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HomeMy WebLinkAbout2259ORDINANCE NO. 2259 AN ORDINANCE OF THE PEOPLE OF THE CITY OF ARCADIA UPDATING THE TELEPHONE/TELECOMMUNICATIONS PROVISIONS OF THE CITY'S UTILITY USERS TAX THE PEOPLE OF THE CITY OF ARCADIA, CALIFORNIA DO HEREBY ORDAIN AS FOLLOWS: SECTION 1. Section 2670 of Part 7 of Chapter 6 of Allic,e 11 of the Arcadia Municipal Code is hereby amended to read as follows: "2670. DEFINITIONS. The definitions given in this section govern the construction of this Part. (a) "Person" shall mean any domestic or foreign corporation, firm, association, syndicate, joint stock company, partnership or any kind, joint venture, club, Massachusetts business or common-law trust, society, individual, or municipal corporation. (b) "City" shall mean the City of Arcadia. (c) Electrical corporation", "gas corporation", "water corporation", and "cable television corporation" shall have the same meanings as defined in Sections 218, 222, 241 and 215.5, respectively, of the Public Utilities Code of the State of California, as said sections existed on January 1, 1970, except that "water corporation" shall not mean or include the City of Arcadia. (d) "Tax Administrator" shall mean the Finance Director of the City of Arcadia. (e) "Service Supplier" shall mean a person required to collect and remit a tax imposed by this Part. (f) "Service User" shall mean a person required to pay a tax imposed by this Part. (g) "Month" shall mean a calendar month. (h) "Ancillary Telecommunications Services" shall mean services that are associated with or incidental to the provision, use or enjoyment of telecommunications services, including but not limited to the following services: (1) "Conference bridging service" means an ancillary service that links two or more participants of an audio or video conference call and may include the 1 provision of a telephone number. Conference bridging service does not include the telecommunications services used to reach the conference bridge. (2) "Detailed telecommunications billing service" means an ancillary service of separately stating information pertaining to individual calls on a customer's billing statement. (3) "Directory assistance" means an ancillary service of providing telephone number information, and/or address information. (4) "Vertical service" means an ancillary service that is offered in connection with one or more telecommunications services, which offers advanced calling features that allow customers to identify callers and to manage multiple calls and call connections, including conference bridging services. (5) "Voice mail service" means an ancillary service that enables the customer to store, send or receive recorded messages. Voice mail service does not include any vertical services that the customer may be required to have in order to utilize the voice mail service. (i) "Billing Address" shall mean the mailing address of the service user where the service supplier submits invoices or bills for payment by the service user. (j) "Communication Services" shall mean telecommunications services and ancillary telecommunication services. (k) "Mobile Telecommunications Service" shall have the same meaning and usage as set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124) and the regulations thereunder. (1) "Municipal Organization" shall mean an organization or association created by statute or by voluntary action, whose purpose is to facilitate the development and dissemination of uniform rulings or interpretations regarding the application of utility users taxes to communications services in the State of California. (m) "Place of Primary Use" shall mean the street address representative of where the customer's use of the communications service primarily occurs, which must be the residential street address or the primary business street address of the customer. (n) "Post-Paid Telecommunication Service" shall mean the telecommunication service obtained by making a payment on a telecommunication-by-telecommunication basis either through the use of a credit card or payment mechanism such as a bank card, travel card, credit card, or debit card, or by charge made to a service number which is not associated with the origination or termination of the telecommunication service. (o) "Prepaid Telecommunication Service" shall mean the right to access telecommunication services, which must be paid for in advance and which enables 2 the origination of telecommunications using an access number or authorization code, whether manually or electronically dialed, and that is sold in predetermined units or dollars of which the number declines with use in a known amount. (p) "Private Telecommunication Service" shall mean a telecommunication service that entitles the customer to exclusive or priority use of a telecommunications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel or channels. A telecommunications channel is a physical or virtual path of telecommunications over which signals are transmitted between or among customer channel termination points (i.e., the location where the customer either inputs or receives the telecommunications). (q) "Service Address" means any of the following: (1) The location of the service user's telecommunications equipment from which the telecommunication originates or terminates, regardless of where the telecommunication is billed or paid; or, (2) If the location in subsection (1) of this definition is