Chapter 3.16
UNIFORM TRANSIENT OCCUPANCY TAX*

Sections:

3.16.010    Short Title.

3.16.020    Definitions.

3.16.030    Tax Imposed.

3.16.040    Exemptions.

3.16.050    Operator’s Collection Duties.

3.16.060    Registration of Hotel.

3.16.070    Reporting and Remitting.

3.16.075    Duty of Successor of Operator.

3.16.080    Penalties and Interest.

3.16.085    False and Fraudulent Reports—Penalties.

3.16.090    Enforcement Proceedings—Appeal.

3.16.100    Payment Required.

3.16.110    Records.

3.16.115    Divulging Information Prohibited.

3.16.120    Refunds.

3.16.130    Tax Declared a Debt—Action to Collect.

3.16.140    Penalty for Violations.

3.16.145    Notice.

*    Prior history: Ords. 1101, 1215, 1255 1448, 83-26, 84-12, 93-12 and 94-6; 1949 Code §§ 6900—6913.

3.16.010 Short Title.

This chapter shall be known as the Uniform Transient Occupancy Tax Ordinance. (Ord. 2003-12 § 1 (part), 2003)

3.16.020 Definitions.

Except where the context otherwise requires, the definitions in this section shall govern the interpretation and construction of the terms of this chapter:

City. The term “City” shall mean the City of Newport Beach.

Finance Director. The term “Finance Director” shall mean the Finance Director of the City of Newport Beach or his/her designated representative.

Hotel. The term “hotel” shall mean any structure, or any portion of any structure or the air space within any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes for periods of thirty (30) days or less. The term “hotel” includes any inn, residential dwelling unit, motel, group residential or lodging house, bed and breakfast inn, single room occupancy hotel, hostel, rental unit, public or private residential club, mobile home, time-share project, house trailer at a fixed location, or other structure or portion of a structure.

The term “hotel” shall also include a space, campsite or similar facility which is occupied, or intended or designed for occupancy, by a recreational vehicle, camper, van, trailer, motor home or similar vehicle used, or intended for use, as a dwelling, lodging or for sleeping purposes.

Including. The term “including” shall mean “including, without limitation” and “including, but not limited to” and shall not be interpreted to imply any limitation on the more general preceding provision unless otherwise expressly stated.

Individual. The term “individual” shall mean any natural person.

Occupancy. The term “occupancy” shall mean the use or possession, or the right to use or possession, of a specific campsite, space, area, room or rooms in any hotel for the purpose of dwelling, lodging or sleeping.

Operator. The term “operator” shall mean the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time-share project owner’s association or any other capacity. Where the operator performs his functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purposes of this chapter and shall have the same duties and liabilities as his principal. Compliance with the provisions of this chapter by either the principal or the managing agent shall, however, be considered to be compliance by both.

Person. The term “person” shall mean any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit.

Qualifying Rental Agreement. The term “qualifying rental agreement” shall mean a written leasehold agreement signed by both the operator and transient obligating the transient to pay rent for use and possession of a room or space in a hotel for a period of not less than thirty-one (31) consecutive days. The qualifying rental agreement shall be legally enforceable by both the operator and transient and shall include in its terms both the right to occupy and the obligation to pay for a room or rooms for thirty-one (31) days or more. “Qualifying rental agreement” expressly excludes:

A.    Any agreement, regardless of the rental term, which is terminated for any reason, by either party, or by mutual consent, prior to the thirty-first consecutive day of occupancy; or

B.    Any agreement that would be unlawful or constitute a violation of law.

Rent. The term “rent” shall mean the consideration charged, whether or not received, for the occupancy of space in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits, and property and services of any kind or nature, without any deduction. Rent shall include the consideration charged by an operator for accommodations, including any (A) un-refunded advance rental deposits or (B) separate charges levied for items or services which are part of such accommodations including, but not limited to, furniture, fixtures, appliances, linens, towels, non-coin-operated safes, utilities (such as energy surcharges) and maid service.

Time-Share Interest. The term “time-share interest” shall mean either a time-share estate or a time-share use (as those terms are defined in Section 11003.5 of the Business and Professions Code) and any similar form of ownership involving a right in perpetuity, for life, or for a term of years, to occupy any room, space or area in a time-share project.

Time-Share Owner. The term “time-share owner” shall mean any person or entity that owns a time-share interest.

Time-Share Project. The term “time-share project” shall mean a structure or real property (including air space) in which a time-share interest has been sold.

