Monterey Municipal Code Art. 5 Public Utilities Use Tax

For the purposes of this Article, the following words and phrases shall have the meanings respectively ascribed to them by this Section.

City: The City of Monterey.

Electrical corporation, gas corporation, telephone corporation, water corporation. Such terms shall have the same meanings as defined in Sections 218, 222, 234 and 241, respectively, of the Public Utilities Code of the state, as such Sections read on January 1, 1970.

Month: A calendar month.

Person: All domestic and foreign corporations, associations, syndicates, joint stock companies, partnerships of every kind, joint ventures, clubs, Massachusetts business or common law trusts, societies and individuals.

Service supplier: A person required to collect and remit a tax imposed under the provisions of this Article.

Service user: A person required to pay a tax imposed under the provisions of this Article.

Tax administrator: The Finance Director of the City.

Nothing in this Article shall be construed as imposing a tax upon the City or any person when imposition of such tax upon that person would be in violation of the Constitution of the United States or the state. The tax administrator shall prepare a list of the persons exempt from the provisions of this Article by virtue of this Section and furnish a copy thereof to each service supplier.

a.There is hereby imposed a tax upon every person using telecommunication services in the City. The tax imposed by this section shall be at the rate of five percent (5%) of the charges made for such services for industrial, commercial, or any use other than service to a person’s principal place of residence. The tax imposed by this section shall be at the rate of two percent (2%) of the charges made for such services to a person’s principal place of residence. There is a rebuttable presumption that telecommunication services billed to an address in the City are used, in whole or in part, within the City, and such services are subject to tax under this section. There is also a rebuttable presumption that prepaid telecommunication services sold within the City are used, in whole or in part, within the City and are therefore subject to taxation under this section. If the billing address of the service user is different from his or her service address, the service address shall be used for purposes of imposing the tax. As used in this section, the term “charges” shall include the value of any other services, credits, property of every kind or nature, or other consideration provided by the service user in exchange for the telecommunication services.

b.“Mobile telecommunications service” shall be sourced in accordance with the sourcing rules set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124). The tax administrator may issue and disseminate to telecommunication service suppliers subject to the tax collection requirements of this Article sourcing rules for the taxation of other telecommunication services, including but not limited to post-paid telecommunication services, prepaid telecommunication services, VoIP, and private telecommunication services; provided, that such rules are based upon custom and common practice and further administrative efficiency and avoid multi-jurisdictional taxation (e.g., streamlined sales and use tax agreement).

c.To prevent actual multi-jurisdictional taxation of telecommunication services subject to tax under this section, any service user, upon proof to the tax administrator that the service user has previously paid tax in another state or city on such telecommunication services, shall be allowed a credit against the tax imposed in the amount of such tax legally imposed in such other state or city; provided, however, the amount of credit shall not exceed the tax owed to the City under this section.

d.If any nontaxable charges are combined with and not separately stated from taxable service charges on a bill, the combined charge is subject to tax unless the service supplier apportions, by reasonable and verifiable standards, the combined charge between nontaxable and taxable services using books and records kept in the regular course of the service supplier’s business, and in accordance with generally accepted accounting principles, and not created and maintained only for tax purposes. If the service supplier offers a combination of taxable and nontaxable services, and the charges are separately stated, then for taxation purposes, the apportionment shall use books and records kept in the regular course of the service supplier’s business and in accordance with generally accepted accounting principles, and not created and maintained only for tax purposes. The service supplier has the burden of proving the proper apportionment of taxable and nontaxable charges.

