SR-8-E (10)
.
'*
8-E
JUri 2 ~ 1!8i
It
CA: RtlM: rrnd264/ca
CIty CounCIl M~etlnq
:;2P'$-O/O tI
6-24-86
Santa MonIca}
C.a 1 I f 0.... n 1 a
STAFF REPORT
TO:
Mayor and CIty CouncIl
FROM:
CIty Attorney
SUBJECT:
OrdInance Establlshlng BusIness LIcense
Tax Amnesty and AudIt Program
Ctt
Its meetIng on May
1986,
the CIty Cou~cll
13,
dIrected
the
CI ty
Attorney
to
prepare an ordInance
establIshIng a bUSIness lIcense amnesty and audIt program and
to
make
In
changes
bU&IneS5
lIcense
tax
varIOUS
admtrllstrat lon,
In
response
to
thIS
dIrectIon}
the
accompanYIng ordInance has been prepared and 15 presented for
CIty CounCIl conSIderatIon.
~ECTION-BY-SECTION ANALYSIS
The
follOWIng
IS a sectlon-by-sectlon analysls of the
proposed ordInance:
SectIon .1
SectIon 1 amends subdIVISIon (g) of Santa
MonIca
MunICIpal
to prOVIde 2l
clear
Code SectIon 6116
oblIgatIon on the part of lIcensees to cooperate In any audIt
unde....taken bv the DIrector of FInance.
Currently,
thIS
subdIVISIon empowers
the DIrector of FInance
to audIt the
books and rerords of lIcensees.
ImplICIt In thIS prOVISIon 15
the oblIgatIon
to cooperate
In the audIt
of
the
lIcensee
1
6-E
JUM 2 4 1986-
proce~5.
The
-
amendment
to
this
e
Sectlon adds
addltlonal
language to clearly requlre audit cooperation by licensees.
Section 2.
Section 2 amends Santa Monica Munlclpal Code
Sectlon 61168
to change the
gross receipts reportlng perlod
from a flscal year baslS to a calendar year baSIS.
Sectlon 3.
Section 3 adds S~ctlon 6128 to the Santa
Monica Munlc1pal Code to prOVide for a tax amnesty and aud1t
program.
Sections
4-7.
Sections 4-7 are standard provlslons of
an ordinance.
Th1s ordinance 15 presented a5 an emergency
ordinance 50
that
the
tax amnesty and audit
program may
commence on July 1, 1986.
Other
techn1cal changes requested at
the May 13, 1986,
C1 ty
Councll
meetlng wlll
be
returned
In an
ordlnance
presented at
a subsequent meet1ng.
These techn1cal changes
are unrelated to the ta~ amnesty and audit program.
RECOMMENDATION
It
15
respectfully recommended that
t he accompan~.,J1 ng
ord1nance be Introduced and adopted.
PREPARED BY: Robert M. Mvers, C1ty Attorney
2
-
e
BEFOR~ DISTRIBUTION CHECK CONTENT
DISTRIBUTION OF RESOLUTION #
t'6y /1'
OF ALL
FOR CITY CJ.ERK' S ACTION ·
ORDINPu\JCE # /37{.
Introduced: ?4Y/~b
Adopted:
AJJriJAYS PUBLISH AOOPTr.D ORDINANCES *
*Cross out Attorney's a?proval
Agenda Item #
CounCIl MeetIng Date
/' ~
c' - L
Was It amended?
./Vu
VOTE' AffIrmative:
NegatIve:
Abstain:
Absent:
~ FROOF VOTE<.: KITH AKOTHER PERSOY BEF'ORE AI\TVTHIlfG
DISTRlnUTlux: uRIGINAL LO be slgned~ sealed and filed In Vault.
---; - C
/
NEWSPAPER PUBLICATION (Date: )
Department origInatIng staff report ( * )
*C1 ty Attorney does not want copies of his ord.11]al1ces or resolutions.
~ana~ement Services Lvnne Barrette 0rdInances only
~ '" - I ~
I
~
."
Agency mentioned in document or staff report
(certified?)
Subject file (agenda packet)
1
Counter file
1
Others: (Review for deparbnents who need to kncM).
AIrport
Parking Auth.
Auditorum
Personnel
Building Dept.
