Article III — TRANSIENT OCCUPANCY TAX

For the purposes of this article, the following words and phrases shall have the meanings respectively ascribed to them by this section:

Hotel means any structure, or any portion of any structure, which is occupied or intended to be designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist home or house, studio hotel, bachelor hotel, lodginghouse, roominghouse, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof.

Occupancy means the use or possession, or the right to the use or possession, of any room or rooms or portion thereof, in any hotel for dwelling, lodging or sleeping purposes.

Operator means the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, or any other capacity. Where the operator performs the operator's functions through a managing or booking agent of any type or character other than an employee, including but not limited to an online travel company the managing/booking agent shall also be deemed an operator for the purposes of this article, and shall have the same duties and liabilities as the managing agent's principal. Compliance with the provisions of this article by either the principal or the managing/booking agent shall, however, be considered to be compliance by both.

Online Travel Company means any person, whether operating for profit or not for profit, which enables transients to purchase occupancy of space in a hotel via the Internet, or by similar electronic means.

Person means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit.

Rent means the total consideration charged, to the transient, (including but not limited to, room rates, service charges, retail markup, commissions, processing fees, cancellation charges, attrition fees or online booking fees), whether or not received, for the occupancy of space in a hotel, valued in money, whether to

be received in money, goods, labor or otherwise, including all receipts, cash, credits and property and services of any kind or nature, without any deduction therefrom whatsoever.

Tax Administrator means the Finance Director of the Town.

Transient means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty (30) consecutive calendar days or less, counting portion of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty (30) days has expired, unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to the effective date of this article may be considered.

(Ord. No. 911, § 2, 6-5-67; Code 1968, § 28-17; Ord. No. 1913, § II, 9-21-92; Ord. No. 2255, § I, 8-2-16)

Cross reference— Definitions and rules of construction generally, § 1.10.015.

(a)

For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of twelve (12) percent of the rent charged by the operator. Such tax constitutes a debt owed by the transient to the Town, which is extinguished only by payment to the operator or to the Town. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due upon the transient's ceasing to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Tax Administrator may require that such tax shall be paid directly to the Tax Administrator.

(b)

For purposes of this section, the term "the privilege of occupying a room or rooms in a hotel, inn, tourist home or house, motel, or other lodging" does not include the right of an owner of a timeshare estate in a room or rooms in a timeshare project, or the guest of that owner, to occupy the room, rooms, or other real property in which that owner retains the timeshare estate. For purposes of this paragraph, "timeshare estate" means a timeshare estate, as defined by Business and Professions Code section 11003.5 and the term "guest of that owner" means a person who occupies real property accompanied by the owner of a timeshare estate in that real property, or who exercises that owner's right of occupancy of a timeshare estate without payment of any compensation to the owner. The term "guest of that owner" specifically includes a person occupying a timeshare unit pursuant to any form of exchange program.

(c)

Subsection (b) shall not affect or apply to the authority of the Town to collect a transient occupancy tax from timeshare projects which were in existence as of May 1, 1985, and which timeshare projects were then subject to such tax imposed by this article duly enacted prior to May 1, 1985, pursuant to this section.

(Ord. No. 911, § 3, 6-5-67; Ord. NO. 946, § 1; Ord. No. 1289, § 1, 2-17-76; Ord. No. 1362, § 1, 7-5-77; Ord. No. 1561-A, § 1, 1-3-83; Code 1968, § 28-18; Ord. No. 2255, § I, 8-2-16)

No tax shall be imposed upon:

(a)

Any person as to whom, or any occupancy as to which it is beyond the power of the Town to impose the tax herein provided;*

(b)

Any officer or employee of a foreign government who is exempt by reason of expression of federal law or international treaty.

* State and federal employees are not exempt 46 Ops. Atty. Gen. 16.

(Ord. No. 1913, § III, 9-21-92)

Each operator shall collect the tax imposed by this article to the same extent and at the same time as the rent is collected from every transient. The amount of tax shall be separately stated from the amount of the rent charged, and each transient shall receive a receipt for payment from the operator. No operator of a hotel shall advertise or state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the operator, or that it will not be added to the rent, or that, if added, any part will not be refunded, except in the manner hereinafter provided.

