R-9202
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Council Meetmg September 23, 1997
Santa Monica, California
RESOLUTION NUMBER 9202 (ees)
(City Council Senes)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
AMENDING THE CITY'S UTILITY USER TAX ADMINISTRATIVE RULES
WHEREAS, the City of Santa MOnica's Utility Tax (UUT) Ordmance (Chapter
6 72 of the MUnicipal Code) places a utility users tax on the use of certain utility
services within the City.
WHEREAS, the utility Service Supplier (as that term IS defined m Section
672 010(e) of the MUnicipal Code) IS required to Impose and collect the UUT tax from
ItS customers. and remit the tax to the City,
WHEREAS, the cooperation of the utility Service Supplier IS of great Importance
to the appropriate Implementation of the City's U UT ordmance,
WHEREAS, the City Council adopted Resolution No 9086 (CCS) on September
10, 1996 which established and approved the City'S UUT Administrative Rules.
WHEREAS, the City now proposes to amend the UUT Admmlstratlve Rules to
further faCIlitate Implementation of the City's UUT ordmance,
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NOW. THEREFORE, the City Council of the CITY OF SANTA MONICA does
hereby resolve
SECTION 1 The UUT Administrative Rules are hereby amended as detailed In
Attachment "A" to this resolution. and shall be followed and Implemented by the Tax
AdminIstrator of the City's Utility Tax Ordmance
SECTION 2 A copy of the amended UUT Administrative Rules shall be
dlstnbuted, Within thirty days hereof, to all utility Service Suppliers that conduct
business wlthm the City
SECTION 3 The City Clerk shall certrfy to the adoptIon of this Resolution, and
thenceforth and thereafter the same shall be In full force and effect
APPROVED AS TO FORM
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MARSHA JONES MOUTRIE
City Attorney
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Attachment A
Utility Tax Administrative Rules
I To assist utrltty Service Suppliers that perform the valuable public service of collectmg
the City's UtlMy Users Tax (UUT), City will assume the followmg responsibilities
A Subsequent to adoption of these administrative rules, City Will assure the
accuracy of Its boundary information needed for utility billing and tax collectron
purposes, by offering to revlewiiig and correctfflg the utrllty Service Supplier's
computenzed billing data no less than once a year The City will also make
available, upon request by a utility Service Sup~lier. its current boundary
information. The utility Service Supplier shall not be responsible or liable for the
collection or payment of any UUT taxes that were due pnor to the adoption of these
Admlnlstratlve Rules that were not collected due to the maccuracy of information
provided by the City or due to the City's faIlure to make appropnate corrections to
the utility Service Supplier's billing data to the extent that the City reviewed such
data at the request of the utility Service Su~plier
B The City Will proVide utility Service Suppliers With accurate and timely ordinance
mformatlon, Including ordinance amendments, at a central location (currently the
Municioal Resource Web site: http:\www.mrc-usa.com e 9 , 'Neb Page on
Internet) City Will proVide wntten notIce of ordinance changes to persons
deSignated by the utility Service Supplier In the absence of speCial Circumstances,
as determined by the Tax Administrator In hiS or her sole discretion, the utility
SeNlce Supplier shall begin ImplementatIon of the UUT tax change WIthin sIxty (60)
days from the date on which the utility Service Supplier receives the wntten
notification from the City If the 60th day IS not the fIrst day of a month, then the
utility Service Supplier shall Implement the changes - ----: - : _ - :- _
cycle on the first day of the month follOWing the month In which the 60th day
occurs To "begin Implementation" means to calculate and place the UUT tax In the
customer billing
C As provided in Public Utilities Code Section 799. =Fthe City Will assume sole
responsibility for defending any legal challenge regarding the validity of the City's
UUT Ordinance, any part thereof, or any collection thereunder, and shall defend
and hold harmless any tax collecting agent (utility SeNlce Supplier) named In such
action for properly performing ItS legal obligations set out In the UUT Ordinance
D The City, In Its sole dIscretion, Will reimburse utility Service Suppliers for the
reasonable costs associated with an extraordmary audit request (includIng, but not
limited to e-g-, modifications to eXisting billing software In order to respond to an
audit request)
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E The City will take reasonable steps to assure that all utility Service Suppliers,
including new market entrants, are correctly applYing and collecting the UUT tax
F To the extent feasible. the City Will permit utility Service Suppliers to follow the
same payment and remittance protocol for UUT collections that IS generally
employed by other California public agencies, proVided that such protocol IS
consistent with the City's UUT Ordinance
UUT taxes may be remitted by electronic funds transfer (EFT) in lieu of U.S.
