Monterey Municipal Code Art. 3 Uniform 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:

Visitor Accommodation Facility. Any structure, or any portion of a structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes for periods of 30 days or less, including any inn, residential dwelling unit, motel, or lodging house, bed and breakfast inn, single room occupancy hotel, hostel, rental unit, public or private residential club, mobile home, house trailer at a fixed location, or other structure or portion of a structure. This definition includes Vacation Rentals, such as those marketed by VRBO and Airbnb, whether or not such rentals are permitted to operate within the City of Monterey.

Occupancy. The use or possession, or the right to the use or possession, of any room or portion thereof in any visitor accommodation facility for dwelling, lodging or sleeping purposes.

Operator. The person who is proprietor of the visitor accommodation facility, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, manager or any other capacity. Where the operator performs through a managing agent of any type or character other than an employee, or a booking agent other than an employee, including but not limited to online booking agencies such as Expedia or Travelocity, the managing or booking agent shall also be deemed an operator for the purposes of this Article and shall have the same duties and liabilities as the principal. Compliance with the provisions of this Article by either the principal or the agent shall be considered to be compliance by both.

Rent. The consideration charged to the transient, whether or not received, for the occupancy of space in a visitor accommodation facility, 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. Rent includes charges for amenities, including but not limited to movie/DVD fees, mini bar fees, telephone fees, parking fees, resort fees, charges for rollaway beds, cribs, pet fees, and internet fees, in addition to online booking fees and charges.

Finance Director. The Finance Director of the City of Monterey.

Transient. 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 30 consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a visitor accommodation facility shall be deemed to be a transient until the period of 30 days has expired unless there is an agreement, in writing, between the operator and the occupant providing for a longer period of occupancy. (Ord. 3622 § 2, 2020)

For the privilege of occupancy in any visitor accommodation facility, each transient is subject to and shall pay a tax in the amount of 12% of the rent charged by the operator. Such tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. The transient shall pay the tax to the operator of the visitor accommodation facility 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 visitor accommodation facility. If, for any reason the tax due is not paid to the operator of the visitor accommodation facility, the Finance Director may require that such tax shall be paid directly to the City. Sixteen percent of the tax rate approved by voters on or before November 3, 2020, shall be allocated to the Neighborhood and Community Improvement Program set forth in Charter subsection 6.6(c). (Ord. 3622 § 3, 2020)

a.No tax shall be imposed pursuant to Chapter 35, Article 3 upon:

1.Any federal officer or employee when on official business.

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

b.A claim for an exemption must be made at the time rent is collected, and under penalty of perjury on a form designated by the City, in order for the exemption to apply. (Ord. 3636 § 3, 2021)

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 rent charged, and each transient shall receive a receipt for payment from the operator. No operator of a visitor accommodation facility 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 be refunded, except in the manner provided in this Article.

Within 10 days after commencing business, each operator of any visitor accommodation facility shall register with the Finance Director by completing a registration form provided by the City. Such registration form shall, among other things, provide the following information:

a.The name of the visitor accommodation facility.

b.The name and telephone number of the operator.

c.The address and telephone number of the visitor accommodation facility.

d.The date upon which the visitor accommodation facility began operation under this operator.

e.The number of rooms available for rent.

f.The County of Monterey Assessor’s Parcel Number of the visitor accommodation facility.

This registration application does not authorize any person to conduct any unlawful business or to conduct any lawful business in an unlawful manner, nor to operate a visitor accommodation facility 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 City. This registration does not constitute a permit.

a. Original Delinquency.Any operator who fails to remit any tax imposed by the Article within the time required shall pay a penalty of 10 percent of the amount of the tax in addition to the amount of the tax or the estimated tax.

b. Continued Delinquency.Any operator who fails to remit any delinquent taxes on or before a period of 30 days following the date on which the taxes first became delinquent shall pay a second delinquency penalty of 10 percent of the amount of the tax in addition to the amount of the tax and the 10 percent penalty first imposed.

c. Fraud.If the Finance Director determines that the nonpayment of any remittance due under this Article 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 (a) and (b) of this section.

d. Compound 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 percent per month or fraction thereof, compounded, on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent, until paid.

e. Penalties.Every penalty imposed and such interest that accrues under the provisions of this section shall become a part of the tax required to be paid.

f. Audit Deficiency.If, upon audit by the City, an operator is found to be deficient in either its return or its remittance or both, the Finance Director shall invoice the operator for the amount of the net deficiency plus a penalty of 10 percent of the net deficiency. If the operator fails or refuses to pay the deficient amount and applicable penalties within 30 days of the date of the invoice, an additional 10 percent penalty shall be added to the original deficiency. In addition to the penalties imposed, any operator who fails to remit payment of billed audit deficiencies within 30 days of the date of the invoice shall pay interest at the rate of one percent per month or fraction thereof, compounded, on the amount of the tax, exclusive of penalties. (Ord. 3636 § 6, 2021)

a.If any operator fails or refuses to collect the tax imposed by this Article, or to make, within the time provided in this Article, any report and remittance of such tax or any portion thereof, the Finance Director shall proceed in such manner as they may deem best to obtain facts and information on which to base an estimate of the tax due. The Finance Director shall determine and assess against such operator the tax, interest, and penalties provided for by this Article. The Finance Director shall give a notice of the amount so assessed by serving it personally, by email, or by depositing it in the United States mail, postage prepaid, addressed to the operator so assessed at the last known place of address.