Planning
WllHllIll ty and Econcnuc Dev 9
F}.na,nce
k~~i<-tkL
Fire
Police (en-
forcement?)
--1-_
PurchasIng
.
Recr/Parks
General Servo
Transportation
LIbrary
Treasurer
Manager
SE:-:D F()U~ COPIES OF ALL ORDINA!\CES TO:
CODfD SYSTEMS, Attn-peter Maclearie
l? 0 "laIn r~r~et L
Avn'l y~w Jersey_07717
SEND FOUR COPIES OF 1\1111 01l:nTNANrp~ JO:
.ol2:0..ra ~yr~ck
~ANTA MO:.J'ICA MUNICIPAL COURT
(725 MAIN STREE~ Room 118
SAi'ITA MONICA, CA 90401
*d1ecJ<. Code Sect10ns before sendmg.
TOTAL COPIES
~-j~.,
~ I.
"" j .,.
.' .
. .
e
Santa MonIca, CallfornI~
CA:RMM:rmd264/c~
City CouncIl MeetIng 6-24-86
ORDINANCE NUM8~R 1376(CCS)
(CIty CounCil Serlea)
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA
AMENDING SECTIONS 6116 AND 61168 OF
THE SANTA MONICA MUNICIPAL CODE AND
ADDING SECTION 6128 TO THE
SANTA MONICA MUNICIPAL CODE RELATING
TO THE BUSINESS LICENSE TAX AND
DECLARING THE PRESENCE OF AN EMERGENCY
THE ClTY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN
AS FOLLOWS:
SECTION 1. Section 6116 of the Sant~ Monica MunICIpal
Code 15 amended to read as tollows:
SECTION
6116.
S.t.::ltement
Q~
LIcensee.
(a) In all cases where the amount
of lIcense to be paId by any per50n IS
ba~ed upon the amount of receIpts, or
sales or of bU51nss5 transacted, or upon
the number of persons employed or upon the
number of wagons or other vehIclea, u5ed,
or
the
amount of the maXImum
upon
adml~~lon fee charged. or upon the number
of tables or chaIrs used for any game or
upon the number 0; unIts In any but IdIng
1
. J. ~ ~
or IJpo~he seatIng capacIty, su_per~on,
before obtaining a lIcense for ~uch
bU5ine~s ~nd within thIrty (30) days after
the begInnIng of each lIcense period,
shall fIle WIth the 01~ector of FInance a
written statement In the form required by
the Director of Flnence, supported by ~uch
documentatIon requested by the Director of
Finance, shOWing the total amount of
receIpts
tran!.acted
year, or
or !.ale!.
or
of
business
d_urlng the
the number of
preceding Ilcen58
wagons, o~ other
vehicles used or the amount of the maXImum
admiSSIon
fee charged, or
the number of
seating
capacity at the
bUilding, or the
date of such
un 1 t !.
contaIned in $uch
statement.
(b)
If
two or more closely related
bU5lneS$eS are carrIed on
at
the -same
locatIon and under the same ownershIp and
the bU51nesses are on a gross receipts
baSIS,
the
gross
receIpts shall be
reported together and the
rates applIcable WIll be
compIlation of the annual
greater of the
u5ed for the
lIcen~e fee.
When
two or more non-related bU~lnesse3
2
. '
~re Jltrated ~t one locatLon~epar~te
Ileense~ ~hall be reqUlr~d.
(0 }
If ~ny person 13
required to
have
two 0 r
more Ilcense3 subJect to a
under Sectlons 6227} 622?A)
or 6240 of th1s Code, the
pay, 1n ~dd1tlon to the
lIcense Fee
6226, 6236,
person shall
mInImum
annual
llcense
fee
for each
lIcense, a SIngle lIcense fee for ~ll
llcenses computed on the basls of the
tot~l gross receipts of all 1lcen3es.
(d) No statement flIed pursuant to
this Section shall be conclUSIve upon the
City or upon. ~ny offlcer thereof ~s to the
matters thereIn set forth, and the 5a~e
shall
not prejUdICe the rIght of the ~lty
to recover
ascertaIned
any amount that may be
to be due from such pel"'~on In
addItIon to the amount shown by such
statement should It be foun~ to be
Incorrect.