(Ord. No. 911, § 5, 6-5-67; Code 1968, § 28-20)

Each operator of any hotel renting occupancy to transients shall register such hotel with the Tax Administrator and obtain from the Tax Administrator a transient occupancy registration certificate, to be at all times posted in a conspicuous place on the premises. Operators beginning business shall so register within thirty (30) days after commencing business. Such certificate shall, among other things, state the following:

(1)

The name of the operator;

(2)

The address of the hotel;

(3)

The date upon which the certificate was issued;

(4)

"This transient occupancy registration certificate signifies that the person named on the face hereof has fulfilled the requirements of article 3 of chapter 25 of the Code of the Town of Los Gatos, California, by registering with the Tax Administrator for the purpose of collecting from transients the transient occupancy tax and remitting such tax to the Tax Administrator. This certificate does not authorize any person to conduct any unlawful business in an unlawful manner, nor to operate a hotel without strictly complying with all local applicable laws, including, but not limited to, those requiring a permit from any board, commission, department or office of this Town. This certificate does not constitute a permit."

(Ord. No. 911, § 6, 6-5-67; Code 1968, § 28-21)

Each operator shall, on or before the last day of the month following the close of each calendar quarter, or at the close of any shorter reporting period which may be established by the Tax Administrator, make a return to the Tax Administrator, on forms provided by the Tax Administrator, of the total rents charged and received and the amount of tax collected for transient occupancies. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax Administrator. The Tax Administrator may establish shorter reporting periods for any certificate holder if it is deemed necessary in order to ensure timely collection of the tax. The Tax Administrator may also require further information in the return. All taxes collected by operators pursuant to this article shall be held in trust for the account of the Town until payment thereof is made to the Tax Administrator. Returns and payments are due immediately upon cessation of business for any reason.

(Ord. No. 911, § 7, 6-5-67; Code 1968, § 28-22; Ord. No. 1913, § IV, 9-21-92)

(a)

Original delinquency. Any operator who fails to remit any tax imposed by this article within the time required shall pay a penalty of ten (10) percent of the amount of the tax, in addition to the amount of the tax.

(b)

Continued delinquency. Any operator who fails to remit any delinquent remittance on or before each period of thirty (30) days following the date on which the remittance first became delinquent shall pay an additional delinquency penalty of ten (10) percent of the amount of the tax in addition to the amount of the tax and the ten-percent penalties earlier imposed. Such penalties shall continue to accrue until such time as the cumulative penalties reach one hundred (100) percent of the amount of the tax originally due.

(c)

Individual liability.

(1)

Any person required to collect, truthfully account for, or pay over any tax imposed by this article who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable for the penalties described in subsection (b) above on the total amount of the tax evaded, or not collected, or not accounted for and paid over.

(2)

No penalty shall be imposed pursuant to this subsection unless the tax administrator notifies the operator in writing that persons subject to this subsection shall be liable for such a penalty at least sixty (60) days before the penalty shall apply to those persons.

(3)

If more than one person is liable for the penalty described in this subsection, each person who paid such a penalty shall be entitled to recover from other persons who are liable for such penalty an amount equal to the excess of the amount paid by such person over such person's proportionate share of the penalty. Any claim for such a recovery may be made only in a proceeding that is separate from or at the least severed from any action brought by the Town to collect the penalty and tax.

(4)

For purposes of this subsection only, "person required" means the same as the term "person" under interpretations of sections 6671 and 6672 of the Internal Revenue Code, and includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.

(d)

Interest. In addition to the penalties imposed, any operator who fails to remit any tax imposed by this article shall pay interest at the rate of one-half of one percent 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 paid.

(e)

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 required by this article to be paid.

(Ord. No. 911, § 8, 6-5-67; Code 1968, § 28-23; Ord. No. 1867, §§ I, II, 9-3-91; Ord. No. 1913, § V, 9-21-92; Ord. No. 2026, § XX, 2-18-97)

If any operator shall fail or refuses to collect the tax levied by this article and to make, within the time provided in this article, any report and remittance of such tax or any portion thereof required by this article, the Tax Administrator shall proceed in such manner as may be deemed best to obtain facts and information on which to base the estimate of the tax due. As soon as the Tax Administrator shall procure such facts and information as the Tax Administrator is able to obtain upon which to base the assessment of any tax imposed by this article and payable by any operator who has failed or refused to collect the same and to

make such report and remittance, the Tax Administrator shall proceed to determine and assess against such operator the tax, interest and penalties provided for by this article. In case such determination is made, the Tax Administrator shall give a notice of the amount so assessed by serving it personally, or by depositing it in the United States mail, postage prepaid, addressed to the operator so assessed at the operator's last known place of address. Such operator may, within ten (10) days after the serving or mailing of such notice, make application in writing to the Tax Administrator for a hearing on the amount assessed. If application by the operator for a hearing is not made within the time prescribed, the tax, interest and penalties, if any, determined by the Tax Administrator, shall become final and conclusive and immediately due and payable. If such application is made, the Tax Administrator shall give not less than five (5) days' written notice in the manner prescribed herein to the operator to show cause at a time and place fixed in such notice why such amount specified therein should not be fixed for such tax, interest and penalties. At such hearing, the operator may appear and offer evidence why such specified tax, interest and penalties should not be so fixed. After such hearing, the Tax Administrator shall determine the proper tax to be remitted, and shall thereafter give written notice to the person in the manner prescribed herein of such determination, and the amount of such tax, interest and penalties. The amount determined to be due shall be payable after fifteen (15) days, unless an appeal is taken as provided in section 25.30.045.