b.Within 10 days after service of such notice, the operator may request, in writing, to the Finance Director for a hearing on the amount assessed. If the operator does not request a hearing within the time prescribed, the tax, interest, and penalties determined by the Finance Director shall become final and conclusive and immediately due and payable.

c.If a request for hearing is made, the Finance Director shall give not less than five days’ written notice in the manner prescribed in this section to the operator of the time and place of the hearing before the Finance Director, or their designee. 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 Finance Director shall determine the proper tax to be remitted and shall thereafter give written notice to the operator in the manner prescribed in this section of such determination and the amount of such tax, interest, and penalties. The amount determined to be due shall be payable after 15 days unless an appeal is taken as provided in Section 35-18. (Ord. 3636 § 7, 2021; Ord. 3102, 1992; Ord. 1405, 1964)

Any operator aggrieved by a decision of the Finance Director with respect to Section 35-16(c), Fraud, Section 35-16(f), Audit Deficiency, and Section 35-17, Failure to collect and report tax; determination of tax by Finance Director, may appeal to the Appeals Hearing Board by filing a written notice of appeal with the City Attorney’s Office within 15 calendar days of the service of the determination of tax due. All other decisions of the Finance Director are final. The Clerk of the Board shall fix a time and place for hearing such appeal, and the City shall give notice in writing by serving it personally, by email, or by depositing it in the United States mail, postage prepaid, addressed to such operator at the last known place of address. At the hearing, the operator and the Finance Director shall have an opportunity to explain their case and introduce evidence. Formal rules of evidence do not apply in proceedings under this section and the Board may consider any evidence or information deemed relevant and reasonably reliable. The decision of the Appeals Hearing Board shall be final and conclusive and shall be served upon the appellant in the manner prescribed above for service of notice of hearing. If the Board upholds the appeal, or a portion thereof, within 30 days of the Board’s decision the City shall refund the deposited amount of the tax, interest or penalty as specified in the decision. (Ord. 3659 § 4, 2023; Ord. 3636 § 8, 2021; Ord. 3102, 1992; Ord. 3080, 1991; Ord. 1405, 1964)

It shall be the duty of every operator liable for the collection and payment to the City of any tax imposed by this Article to keep and preserve, for a period of four years not including the present calendar year, all records as may be necessary to determine the amount of such tax the operator may have been liable for the collection of and payment to the City. The Finance Director and authorized agents shall have the right to inspect such records at all reasonable times. The records maintained by the operator under this section shall include, but are not limited to, the following:

a.A written report that includes daily records of all of the following:

1.Name of person occupying the room;

2.Number or other identifier of the room occupied;

3.Room rate;

4.Amount charged, if any, for the occupancy;

5.Amount of transient occupancy tax collected; and

6.Method of payment.

b.A written record of each occupancy for which an exemption is claimed, including the name of the person occupying the room, date(s) of occupancy, reason(s) for the exemption, and the exemption claim form required under Section 35-12.

All records which may be necessary to inspect shall be kept within the City or shall be produced within 10 working days of written notice at the business location within the City.

In the event that records are not produced upon request, or such records are not reasonably able to be audited, tax, interest, and penalties will be levied based upon the average room rate and occupancies for similar properties within the City during the audit period. Further, and without limitation, any operator who does not produce records following written notice as set forth herein shall pay, as a civil penalty, in addition to any tax, penalty or interest, the sum of $100.00 per day for each business day the records are not produced for audit.

Further, the City may issue a subpoena pursuant to Government Code Section 37104 et seq., as may be amended, or utilize any other lawful means to access and inspect the records of an operator who refuses to make such records available for inspection. (Ord. 3659 § 5, 2023; Ord. 3636 § 9, 2021)

a. Claim Required.Whenever the amount of any tax, interest or penalty has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the City under this Article, the amount may be refunded as provided in subsections (b) and (c) of this section; provided, that a claim in writing is filed in accordance with Section 1-1.09 stating under penalty of perjury the specific grounds upon which the claim is founded and within a period of one year from the date of the claimed overpayment.

b. Claim by Operator.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 Finance Director that the person from whom the tax has been collected was not a transient; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the payor or credited to rent subsequently payable by the payor to the operator.

c. Claim by Payor.A payor may obtain a refund of taxes overpaid, paid more than once, or erroneously or illegally collected or received by the City by filing a claim in the manner provided in subsection (a) of this section, but only when the tax was paid by the payor directly to the City, or when the payor, having paid the tax to the operator, establishes to the satisfaction of the Finance Director that the payor has been unable to obtain a refund from the operator who collected the tax. (Ord. 3659 § 6, 2023; Ord. 3636 § 10, 2021; Ord. 3474 § 2, 2012; Ord. 3350, 2005)

No person may commence or maintain any proceeding, or assert any administrative, legal or equitable claim of any kind, whether affirmatively or by defense, against the City challenging or disputing in any way the imposition, assessment or collection of any tax, interest, or penalty imposed under this Article, unless the person first deposits with the City the full amount of any tax, interest or penalty imposed or assessed or otherwise challenged or claimed to be in dispute. Only after payment of the full amount of any tax, including interest and any penalties assessed or imposed, claimed to be illegal or otherwise improper, may a person maintain an action to recover the tax and other amounts paid and in dispute, with interest, in such manner as provided by law. (Ord. 3659 § 7, 2023; Ord. 3636 § 11, 2021)