(e) If
any person reqUIred to file
pursuant to thIS SectIon
any
st~tement
sha 11
Fall to do
50)
such person shall be
license fee at the
reqUIred
to pay
a
maXImum rate herein prescrIbed for the
bU~lne~s carrIed on by such person and
3
sh~ll~e gUIlty of a vlolatl4lt of thIS
Code and shall be punIshable therefor as
hereInafter provIded.
( F )
In any case where
the First
11cense
15
to be
Issued
for a newly
establIshed busIness, the minImum tax for
that type of busIness
at the termInatIon or
which
shall be paId, and
the lIcense perIod
operatton of 5uch
during
the
bUSiness
1S commenced,
the
lIcense for
such llcens, perIod shall be adjusted and
paid In the manner prOVIded by thIS
SectIon for the ascertaIning and paYIng of
lIcenses for other lIcense perIods, after
deductIng From the amount 50 found to be
due the amount paId at the tIme such fIrst
license was Issued.
(9) The correctness of any
statement flied pursuant to thIS SectIon
shall be subject to audIt and verIfIcatIon
by the DIrector Ot FInance, who 15 hereby
authorIzed and empowered to Inspect and
audIt the books and records of any and all
persons
lIcensed to carryon any bUSIness
speCIfIed
lIcensed
speCIfIed
In thIS Code. No person
to carryon any bU~lness
In thIS Code shall refuse or
4
fa 11
e allow the
Director of ~a"c. to
In~pect and audit such books and ~ecord$
or shall reFuse or fall to provide such
additional Information as requested by th~
Director of Finance.
(h) Any $tatement flIed pursuant to
this Section shall be Signed and shall
contain the follOWing:
"1 declare, under penalty of making
a raIse declaration, that I am authorized
to make thl~ statement and to the best of
my knowledge
correct: and
and be lie t
1 t IS
a true,
made In
complete statement}
good faith for the period stated."
For making a false statement or
declaration the person signing the
statement shall be gUilty of a
misdemeanor.
(1) Any statement flIed pursuant to
thiS Section shall be confidential In
character and shall not be subJect to
publiC inspection. It shall be the duty
of the Director of Finance to preserve and
keep the statements 50 that the contents
thereof mey not become known except to the
persons charged by law With the
administration of thiS Code.
?
SECTION ~ Sect10n 61168 of the s~a Mon1ca Mun1c1pal
Code 1S amended to read as follows:
SECTION 61168.
Gross Rece1pts.
ea) "Gross receipts," whenever used
1n this Art1cle, ahall be construed as
def1ned 1n thIS SectIon unless from the
context a dIfferent meanIng 15 Intended or
unless a dIfferent meanIng 15 specIf1cally
defIned.
(b) "Gross rece1pts" shall mean:
~l) For any tax due on or
after July 1, 1986, gross receIpts shall
be determIned based upon gross receIpts
for the calendar year preced1ng the
lIcense tax perIod for wh1ch the tax 15
due.
1986,
based
For any tax due prIor to July 1,
gross rece1pts shall be determIned
upon gross receIpts for the f15cal
year commenCIng on July 1 and end1ng on
June 30 preced1ng the lIcense tax per10d
for WhICh the tax 1S due.
(2) The total amount of the
5~le prIce of all sales} the total amount
charged or received for the performance of
any act, serVIce or employment of whatever
nature It may be, whether such serVIce,
act or employment 15 done as part of or 1n
6
conneJllon wIth the ~ale ~f 900~, war~$J
merchandise or not, for which 8 ch~rge 1$
made or credit allowed, including all
receipts, cash, credits and property of
any kind or nature, ~ny amount for which
credit IS allowed by the seller to the
purchaser without any deduction therefrom
on account of'
the cost Ot the property
sold,
labor
the cost
of
the
materials used,
Interest paid or
othe r expense
or service costs,
payable,
lqsses Or any
whatsoever.
(3) The amount of' any federal
manufacturers I
or
Importers'
excise tax
Included
In
the price of property sold,
even though tne manufacturer or Importer
1$ alao the retailer thereof and whether
or not the amount of such tax 15 stated aa
a separate charge.
