Irvine Municipal Code Ch. 7 Utility User's Tax

Footnotes:

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Editor's note— Ord. No. 24-11, § 2(Exh. A), adopted June 25, 2024, repealed the former Ch. 7, §§ 2-9-701—2-9-720, and enacted a new Ch. 7 as set out herein. The former Ch. 7 pertained to similar subject matter and derived from Code 1976, § II.L-1001; Ord. No. 87-15, § 1, 6-23-87; Ord. No. 89-6, § 1, 4-11-89; Ord. No. 91-23, 12-17-91; Ord. No. 06-16, § 1, 9-26-06.

Cross reference— Utilities, tit. 6, div. 4.

The taxes imposed by this chapter are established solely as revenue measures. This chapter is required for the purpose of fixing the rate of taxation for the utility user tax and for the purpose of providing a tax levy for the usual and current expenses of the City of Irvine. This chapter shall not apply to any person exempt from the taxes imposed hereunder pursuant to applicable United States or California law.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

The following words, terms and phrases, when used in this chapter, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Business shall mean any domestic or foreign corporation, firm, association, syndicate, joint stock company, partnership of any kind, joint venture, club, Massachusetts business or common law trust, society or individual that is carrying on professions, trades, occupations and each and every kind of calling carried on for profit or livelihood within the City.

Delinquency shall mean taxes payable by a service user which are not remitted to the Director of Administrative Services of the City on or before the due dates provided in this chapter.

Electrical corporation shall mean an electrical corporation as defined in California Public Utilities Code Section 218 as the same may be amended from time to time. To the fullest extent of the definition in California Public Utilities Code Section 218, "electrical corporation" shall be construed to include any municipality or franchised agency engaged in the selling or supplying of electrical power to a service user.

Gas corporation shall mean a gas corporation as defined in California Public Utilities Code Section 222 as the same may be amended from time to time.

One location shall mean one or more contiguous sites of land, not separated by public roads, facilities, or properties owned by others for which the service user receives one or more utility billings, and which sites are used for a single business activity with the same business name.

Residential service user shall mean a person using utility services in a home or place of residence.

Service supplier shall mean a utility company which provides electricity, gas, telephone, and communication services and receives taxes paid and remits the tax payment to the City as imposed by this chapter.

Service user shall mean a person or business required to pay a tax imposed by this chapter.

Tax shall mean those utility taxes imposed under this Chapter 7.

Telephone corporation shall mean a telephone corporation as defined in California Public Utilities Code Section 234 as the same may be amended from time to time.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

Cross reference— Utilities, tit. 6, div. 4.

A. Nothing in this chapter shall be construed as imposing a tax upon any person when imposition of such tax upon that person would be in violation of the Constitution of the United States or that of the State of California. The Director of Administrative Services or designee shall prepare a list of the persons exempt from the provisions of this chapter by virtue of this section and furnish a copy thereof to each service supplier.

B. The tax imposed under this chapter shall not apply to any residential service user, not-for-profit and nonprofit business, or insurance company.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

A. There is hereby imposed a tax on the charges paid for any intrastate telephone services by every business in the City other than a telephone corporation using such services. The tax imposed by this section shall be at the rate of 1.50 percent of the charges made for such services to service users and shall be paid by the person paying for such services. To the fullest extent permitted by law, there is a rebuttable presumption that telephone communication services, which are billed to a billing or service address in the City, are used, in whole or in part, within the City's boundaries, and such services are subject to taxation under this chapter. If the billing address of the service user is different from the service address, the service address of the service user shall be used for purposes of imposing the tax. To the fullest extent permitted by law, this chapter shall apply to mobile telephone communications services registered to or used for businesses in the City otherwise subject to this chapter regardless of where the mobile telephone communications services may originate, terminate, or pass through.

