in the city using cable television service. The tax imposed by this subsection shall be at the rate of not more than nine percent (9%) of the charges made for such cable television service and shall be paid by the person paying for such cable television service.

b. The tax imposed in this subsection shall be collected from the service user by the person furnishing the cable television service. The amount collected in one month shall be remitted to the tax administrator on or before the last day of the following month. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.11 Remittance Of Tax:

a. Taxes collected from a service user which are not remitted to the tax administrator on or before the due dates provided in this section are delinquent. Should the due date occur on a weekend or legal holiday, the return may be postmarked on the first regular working day following a Saturday/Sunday, or legal holiday. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.12 Actions To Collect:

Any tax required to be paid by a service user under the provisions of this section shall be deemed a debt owed by the service user to the city. Any such tax collected from a service user which has wilfully been withheld from the tax administrator shall be deemed a debt owed to the city by the person required to collect and remit. Any person owing money to the city under the provisions of this section shall be liable to an action brought in the name of the city for the recovery of such amount. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.13 Duty To Collect; Procedures:

The duty to collect and remit the taxes imposed by this section shall be performed as follows:

a. Notwithstanding the provisions of subsection 6-5.8 of this section, 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 service supplier. Where the amount paid by a service user to a service supplier is less than the full amount of the service charge and tax which has accrued for the billing period, such amount and any subsequent payments by a service user shall be applied to the utility charge first until such charge has been fully satisfied. Any remaining balance shall be applied to taxes due. In those cases where a service user has notified the service supplier of his refusal to pay the tax imposed on said energy charges subsection 6-5.14 of this section will apply.

b. The duty to collect tax from a service user shall commence with the beginning of the first full regular billing period applicable to the service user where all charges normally included in such regular billing are subject to the provisions of this section. 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. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.14 Additional Power And Duties Of Tax Administrator:

a. The tax administrator shall have the power and duty, and is hereby directed to enforce each and all of the provisions of this section.

b. The tax administrator shall have the power to adopt rules and regulations not inconsistent with provisions of this section for the purpose of carrying out and enforcing the payment, collection and remittance of the taxes herein imposed. A copy of such rules and regulations shall be on file in the tax administrator’s office.

c. The tax administrator may make administrative agreements to vary the strict requirements of this section so that collection of any tax imposed herein may be made in conformance with the billing procedures of particular service supplier so long as said agreements result in collection of the tax in conformance with the general purpose and scope of this section. A copy of each such agreement shall be on file in the tax administrator’s office.

d. The tax administrator shall determine the eligibility of any person who asserts a right to exemption from the tax imposed by this section. The tax administrator shall provide the service supplier with the name of any person who the tax administrator determines is exempt from the tax imposed herein, together with the address and account number to which service is supplied to any such exempt person. The tax administrator shall notify the service supplier of termination of any person’s right to exemption hereunder, or the change of any address to which service is supplied to any exempt person.

e. The tax administrator shall provide notice to all service suppliers, at least ninety (90) days prior to any annexation or other change in the city’s boundaries. Said notice shall set forth the revised boundaries by street and address, along with a copy of the final annexation order from LAFCO. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.15 Assessment; Service User Administrative Remedy:

a. Whenever the tax administrator determines that a service user has deliberately withheld the amount of the tax owed by him or her from the amounts remitted to a person required to collect the tax, or that a service user has refused to pay the amount of tax, such person may be relieved of the obligation to collect taxes due under this section from certain named service users for specified billing periods as set forth below. The notice shall be served on the service user by handing it to him or her personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to the service user at the address to which billing was mailed by the person required to collect the tax.

b. The service supplier shall provide the city with amounts refused and/or unpaid along with the names and addresses of the service users neglecting to pay the tax imposed under provisions of this section. Whenever the service user has failed to pay the amount of tax for a period of two (2) or more billing periods, the service supplier shall be relieved of the obligation to collect taxes due.

c. The tax administrator shall notify the service user that the tax administrator assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes. The notice shall be served on the service user by handing it to him or her personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to the service user at the address to which billing was mailed by the person required to collect the tax; or, should the service user’s address change, to the last known address. If a service user fails to remit the tax to the tax administrator within fifteen (15) days from the date of the service of the notice upon him or her, which shall be the date of mailing if service is not accomplished in person, a penalty of twenty five percent (25%) of the amount of the tax set forth in the notice shall be imposed, but not less than five dollars ($5.00). The penalty shall become part of the tax herein required to be paid. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.16 Records:

It shall be the duty of every person required to collect and remit to the city any tax imposed by this section to keep and preserve, for a period of three (3) years, all records as may be necessary to determine the amount of such tax as he may have been liable for the remittance to the tax administrator, which records the tax administrator shall have the right to inspect at all reasonable times. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.17 Refunds:

a.    Written Claim for Refund. Any UUT claim sought pursuant to this section shall comply with section 2-7 and the additional requirements as provided herein. 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 perjury as provided by this subsection. It is the intent of the city council that the one-year written claim requirement of this subsection be given retroactive effect; provided, however, that any claims which arose prior to the commencement of the one-year claims period of this subsection, and which are not otherwise barred by a then-applicable statute of limitations or claims procedure, must be filed with the tax collector as provided in this subsection within ninety (90) days following the effective date of the ordinance codified in this subsection.

b.    Compliance with Claims Act. 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. The tax administrator, or the city council where the claim is in excess of five thousand dollars ($5,000.00), 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.

c.    Refunds to Service Suppliers. Notwithstanding the notice provisions of subsection 6-5.17a, the tax administrator may, at his or her discretion, give written permission to a service supplier who has collected and remitted any amount of tax in excess of the amount of tax imposed by this chapter to claim credit for such overpayment against the amount of tax which is due the city upon a subsequent monthly return(s) to the tax administrator; provided, that: (1) such credit is claimed in a return dated no later than one year from the date of overpayment or erroneous collection of said tax; (2) the tax administrator is satisfied that the underlying basis and amount of such credit has been reasonably established; and (3) in the case of an overpayment by a service user to the service supplier that has been remitted to the city, the tax administrator has received proof, to his or her satisfaction, that the overpayment has been refunded by the service supplier to the service user in an amount equal to the requested credit. (Ord. #1352, §1; Ord. #1433, §§3-5; Res. 2008.118 (Voters Approved 11-4-2008); Ord. #1631 §2)

6-5.18 Severability:

If any subsection, subdivision, paragraph, sentence, clause or phrase of this section or any part thereof is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portion of this section or any part thereof. The city council hereby declares that it would have passed each subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more subsection, subdivision, paragraph, sentence, clause or phrase be declared unconstitutional. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.19 Termination Or Suspension Of Utility Users Tax:

The service supplier shall, upon notification, terminate or suspend any utility users tax commencing with the first full billing period which occurs after the effective date of such action by the city council. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))

6-5.20 Operative Date:

Under the provisions of Government Code section 36937, this section shall become effective immediately upon passage of the enacting ordinance. The tax imposed under this section shall apply to bills rendered on or after ninety (90) days or as soon thereafter as the respective utilities are physically and mechanically able to get “on line” for the imposition of charges (not more than 60 days). This section was adopted by the voters of the city of Lynwood on November 4, 2008. (Ord. #1352, §1; Res. 2008.118 (Voters Approved 11-4-2008))