Mail. orovided that such orotocol IS aareed to bv the Tax Adminstrator. For
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example:
The utility will initiate an Automated Clearinghouse (ACH) credit
transfer on the due date that will be received by the City's bank on the
followina business dav. The ACH will be in a format that identifies the
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type of payment being made. A monthly written report of amounts
remitted. including amounts billed. write-offs, unpaid liability,
adiustments and net tax oavable will be orovided bv U.S. Mail.
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G Following the effective date of these Administrative Rules. the Tax Administrator
shall give notice to the utility Service Suppliers Within the City that they may request
that the Tax Administrator, In consultation With the City Attorney. render a
determination of the application of the UUT tax to their various eXisting services
If such request IS made Within ninety (90) days of the notice by the Tax
Administrator to the utility Service Supplier of these Administrative Rules, then any
determination by the Tax Administrator shall apply prospectively The Tax
Administrator shall give the utility Service Supplier at least SIXty (60) days written
notice followmg the determinatIon of tax application before Implementation of such
changes shall be required If the 60th day IS not the first day of a month, then the
utility Service Supplier shall Implement the changes on the first day of the month
follOWing the month In which the 60th day occurs To "begin Implementation"
means to calculate and place the UUT tax In the customer billing The Tax
Administrator and City Attornev shall not be reauired to render a
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determination With orosoectlve effect under this subsection where a utilitv
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Service Suoolier fails to apply the UUT at all. or fails to apply the tax to a
service that the utility Service Supplier, in good faith, b$lieves to be taxable.
A utilitv Service Suoolier's failure to aoolv the UUT tax to a service shall not
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be deemed in good faith, for purpose$ Qf this $ubsection, if the servic~ is
oredominantlv viewed bv the utilitv Service Suoolier's industrv as beina
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subject to the UUT tax or, In the case of telecommunication servIces, has
been directly determined by the IRS within the past six months or moret to be
subiect to the federal excise tax.
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H Where new utility technologies are employed or new utility services are beIng
offered, a utIlity Service Supplier may request that the Tax Administrator, In
consultation with the City Attorney. render a determination of the applicatIon of the
UUT tax to such new technology or service within ninety (90) days of providing such
services or technologies Upon rendenng a determinatIOn of applicability, the Tax
Administrator shall seek prospective application of the UUT tax Ordinance to such
technologies or services The Tax Administrator shall give the utility Service
Supplier at least sixty (60) days wntten notice before Implementation of such
changes shall be required If the 60th day IS not the first day of the month, then the
utility Service Supplier shall Implement the changes on the first day of the month
follOWing the month In which the 60th day occurs To "begin Implementation"
means to calculate and place the UUT tax In the customer billing
I Regarding Paragraphs G and H above, the Tax Administrator, In his or her sole
discretion and upon consultation with the City Attorney, may participate In an
adVISOry committee, comprised of representatives of public agencies with UUT
ordinances, to develop and recommend to such public agencies (after meeting and
conferring with utility representatives) uniform applications of the UUT tax to
various utility serviceS and technologies, Uniform Implementation protocols, and
appropnate amendments to UUT ordinances to reflect Industry, regulatory, and
technological changes
J The Tax Administrator shall not reduce or waive any obligation to collect any tax
or any obligation to pay any penalty pursuant to Santa MOnica MUnicipal Code
Sections 6 72 070(d) and 6 72 090(e), unless the affected utility Service Supplier
requests a determination as IS prOVided for In Paragraphs G and H above Pending
completion ofthe requested determination, the utIlity Service Supplier shall continue
to collect all applicable taxes
K. The Tax Administrator shall take reasonable steps to notify all Service
Suppliers providing similar services of any determination made under
paragraph G. or H.