B. As used in this section the term "charges" shall not include charges for services paid for by inserting coins in coin-operated telephones except that where such coin-operated service is furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; nor shall the term "charges" include charges for any type of service or equipment furnished by a service supplied subject to public utility regulation during any period in which the same or similar services or equipment are also available for sale or lease from persons other than a service supplier subject to public utility regulation; nor shall the words "telephone communication services" include land mobile service or maritime mobile service as defined in Section 2.1 of Title 47 of the Code of Federal Regulations, as said section existed on January 1, 1970. The term "telephone communication services" refers to that service which provides access to telephone system and the privilege of telephone quality communication with substantially all persons having telephone stations which are part of such telephone system. To the fullest extent permitted by law, the telephone users tax is intended to, and does, apply to all charges billed to a telephone account when used for businesses in the City otherwise subject to this chapter regardless of where the telephone communication services may originate, terminate, or pass through.

C. The tax imposed by this section shall be collected from the service user by the service supplier. The amount of the tax collected in one month shall be remitted to the Director of Administrative Services or designee on or before the last day of the following month. When the exact tax is not known, the service supplier may remit an estimated amount of tax to be collected measured by the tax bill in the previous month, or the estimate may be predicated on a formula based upon the payment pattern of the supplier's customers. Estimated tax amounts shall be remitted to the Director of Administrative Services or designee on or before the last day of the following month. Any differences between the actual amount and the estimated amount shall be reflected on the tax bill for the following month and shall result in either an additional payment to the City or a credit against the future amount due. This provision shall not change the actual amounts due under this chapter.

D. Notwithstanding the provisions of Subsection A, the tax imposed under this section shall not be imposed upon any person for using intrastate telephone communication services to the extent that the amounts paid for such services are exempt from or not subject to the tax imposed under Revenue and Taxation Code div. 2, pt. 20 (Revenue and Taxation Code - § 41001 et seq.).

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

A. There is hereby imposed a tax upon every business in the City using electrical energy in the City. The tax imposed by this section shall be at the rate of 1.50 percent of the charges made for such energy to service users and shall be paid by the person paying for such energy. "Charges," as used in this section, shall include charges made for:

1. Metered energy; and

2. Minimum charges for service, including, but not restricted to, customer charges, service charges, demand charges, standby charges, annual and monthly charges, fuel, and cost adjustments.

B. As used in this section the term "using electrical energy" shall not be construed to mean the storage of such energy by a person in a battery owned or possessed by him or her for use in an automobile or other machinery or device apart from the premises upon which the energy was received; provided, however, that the term shall include the receiving of such energy for the purpose of using it in the charging of batteries; nor shall the term include electricity used and consumed by an electric utility supplier in the conduct of its business as an electric public utility; nor shall the term include the mere receiving of such energy by an electric public utility or governmental agency at a point within the City for resale; or the use of such energy in the production or distribution of water by a public utility or a governmental agency.

C. The tax imposed by this section shall be collected from the service user by the service supplier. The amount of the tax collected in one month shall be remitted to the Director of Administrative Services or designee on or before the last day of the following month. When the exact tax is not known, the service supplier may remit an estimated amount of tax to be collected measured by the tax bill in the previous month, or the estimate may be predicated on a formula based upon the payment pattern of the supplier's customers. Estimated tax amounts shall be remitted to the Director of Administrative Services or designee on or before the last day of the following month. Any differences between the actual amount and the estimated amount shall be reflected on the tax bill for the following month, and shall result in either an additional payment to the City or a credit against the future amount due. This provision shall not change the actual amounts due under this chapter.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

A. There is hereby imposed a tax upon every business in the City other than a gas corporation or electrical corporation, using gas in the City which is delivered through any gas distribution system. The tax imposed by this section shall be at the rate of 1.50 percent of the charges made for such gas for service users and shall be paid by the person paying for such gas. "Charges," as used in this section, shall include:

1. Gas which is delivered through any gas distribution system;

2. Minimum charges for such services, including, but not restricted to, customer charges, service charges, demand charges, standby charges, annual and monthly charges, fuel, and cost adjustments.

B. There shall be excluded from the base on which the tax imposed in this section is computed:

1. Charges made for gas which is to be resold and delivered through any gas distribution system;

2. Charges made for gas sold for use in the generation of electrical energy or for the production or distribution of water by a public utility or governmental agency;

3. Charges made by a gas public utility for gas used and consumed in the conduct of the business of gas public utilities; and

4. Charges made for gas used in the propulsion of a motor vehicle, as that phrase is defined in the Vehicle Code of the State of California, utilizing natural gas.