Transient. The term “transient” shall mean any individual who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty (30) consecutive calendar days or less, counting portions of calendar days as full days. Any individual occupying space in a hotel shall be deemed to be a transient until the period of thirty (30) days has expired, and the tax imposed by this chapter shall be due upon all rent collected or accruing prior to the thirty-first consecutive day of occupancy unless occupancy extends to the thirty-first day or thereafter. The term “transient” shall not include any person who occupies any room, space or area in a time-share project pursuant to a time-share interest and without paying rent including: (A) a time-share owner; (B) a member of the family or guest of the time-share owner; (C) any person who is entitled to occupancy pursuant to any time-share exchange program, or any similar program; and (D) any person entitled to occupancy pursuant to any exchange or incentive program involving or sponsored by the operator of the time-share project. (Ord. 2012-18 § 1, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.030 Tax Imposed.

For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of nine percent of the rent charged by the operator. The tax constitutes a debt owed by the transient to the City, which is extinguished only by payment to the operator or to the City. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Finance Director may require that such tax shall be paid directly to the Finance Director. (Ord. 2012-18 § 2, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.040 Exemptions.

No tax shall be imposed upon:

A.    Any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the tax specified in this chapter, and only when in the performance of official duties thereof;

B.    Any officer or employee of a foreign government who is exempt by reason of express provision of Federal law or international treaty;

C.    A transient occupying a hotel pursuant to a qualifying rental agreement entered into prior to the first day of occupancy;

D.    An employee of an airline company who is occupying a hotel room in the course of his or her employment, but only when the room is rented by the airline employer pursuant to a qualifying rental agreement that has been preapproved by the Finance Director;

E.    Any person or transient occupying a hotel room provided without rent charged (complimentary) to the person or transient by the operator, including but not limited to:

1.    Rooms provided to charitable organizations;

2.     Rooms provided to meeting planners who may book future hotel rooms and provide business and conferencing opportunities for the economic benefit of the City;

3.    Rooms provided to displeased guests; and/or

4.    Rooms provided to hotel employees;

F.    No exemption shall be granted except pursuant to an application filed when the rent is collected and under penalty of perjury upon a form prescribed by the Finance Director. It is the transient’s responsibility to provide necessary proof of the exemption. (Ord. 2012-18 § 3, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.050 Operator’s Collection Duties.

A.    Each operator shall collect the tax imposed by this chapter to the same extent and at the same time as the rent is collected from every transient. The amount of tax shall be separately stated from the amount of the rent charged, and each transient shall receive a receipt for payment from the operator. No operator of hotel shall advertise or state in any manner, directly or indirectly, that all or a portion of the tax will be assumed, waived, absorbed or refunded by the operator.

B.    Notwithstanding the provisions of subsection (A) of this section, the operator shall not be required to separately state the rent and the tax on receipts and books of record, when room accommodations constitute only a portion of a collective group of services, privileges, entitlement or benefits (“benefits”) that include, at a minimum, room accommodations and food and beverage services or room accommodations and at least one other benefit having an ascertainable fair market value (“special package”) offered for one fixed charge (“special package rate”), provided the operator complies with subsection (C) of this section.

C.1.    The operator shall file with the Finance Director a statement of each special package on a form (“special package application”) provided by the Finance Director. The special package application shall detail the benefits of the special package and an itemization of that portion of the special package that is rent and tax and each of the benefits. The operator shall provide written evidence to establish the claimed fair market value of each benefit other than rent and tax. The Finance Director shall mark the date of receipt on the special package application and review the submitted information to determine if sufficient information is provided to verify the value of the benefits, rent and tax. The operator shall designate a specific name or number to the special package as part of the special package application. The special package application shall not be accepted unless accompanied by a fee for processing that has been established by resolution of the City Council.

2.    The name or number designated on the special package application shall appear on all receipts and books of record whenever the special package is sold.

3.    If the special package application is deemed incomplete, the Finance Director will advise the operator of any required changes within fourteen (14) City business days. The operator must either make the required changes and resubmit the special package application or comply with subsection (A) of this section.

4.    The Finance Director shall approve, conditionally approve or disapprove the special package within fourteen (14) days of receipt of a complete special package application. In the event of disapproval the Finance Director shall give the operator written notice of the reasons for disapproval. The effective date of the special package rate shall be the date on which the Finance Director receives a complete special package application that is approved. A new special package application shall be submitted whenever the operator changes the rent or benefits of any previously approved special package.

