East Palo Alto Municipal Code Ch. 5.04 Business Licenses Generally

The purpose of this chapter is to provide for the establishment and levying of license taxes for the transaction and carrying on of certain businesses, trades, professions, callings and occupations in the city. This chapter is enacted solely to raise revenues for municipal purposes, and is not intended for regulation.

(Prior code § 3-1.101)

For the purpose of this chapter, certain words and phrases are defined and certain provisions shall be construed as set out below, unless it is apparent from their context that a different meaning is intended:

"Business" means and includes all activities engaged in or caused to be engaged in within this city with the object of gain, benefit or advantage, whether direct or indirect, to the taxpayer or to another or to others, but does not include the services rendered by an employee to his or her employer or a casual or isolated transaction. Although an activity of a taxpayer may be incidental to another or other of his or her business activities, each such activity shall be considered to be business engaged in within the meaning of this chapter.

"Engaging in business" means commencing, conducting or continuing in business, and also the exercise of corporate or franchise powers, as well as liquidating a business when the liquidators thereof hold themselves out to the public as conducting such business.

"Gross receipts," except as otherwise specifically provided in this chapter, means the gross receipts of the preceding fiscal year of the licensee or part thereof, and defined as follows: the total amount actually received or receivable from all sales; the total amount of compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; and gains realized from trading in stocks or bonds; interest discounts, rents, royalties, fees, commissions, dividends or other emoluments, however designated. Included in "gross receipts" are all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following are excluded therefrom:

1. Cash discounts allowed and taken on sales;

2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price shall be included as "gross receipts";

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

4. Such part of the sale price of property returned by purchasers upon rescission of a contract of sale as is refunded either in cash or in credit;

5. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business shall not be excluded when in excess of one dollar;

6. Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees must provide the finance department with the names and the addresses of the others and the amounts paid to them. This exclusion shall not apply to any fees, percentages, or other payments retained by the agent or trustees;

7. Cash value of sales trades or transactions between departments or units of the same business;

8. Transaction between a partnership and its partners;

9. Receipts from services or sales in transactions between affiliated corporations. An "affiliated corporation" is a corporation:

a. The voting and nonvoting stock of which is owned at least eight percent by such other corporation with which such transaction is had,

b. Which owns at least eighty (80) percent of the voting and nonvoting stock of such other corporation, or

c. At least eighty (80) percent of the voting and nonvoting stock which is owned by a common parent corporation which also has such ownership of the corporation with which such transaction is had;

10. Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or other equipment used by the licensee in the regular course of the licensee's business.

"Occasional recreational, sporting or entertainment events" means any recreational, sporting or entertainment exhibitions, shows, games, motion pictures, screenings, or theatrical or vaudeville performances which are not operated or carried on regularly throughout the year in the city.

"Sale" and "sell" mean and include and refer to the making of any transfer of title, in any manner or by any means whatsoever, to tangible personal property for a price, and to the serving, supplying or furnishing, for a price, of any tangible personal property fabricated or made at the special order of consumers who do or who do not furnish directly or indirectly the specifications therefor. A transaction whereby the possession of property is transferred but the seller retains the title as security for the payment of the price shall likewise be deemed a sale. The foregoing definitions do not exclude any transaction which is or which, in effect, results in a sale within the contemplation of the law.

(Prior code § 3-1.102)

It is unlawful for any person, either for himself/herself or for any other person, to commence or carry on any business specified in this chapter, in the city, without first having procured a license from the city to do so, or without complying with any and all regulations of such business contained in this chapter. The carrying on of any business without first having procured a license from the city to do so, or without complying with any and all regulations of the chapter, shall constitute a separate violation of this chapter for each and every day that such business is so carried on.

(Prior code § 3-1.103)

A separate license must be obtained for each and every branch establishment or separate place of business in which a business is carried on in the city.

