Morgan Hill Municipal Code Ch. 3.21 Use Tax Incentive Program

Any person or entity doing business in the City of Morgan Hill is eligible for the use tax rebate described herein if all of the following conditions have been satisfied:

A. The person or business is enrolled in the city's use tax incentive program.

B. The person or entity has obtained a State of California Use Tax Direct Payment Permit pursuant to California Revenue and Taxation Code Section 7051.3, or a Sub Sellers Permit pursuant to State Board of Equalization Operations Memo No. 1023 ("permit").

C. The City of Morgan Hill is properly identified in the permit as the jurisdiction in which the property acquired under the permit is first functionally used, stored or consumed, or sold from Morgan Hill in business to business transactions.

(Ord. No. 2250 N.S., § 1, 6-28-2017)

A. Within forty-five days after the close of the state's tax reporting quarter, an eligible person or entity doing business in Morgan Hill may file a rebate claim with the city's finance director, on a form provided by the finance director.

B. The claim must contain evidence of the amount of the use Tax paid to the state. The director may request from the claimant any other information necessary to substantiate the rebate claim.

(Ord. No. 2250 N.S., § 1, 6-28-2017)

A. The finance director shall issue the rebate within ninety days of verification that the city received the correct amount of funds from the state. The use tax rebate shall be based upon the following schedule:

B. The rebate shall be paid by check directly to the claimant but shall be increased or decreased in accordance with any adjustment made by the state to a prior use tax payment by the claimant.

C. Upon enrollment in the use tax incentive program, the city will determine the baseline use tax received by the city from the taxpayer as follows:

1. For direct payment permittees, by averaging the amount of tax received by the city from that taxpayer over the twelve quarters prior to enrollment;

2. For sub sellers permittees, by averaging the amount of tax received from that construction site over the twelve quarters prior to enrollment.

D. "Net new use tax", for the purposes of this chapter, shall mean the difference between the amount of taxes actually received by the city resulting from the taxpayer's permit and the baseline amount as calculated for the taxpayer upon enrollment in the use tax incentive program.

E. The rebate will be paid quarterly based on twenty percent of the net new use tax received in each quarter. After four consecutive quarters, the city will adjust the percentage if warranted, based on the total net new use tax received over the prior four quarters. The rebate amount for the fourth consecutive quarter will reflect the amount attributed to the adjusted percentage, if applicable.

F. For the purposes of this calculation, the quarters are based on the taxpayer's tax reporting calendar, but the calculation is based on the four consecutive quarters immediately following enrollment in the use tax incentive program.

G. Once the rebate has been provided for the fourth consecutive quarter, the calculation of the rebate for the next four quarters will begin again.

(Ord. No. 2250 N.S., § 1, 6-28-2017)

The city reserves the right to amend or discontinue any provision of this use tax incentive program without voter approval. Any amendment shall be made by ordinance and shall be applicable to any transaction made subsequent to the effective date of any ordinance.

(Ord. No. 2250 N.S., § 1, 6-28-2017)