(Ord. No. 911, § 9, 6-5-67; Code 1968, § 28-24)

Any operator aggrieved by any decision of the Tax Administrator with respect to the amount of such tax, interest and penalties, if any, may appeal to the Town Council by filing a notice of appeal with the Town Clerk within fifteen (15) days of the serving or mailing of the determination of tax due. The Town Council shall fix a time and place for hearing such appeal, and the Town Clerk shall give notice in writing to such operator at the operator's last known place of address. The findings of the Town Council shall be final and conclusive and shall be served upon the appellant in the manner prescribed above for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice.

(Ord. No. 911, § 10, 6-5-67; Code 1968, § 28-25)

It shall be the duty of every operator liable for the collection and payment to the Town of any tax imposed by this article to keep and preserve, for a period of three (3) years, all records as may be necessary to determine the amount of such tax as the operator may have been liable for the collection of and payment to the Town, which records the Tax Administrator shall have the right to inspect at all reasonable times. The records shall include at least the following:

(1)

Daily summaries of room occupancies;

(2)

A record of each occupancy charge for which an exemption is claimed, including the name of the individual occupying the room, dates of occupancy, and reasons for exemption;

(3)

Lists of bad debts claimed for exemption, including names and addresses of debtor and amount of room rent unpaid.

(Ord. No. 911, § 11, 6-5-67; Code 1968, § 28-26; Ord. No. 1913, § VI, 9-21-92)

(a)

Whenever the amount of any tax, interest or penalty has been overpaid, or paid more than once, or has been erroneously or illegally collected or received by the Town under this article, it may be refunded as provided in subsections (b) and (c) of this section; provided that, a claim in writing therefor, stating under penalty of perjury to specific grounds upon which the claim is founded, shall be filed with the Tax Administrator within three (3) years of the date of payment. The claim shall be on forms furnished by the Tax Administrator.

(b)

An operator may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid more than once, or erroneously or illegally collected or received, when it is established in a manner prescribed by the Tax Administrator that the person from whom the tax has been collected was not a transient; provided, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator.

(c)

A transient may obtain a refund of taxes overpaid or paid more than once, or erroneously or illegally collected or received by the Town, by filing a claim in the manner provided in subsection (a) of this section, but only when the tax was paid by the transient directly to the Tax Administrator, or when the transient having paid the tax to the operator, establishes to the satisfaction of the Tax Administrator that the transient has been unable to obtain a refund from the operator who collected the tax.

(d)

No refund shall be paid under the provisions of this section unless the claimant establishes the right thereto by written records showing entitlement thereto.

(Ord. No. 911, § 12, 6-5-67; Code 1968, § 28-27)

(a)

Actions to collect. Any tax required to be paid by any transient under the provisions of this article shall be deemed to be a debt owed by the transient to the Town. The amount of the tax collected by the operator shall be held to be a special fund in trust for the Town of Los Gatos and shall be deemed to be public

monies upon collection. Upon proper notice, the Town may require the person collecting the tax to deposit such amount in a separate account in a federally or state chartered bank located in California and keep the amount of such taxes in that account until payment over to the Town; however, whether the collected taxes are placed in a separate account or not shall have no effect on the trust obligation of the person collecting the tax to hold and remit the taxes to the Town. Any person owing money to the Town under the provisions of this article shall be liable to an action brought in the name of the Town for the recovery of such amount.

(b)

Recording certificate — Lien. If any amount required to be paid to the Town under the ordinance codified in this article is not paid when due, the Tax Administrator, upon expiration of the second delinquency period referenced in section 25.30.035(b), may within three (3) years after the amount is due file for record in the office of the Santa Clara county recorder and in the office of the county recorder of any other county in which the operator owns real property, a certificate specifying the amount of tax, penalties and interest due, the name and address as it appears on the records of the Tax Administrator of the operator liable for the same and the fact that the Tax Administrator has complied with all provisions of this article in the determination of the amount required to be paid. From the time of the filing for record, the amount required to be paid together with penalties and interest constitutes a lien upon any real property in the county owned by the operator or acquired by the operator afterwards and before the lien expires. The lien has the force, effect and priority of a judgment lien and shall continue for ten (10) years from the time of filing of the certificate unless sooner released or otherwise discharged.