(4) In
COl'"\nectlon
With a
person leaSing or renting propertv, all
amounts paid by a tenant to a lessor for
the serVices performed, or materials used,
or utIlIties or faCllltlea
furnished by
the
le~aor
on
the
the
prenn~ee or
In
connection
Wl th
tenant: IS
use,
p05~e5SI0n,
or
the rIght
to p055es5 the
7
prope~; any ~ecelpt$ paId by Jltenant to
a
lessor
for
the use or possession of
land~
or the rlght to use or possess land
other th4n that upon whlCh the bUilding or
structure
15 located but which 15 used or
possessed or
IS available
possession
by
IS
tenant
f'or use or
for purposes
related
to
the tenancy;
and all amounts
paid as prepaid rent.
(5) Receipts of' any person
received as ~omml5slons or fees earned, or
charge~
of'
any
char~cter
made
or
compensation of' any character received,
for the performance of' any service by said
person or any of said person's employees
and receipts of' any person
received 155
partial
o~
fu 11
compensation
o~
reimbursement ror salaries, payroll taxes,
fringe benefits and any and all Similar
expenses
for persans who are employees of
said person and
receipts of any person
received as partial
or full compensation
or reimbursement for equipment, supplIes,
utili ties,
or other
Items or serVlces
~cqulred by $ald per~on
in that per5onl~
naml!
and
u5ed
or
con$umed
1n
the
perFormance of serVlces.
8
.)
If GrOS:!t
rece 1 P t 5.1
.11
not
1nclude:
(1) The amount of any federal
tax Imposed on or with respect to retail
sales whether Imposed upon the retailer or
upon the consumer and regardless of
whether or not the amount of federal tax
1S stated
charge.
to customers as a separate
(2) Any Callforn1a state,
City, or city and county sal~s or use tax
requ1red by law to be Included In or added
to the purchase price and collected from
the consumer or purchaser.
(3) Such part of the sales
price of any property previously sold and
returned by the purchaser to the seller
which 1S refunded by the seller by way of
cash or credit allowances given or taken
as part payment on any pr~perty so
accepted for resale.
(4) Caeh d1scounts allowed or
taken on sales.
(5) Receipts of persons
acting as agents or brokers, other than
receIpts
received as commlSS1ons or feee
earned and other than net Interest Income
9
earnee from margin .:lIccount _.:lIns, or
charges of any cha r ac t e.... made 01"'
compensat1on of any character receIved for
the performance of any serVIce as agent or
broker; prOVIded, however, any agent or
broker dealIng 1n stocks or other SImIlar
wrItten Instruements eVldenclng a rIght to
participate In the assets or any busIness,
or dealing in bonds 01"' other eVldence~ of
Indebtedness, who also deals In such
property as~a princIpal, shall Include 1n
gross rece1pts the amount of tradIng
profIts resultlng from such dealIngs.
(6) Any refundable depOSIt
WhICh IS returned to the deposltor.
(/' )
Gross
receIpts
from any
actlvIty for whIch a bUSIness lIcense
would not be required under tnIs Code and
WhICh 1$ receIved from InCldentlal
actIVItIes of the lIcensee.
(8)
That
partlon
of
the
receIpts of a general contractor llcensed
under SectIons
6212E
whlch
6212, 62128, 6212C, or
represents payments to
prOVIded ~uch
are lIcensed under the
thIS Chapter and that the
~ljbcontractor5
subcontractor$
pr-ovlslon~ or
10
gener~ eontrsctor furnl~hes t~lrector
of Finance wIth the name$ and addre~se~ Ot
the subcontractors and the amounts paid to
each 3ubcontractor.
(9)
Gross
receipts
attributable
to sales WIthin a s1ngle
bUSiness entity when no net galn results,
lncludlng afflllated corporations when one
has at least an 80% Interest In the other,
who 11 y-owned
corporations,
and
partnershIps_and partners.
( 1 0 ) 8a d
debts
taken
from
gros~ receipts reported during a prior tax
year
In
accordance
WI th
genera 11y
acceptable accounting practices.
(11) AnythIng WhICh the CIty
of Santa Mon1ca may not lawfully Include
by vIrtue of the Constitution of the
United States or the Constitution of the
-State of CalIfornia.