D.    The tax shall apply only to the amount of rent identified in the special package that has been approved by the Finance Director.

E.    If an operator fails to comply with subsection (A) of this section and also fails to obtain approval of a special package rate pursuant to subsection (C) of this section, the tax (“imputed rate”) shall be the lesser of (1) the amount collected for the total special package or (2) an amount equal to the median average double occupancy room rate for the accommodations as posted in the room pursuant to the requirements of Section 1863 of the Civil Code (or any successor section).

F.    Notwithstanding subsections (C) and (D) of this section, if any audit reveals that the gross income to the operator attributable to the rent portion of special package (“audited rate”) is more than ten (10) percent greater than the rent specified in the special package rate, the rent for purposes of calculating the tax shall be the audited rate. In the event subsection (E) of this section applies and the audited rate is greater than the imputed rate, the rent for tax purposes shall be the audited rate. The audited rate shall be determined by an audit of a sample of the special packages sold by the operator within each special package category. The audited rate shall be the amount of the special package rate remaining after deducting the fair market value of each of the benefits included in the special package rate other than room accommodations and tax. Where more than one type of special package is offered within the audit period, each special package shall be audited separately for purposes of determining the applicable audited rate. Credits or offsets shall not be allowed between different special packages. (Ord. 2012-18 § 4, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.060 Registration of Hotel.

Within thirty (30) days after commencing business each operator of any hotel renting occupancy to transients shall register the hotel with the Finance Director and obtain a “transient occupancy registration certificate” to be at all times posted in a conspicuous place on the premises. The certificate shall, among other things, state the following:

A.    The name of the operator;

B.    The address of the hotel;

C.    The date upon which the certificate was issued;

D.    The following statement:

This transient occupancy registration certificate signifies that the person named on the certificate has fulfilled the requirements of the Uniform Transient Occupancy Tax Ordinance (Chapter 3.16 of the Newport Beach Municipal Code) by registering with the Finance Director for the purpose of collecting the tax from transients and remitting the tax to the Finance Director. This certificate does not authorize any person to conduct any unlawful business, to conduct any lawful business in an unlawful manner or to operate a hotel without strictly complying with all local laws, including those requiring a permit from any board, commission, department or office of the City. This certificate does not constitute a permit.

(Ord. 2012-18 § 5, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.070 Reporting and Remitting.

A.    Each operator shall, on a form provided by the City, make a return to the Finance Director of the total rents charged and received, the amount of tax collected for transient occupancies, the number of rental units available on the premises, and such other information as the Finance Director may reasonably require. The return shall be made on or before the last day of the month following the close of each calendar quarter or on the day specified by the Finance Director if a different reporting period has been established. Returns are considered made and taxes paid only upon receipt of the tax return and the tax by the City. At the time the return is filed, the full amount of the tax collected shall be remitted to the Finance Director. The Finance Director may establish either shorter or longer reporting periods for any individual certificate holder or category of certificate holders if the Finance Director deems it necessary or desirable in order to insure collection of the tax or to increase the efficiency of its administration. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to this chapter shall be held in trust for the account of the City until payment is made to the Finance Director.

B.    The filing of a return shall not preclude the City from collecting by appropriate action any tax actually due and payable pursuant to this chapter or taking any other action to enforce the provisions of this chapter. Each return shall be subject to audit and verification by the Finance Director or authorized agents of the City, who are authorized to examine, audit and inspect such books and records of any operator as may be necessary in their judgment to verify or ascertain the amount of tax due. The Finance Director or agent of the City shall not have right of access to, nor examine, records that are not pertinent to ascertaining the amount of tax due unless the operator fails to provide City with the means of verifying information relevant to the obligations imposed by this chapter. (Ord. 2012-18 § 6, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.075 Duty of Successor of Operator.

A.    If an operator who is liable for any tax or penalties under this chapter sells or otherwise disposes of the hotel operation, his/her successor shall notify the Finance Director of the date of sale at least thirty (30) days before the date of sale, or if the decision to sell was made less than thirty (30) days prior to the actual sale, then immediately, and shall upon withhold a sufficient portion of the purchase price to equal the amount of any unpaid taxes or penalty until the selling operator produces a receipt from the Finance Director showing that the tax or penalty has been paid or a tax clearance certificate from the Finance Director stating that no tax or penalty is due. If the seller does not present a receipt or tax clearance certificate within thirty (30) days after such successor commences to conduct business, the successor shall deposit the withheld amount with the Finance Director pending settlement of the account of the seller.

