Fremont Municipal Code Art. I General – Administration and Enforcement

This chapter may be referred to and cited as the “business tax ordinance.” (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1100.)

This chapter is enacted, pursuant to the authority granted to the city council under Cal. Gov’t Code § 37101, to license for revenue every kind of lawful business, profession, or trade in the city. This chapter is enacted solely to raise revenue for municipal purposes and is not intended to license or tax for regulation. Except as provided otherwise in this chapter, any person required to pay a business tax for transacting and carrying on any business under this chapter shall not be relieved from the payment of such business tax, notwithstanding that such business is not in compliance with zoning, health, safety and other regulations of this code or other regulatory provisions of law. Compliance with the provisions of this chapter shall not constitute evidence that such business is in compliance with any other such regulation or provision of law. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1101.)

For the purposes of this chapter, unless it is plainly evident from the context that a different meaning is intended, certain terms used herein are defined as follows:

(a) “Agriculture,” when such term is used herein, includes but is not limited to the following: general produce farming, growing of nursery products, growing of any products commonly associated with farming activities, growing of any product to be sold at either wholesale or retail or both, dairying, animal or poultry husbandry, breeding of any animal or fowl, any and all business and occupations dealing with the growing of foodstuffs or products and sale of agricultural products at wholesale.

(b) “Business” includes professions, trades and occupations, and all and every kind of calling whether or not carried on for profit.

(c) “City” means the city of Fremont, a municipal corporation of the state of California, in its present incorporated form or in any later reorganized, consolidated, enlarged, or reincorporated form.

(d) “Collector” means the finance director or other city officer or employee designated by the city manager as responsible for administration and enforcement of this title.

(e) “Employee” means any person engaged in the operation or conduct of any business, whether as a member of the owner’s family, agent, manager, solicitor, or any other person employed or working in said business.

(f) “Fixed place of business” means the premises within the city where a business is continuously conducted from day to day and regularly kept open for the purposes of such business. The term “regular place of business” has the same meaning as “fixed place of business.”

(g) “Gross payroll” means and includes the total gross amount of all salaries, wages, commissions, bonuses, or other money payment of any kind which a person received from or is entitled to receive from or be given credit for by his/her employer for any work done or personal service rendered in any trade as reported on federal, quarterly, or annual payroll Forms 941 and 940; provided, however, that where employees working in the city were reported as having worked elsewhere than in the city, the part of their wages paid or due for work performed in the city shall be included as gross payroll in the city for purposes of this chapter.

(h) “Gross receipts” includes the total of amounts 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 part of or in connection with the sale of materials, goods, wares, or merchandise; and gains realized from trading in stocks or bonds, interest income, carrying charges, rents, royalties, fees, commissions, dividends, or other emoluments, however designated. Included in “gross receipts” shall be 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 shall be excluded therefrom:

(1) Any tax required by law to be included in or added to the purchase price and collected from the customer or purchaser;

(2) Cash discounts allowed and taken on sales;

(3) Such part of the sale price of property returned by purchasers upon rescission of the contract of sale as is refunded either in cash or by credit;

(4) Amounts collected for others where the business is acting as an agent or trustee, to the extent that such amounts are paid to those for whom collected; provided, the business furnished the collector with the names and addresses of the others and the amounts paid to them;

(5) Receipts of refundable deposits, except that refundable deposits forfeited and taken into the income of the business shall not be excluded;

(6) As to alcohol, alcoholic beverages, bars, restaurants, liquor stores, and like businesses dispensing and/or selling alcoholic beverages, only that portion of the gross receipts related to the sale of alcohol shall be exempt;

(7) Amounts received or receivable by persons having a fixed place of business within the city for acts or services performed outside the city, but only to the extent a business tax has been paid to the city or cities in which the acts or services were performed.