Cd)
When,
by
reason
of
the
the
prOVUHone of
the Con3tItutlon of
UnIted States 01'" the ConstItutIon of the
State of CalIfornia, the bUSIness lIcense
fee Imposed
enforced
by
thIS
ArtIcle
cannot be
WIthout
there
beIng an
the amount of
apportionment
accordIng to
11
bU&1~ done 1n the C1ty oT Sa~ MonIca,
or 1n the State of Cal1fornla, ~s the case
may be, apport1onment rules shall be
establ1shed as follow~:
(1) The City Council From
time to t1me shall adopt by reeolutlon
general gU1dellnes for apport1onment.
(2) The Director of FInance}
with the approval of the C1ty Attorney,
may make such rules and regulatIons for
the apport\onment of the tax as are
necessary and des1rable to overcome the
constitutional obJect10ns and which are
cons1stent With the general apportionment
gUldel1nes adopted by resolution of the
City Counc11. The Dlreetor of Finance
shall publish such rules and regulatIons
once In a newspaper of general clrculat10n
wlth1n the City of Santa MonIca. WIthIn
10 days of the date of publ1catIon of such
rules and regulations, any Interested
person may f1le a request With the C1ty
Cl~rk that the CIty CounCil reVIew the
rules and regulatIons so publIshed. The
rules and regulatIons shall be tlnal at
the exp1ration or the per10d for
requesting rev1ew In the event no request
12
for elew 15 fi led, or In t.vent of
the filIng of a request for revIew, when
tne rules and regulations nave been
adopted by the City CouncIl.
(,) The apportIonment shall
be made on the baSIS of payroll value and
SItus of tangIble property, general
expense, or by referenee to any other
method of apportionment as WIll Fairly
determine tne amount of grOS5 receipts
derIved fro~ or attributable to engagIng
In bUSIness In the CIty. Gross receipts
derived
from
150lated
or occasional
transact lonl!>. at
places outSIde
the Cl ty
but wIthIn the State of CalIfornIa, where
the lIcensee IS not regularly engag~d In a
course of bUSIness
transactions shall be
deemed
gr055
receipts
derIved
from
engaging In bUSiness In the CIty. Gross
receIpts derIved from or attrIbutable to
sources WIthIn the City
receipts from tangIble
include gr055
or IntangIble
property located or haVing a Situs In the
City and, when not contrary to law, gross
receipts from any actIVities carrIed on In
the CIty regardless of whether carried on
13
1n
_erstate.
1ntr-as.tate,
_ fore1gn
commerce.
SECTION 3.
Section 6128 15 added to the Santa
-
MonIca Mun1c1pal Code to read a~ follows:
SECTION 6128.
Tax ~fTln~~tv and
AudIt Procram.
(a) The DIrector of Finance shall
develop and administer a bUSiness 11cense
tax amnesty and audit program as provided
In thiS Section.
'"
(b) The tax amnesty program shall
be conducted during the period from July
1 ,
1986,
through Augu~t 31,
1986.
The
program
she 11
apply
to
de Ilnquent,
unreported,
or
underreported bU51~es5
license taxes due during the period from
July 1, 1984, through June 30, 1986.
(c) The prov1s1ons of thiS Section
shall apply to any person required to pay
a bUSiness license tax under thiS Article
wh 0 ,on 0 r aft e r J u 1 y .1, 1986 , an don 0 r
before August 31, 1986:
(1) Ftles
a completed tax
amnesty
applicatIon
for
FISCS 1 Year
1984-85 and/or Fiscal Year 1985-86.
(2) Pays
In full
the unpaid
taxes plus Interest from the date the tax
14
wa~ ~~t due In tne amount deAltmln~d by
the DIrector of FInance ba~ed upon the
C1tyls actual rate of return on 1t~
1nvested funds.
(d) For any taxpayer who meets the
reqUIrements of thIS SectIon:
(1) The Dlrect~r of FInRnce
shall waIve all penaltIes
SectIons 6109 and 6112.
(2) No crImInal actIon shall
1mposed under
be brought ~ga1n5t the taxpayer, for any
tax perIod for which tax penalty amnesty
IS requested, based upon the dellnquent,
non-reporting,
or under-reportIng of tax
lIabIlItIes.
ThIS subdIVISIon shall not
effect, bar, or reqUIre
the dISml$~al or
any crImInal prosecutIon prIor
effectIve date of thIS SectIon.