unknown (e.g., mobile telecommunications or VOIP service), the service address means the location of the service user's place of primary use, or (3) For prepaid telecommunication service, "service address" means the location associated with the service number. (r) "Streamlined Sales and Use Tax Agreement" shall mean the multi-state agreement commonly known and referred to as the Streamlined Sales and Use Tax Agreement, and as it is amended from time to time. (s) "Communications Services" shall mean the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points, whatever the technology used. The term "communications services" includes such transmission, conveyance, or routing in which computer processing applications are used to act on the form, code or protocol of the content for purposes of transmission, conveyance or routing without regard to whether such services are referred to as voice over internet protocol (Vol?) services or are classified by the Federal Communications Commission as enhanced or value added, and includes video and/or data services that is functionally integrated with "communications services". "Communications services" include, but are not limited to the following services, regardless of the manner or basis on which such services are calculated or billed: ancillary telecommunication services; mobile telecommunications service; prepaid telecommunication service; post-paid telecommunication service; private telecommunication service; paging service; 800 service (or any other toll-free numbers designated by the Federal Communications Commission); 900 service 3 (or any other similar numbers designated by the Federal Communications Commission for services whereby subscribers who call in to pre-recorded or live service). (t) "VoIP" (Voice over Internet Protocol) shall mean the digital process of making and receiving real-time voice transmissions over any Internet Protocol network. (u) "800 SERVICE" shall mean a "communications service" that allows a caller to dial a toll-free number without incurring a charge for the call. The service is typically marketed under the name "800", 6685599, 4686699, "877", and "888" toll- free calling, and any subsequent numbers designated by the Federal Communications Commission. (v) "900 SERVICE" shall mean an inbound toll "communications service" purchased by a subscriber that allows the subscriber's customers to call in to the subscriber's prerecorded announcement or live service. "900 service" does not include the charge for: collection services provided by the seller of the "telecommunications services" to the subscriber, or service or product sold by the subscriber to the subscriber's customer. The service is typically marketed under the name "900" service, and any subsequent numbers designated by the Federal Communications Commission." SECTION 2. Section 2671 of Part 7 of Chapter 6 of Article II of the Arcadia Municipal Code is hereby amended to read as follows: "2671. COMMUNICATIONS SERVICES TAX. (a) There is hereby imposed a tax upon every person in the City, using intrastate, interstate and international communications services, including cellular telephone services, and the telephone services that gain access to the Public Switched Network (PSN), by means of various technologies, by every person in the City using such services. The tax imposed by this section shall be at the rate of five percent (5%) of all charges made for such services and shall be paid by the person paying for such service. There is a rebuttable presumption that communications services, which services are capable of terminating a call to another person on the general telephone network, and which are billed to a billing or service address in the City, are used, in whole or in part, within the City's boundaries, and such services are subject to taxation under this chapter. If the billing address of the service user is different from the service address, the service address of the service user shall be used for purposes of imposing the tax. (b) "Mobile Telecommunications Service" shall be sourced in accordance with the sourcing rules set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124). The Tax Administrator may issue and disseminate to communication service suppliers, which are subject to the tax collection requirements of this Part, sourcing rules for the taxation of other communication services, including but not limited to post-paid telecommunication services, prepaid telecommunication services, and private 4 telecommunication services, provided that such rules are based upon custom and common practice that further administrative efficiency and minimize multi jurisdictional taxation (e.g., Streamlined Sales and Use Tax Agreement). (c) As used in this section, the term "communications services" shall not include "private mobile radio service" [as defined in Part 20.3 of Title 47 of the Code of Federal Regulations], or "private mobile service" [as defined in 47 U.S.C.A. Section 332(d)(3)], which is not interconnected with the PSN. As used in this section, the term "communications services" shall include, but shall not be limited to charges for: connection, reconnection, termination, movement, or change of communications services; late payment fees; detailed billing; central office and custom calling features (including but not limited to call waiting, call forwarding, caller identification and three-way calling); voice mail and other messaging services; directory