C. The tax imposed by this section shall be collected from the service user by the service supplier. The amount of the tax collected in one month shall be remitted to the Director of Administrative Services or designee on or before the last day of the following month. When the exact tax is not known, the service supplier may remit an estimated amount of tax to be collected measured by the tax bill in the previous month, or the estimate may be predicated on a formula based upon the payment pattern of the supplier's customers. Estimated tax amounts shall be remitted to the Director of Administrative Services or designee on or before the last day of the following month. Any differences between the actual amount and the estimated amount shall be reflected on the tax bill for the following month, and shall result in either an additional payment to the City or a credit against the future amount due. This provision shall not change the actual amounts due under this chapter.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

A. Assessment by Director of Administrative Services. The Director of Administrative Services or designee may make an assessment for taxes not remitted by a service user.

B. Relief from collecting tax. Whenever the Director of Administrative Services or designee determines that either a service user has deliberately withheld any portion of the tax owed by him or her from the amounts remitted to a service supplier required to collect the tax, or that a service user has refused to pay any portion of tax to such service supplier or whenever the Director of Administrative Services or designee deems it in the best interest of the City, he or she may relieve such service supplier of the obligation to collect taxes due under this chapter from certain named service users for specified billing periods.

C. List of unpaid tax. Every month, the service supplier shall provide the City itemized statements indicating the unpaid tax along with the names and addresses of the service users neglecting or refusing to pay the tax imposed under provisions of this chapter. Whenever the service user has failed to pay any portion of the tax for a period of two or more billing periods, the service supplier shall be relieved of the obligation to collect taxes due until such time as the Director of Administrative Services instructs the service supplier to resume collection of the tax.

D. Original delinquency. Any service supplier who fails to remit any portion of the tax imposed by this chapter within the time required shall pay a penalty of ten percent of the amount of the unpaid tax in addition to the amount of the tax due.

E. Continued delinquency. Any service supplier who fails to remit any delinquent remittance on or before a period of 30 days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of ten percent of the amount of the unpaid tax in addition to the amount of the tax due and the ten percent penalty first imposed pursuant to Subsection D. above.

F. Notice to service user. In the event that the delinquency procedure, as defined in Sections D and E above, does not result in the payment of the taxes due, then the Director of Administrative Services or designee shall take the following actions: The Director of Administrative Services or designee shall notify the service user that he or she has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes. The notice shall be served on the service user by handing it to him or her personally or by deposit of the notice in the United States mail, postage prepaid thereon addressed to the service user at the address to which billing was made by the person required to collect the tax; or should the service user have changed his or her address, to his or her last-known address. If a service user fails to remit the tax to the Director of Administrative or designee Services within 15 days from the date of the service of the notice upon him, which shall be the date of mailing if service is not accomplished in person, a penalty of 25 percent of the amount of the tax set forth in the notice shall be imposed, but not less than $25.00. The penalty shall become part of the tax herein required to be paid.

G. Fraud. If the Director of Administrative Services determines, based upon a preponderance of the evidence, that the nonpayment of any remittance due under this chapter is due to fraud, a penalty of 25 percent of the amount of the tax shall be added thereto in addition to the penalties stated in Subsections D. and E. of this section. Any penalty imposed by this Subsection G may be appealed to the City Manager or designee within ten working days pursuant to the provisions of Section 2-9-715. Failure to file the appeal with the City Clerk within ten working days shall render the penalty decision final.

H. Interest. In addition to the penalties imposed, any service supplier who fails to remit any tax imposed by this chapter shall pay interest at the rate of eight tenths percent (0.8%) per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until such date as the tax is paid.