B.    If the successor operator to the hotel operation fails to withhold a portion of the purchase price as required in subsection (A) of this section, the successor operator shall be liable to the City for the payment of the amount required to be withheld. Within thirty (30) days after receiving a written request from the successor for a tax clearance certificate stating that no tax or penalty is due, the City collector shall either issue the certificate or mail notice to the successor at its address as it appears on the records of the City collector of the estimated amount of the tax and penalty that must be paid as a condition of issuing the certificate. (Ord. 2012-18 § 7, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.080 Penalties and Interest.

A.    Initial Penalty. Any operator who fails to remit any tax imposed by this chapter within the time required shall pay a penalty of ten (10) percent of the amount of the tax in addition to the amount of the tax (initial penalty). The initial penalty may not be waived.

B.    Second Penalty. Any operator who fails to remit the tax and initial penalty on or before a period of thirty (30) days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of ten (10) percent on both the amount of the tax and the initial penalty (second penalty). The second penalty may not be waived.

C.    Interest. In addition to the penalties imposed, any operator who fails to remit any tax imposed by this chapter shall pay interest on the amount of tax that is due and owing at the rate of one and one-half of one percent (1-1/2%) per month for each month or portion of a month that the tax remains unpaid exclusive of penalties.

D.    Penalties Merged with Tax. For purposes of collection, every penalty imposed and such interest as accrues under the provisions of this section shall become a part of the tax required to be paid.

E.    In addition to the penalties and interest provided in this section, the operator shall reimburse City for City’s costs in performance of an audit if, as a result of the audit, it is determined there was any intentional misrepresentation by the operator with respect to the amount of transient occupancy tax due to the City or there is a five percent (5%) or greater discrepancy between the amount of annual transient occupancy tax due to the City and the amount paid by the operator. Such reimbursement shall be paid by operator within thirty (30) days of the date City notifies operator in writing of the amount of City’s costs. (Ord. 2003-12 § 1 (part), 2003)

3.16.085 False and Fraudulent Reports—Penalties.

A.    It shall be unlawful for any operator or person to willfully make, render, sign or verify any false or fraudulent report required by this chapter with intent to defeat or evade the determination of any amount required to be paid under this chapter.

B.    If the Finance Director determines that the nonpayment of any remittance (tax and/or penalty) due under this chapter is due to fraud, a penalty of twenty-five (25) percent of the amount of the tax shall be added thereto in addition to any penalties stated in Section 3.16.080. (Ord. 2012-18 § 8, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.090 Enforcement Proceedings—Appeal.

A.    If any operator shall fail or refuse to collect the tax or to make, within the time provided in this chapter, any report and remittance of the full amount of the tax required by this chapter, the Finance Director shall use his/her best efforts to obtain information on which to base an estimate of the tax due. The Finance Director shall, upon making a determination of the estimated tax or other violation, provide the operator with written notice of the determination and the factual basis for the estimated tax or other violation. The written notice of determination shall be served on the operator personally or by deposit in the United States mail, postage prepaid, addressed to the operator at the last known place of address. The operator may, within ten (10) days after service of written notice of determination, appeal the determination by filing a written appeal with the Finance Director specifying the basis of the appeal and amount of tax or nature of violation contested.

B.    If the operator fails to timely appeal a determination by the Finance Director the determination shall be final and conclusive and the tax, interest and penalties shall become immediately due and payable and/or the violation shall be deemed established.

C.    If the operator files a timely appeal of the determination, the Finance Director shall appoint a hearing officer and give the operator not less than fifteen (15) days’ written notice of the hearing on the appeal. The operator shall have the right to present evidence relevant to the determination and the hearing shall be conducted in accordance with the general rules applicable to any administrative hearing. The hearing officer shall submit to the City Manager a transcript of the hearing together with recommended findings of fact and conclusions of law. The City Manager shall consider the material submitted by the hearing officer and render a decision within fifteen (15) days after submission. The decision of the City Manager shall be final. (Ord. 2012-18 § 9, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.100 Payment Required.