(e) The DIrector of FIn~nce ~hall
to
the
deve 100 an aud I t program to rardom ~ 'J .!Iud 1 t
up
to 50% of
the bUSIne'!>5
lIcense tax
returns of bUSInesses operatIng In the
CIty of Santa MonIca durIng the two annual
tax perIods endIng on or before June 30.
1986.
If,
subsequent
to
an al.ld I t
conducted
30, 1987,
between July 1, 1986, and June
It I~ determIned t.h~t the
1~
bus In.:s
ha:!l been
e
del1nQuent, or ha~
non-reported
or
under-reported
gros~
rece1pts,
thereby under-paY1ng bus1ness
llcense
taxes, the llcensee shall pay to
the C1ty, wlthln 10 days of notlflcat1on
of the determlnat1on, the amount of tax
due,
Interest
from the date
the tax was
due
1n
the amount
determ1ned by the
Director of Finance based upon the C1ty'S
actual
rate of return on
1tS Inve:!lted
funds, and a penalty 1n t~e amount of the
tax due.
(f) The D1rector of F1nance shall
Issue
forms and
Instructions and
take
other act10ns a~ needed to 1mplem~nt thIS
Section.
SECTION 4.
Any provlslon of the Santa Mon1ca Munlclpal
Code or appendlce:!l thereto lnconsLstent wLth the provLs1on3 of
th1S ordlnance, to the extent
of :!Iuch 1nconsLstenc1es and no
further,
are hereby repealed or mod1fl~d
to
that ex"ent
necessary to affect the prOVi:!llOnS of th15 ordinance.
SECTION
5.
If any sect lon,
5ubsect!'=ln,
sen t enee ,
c 1 ~U5e .
or phrase or th15 ord1nance 15 for any reason held to
be 1nva11d or unconstItutIonal by a deCISIon af any court o~
any competent Jur1$dlctlon, $uch deCl$lOn $hall not affect the
valIdIty 0; the remaining portlon5 of the ordInance.
Th eel t \..'
Counc1l
hereby declare~
that
L t
would have pas~ed
thl~
16
.. I.......
ordinance
and eeh and e....e r-y
section,
stlbectlon, sentence,
clause or ~hrase not declared Invaild or unconstitutional
WI thout
re~ar-d to whether- any por-tlon of the ordinance would
be subsequently declared Inv~lld or unconstitutional.
SECTION 6.
The Mayor shall sign and the CIty Clerk
shall attest
to the passage of thiS ord1nance.
Th I S C 1 t Y
Clerk shall cause the same to be publIshed once
1n the
offlc1al newspaper Within 1S days after Its adoption.
SECTION 7.
Pursuant to City Charter Sectlon3 619(c) and
619(d),
th1s ordinance shall take effect and be In full force
Immediately after the eS5ssge and adoption thereof.
SECTION
8.
ThiS ordinance
1$ declared to be an
emergency measure adopted pursuant to the pr-ovl510ns of City
Cnarter Section 615 and 15 necessar-y for preserving the publ1c
peace, health, and safety, and the urgency for Its adopt1on 15
so that the tax amnesty and audit program may commence on July
l} 1986, which IS essential to ensure continuity or revenue to
prOVide e5s~ntlal City Se~Y1CeS and wh1ch wtll aVOid dlve~tlng
resources from the prosecution of seriOUS crl~e.
APPROVED AS TO FORM:
f'1..J1.,-...vt ~.
Robert M. Myers
City Attorney
'(J
17
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Adopted and approved this 24th day of June, 1986.
I~l~ -h~ ) - I~
/ . -- Mayo'r '. -
I hereby certify that the foregoing Ordinance No. 1376 (CCS)
was duly and regularly- introduced at a meeting of the City
Council on the 24th day of June 1986; that the said Ordinance was
thereafter duly adopted at a meeting of the City Council on the
24th day of June 1986 by the following Council vote:
Ayes: Councllmembers:
Conn, Epsteln, Jennings, A. Katz,
H. Katz, Zane and Mayor Reed
Noes: Councilmembers:
None
Abstain: Councilmembers:
None
Absent: Councilmembers:
None
ATTEST:
/, ~~ ,
I , i r .
v~ "'"-?-<.. /). --<-.- /( Got. ~
City Clerk