e.For purposes of imposing a tax or establishing a duty to collect and remit a tax under this section, “substantial nexus” and “minimum contacts” shall be construed broadly in favor of the imposition, collection and/or remittance of the tax to the fullest extent permitted by state and federal law, and as it may change from time to time by judicial interpretation or by statutory or constitutional enactment. Any telecommunication service (including VoIP) used by a person with a service address in the City, which service is capable of terminating a call to another person on the general telephone network, is rebuttably presumed to have “substantial nexus/minimum contacts” with the City for purposes of imposing a tax, or establishing a duty to collect and remit a tax, under this section. A service supplier shall be deemed to have sufficient activity in the City to be obliged to collect and remit tax if its activities include, but are not limited to, any of the following: maintains or has within the City, directly or through an agent, affiliate, or subsidiary, a place of business of any nature; solicits business in the City by employees, independent contractors, resellers, agents or other representatives; solicits business in the City on a continuous, regular, seasonal or systematic basis by means of advertising that is broadcast or relayed from a transmitter in the City or distributed from a location within the City; or advertises in newspapers or other periodicals printed and published within the City or through materials distributed in the City by means other than the United States mail; or if there are activities performed in the City on behalf of the service supplier that are significantly associated with the service supplier’s ability to establish and maintain a market in the City for the provision of utility services that are subject to a tax under this Article (e.g., electronic advertising received within the City or activities in the City by an affiliated person that inure to the benefit of the service supplier in its developing or maintaining a market in the City).

f.The tax imposed by this section shall be collected from the service user by the telecommunications service provider. The tax collected in one month shall be remitted to the Finance Department on or before the last day of the following month.

g.Notwithstanding the provisions of subsection (a) of this section, the tax imposed by this section shall not be imposed upon any person using telecommunication services in the City under the following circumstances:

1.Except with respect to local telephone service, on any charges for services used in the collection of news for the public press; a news ticker service furnishing a general news service similar to that of the public press; radio broadcasting; in the dissemination of news through the public press; or a news ticker service furnishing a general news service similar to that of the public press or by means of radio broadcasting.

2.On any charges for services used by a public international organization in which the United States Government participates pursuant to a treaty or a federal statute; or the American National Red Cross.

3.On any charges for toll telephone services used, which originate within a combat zone from a member of the Armed Forces of the United States performing service in the combat zone, as defined under Section 112 of Title 26 of the United States Code.

4.On any charges for services used by a common carrier, telephone or telegraph company, or radio broadcasting station or network, in the conduct of its business.

5.On any charges for the installation of any instrument, wire, pole, switchboard, apparatus, or equipment, to the extent properly attributable to such installation.

6.On any charges for services used by a “nonprofit hospital” as defined in Section 170(b)(1)(A)(iii) of Title 26 of the United States Code, which is exempt from federal income taxation under Section 501(a) of Title 26 of the United States Code.

7.On any charges for services used by any federal or state government, or any of their political subdivisions, or the District of Columbia.

8.On any charges for services used by a “nonprofit educational organization” as defined in Section 170(b)(1)(A)(ii) of Title 26 of the United States Code, which is exempt from federal income taxation under Section 501(a) of Title 26 of the United States Code. “Nonprofit educational organization” also includes a school operated as an activity of an organization described in Section 501(c)(3) of Title 26 of the United States Code, which is exempt from federal income taxation under Section 501(a) of Title 26 of the United States Code, if the school normally maintains a regular facility and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.

9.On any charges for services paid for by inserting coins in coin-operated machines.

h.As used in this section, the following words and phrases shall have the meanings respectively ascribed to them by this subsection:

1.“Ancillary telecommunication services” means services that are associated with or incidental to the provision, use, or enjoyment of telecommunications services including, but not limited to:

i.“Conference bridging service” means an ancillary service that links two or more participants in an audio or video conference call and may include the provision of a telephone number. Conference bridging service does not include the telecommunications services used to reach the conference bridge.

ii.“Detailed telecommunications billing service” means an ancillary service of separately stating information pertaining to individual calls on a billing statement.

iii.“Directory assistance” means an ancillary service of providing telephone number information, and/or address information.

iv.“Vertical service” means an ancillary service that is offered in connection with one or more telecommunications services, which offers advanced calling features that allow customers to identify callers and to manage multiple calls and call connections, including conference bridging services.

v.“Voice mail service” means an ancillary service that enables the customer to store, send, or receive recorded messages. Voice mail service does not include any vertical services that may be required to use voice mail service.