(Prior code § 3-1.104)

"License," as used in this chapter, does not mean a permit. The fees prescribed by this chapter constitute a tax for revenue purposes, and are not regulatory permit fees. The payment of a license tax required by the provisions of this chapter, and its acceptance by the city, and the issuance of such license to any person, shall not entitle the holder thereof to carry on any business unless he/she has complied with all of the requirements of this chapter and all other applicable laws, nor to carry on any business in any building or on any premises designated in such license in the event that such building or premises are situated in a zone or locality in which the conduct of such business is in violation of any law.

(Prior code § 3-1.105)

Every peddler, solicitor or other person claiming to be entitled to exemption from the payment of any license provided for in this chapter upon the ground that such license casts an unreasonable burden upon his/her right to engage in commerce with foreign nations or among the several states, or conflicts with the regulations of the United States Congress respecting interstate commerce, shall file a verified statement with the finance department, disclosing the interstate or other character of the business entitled to such exemption. Such statement shall state the name and location of the company or firm for which the orders are to be solicited or secured; the name and address of the nearest local or state manager, if any; the kind of goods, wares or merchandise to be delivered; the place from which the same are to be shipped or forwarded; the method of solicitation of taking orders; the location of any warehouse, factory or plant within the state; the method of delivery; the name and location of the residence of the applicant; and any other facts necessary to establish such claim of exemption. A copy of the order blank, contract form or other papers used by such person in taking orders shall be attached to the affidavit for the information of the finance department.

(Prior code § 3-1.106)

A. Every person required to have a license under the provisions of this chapter shall make application for the same to the finance department of the city and, upon the payment of the prescribed fee to the department, the department shall issue to such person a license which shall contain the following:

1. The name of the person to whom the license is issued;

2. The business licensed;

3. The place where such business is to be carried on;

4. The date of the expiration of such license; and

5. Such other information as the finance department determines.

B. Application for a license shall be made upon a form provided by the department and payment of a nonrefundable application fee of thirty-five dollars ($35.00).

(Prior code § 3-1.107)

The finance department shall issue to each person to whom a license is issued an identification card for each employee who is engaged in peddling, soliciting or distributing for the licenses in the regular conduct of his/her business.

(Prior code § 3-1.108)

All licenses issued under this chapter except the daily licenses issued to occasional recreational, sporting or entertainment events and the first license issued to a newly established business, shall be considered to be issued on January 1st of each year and shall expire on December 31st of the same year.

(Prior code § 3-1.109)

A. Every person subject to a license fee shall, before the license fee becomes delinquent, file with the finance department a written statement setting forth the then applicable factor or factors that constitutes the measure of the fee, together with such other information as is required by the finance department to enable it to administer the provisions of this chapter, and shall pay at such time the amount of the fee computed thereon.

B. The written statement provided for in this section shall be on a form prescribed by the finance department and shall include a declaration substantially as follows:

I declare under penalty of perjury that to my knowledge all information contained in this statement is true and correct.

(Prior code § 3-1.110)

A person applying for the first license for a newly established business shall pay the minimum tax as provided in the fee schedule established by the city. No additional license fee otherwise due under this chapter shall be required for the calendar year in which the business was commenced.

(Prior code § 3-1.111)

In addition to the information required to be included in the written statement of the applicant for a first license, and of the license for a renewal of license, as provided in Section 5.04.100, and in addition to and as a part of the procedure to be followed in any assignment or transfer of a license, as provided in Section 5.04.150, each applicant, license or transferee who is subject to the contractor license law shall state that he/she is licensed under such law, that his/her license is in full force and effect, and the number thereof, or, if he/she is exempt from the provisions of the contractor license law, proof of the facts which entitle the applicant to such exemption.