(i) “Itinerant vendor” means all persons, both principal and agent, who engage in a temporary and transient business in the city of Fremont – selling goods, wares and/or merchandise – and for the purpose of carrying on such business hire, lease or occupy any room, building or structure for the exhibition or sale of such goods, wares and/or merchandise, or who from any such room, building or structure makes sales or solicits business by means of samples or deliveries from house to house. The persons so engaged shall not be relieved from the provisions of this chapter by reason of associating temporarily with any local dealer, trader, merchant, or auctioneer, or by conducting such temporary or transient business in connection with, or as a part of, or in the name of, any local dealer, trader, merchant or auctioneer.

(j) “Peddler” means any hawker, vendor, or other person who goes from house to house, from place to place, or in or along the streets within the city selling and making immediate delivery or offering for sale and immediate delivery any goods, wares, merchandise, or anything of value in his or her possession to persons other than manufacturers, wholesalers, jobbers, or retailers in such commodities.

(k) “Person” includes all domestic and foreign corporations, associations, syndicates, joint stock corporations, partnerships of every kind, clubs, Massachusetts business trusts, business trusts, or common law trusts, societies and individuals, transacting and carrying on any business within the city, other than as an employee.

(l) “Retail sales” means all sales to the ultimate consumer or end user.

(m) “Sale” includes the transfer, in any manner or by any means whatever, of title to property for a consideration; the serving, supplying or furnishing for a consideration of any properties; and a transaction whereby the possession of property is transferred and the seller retains the title as security for the payment of the price shall likewise be deemed a sale. The foregoing definition shall not be deemed to exclude any transaction which is, or which in effect results in, a sale within the contemplation of law.

(n) “Solicitor” means a person engaged in soliciting, canvassing, or taking orders from house to house or from place to place, by telephone or by any other means of communication for any goods, wares or merchandise, for any article to be delivered in the future or for services to be performed in the future, for making, manufacturing or repairing any article whatsoever for future delivery, or for subscriptions to periodicals or tickets of admission to entertainment, or memberships in any clubs.

(o) “Sworn statement” means any affidavit sworn to before a person authorized to take oaths, or a declaration or certification under penalty of perjury.

(p) “Transient business” means every business not conducted as a “fixed place of business” or at a regular place of business, whether the person conducting such transient business is or is not a resident of this city.

(q) “Wholesale and manufacturing business” means every business conducted solely for the purpose of selling or manufacturing goods, wares or merchandise in wholesale lots for resale. (Ord. 1876 § 2, 6-6-89; Ord. 2419 § 1, 3-27-01; Ord. 16-2009 § 1, 7-21-09; amended during 2012 reformat. 1990 Code § 5-1102.)

No person shall commence or carry on any business in the city without first having applied for and having paid a business tax and registration tax in accordance with the provisions of this chapter. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1103.)

When a person shall – by the use of signs, circulars, cards, telephone books or newspapers – advertise, hold out or represent that he or she is in business in the city, or when any person holds an active license or permit issued by a governmental agency indicating that he or she is in business in the city, or when any person makes a sale, takes an order, renders a commercial service or performs any other similar act within the city, then these facts shall be considered prima facie evidence that he or she is conducting a business in the city. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1104.)

None of the business operations taxes provided for by this chapter shall be so applied as to occasion an undue burden upon interstate commerce or be violative of the equal protection and due process clauses of the Constitutions of the United States and the state of California.

In any case where a tax is believed by a business or applicant to place an undue burden upon interstate commerce or be violative of such constitutional clauses, he or she may apply to the collector for an adjustment of the tax. Such application may be made before, at or within six months after payment of the prescribed business tax. The applicant shall, by sworn statement and supporting testimony, show his or her method of business and the gross volume or estimated gross volume of business and such other information as the collector may deem necessary to determine the extent, if any, of such undue burden or violation. The collector shall then conduct an investigation; and after obtaining the written approval of the city attorney, the collector shall fix an amount that is reasonable and nondiscriminatory as the tax for the applicant. If the tax has already been paid, the collector shall order a refund of the amount over and above the tax so fixed. In fixing the tax to be charged, the collector shall have the power to base the tax upon a percentage of gross receipts or upon any other measure which will assure that the tax assessed shall be uniform with that assessed on businesses of like nature, so long as the amount assessed does not exceed the tax as prescribed by this chapter.