No injunction, writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the City or an officer thereof, to prevent or enjoin the collection of taxes sought to be collected pursuant to this chapter. Payment of all tax, interest and penalties is a required condition precedent to seeking judicial review of any tax liability. (Ord. 2009-17 § 1, 2009)

3.16.110 Records.

It shall be the duty of every operator liable for the collection and payment to the City of any tax imposed by this chapter to keep and preserve, for a period of not less than four years, all records necessary to determine the amount of tax the operator was required to collect and pay to the City. All retained records shall be subject to audit as provided in Section 3.16.070. The Finance Director shall have the right to inspect and/or audit these records at any time during normal business hours on twenty-four (24) hours’ written notice. The records shall be maintained at the operator’s premises or at a location convenient to the Finance Director. The records shall include at least the following:

A.    Daily summaries of room occupancies;

B.    A record of each occupancy charge for which exemption is claimed, the City provided form of exemption, if applicable, including the name of the individual occupying the room, dates of occupancy and reasons for exemption;

C.    All qualifying rental agreements. (Ord. 2012-18 § 10, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.115 Divulging Information Prohibited.

Returns filed with the City pursuant to this chapter, and information regarding the amount of gross receipts, adjustments, credits, over collections, tax, penalty and interest, shall be and remain confidential. No person having an administrative duty under this chapter shall make known in any manner whatever the business affairs, operations, or information obtained by an investigation or audit of the records of any operator or any other person visited or examined in the discharge of official duty, or the amount or source of income, profits, losses, expenditures, of the operator, set forth or to knowingly permit any return or any abstract, or copy of the return to be seen or examined by any person, except this section shall not apply to: (i) any disclosures made in connection with any hearing, appeal, or any civil action or proceeding relating to the determination or recovery of the tax; (ii) any prosecution of any person for violation of any provision of this chapter; or (iii) any criminal or civil proceeding pertaining to the tax. This subsection shall not prohibit, nor be construed to prohibit, disclosure of statistical or cumulative information derived from tax returns, when the information disclosed does not identify or relate to any particular operator. This subsection shall not prohibit, nor be construed to prohibit, any disclosure of tax returns or information when disclosure is compelled by an order of court or other judicial process. (Ord. 2003-12 § 1 (part), 2003)

3.16.120 Refunds.

A.    Claim Required. Whenever the amount of any tax, interest or penalty has been overpaid, paid more than once or has been erroneously or illegally collected or received by the City, the tax may be refunded as provided in subsections (B) and (C) of this section; provided, that a written claim for refund is filed with the Finance Director. The claim for refund must be filed within three years of the date of payment, be made on forms furnished by the Finance Director and be signed by the operator under penalty of perjury.

B.    Claim by Operator. An operator may claim a refund, or take as credit against taxes collected and remitted, the amount overpaid, paid more than once or erroneously or illegally collected or received when it is established in a manner prescribed by the Finance Director that the person from whom the tax has been collected was not a transient. However, neither a refund nor a credit shall be allowed unless the amount of the tax collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator.

C.    Claim by Transient. A transient may obtain a refund of taxes overpaid or paid more than once or erroneously or illegally collected or received by the City by filing a claim in the manner provided in subsection (A) of this section, but only when the tax was paid by the transient directly to the Finance Director, or when the transient, having paid the tax to the operator, establishes to the satisfaction of the Finance Director that the transient has been unable to obtain a refund from the operator who collected the tax.

D.    Evidence. No refund shall be paid under the provisions of this section unless the claimant establishes his/her right by written evidence and to the satisfaction of the Finance Director. (Ord. 2012-18 § 11, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.130 Tax Declared a Debt—Action to Collect.

Any tax required to be paid by any transient pursuant to this chapter shall be deemed a debt owed by the transient to the City. Any such tax collected by an operator that has not been paid to the City shall be deemed a debt owed by the operator to the City. Any person owing money to the City pursuant to this chapter shall be liable to an action brought in the name of the City for the recovery of such amount. (Ord. 2003-12 § 1 (part), 2003)

3.16.140 Penalty for Violations.

Any operator or other person who willfully (A) fails or refuses to register as required by this chapter; (B) fails to make any return required by this chapter; (C) fails or refuses to furnish a supplemental return or other data required by the Finance Director; or (D) makes a false or fraudulent return or claim, is guilty of a misdemeanor and is punishable as provided in Section 1.04.010. (Ord. 2012-18 § 12, 2012: Ord. 2003-12 § 1 (part), 2003)

3.16.145 Notice.

Any notice required to be given pursuant to this chapter, shall be deemed given if personally served on the operator or the operator’s representative, or if deposited in the United States mail, first class postage prepaid, and addressed to the operator at the address shown on the transient occupancy registration certificate. (Ord. 2003-12 § 1 (part), 2003)