(Prior code § 3-1.112)

No statements required in this chapter shall be conclusive upon the city or any department, officer or agent thereof, and whenever it appears to the satisfaction of the finance department and it has reason to believe that such statement does not set forth the true facts of the business for which a license is required, the finance department may withhold the issuance of a license therefor until such time as the applicant furnishes to the department satisfactory evidence of the truth of such statement. If such evidence is not furnished to the finance department within a reasonable time, or should it at any time appear to the department that, by reason of error, misrepresentation, fraud or any other cause whatsoever, the license fee has not been properly fixed for any license issued, the department shall give no fewer than five days written notice to the licenses to show cause, at that time and place fixed in the notice, why a fee, to be determined by the department and specified in the notice, should not be fixed for such license. After such hearing, the finance department shall determine the proper fee to be charged and shall forthwith give written notice to the licensee of such determination and the amount of such fee.

Any fee finally determined shall be due and payable as of the date the original license fee was due and payable together with any penalties that may be due thereon; provided, however, if such fee is fixed in accordance with the original statement of the licensee, then no penalty shall attach to such fee by reason of any delinquency.

(Prior code § 3-1.113)

The statements filed pursuant to the provisions of this chapter shall be deemed confidential in character and shall not be subject to public inspection, and shall be kept so that the contents thereof shall not become known except to the persons charged with the administration of this chapter.

Any officer or employee who wilfully violates any provision of this section shall be deemed guilty of a misdemeanor and such violation shall be cause for discharge from the city's service.

(Prior code § 3-1.114)

No license granted or issued under any provisions of this chapter shall be in any manner transferred or assigned, or authorize any person other than the person named in the license to carry on the business therein named or to transact such business in any place other than the place or location therein named without the written consent of the finance department endorsed thereon. At the time such license is assigned or transferred or the place or location for the carrying on of such business is changed, the person applying for such transfer or change shall pay to the finance department a fee, as provided in a fee schedule established by the city, for each assignment or transfer.

(Prior code § 3-1.115)

Every person having a license under the provisions of this chapter and carrying on a business at a fixed place of business shall keep such license posted and exhibited while in force in some conspicuous part of such place of business.

Every person having a license and not having a fixed place of business shall carry such license in possession at all times while carrying on the business for which the same was granted. Every peddler having a license shall keep such license prominently displayed at all times.

(Prior code § 3-1.116)

The finance department shall make a charge, as provided in the fee schedule established by the city, for each duplicate license issued to replace any license issued under the provisions of this chapter which has been lost or destroyed; the applicant shall make satisfactory proof of such loss.

(Prior code § 3-1.117)

Every annual license renewal which is not paid on or before February 1st of each year, or within thirty (30) days after commencing business for a newly established business, is declared delinquent, and the finance department shall thereupon add to such license and collect a penalty of ten percent per month in the unpaid delinquent balance up to one hundred (100) percent of the total tax originally due and payable. The interest would be charged at one percent on the total amount outstanding.

(Prior code § 3-1.118)

Every daily license which is not paid at the close of the day when the same was due and payable is declared to be delinquent, and the finance department shall thereupon add to such license and collect a penalty of ten percent per month on the unpaid delinquent balance up to one hundred (100) percent of the total tax originally due and payable. Interest will be charged at one percent per month on the unpaid delinquent balance as long as it is outstanding. The interest would be charged at the rate of one percent on the total amount outstanding.

(Prior code § 3-1.119)

In addition to the penalties imposed, any person who fails to remit any license fee imposed by this chapter shall pay interest at the rate of one percent per month, or fraction thereof, on the amount of the fee and penalties from the date on which the license fee first became delinquent until paid.

(Prior code § 3-1.120)

The amount of any license fee and penalty imposed by the provision of this chapter shall be deemed a debt to the city; and any person carrying on any business without first having procured a license from the city to do so shall be liable to an action in the name of the city, in any court of competent jurisdiction, for the amount of license and penalties imposed on such business.

(Prior code § 3-1.121)

The conviction and punishment of any person for transacting any business without a license does not excuse or exempt such person from the payment of any license due or unpaid at the time of such conviction, and nothing in this chapter shall prevent a criminal prosecution of any violation of the provisions of this chapter.

(Prior code § 3-1.122)