Should the collector determine the gross receipts measure of tax to be the proper basis, he or she may require the applicant to submit, either at the time of termination of the applicant’s business in the city or at the end of each three-month period, a sworn statement of the gross receipts and pay the amount of tax therefor; provided, that no additional business operations tax during any one calendar year shall be required after the business shall have paid an amount equal to the annual tax as prescribed in this chapter. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1105.)

The city manager may make such rules and regulations, consistent with the provisions of this chapter, as may be necessary or desirable to supplement or clarify such provisions or aid in their enforcement. When, by reason of the provisions of the Constitution of the United States or the state of California, the business tax imposed by this chapter cannot be enforced without an apportionment of the taxes having been made according to the amount of business done in the city of Fremont or in the state of California, as the case may be, the city manager may make such rules and regulations for the apportionment of the tax as are necessary or desirable to overcome the constitutional objections. Rules and regulations made pursuant to this section shall be known as the “business tax rules and regulations,” and shall be in written form, approved by the city attorney and filed with the city clerk. (Ord. 1876 § 2, 6-6-89; Ord. 16-2009 § 2, 7-21-09. 1990 Code § 5-1106.)

(a) Agriculture. The provisions of this chapter shall not require a business tax payment on the business of agriculture except for the retail activities conducted in connection therewith.

(b) Exemptions Shall Not Apply to Profit Corporations, Associations, Etc. Every institution, corporation, organization or association that qualifies for nonprofit, tax-exempt status under either state or federal law seeking an exemption pursuant to this section shall submit the original exemption certificate plus an annual tax-exempt status to the collector.

(c) Youth and Senior Part-Time Occupations. Any person under the age of 18 or over the age of 65 shall be exempt if gross receipts do not exceed the greater of: (1) $1,417 per month or $17,000 per year; or (2) the maximum amounts identified in Social Security regulations for the relevant calendar year.

(d) Veterans. All veterans qualifying under Cal. Bus. & Prof. Code § 16001 will be granted the exemption as set forth in that section.

(e) Public Utilities. An exemption shall apply to any public utility which makes an annual franchise payment to the city. This exemption applies only to the business conducted under the franchise agreement.

(f) Highway Carriers. Persons who operate vehicles for hire and pay public utilities commission taxes for inter-city (between cities) activities shall be exempt. Pursuant to the California Public Utilities Code (Highway Carriers Uniform Business License Tax Act), Chapter 3, Sections 4301 et seq. and the regulations promulgated thereunder, intra-city (within the city) business activities shall not be entitled to such exemption.

(g) Bank/Financial Institutions. Any bank or financial institution which pays taxes under Cal. Rev. & Tax. Code §§ 23181 and 23182 shall be exempt.

(h) Insurance Companies. Insurance companies are exempt under the provisions of California Constitution Article XIII, Section 28. Independent insurance brokers shall not be exempt.

(i) Revocation of Exemptions. An exemption will be revoked whenever there is reason to believe that any person to whom a tax-exempt certificate was issued pursuant to this section has furnished false or misleading information in the affidavit. (Ord. 1876 § 2, 6-6-89; Ord. 2419 § 2, 3-27-01; Ord. 16-2009 § 3, 7-21-09. 1990 Code § 5-1107.)

(a) Clean technology businesses and biotechnology businesses may be exempt from the business tax payment required by this chapter for up to five consecutive years: existing businesses may be exempt for two consecutive years and new businesses may be exempt for five consecutive years. In order to be eligible for this exemption a person must file an application with the collector for designation as a clean technology business or biotechnology business no later than December 31, 2021. This exemption does not apply to the annual registration tax provided for in Section 5.05.230, which shall continue to be due and payable on an annual basis.

(b) For purposes of this section, the following terms are defined as set forth:

(1) “Biotechnology business” or “BTB” means a business that researches and applies the scientific manipulation of living organisms to develop or produce therapeutics, diagnostic products and/or devices targeted to the improvement of human or animal health care.