2.“Mobile telecommunications service” means commercial mobile radio service, as defined in Section 20.3 of Title 47 of the Code of Federal Regulations and as set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124) and the regulations thereunder.

3.“Prepaid telecommunication service” (including prepaid mobile telecommunication service) shall mean the right to access telecommunication services, which must be paid for in advance and which enables the origination of communications using an access number or authorization code, whether manually or electronically dialed.

4.“Private telecommunication service” means a telecommunication service that entitles the service user to exclusive or priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel or channels. A communications channel is a physical or virtual path over which signals are transmitted between or among customer channel termination points (i.e., the place at which the service user inputs or receives the communications).

5.“Post-paid telecommunication service” means a telecommunication service obtained by making a payment on a communication-by-communication basis either through the use of a credit card or payment mechanism such as a bank card, travel card, credit card, or debit card, or by charge made to a service number which is not associated with the origination or termination of the telecommunication service.

6.“Telecommunications service” means the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points, whatever the technology used. The term “telecommunications services” includes such transmission, conveyance, or routing in which computer processing applications are used to act on the form, code, or protocol of content for purposes of transmission, conveyance or routing without regard to whether such services are referred to as Voice over Internet Protocol (VoIP) services or are classified by the Federal Communications Commission as enhanced or value added, and includes video and/or data services that are functionally integrated with “telecommunication services.” “Telecommunications services” include, but are not limited to, the following services, regardless of the manner or basis on which the charges for such services are calculated or billed: ancillary telecommunication services; intrastate, interstate, and international telecommunication services; mobile telecommunications service; prepaid telecommunication service; post-paid telecommunication service; private telecommunication service; paging service; 800 service; and 900 service. The term “telecommunication services” shall include, but is not limited to, charges for: connection, reconnection, termination, movement, or change of telecommunication services; late payment fees; detailed billing; central office and custom calling features (including but not limited to call waiting, call forwarding, caller identification and three-way calling); voicemail and other messaging services; directory assistance; access and line charges; universal service charges; regulatory or administrative fees, charges or surcharges, including charges or surcharges for programs imposed by state or federal law (whether such charges or surcharges are imposed on the service supplier or the service user); local number portability charges; and text and instant messaging. “Telecommunication services” shall not include digital downloads that are not “ancillary telecommunication services,” such as music, ringtones, games, and similar digital products.

7.“VoIP (Voice over Internet Protocol)” means the digital process of making and receiving real-time voice transmissions over any Internet Protocol network.

8.“800 service” means a “telecommunications service” that allows a caller to dial a toll-free number without incurring a charge for the call. The service is typically marketed under the name “800,” “855,” “866,” “877,” and “888” toll-free calling, and any subsequent numbers designated by the Federal Communications Commission.

9.“900 service” means an inbound toll “telecommunications service” purchased by a subscriber that allows the subscriber’s customers to call in to the subscriber’s prerecorded announcement or live service. “900 service” does not include the charge for: collection services provided by the seller of the “telecommunications services” to the subscriber, or service or product sold by the subscriber to the subscriber’s customer. The service is typically marketed under the name “900” service, and any subsequent numbers designated by the Federal Communications Commission. (Ord. 3558 § 1, 2017)

a.There is hereby imposed a tax upon every person in the City, other than an electrical corporation or a gas corporation, using electrical energy for industrial, commercial or any use other than services to the person’s principal place of residence, a tax at the rate of 5% of the charges made for said service.