assistance; access and line charges; universal service charges; regulatory, administrative and other cost recovery charges; local number portability charges; and text and instant messaging. "Communication services" shall not include digital downloads such as, music, ringtones, games, and similar digital products. (d) As used in this section, the term "charges" shall include the value of any other services, credits, property of every kind or nature, or other consideration provided by the service user in exchange for the communications services. (e) The Tax Administrator, from time to time, may issue and disseminate to communications service suppliers that are subject to the tax collection requirements of this Part, an administrative ruling identifying those communications services that are subject to the tax of subsection (a) above. This administrative ruling shall not impose a new tax, revise an existing tax methodology as stated in this Part, or increase an existing tax except as allowed by California Government Code Section 53750(h)(2), as it may be amended from time to time. (f) To facilitate the uniform interpretation and application of similar ordinance provisions in other local jurisdictions in the state, the Tax Administrator may, prior to issuing and disseminating a sourcing rule or an administrative tax ruling, submit his or her proposed sourcing rule or administrative tax ruling to a Municipal Organization for review and comment, according to the rules and procedures of that Municipal Organization, or its successor organization. (g) To prevent actual multi jurisdictional taxation of communications services subject to tax under this section, any service user, upon proof to the Tax Administrator that the service user has previously paid the same tax in another state or city on such communications services, shall be allowed a credit against the tax imposed to the extent of the amount of such tax legally imposed in such other state or city; provided, however, the amount of credit shall not exceed the tax owed to the City under this section." SECTION 3. Section 2671.4 is hereby added to Part 7 of Chapter 6 of Article II of the Arcadia Municipal Code and shall read as follows: 5 "2671.4 EFFECT OF BUNDLING TAXABLE WITH NON-TAXABLE ITEMS. If any nontaxable charges are bundled with and not separately stated from taxable service charges on the customer bill or invoice of a service supplier, the combined charge is subject to tax unless the service supplier identifies, by reasonable and verifiable standards, the portions of the combined charge that are nontaxable and taxable through the service supplier's books and records kept in the regular course of business, and in accordance with generally accepted accounting principles, and not created and maintained for tax purposes. The service supplier has the burden of proving the proper apportionment of taxable and non-taxable charges. If the service supplier offers a combination of taxable and non-taxable services, and the charges are separately stated, then for taxation purposes, the values assigned the taxable and non-taxable services shall be based on its books and records kept in the regular course of business and in accordance with generally accepted accounting principles, and not created and maintained for tax purposes. The service supplier has the burden of proving the proper valuation of the taxable and non-taxable services." SECTON 4. Section 2671.6 of Part 7 of Chapter 6 of Article II of the Arcadia Municipal Code is hereby amended to read as follows: "2671.6 INDEFINITE SUSPENSION OF A PORTION OF THE UTILITY USER TAX RATE That notwithstanding the utility user tax rates set forth in 2671.1 (a) and 2671.2 (a), of this Code, the utility user tax rate for electricity shall be five percent (5%) of the charges for such electricity and the utility user tax rate for gas shall be five percent (5%) of the charges for such gas. That during such time as this Section of the Arcadia Municipal Code is in effect, the utility user tax rates imposed by Subsections 2671.1 (a) and 2671.2 (a) over the rate set forth in this Section, shall be suspended, and shall not be collected. The rate set forth in this Section shall not be operative as to a service user and the duty to collect the tax pursuant to such rate from a service user shall not commence until the beginning of the first regular billing period applicable to that service user which starts on or after June 3, 1980. Where a service user receives more than one (1) billing, one or more being for different periods than another, the rate set forth in this Section shall be operative, and the duty to collect the tax pursuant to said rate shall arise separately for each billing period. The utility users tax shall be reviewed annually by the City Council and the City Council may, by ordinance or resolution, adjust the rate or temporarily suspend all or a portion of the tax, as appropriate to the financial condition of the city. No adjustment to the rate or temporary suspension of the tax shall constitute a decrease in a tax, or an increase in a tax requiring voter approval under California Constitution Article XIIIC (Proposition 218); provided the City Council's action does not increase the tax beyond the maximum rate or methodology set forth in this voter-approved ordinance. To the extent that any aspect of a rate adjustment or temporary tax suspension is found to invoke such a requirement under Proposition 218, the entire