(2) “Clean energy” means energy produced by wind, solar power, landfill gas, geothermal resources, ocean thermal energy conversion, quantifiable energy conservation measures, tidal energy, wave energy, biomass, biofuels, or hydrogen fuels derived from renewable sources. Clean energy does not include any fossil fuel-based energy production, including, but not limited to, clean coal, clean diesel, natural gas and hydrogen from natural gas, any nuclear-based energy production, waste-to-energy production via combustion or incineration, or other energy technologies derived from nonrenewable resources.

(3) “Clean technology business” or “CTB” means a business in which at least 75 percent of all business activities carried on during the tax year are directly related to one or more of the following activities:

(A) Research and development and/or associated manufacturing applying scientific advances to the production, distribution or storage of clean energy.

(B) Research and development and/or associated manufacturing applying scientific advances to prototype or commercially viable materials and products powered by clean energy, including but not limited to single passenger vehicles and fueling infrastructure.

(C) Research and development, and/or manufacture of solar panels.

(D) Research and development and/or associated manufacturing applying scientific advances to prototype or commercially viable techniques, materials and products that materially improve energy efficiency, water conservation or air quality.

(E) Research and development and/or associated manufacturing applying scientific advances to chemistry-based products and processes that use sustainable chemistry techniques to reduce or eliminate the use and generation of substances that are toxic to humans and the environment.

(4) “Clean technology or biotechnology business review team” or “business review team” refers to a team comprised of the collector plus a representative from the economic development department and a representative from the planning division of the community development department whose purpose is to review and determine applications for the CTB or BTB exemption.

(c) In order to be eligible for the CTB or BTB exemption authorized under this section, persons wishing to claim the exemption must:

(1) Complete and submit an initial application to the collector for review and evaluation.

(2) After approval, file an annual sworn statement with the collector affirming that they continue to meet the eligibility criteria. The sworn statement must be filed with the collector on or before January 31st of every year after the year the application is first approved.

(3) File an annual business tax return renewal with the collector regardless of the amount of tax liability shown on the return after claiming the CTB or BTB exemption.

(d) The collector shall:

(1) No later than the effective date of the ordinance codified in this section, adopt regulations and forms regarding eligibility and the application process for the CTB and BTB exemption, which may be amended from time to time as the collector deems necessary.

(2) Review all applications for completeness and convene a meeting of the business review team to consider and make a determination on eligibility for the CTB or BTB exemption. If an application is approved by the business review team, the collector shall issue a CTB or BTB exemption certificate to the applicant.

(e) The applicant may appeal the business review team’s decision on the application to the finance director, by filing a written notice of appeal with the collector no later than 10 days after notice of the decision. The finance director’s decision on the application shall be final and conclusive.

(f) The BTB and CTB exemption under this section shall be available and may be taken for each tax year that the business holds a valid certificate of exemption.

(1) For new businesses commencing operations in the city after January 1, 2016, the exemption shall be available for a period of five consecutive years from the date of issuance of the initial certificate.

(2) For businesses existing in the city prior to January 1, 2016, the exemption shall be available for a period of two consecutive years from the date of issuance of the initial certificate.

The opportunity to apply for an exemption shall expire December 31, 2021. Every person engaging in a clean technology business or biotechnology business in the city shall pay the business tax imposed under this chapter from and after the expiration of the exemption. (Ord. 4-2012 § 1, 3-20-12; Ord. 24-2016 § 1, 12-6-16. 1990 Code § 5-1107.1.)

Prior to the commencement of a newly established business subject to the requirements of this chapter, a business tax application shall be submitted to the collector. Each applicant shall provide the required information to determine the nature of the proposed business in order to determine the proper business classification(s). The application shall contain a declaration attesting to the accuracy of the information provided signed by the applicant under penalty of perjury.