Persons using electrical energy for their principal place of residence shall pay a tax in the amount of 2% of the charges made for said service. The tax shall be paid by the person or persons responsible for payment of the service.

b.As used in this Section, the words “using electrical energy” shall not be construed to mean the use of such energy from a storage battery; provided, that such term shall include the receiving of such energy for the purpose of using it in the charging of storage batteries.

c.As used in this Section, the words “using electrical energy” shall not be construed to mean the receiving of such energy by an electrical corporation or a governmental agency at a point within the City for resale.

d.The tax imposed in this Section shall be collected from the service user by the person selling such electrical energy. The amount of tax collected in one month shall be remitted to the Finance Department on or before the last day of the following month.

a.There is hereby imposed a tax upon every person in the City, other than a gas corporation or an electrical corporation, using gas service for industrial, commercial or any use other than services to the person’s principal place of residence, a tax at the rate of 5% of the charges made for said service.

Persons using gas service for their principal place of residence shall pay a tax in the amount of 2% of the charges made for said service. The tax shall be paid by the person or persons responsible for payment of the service.

b.As used in this Section, the word “charges” shall not include charges made for gas used in the generation of electrical energy by a public utility or a governmental agency.

c.As used in this Section, the words “using gas” shall not be construed to mean the receiving of such gas by a gas corporation or a governmental agency at a point within the City for resale.

d.The tax imposed in this Section shall be collected from the service user by the person selling the gas. The amount of tax collected in one month shall be remitted to the Finance Department on or before the last day of the following month.

a.There is hereby imposed a tax upon every person in the City, other than a water corporation, using water services for industrial, commercial or any use other than services to the person’s principal place of residence, a tax at the rate of 5% of the charges made for said service.

Persons using water service for their principal place of residence shall pay a tax in the amount of 2% of the charges made for said service. The tax shall be paid by the person or persons responsible for payment of the service.

b.The tax imposed in this Section shall be collected from the service user by the person selling the water. The amount collected in one month shall be remitted to the Finance Department on or before the last day of the following month.

Any tax required to be paid by a service user under the provisions of this Article shall be deemed a debt owed by the service user to the City. Any such tax collected from a service user which has not been remitted to the Finance Department shall be deemed a debt owed to the City by the person required to collect and remit. Any person owing money to the City under the provisions of this Article shall be liable to an action brought in the name of the City for the recovery of such amount.

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

a.The tax shall be collected insofar as practicable at the same time as and along with the charges made in accordance with regular billing practices of the service supplier. Except in those cases where a service user pays the full amount of such charges, but does not pay any portion of a tax imposed by this Article, or where a service user has notified a service supplier that he is refusing to pay a tax imposed by this Article which such service supplier is required to collect, if the amount paid by a service user is less than the full amount of the charge and the tax which has accrued for the billing period, a proportionate share of both the charge and the tax shall be deemed to have been paid.

b.The duty to collect tax from a service user shall commence with the beginning of the first regular billing period applicable to that person which starts on or after the operative date of this Article. Where a person receives more than one billing, one or more being for different periods than another, the duty to collect shall arise separately for each billing period.

The tax administrator shall have the power and duty, and is hereby directed, to enforce each and all of the provisions of this Article. The tax administrator shall have the power to adopt rules and regulations not inconsistent with the provisions of this Article for the purpose of carrying out and enforcing the payment, collection and remittance of the taxes imposed by this Article and a copy of such rules and regulations shall be on file and available for public examination in the tax administrator’s office.