I. Penalties merged with tax. Every penalty imposed and such interest as accrues under the provisions of this section shall become a part of the tax herein required to be paid.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

Any such tax received from a service user which has willfully been withheld from the Director of Administrative Services or designee shall be deemed a debt owed to the City by the person required to collect and remit the tax. Any person holding such money contrary to the provisions of this chapter shall be liable to an action brought in the name of the City for the recovery of such amount. All cost incurred by the City, inclusive of legal fees and other direct cost, shall be included with the delinquent amount due to the City.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

The duty to collect and remit the taxes imposed by this chapter shall be performed as follows:

A. Notwithstanding the provisions of Sections 2-9-704C, 2-9-705C and 7-9-707C, the tax shall be collected insofar as practicable at the same time as and along with the charges made in accordance with the regular billing practices of the service supplier. Where the amount paid by a service user to a service supplier is less than the full amount of the utility charge and tax which has accrued for the billing period, such amount and any subsequent payments by a service user shall be applied to the utility charge first until such charge has been fully satisfied. Any remaining balance shall be applied to taxes due. In those cases where a service user has notified the service supplier of his or her refusal to pay the tax imposed on said utility charges, Section 2-9-709 will apply.

B. The duty to collect tax from a service user shall commence with the beginning of the first regular billing period applicable to the service user where all charges normally included in such regular billing are subject to the provisions of this chapter. Where a person receives more than one billing, one or more being from different periods than another, the duty to collect shall arise separately for each billing.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

A. The Director of Administrative Services or designee shall have the power and duty and is hereby directed to enforce each and all of the provisions of this chapter.

B. The Director of Administrative Services shall have the power to adopt rules and regulations not inconsistent with provisions of this chapter for the purpose of carrying out and enforcing the payment, collection and remittance of the taxes herein imposed. A copy of such rules and regulations shall be on file in the Director of Administrative Services' office.

C. The Director of Administrative Services may make administrative agreements to vary the strict requirements of this chapter so that collection of any tax imposed here may be made in conformance with the billing procedures of particular service supplier so long as said agreements result in collection of the tax in conformance with the general purpose and scope of this chapter. A copy of each such agreement shall be on file with the City.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

It shall be the duty of every service supplier required to collect and remit to the City any tax imposed by this chapter to keep and preserve, for a period of three years, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of a remittance to the Director of Administrative Services, which records the Director of Administrative Services or designee shall have the right to inspect at all reasonable times.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

If a person subject to this chapter is aggrieved by any decision of the Director of Administrative Services or designee, with the administration of this chapter, they may appeal to the City Manager or designee, by filing a notice of appeal with the City Clerk within ten working days of the decision which aggrieved said person. The City Clerk shall thereupon fix a time and place for a hearing of such appeal. The City Clerk shall give notice to such person of the time and place of hearing as herein provided. The decision of the City Manager or designee may be appealed to the City Council by filing a notice of appeal with the City Clerk within ten working days of the decision. The City Clerk shall thereupon fix a time and place for a hearing of such appeal. The City Clerk shall give notice to such person of the time and place of hearing as herein provided. No decisions on appeal shall conflict with the provisions of this chapter.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

A. Whenever the amount of any tax has been overpaid or paid more than once or has been erroneously or illegally collected or received by the Director of Administrative Services or designee under this chapter, including pursuant to Subsection (C) of each of Sections 704, 705, and 707, it may be refunded by making a written request with supporting documentation to the Director of Administrative Services or designee. A three-year statute of limitations shall apply to refund for prior year erroneously or illegally collected taxes.

B. No refund shall be paid under the provisions of this section unless the claimant establishes his or her right thereto by written request specifying the nature of the claim and supporting documentation in the form of authentic service supplier invoices.

C. Notwithstanding other provisions of this section, whenever a service supplier, pursuant to an order of the California Public Utilities Commission or a court of competent jurisdiction, makes a refund to service users of charges for past utility services, the taxes paid pursuant to this chapter on the amount of such refunded charges shall also be refunded to service users, and the service supplier shall be entitled to claim a credit for such refunded taxes against the amount of tax which is due upon the next monthly returns. In the event this chapter is repealed, the amounts of any refundable taxes will be borne by the City.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

The tax imposed by this chapter is in addition to any other tax, license or permit fee that may be required of any person by this Code or any other ordinance of the City.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

Any person violating any of the provisions of this chapter shall be guilty of a misdemeanor and shall be punished as provided in Title 4, Division 13.

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)

The tax imposed under this chapter shall apply to services furnished from the beginning of the first regular billing period commencing on or after October 1, 1987, or as soon thereafter as the respective utilities are physically and mechanically able to get "on line" for the imposition of charges (not more than 60 days).

(Ord. No. 24-11, § 2(Exh. A), 6-25-24)