SR-9-A (7)
e
e
~ tJ 't- 01'$
,.~
.,am
CA:RMM:rm6100r
C~ty Counc~l Meeting 11-8-83
Santa Mon~ca, Cal1forn1a
STAFF REPORT
TO:
Mayor and Clty Councll
FROM:
C1ty Attorney
SUBJECT:
Resolut1on Establlshlng Apportlonment GUldellnes
At lts meeting on October 25, 1983, the City Councll
1ntroduced for f1rst readlng an ordlnance revlsing the buslness
11cense tax structure of the C1ty of Santa Monlca.
At the same
t1me, the Clty Counc11 dlrected the Clty Attorney to prepare a
resolutlon establlshlng general apportionment gU1.dellnes. In
response to thlS d1.rectlon, the accompanYlng resolutlon has been
prepared.
On October 31, 1983, a draft of the resolut1on was
subm1tted to the Chamber of Commerce.
On November 2, 1983, the
Dlrector of F1.nance meet wlth representatlves of the Chamber of
Commerce to d1.SCUSS the proposed resolutlon.
The
representatlves of the Chamber of Commerce, on November 2, 1983,
and aga1h on November 4, 1983, suggested rnlnor reV1.S10nS 1n the
resolut1.on, WhlCh have been lncorporated lnto the reso1ut1.on.
91
lilY 8..
It
e
RECOMMENDATION
It ~s respectfully recommended that the accompanY1ng
resolution be adopted.
PREPARED BY:
Robert M. Myers, C1ty Attorney
e
e
CA:RMM:rm6l00r
City Council Meeting ll-8-83
Santa Monica, California
RESOLUTION NUMBER
6778
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF SANTA MONICA
ESTABLISHING APPORTIONMENT GUIDELINES
WHEREAS, on November 9, 1983, the City Council of the City
Council of the City of Santa Monica adopted Ordinance Number 1289
(CCS) revising the business license tax structure of the City of
Santa Monica: and
WHEREAS, because the revisions contained in the ordinance
eliminate existing maximum tax levels, issues of apportionment
are likely to arise in the administration of the City~s business
license tax: and
WHEREAS, the City Council desires to provide general
guidelines for apportionment,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA
MONICA DOES RESOLVE AS FOLLOWS:
SECTION 1.
In developing apportionment rules and
regulations, the following guidelines shall be considered:
A. The City of Santa Monica may include within gross
receipts upon which the business license tax is measured receipts
from both within the City of Santa Monica and outside of the City
so long as such gross receipts are apportioned in a manner by
which the gross receipts fairly reflect that portion of gross
1
e
e
receipts attributable to activity which is carried on within the
City.
See General Motora Corp. v. City of Los Angeles, 5 Cal.
3d 229, 486 P.2d 163, 95 Cal. Rptr. 635 {1971)r City of Los
Angeles v. Shell Oil Co., 4 Cal. 3d 108, 480 P.2d 953, 93 Cal. 1
(l971).
B. No measure of apportionment shall be developed
which does not limit the measure of the City's business license
tax to activities which bear a fair relationship to activity
actually taking place within the City. See General ,Motors Corp.
v. City of Los Angeles, 5 Cal. 3d 229, 486 P.2d 163, 95 Cal.
Rptr. 635 (1971)7 City of Los Anseles v. Shell Oil Co., 4 Cal. 3d
108, 480 P.2d 953, 93 Cal. 1 (1971).
C. Wholesale sales of products manufactured in the
City shall be taxed on the basis of total gross receipts
regardless of where the sales occur.
See General Motors Corp.
v. City of Los Angeles, 5 Cal. 3d 229, 486 P.2d 163, 95 Cal.
Rptr. 635 (1971); Carnation Co. v. C1ty of Los Angeles, 65 Cal.
..
I
2d 36, 416 P.2d 129, 52 Cal. Rptr. 225 (1966).
D. Wholesale sales of products manufactured outside
of the City and shipped within the City shall be taxed only on
the basis of gross receipts apportioned to reflect selling
activit1es within the City. See General Motors Corp. v. City of
Los Angeles, 5 Cal. 3d 229, 486 P.2d 163, 95 Cal. Rptr. 635
(
(1971); C1ty of Los Angeles v. Belridge oil Co., 42 Cal. 2d 823,
271 P.2d 5 (1954).
E. Wholesale sales of products manufactured outside
of the City and shipped to points outside the City shall be taxed
2
\
,
I
I
"
e
e
only on the basis of gross receipts apportioned to reflect
selling activities within the City. See General Motors Corp. v.
City of Los Anseles, 5 Cal. 3d 229, 486 P.2d 163, 95 Cal. Rptr.
635 (1971); City of Los Anseles v. ~oore B~sin~ss for~s, Inc.,
247 Cal. App. 2d 353, 55 Cal. Rptr. 820 (1966).
F. Retail sales delivered from retail outlets within
the City shall be taxed on the basis of total gross receipts from
such retail outlets.
G. Retail sales delivered from outlets outside the
City to customers within the City of Santa Monica after in-City
solicitation or consummation of orders shall be taxed only on the
basis of gross receipts apportioned to reflect selling activities
within the City. See G~neral Motors Corp. v. City o~ Los
An~eles, 5 Cal. 3d 229, 486 P.2d 163, 9S Cal. Rptr. 635 (1971).
H. Gross receipts of businesses subject to an annual
license fee under Municipal Code Section 6236 (professions and
occupations) and Municipal Code Section 6240 (services) shall not
1nclude the gross receipts attributable to business locations
outside the City of Santa Monica and on which a business license
tax was paid in the jurisdiction in which the business is
located.
I. In determining the amount of activity to be
attributed to activities within the City and the amount of
act~vities to be attributed to activities outside the City in
accordance with the 9uidel~nes established in Subsections A-H
above, a variety of factors may be considered including:
employee time spent inside and outside the City: operating costs
3
"
e
e
, .
within the City; location of business activity within the City;
negotiating and soliciting within the City; displaying of samples
within the City; processing of orders within the City; acceptance
of orders within the City; arranging for delivery within the
City; delivery within the City; and collection and billing within
the City.
J. The apportionment rules and regulations may be based
upon either separate or unitary accounting principles.
SECTION 2. The City Clerk shall certify to the adoption of
this Resolution, and thenceforth and thereafter the same shall be
in full force and effect.
APPROVED AS TO FORM:
~~~?
Robert M. Myers
City Attorney
-
-
4
'.
e
e
ADOPTED AND APPROVED THIS
8th
DAY
OF
November
,
, 1 983 .
~
Pro Tempore
1 HEREBY CERTIFY THAT THE FOREGOING RESOLUTION
NO. 6778
_WAS DULY ADOPTED BY THE CITY COUNCIL OF THE
CITY OF SANTA MONICA ~T A MEETING THEREOF HELD ON
November 8 , 1983 BY THE FOllOWING COUNCIL VOTE:
AYES: COUNCILMEMBERS: Conn, Epstein, Jennings, Press,
Reed and Zane-
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: Edwards
ABSTAIN: COUNCILMEMBERS: None
ATTEST:
~~
CITY CLERK