The tax administrator may make administrative agreements to vary the strict requirements of this Article so that collection of any tax imposed by this Article may be made in conformance with the billing procedures of a particular service supplier, so long as the overall result of such agreements results in collection of the tax in conformance with the general purpose and scope of this Article. A copy of each such agreement shall be on file and available for public examination in the tax administrator’s office.

a.Taxes collected from a service user which are not remitted to the Finance Department on or before the due dates provided in this Article are delinquent. Any tax billed to a service user, but not paid to the service supplier, shall not be deemed an obligation of the service supplier unless such tax is thereafter paid to the service supplier.

b.In addition to remitting the amount of the tax, any service supplier who fails to remit any tax imposed by this Article within the time required and upon ten days written notice to the service supplier of its failure to remit shall pay a penalty of 10% of the amount of the tax.

c.If the tax administrator determines that the nonpayment by any service supplier of any remittance due under this Article is due to fraud, a penalty of 25% of the amount of the tax shall be added thereto in addition to the penalties stated above.

d.Every penalty imposed under the provisions of this Section shall become a part of the tax required to be remitted.

a.Whenever the tax administrator determines that a service user has deliberately withheld the amount of any tax levied on him by the provisions of this Article from the amounts remitted to a service supplier required to collect the tax, or that a service user has failed to pay the amount of the tax to such service supplier for a period of four or more billing periods, or whenever the tax administrator deems it in the best interest of the City, he shall relieve such person of the obligation to collect taxes due under this Article from certain named service users for specified billing periods. The tax administrator shall notify the service user that he 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 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 service supplier required to collect the tax, or, should the service user have changed his address, to his last known address. If a service user fails to remit the tax to the tax administrator within 15 days from the date of the service of the notice upon him, which shall be the date of mailing of service is not accomplished in person, a penalty of 25% of the amount of the tax set forth in the notice shall be imposed, but not less than $5. The penalty shall become part of the tax herein required to be paid.

b.In addition to the penalties imposed, any service user who fails to pay any tax imposed by this Article shall pay interest at the rate of 1/2 of 1% per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the payment first became delinquent until paid.

If any person fails to file any required statement within the time prescribed, or if after demand therefor made by the tax administrator he fails to file a corrected statement, the tax administrator may determine the amount of tax due from such person by means of such information as he may be able to obtain.

In case such a 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 post office at the City, postage prepaid, addressed to the person so assessed at his last known address. Such person may, within ten days after the mailing or serving of such notice, make application in writing to the tax administrator for a hearing on the amount of the tax. If such application is made, or if application is not made within the time prescribed, the tax administrator shall cause the matter to be set for hearing within 15 days before the City Council. The tax administrator shall give at least ten days notice to such person of the time and place of hearing in the manner prescribed above for the service of notice of assessment. The City Council shall consider all evidence produced and make written notice of its findings thereon, which findings shall be final, shall be served upon the applicant in the manner prescribed above for the service of the notice of assessment.

It shall be the duty of every service supplier required to collect and remit to the City any tax imposed by this Article, to keep and preserve, for a period of three years, all record as may be necessary to determine the amount of such tax such service supplier may have been required to collect and remit to the City, which record the tax administrator shall have the right to inspect at all reasonable times.

a. Filing Claim.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 City under this Article, it may be refunded as provided in subsections (b) and (c) of this Section, provided a claim in writing is filed in accordance with Section 1.8.2 (3350 ; 03/2005).

b. Refund to service supplier.A service supplier may claim a refund or take as credit against taxes collected and remitted an amount overpaid, paid more than once or erroneously or illegally collected or received.

c. Refund to service user.Any service user 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 service user having paid the tax to the service supplier establishes to the satisfaction of the tax administrator that the service user has been unable to obtain a refund from the service supplier who collected the tax.

d. Proof required.No refund shall be paid under the provisions of this Section unless the claimant establishes his right thereto by written records showing entitlement thereto.

Nothing contained in this Article is intended to conflict with the applicable rules, regulations and tariffs of any service supplier subject to the jurisdiction of the State Public Utilities Commission. In the event of any conflict, the provisions of such rules, regulations and tariffs shall control.

a.Notwithstanding the provisions of subsection (a) of Sections 35-43 and 35-44, the tax imposed under said sections shall not be imposed upon any person using electrical and gas services who qualifies for and participates in the local electrical and gas corporation “Low Income Rate Assistance” program (LIRA). (Ord. 3558 § 2, 2017)