/I The Tax Administrator has the nght and obligatIOn to assure fair and reasonable
compIJance wlfh the UUT Ordinance Due to the compleXity of utility services.
technologies, and tax admln/stratlon, the Tax Administrator may reqUIre speCial outSide
expertise to assist In performing compliance review of the UUT ordmance Utlltty Service
Supplters have a legltJmate Interest In assunng that such outSide ftrms mamtaln the
conftdent/abty of uf1llty customer information and conduct their compliance reviews In a
profess/onal and effiCient manner The Tax Admln/strator's use of speCial outSide expertise
shall therefore be subject to the fol/owlng rules
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A. The outside firm will Drovide. at the beainnina of each and everv audit
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enaaaement. a letter or resolution from the Citv to the Service SUDDlier that
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identifies the outside firm as an authorized agent of the City.
AS The outside firm will execute a non-disclosure agreement (In a form acceptable
to the City Attorney) In which the outside firm shall agree to malntam the
confidentIality of customer Information and not to use mdlvldual customer
Information for any purpose other than the UUT compliance review of thiS City
BC The outside firm will not Initiate contact with a utility customer In the course of
performing ItS compliance actiVities, except With the pnor written consent of the
utility Service Supplier
GO The outside firm shall fully disclose to the City any potential conflict of mterest
(e g , prior or proposed representation of private utility customers Within the City)
BE The outside firm shall not make any data requests of a utIlity Service Supplier
by a City issued subpoena unless the outside firm first receives the review and
approval of the Tax Administrator prior to the request berng made to the utility
Service Supplier
EF The outside firm shall be authOrized to perform any compliance revIew
(including sampling audits and computenzed reviews) whIch, In ItS profeSSional
opinion. IS reasonably necessary to perform ItS contractual obligation to the City
If a utility Service Supplier refuses to cooperate In connection With such compliance
reView, the outside firm shall Immediately adVise the Tax Administrator so that the
Tax Administrator may take appropriate remedial steps
FG The outSide firm Will use ItS best efforts to accurately Identify all errors, whether
such corrections are In favor of the customer, the City, another public agency, or the
utility Service Supplier
GH The Tax Administrator shall make available to the utility Service Supplier a
copy of any compl1ance report prepared by the outSide firm regardmg such utll1ty
Service Supplier The utility Service Supplier shall be afforded an opportunity (at
least thirty (30) days) to respond to any aspect of the report before such report
becomes final The final reDort will identifv and address all substantive written
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comments on the draft report submitted by the utility Service Supplier.
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III Dispute ResolutIOn Process
A If a utility Service Supplier disputes an applicatIon of these Administrative Rules,
an Interpretation of the UUT Ordinance. or any other action by the Tax Administrator
(Including Its outside firm), the protesting utility Service Supplier may request a
hearing pursuant to Paragraph B below and In additIOn to any other request for
relief may request to the Tax Administrator that the matter be submitted to voluntary
non-binding mediation Within thirty (30) days of the Tax Administrator's actions If
the Tax Administrator m his or her sole dlscretlon agrees to submit the matter to
voluntary non-binding mediation. and If the matter IS not resolved wlthm thirty (30)
days followrng the conclusion of any mediation. the protestrng utility Service
Supplier may request that the matter be set for a hearing before the City Council at
the next available City Council meetmg
B If a hearing before the City Council IS requested, the City Councilor at the
City Council's direction, a hearing officer, shall hear the matter pursuant to Santa
Monica MUnicipal Code Section 6 16010 et seq If a heanng examiner hears the
matter, the deCISion of the hearing examiner shall be reViewed by the City Council
at the next available City Council meeting followmg the hearing examiner's deCISion
and shall be accepted. rejected or modified follOWing arguments from all parties
concerned The City Council's deCISion shall be final and subject to JudiCial review
pursuant to CCP Section 1094 5
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Adopted and approved thlS 23rd of September 1997
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Robert Holbrook, Mayor Pro Tern
I. Mana M Stewart, Clty Clerk of the Cny of Santa Momca, do hereby cemfy that the
foregomg ResolutIon 9202 (CCS) was duly adopted at a meetmg of the Clty Councll held on
the 23rd of September, 1997 by the followmg vote
Ayes
Councllmembers
Ebner. Femstem, Genser, Greenberg, Holbrook, Rosenstem
Noes
Councllmembers
None
Abstam
Counct1members
None
Absent
Councllmembers
O'Connor
ATTEST
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Mana M Stewart, Cny Clerk