Once the collector has determined the proper business classification based on the predominant business activity, the business tax shall be computed, imposed and paid in accordance with the provisions of this chapter applicable to the classification. In cases where a business has multiple predominant business activities, the collector may assign more than one classification to the business, and business tax shall be computed, imposed and paid accordingly. Once established, all businesses shall file a business tax return renewal prior to the applicable tax period as prescribed in Section 5.05.150. (Ord. 1876 § 2, 6-6-89; Ord. 16-2009 § 5, 7-21-09. 1990 Code § 5-1108.)

A separate business tax and registration tax shall be paid for each branch location and for each type of business at the same location. A person who provides goods, services, music or amusement by vending machines or coin-operated devices shall be subject to one registration tax for all such machines or devices within the city. Persons with billboards shall also pay one registration tax and combine total gross receipts for all billboards located within the city. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1109.)

Any person requesting an extension for filing any required sworn statement shall do so in writing prior to the delinquency date of business tax payment. In addition to the other powers conferred upon him or her, the collector shall have the power, for good cause shown, to extend the time for filing any required sworn statement for a period not to exceed 60 days from the due date, and in such case to waive any penalty that would have accrued, except interest which shall accrue at one percent per month until paid. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1110.)

Records which shall be maintained for audit purposes shall include state and federal income tax returns, schedules and records included in such returns, any and all work papers used to prepare such returns, and in the case of businesses whose business tax is computed upon a gross payroll basis, quarterly and annual state and federal payroll tax returns.

All persons subject to the provisions of this chapter shall keep complete records of all business transactions and shall retain such records for examination by the collector and maintain them for a period of at least three years from the annual due date of the federal tax return or the city business tax return, whichever time period is greater. No person required under this section to keep records shall refuse to allow authorized representatives of the collector to examine said records at reasonable times and places.

A mistake made in stating the amount of the business tax shall not, in any case, prevent or prejudice the collector from collecting what is actually due from any person or entity carrying on a trade, calling, profession or occupation subject to a business tax under this chapter.

If any person, subject to the tax imposed by this chapter, fails to submit information required, or if the collector is not satisfied with records and statements filed, the collector shall determine the amount of the business tax due from such person by means of such information as he or she may be able to obtain and shall mail a notice of the amount so assessed by serving it personally or by depositing it in the United States Post Office at Fremont, California, postage prepaid, addressed to the person at his or her last-known address. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1111.)

The statements filed pursuant to the provisions of this chapter shall be deemed confidential in character, shall not be subject to public inspection, and shall be kept so that the contents thereof shall not become known except to the collector or authorized representative.

Nothing in this section shall be construed to prevent the following: the disclosure to or examination of records by another city agent; federal, state or county officials; a grand jury or court of law, upon subpoena, or in a proceeding to determine the existence or amount of any tax liability of the particular taxpayer to the city; the disclosure of the names and addresses of taxpayer pursuant to this chapter, and the general type or nature of their business, together with general statistics regarding business taxes collected or business done in the city. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1112.)

(a) All business taxes due under the terms of this chapter shall be payable in advance of the applicable tax period prescribed as follows:

(1) Businesses subject to daily business taxes: Taxes shall be paid on their effective date and shall be delinquent at 5:00 p.m. on that date.

(2) Businesses subject to monthly business taxes: Taxes shall be paid on the first day of each month for which the business tax is sought and shall be delinquent at 5:00 p.m. on the tenth day of that month.

(3) Businesses subject to quarterly business taxes: Taxes shall be paid on the first day of January, April, July and October and shall be delinquent at 5:00 p.m. on the last day of the first month in which the quarterly business tax is due.

(4) Existing businesses subject to annual business taxes: Taxes shall be paid on the first day of January and shall be delinquent at 5:00 p.m. on the last day of February.

(5) New businesses subject to annual business taxes: Taxes shall be paid on the first day of January, April, July and October. Taxes due on January 1st shall be delinquent at 5:00 p.m. on the last day of February; all other businesses with due dates of April 1st, July 1st and October 1st shall be considered delinquent at 5:00 p.m. on the last day of the month of their due date.