City Council action shall be deemed null and void ab initio, and 6 there shall be no entitlement to adjustment or suspension for any service user." SECTION 5. Section 2671.8 is hereby added to Part 7 of Chapter 6 of Article II of the Arcadia Municipal Code and shall read as follows: "2671.8 SUBSTANTIAL NEXUS/MINIMUM CONTACTS For purposes of imposing a tax or establishing a duty to collect and remit a tax under this chapter, "substantial nexus" and "minimum contacts" shall be construed broadly in favor of the imposition, collection and/or remittance of the utility users tax to the fullest extent permitted by state and federal law, and as it may change from time to time by judicial interpretation or by statutory enactment. A service supplier shall be deemed to have sufficient activity in the City for tax collection and remittance purposes if its activities include, but are not limited to, any of the following: maintains or has within the City, directly or through an agent or subsidiary, a place of business of any nature; solicits business in the City by employees, independent contractors, resellers, agents or other representatives; solicits business in the City on a continuous, regular, seasonal or systematic basis by means of advertising that is broadcast or relayed from a transmitter with the City or distributed from a location within the City; or advertises in newspapers or other periodicals printed and published within the City or through materials distributed in the City by means other than the United States mail; or if there are activities performed in the City on behalf of the service supplier that are significantly associated with the service supplier's ability to establish and maintain a market in the City for the provision of services that are subject to a tax under this Chapter." SECTION 6. Section 2672.1 of Part 7 of Chapter 6 of Article II of the Arcadia Municipal Code is hereby amended to read as follows: "2672.1 EXEMPTION. The tax imposed by this Part 7 shall not apply during any calendar year to any of the following: (a) Any service user who has an income adjusted for family size, at or below fifty percent (50%) of the area median income as determined under the Section 8 Income Limits for Los Angeles County as published by the United States Department of Housing and Urban Development and applicable to the Community Development Block Grant Programs; and (b) Any service user who meets the criterion of disability as established by the Social Security Administration's Supplemental Income program for the Aged, Blind and Disabled. (Title XVI of the Social Security Act as amended.)" SECTION 7. Section 2679.1 is hereby added to Part 7 of Chapter 6 of Article II of the Arcadia Municipal Code and shall read as follows: 7 "2679.1 FUTURE AMENDMENT TO CITED STATUTE Unless specifically provided otherwise, any reference to a state or federal statute in this Part shall mean such statute as it may be amended from time to time, provided that such reference to a statute herein shall not include any subsequent amendment thereto, or to any subsequent change of interpretation thereto by a state or federal agency or court of law with the duty to interpret such law, to the extent that such amendment or change of interpretation would require voter approval under California law, or to the extent that such change would result in a tax decrease (as a result of excluding all or a part of any utility service, or charge therefor, from taxation). Only to the extent voter approval would otherwise be required or a tax decrease would result, the prior version of the statute (or interpretation) shall remain applicable; for any application or situation that would not require voter approval or would not result in a decrease of a tax, provisions of the amended statute (or new interpretation) shall be applicable to the maximum possible extent. To the extent that the City's authorization to collect or impose any tax imposed under this Part is expanded or limited as a result of changes in state or federal law, no amendment or modification of this Part shall be required to conform the tax to those changes, and the tax shall be imposed and collected to the full extent of the authorization up to the full amount of the tax imposed under this chapter." SECTION 8. Effective Date. The amendments to this Part are subject to a vote of the citizens of Arcadia and shall become effective immediately upon the date that the City Clerk certifies that this Ordinance has been approved by a majority of the voters of Arcadia at the Special Municipal Election of June 9, 2009. SECTION 9. Severability. If any section, sentence, clause or phrase of this ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining provisions of this ordinance. The People of the City of Arcadia hereby declare that they would have adopted this ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. SECTION 10. Certification/Summary. Following the City Clerk's certification that the citizens of Arcadia have approved this Ordinance, the Mayor shall sign this Ordinance and the City Clerk shall cause the same to be entered in the book of original 8 ordinances of said City; and shall cause the same, or a summary thereof, to be published as required by law. I hereby certify that the forgoing ordinance was passed, approved and adopted by the People of the City of Arcadia on the 9th day of June, 2009. ATTEST: r ity Clerk Stephen P. Deitsch City Attorney of the City of Arcadia 9