(c)

Priority and lien of tax. The amounts required to be paid by any operator under this article with penalties and interest shall be satisfied first in any of the following cases:

(1)

Whenever the person is insolvent;

(2)

Whenever the person makes a voluntary assignment of the person's assets;

(3)

Whenever the estate of the person in the hands of executors, administrators or heirs is insufficient to pay all the debts due from the deceased; or

(4)

Whenever the estate and effects of an absconding, concealed or absent person required to pay any amount under this article levied upon by process of law.

This article does not give the Town a preference over any recorded lien which attached prior to the date when the amounts required to be paid became a lien.

(d)

Warrant for collection of tax. At any time within three (3) years after any operator is delinquent in the payment of any amount herein required to be paid off after the last recording of a certificate of lien under subsection (b) of this section, the Tax Administrator may issue a warrant for the enforcement of any liens and for the collection of any amount required to be paid to the Town under this article. The warrant shall be directed to any sheriff, marshal or constable and shall have the same effect as a writ of execution. The warrant shall be levied and sale made pursuant to it in the same manner and with the same effect as a levy of and a sale pursuant to a writ of execution. The Tax Administrator may pay or advance to the sheriff, marshal or constable the same fees, commissions and expenses for the sheriff, marshal or constable's services as are provided by law for similar services pursuant to a writ of execution.

(e)

Seizure and sale. At any time within three (3) years after any operator is delinquent in the payment of any amount, the Tax Administrator may forthwith collect the amount in the following manner: The Tax Administrator shall seize any property, real or personal, of the operator and sell the property, or a sufficient portion of it, at public auction to pay the amount due together with any penalties and interest imposed for the delinquency and any costs incurred on account of the seizure and sale. Any seizure made to collect occupancy taxes due shall be only of property of the operator not exempt from execution under the provisions of the code of civil procedure.

(f)

Successor's liability.

(1)

Withholding by purchaser. If any operator liable for any amount under this chapter sells out their business or quits the business, the operator's successors or assigns shall withhold sufficient of the purchase price to cover such amount until the former owner produces a receipt from the Tax Administrator showing that it has been paid or a certificate stating that no amount is due.

(2)

Liability of purchaser — Release. If the purchaser of a hotel fails to withhold funds from the purchase price as required, the purchaser shall become personally liable for the payment of the amount required to be withheld by the purchaser to the extent of the purchase price, valued in money. Within sixty (60) days after receiving a written request from the purchaser for a certificate, or within sixty (60) days from the date the former owner's records are made available for audit, whichever period expires the later, but in any event, not later than ninety (90) days after receiving the request, the Tax Administrator shall either issue the certificate or mail notice to the purchaser at the purchaser's address as it appears on the records of the Tax Administrator of the amount that must be paid as a condition of issuing the certificate. Failure of the Tax Administrator to mail the notice shall release the purchaser from any further obligation to withhold purchase price as above provided. The time within which the obligation of the successor may be enforced shall start to run at the time the operator sells their business, or at the time that the determination against the operator becomes final, whichever event occurs later.

(g)

Sale of a hotel, dismissal of the operator or other termination of the operator's rights to operate the facility shall not relieve the operator from liability for taxes due or owing under this article. Any person assuming responsibility for operation of a hotel after causing dismissal of an operator or termination of the operator's rights to operate the facility shall, by such action, the liability for all taxes due and owing under this article. This liability is in addition to and does not extinguish the liability of the former operator.

(Ord. No. 911, § 13, 6-5-67; Code 1968, § 28-28; Ord. No. 1913, § VII, 9-21-92; Ord. No. 2002, § I, 9-5-95; Ord. No. 2320, § III, 9-7-21)

All taxes, interest and penalties collected or received by the Tax Administrator pursuant to this article shall become part of the general fund of the Town.

(Ord. No. 911, § 14, 6-5-67; Ord. No. 1295, § 1, 3-15-76; Code 1968, § 28-29)

It shall be unlawful for any operator or other person to fail or refuse to register as required herein, or to furnish any return required to be made, or to fail or refuse to furnish a supplemental return or other data required by the Tax Administrator, or to render a false or fraudulent return or claim.

(Ord. No. 911, § 15, 6-5-67; Code 1968, § 28-30)

It shall be unlawful for any person required to make, render, sign or verify any report or claim under this article to make any false or fraudulent report or claim with intent to defeat or evade the determination of any amount due under this article.

(Ord. No. 911, § 15, 6-5-67; Code 1968, § 28-31)