Provided, that the business tax imposed pursuant to Section 5.05.280 shall be due and payable in accordance with the provisions of said section.

(b) For failure to pay a business tax when due, the collector shall add a penalty of five percent per month of said business tax, including the registration tax, and shall in no event exceed 25 percent of the business tax due. Where an audit or inspection of the books or records of a business reveals the amount of business tax paid for any business tax period is less than the amount which was actually due, it shall be deemed for purposes of this subsection that such deficiency was a failure to pay a business tax when due. All taxes imposed and remaining unpaid after delinquency, including any deficiency in payment of taxes, shall bear interest at the rate of one percent per month or fraction thereof until paid. Penalties and interest as provided in this subsection shall be assessed from the date when said deficiency was required to be paid pursuant to this chapter.

(c) The collector may, for good cause shown, waive all or any part of any otherwise applicable penalty and interest. (Ord. 1876 § 2, 6-6-89; Ord. 1889 § 1, 10-3-89; Ord. 1-2013 § 5, 1-8-13. 1990 Code § 5-1113.)

No tax collected under the provisions of this chapter shall be refundable or prorated in any manner; except that if the business subject to the tax establishes to the satisfaction of the collector that it has overpaid the business tax and files a claim with the collector for refund of such overpayment within a period of three years from the day on which the overpayment was made, the collector may refund, or allow credit on a renewal, of the sum so overpaid. Upon request by the collector, the taxpayer shall provide accounting records to verify the amount of refund requested. (Ord. 1876 § 2, 6-6-89; Ord. 2419 § 3, 3-27-01. 1990 Code § 5-1114.)

No person shall knowingly or intentionally misrepresent to any officer or employee of the city any material fact in any statement or other information submitted to the collector or other agent of the city in connection with the administration and enforcement of this chapter. Any person who, with the intent to defraud the city of Fremont or evade his or her business tax obligation, shall misrepresent in any business tax return which he or she files any fact material to the determination of a correct amount of business tax due, shall be assessed a penalty of 25 percent of the amount of business tax due plus one percent interest per month, or fraction thereof, on the unpaid amount from the date the tax was due until the date of payment. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1115.)

The collector shall give written notice to the taxpayer of any determination made regarding any amounts due to the city, taxpayer compliance, claims for tax exemptions or any other decision required under this chapter. The taxpayer may appeal any determination made by the collector in accordance with this chapter by filing a written notice of appeal with the collector no later than 10 days after notice of the determination. The appeal shall be heard by the city manager or designee, whose decision on the matter shall be final and conclusive. (Ord. 1876 § 2, 6-6-89; Ord. 2419 § 4, 3-27-01; Ord. 16-2009 § 6, 7-21-09. 1990 Code § 5-1116.)

It shall be the duty of the collector, as directed, to enforce each and all of the provisions of this chapter. The chief of police, chief building official and community development director shall render assistance as may from time to time be required by the collector, city manager or the city council. The collector and his/her authorized assistants shall examine, or cause to be examined, all places of business in the city to ascertain whether the provisions of this chapter have been complied with. The collector shall have the power and authority to enter free of charge, at any reasonable time, any place of business to demand an exhibition of proof of business tax payment. (Ord. 1876 § 2, 6-6-89; amended during 2012 reformat. 1990 Code § 5-1117.)

The amount of any business tax, registration tax, penalty and interest imposed by the provisions of this chapter shall be deemed a debt to the city; and action may be commenced in the name of said city in any court of competent jurisdiction for the amount of any delinquent business tax, to include registration tax, applicable penalties and interest. The time for commencement of any such action shall be within three years from the date the tax became due and payable as in the case of any liability created by statute. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1118.)

All remedies prescribed hereunder shall be cumulative, and the use of one or more remedies by the city shall not bar the use of any other remedy for the purpose of enforcing the provisions hereof. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1119.)

If any section, subsection, sentence, clause, phrase, or portion of this chapter is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this chapter. (Ord. 1876 § 2, 6-6-89. 1990 Code § 5-1120.)