Chapter 4.50

CIGARETTE TAX*

Parts:

• 1 Statutory Provisions

• 2 Local Tax Provisions

Part 1

STATUTORY PROVISIONS

Sections:

or any other tobacco product, after September 25, 1967, the provisions of Part 2 of Chapter 4.50 of this Code relating to the imposition, collection and enforcement of a cigarette tax shall be suspended on and after September 25, 1967, and shall remain suspended and thereafter be of no force and effect so long as the provisions of the Revenue and Taxation Code of the state, as modified by said Chapter 963 and pursuant to which the city is entitled to receive the allocation specified therein of the state cigarette tax revenues, are effective; provided, however, that in the event said Revenue and Taxation Code shall be further amended so that the city is not entitled to receive the allocation of the state cigarette tax revenues specified in said Chapter 963, then the said provisions of said Part 2 of this chapter shall upon the effective date of such amendment become operative and effective; and further provided that in the event the provisions of said Revenue and Taxation Code, as added by said Chapter 963 and pursuant to which the city is entitled to receive the allocation specified therein of the state cigarette tax revenues, are for any reason declared invalid, then and in that event the said provisions of said Part 2 of this chapter shall not be deemed to have been suspended but shall be deemed to have been in full force and effect continuously from and after September 25, 1967. Nothing in this section shall be construed as relieving any person of the obligation to pay the city any cigarette tax accrued and owing by reason of said provisions of said Part 2 of this chapter in force and effect prior to and including September 24, 1967. (Ord. 13797.)

• 4.50.010 State provisions operative - Exceptions.

In order to comply with the requirements of those provisions of Chapter 963 of the Statutes of 1967 which provide that state cigarette tax revenues may not be allocated to any city imposing a selective local tax on, or with respect to, the sale, distribution, use, consumption or holding of cigarettes

*Cross reference— For the state cigarette tax law, see Rev. and Tax. Code § 30001 et seq.

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§ 4.50.040

Part 2

LOCAL TAX PROVISIONS

Sections:

• 4.50.020 Title of Part 2.

• 4.50.030 Purpose and intent of Part 2.

• 4.50.040 Definitions.

• 4.50.050 Tax imposed - Amount - Sale of untaxed cigarettes unlawful.

• 4.50.060 Cigarette distributor - Registration requirements.

• 4.50.070 Cigarette distributor - Records and statements required.

• 4.50.080 Reporting and remitting.

• 4.50.090 Penalties and interest.

• 4.50.100 Director of finance to determine amount of tax when.

• 4.50.110 Appeals - City council authority.

• 4.50.120 Refunds.

• 4.50.130 Tax deemed debt to city - Actions to collect.

• 4.50.140 Acts constituting misdemeanors designated - Penalty for violations.

This Part 2 of Chapter 4.50 shall be known as the "Cigarette Tax Ordinance of the City of San José."

(Prior code § 14000(a).)

It is the purpose and intent of the council that there be a tax imposed on the privilege of distributing cigarettes in the city for the purpose of raising revenues which will be used to defray operating expenses of the city and also to pay, directly or indirectly, the cost of municipal improvements. (Prior code § 14000(b).)

Except where the context otherwise requires, the definitions given in the following subsections govern the construction of this Part 2.

• A. "Cigarette" means any roll for smoking, made wholly or in part of tobacco, irrespective of size or shape and irrespective of whether the tobacco is flavored, adulterated or mixed with any other ingredient, where such roll has a wrapper or cover made of paper or any other material, except where such wrapper is wholly or in the greater part made of tobacco, and such roll weighs over three pounds per thousand.

• B. "City" means the City of San José.

• C. "Director of finance" means the director of finance of the City of San José.

• D. "Distribute" or "distributing" means the act, by a distributor, of transporting cigarettes to which he has title, or causing or allowing such cigarettes to be transported, to a retail outlet in the city.

• E. "Distributor" means a person who, having title to cigarettes, transports them, or causes or allows them to be transported, to a retail outlet in the city.

• F. "Person" 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.

• G. "Retail outlet" means any place or premises in the city (including, without limiting the generality of the foregoing, every kind of store, business establishment, and club in the city) where cigarettes are transferred to the possession of the ultimate consumer thereof, irrespective of how such transfer is consummated, whether through a natural person, by means of a vending machine or other mechanical device, or otherwise.

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§ 4.50.040

• H. "Ultimate consumer" includes any person who acquires possession of cigarettes for his own use or consumption.

• I. "Untaxed cigarette" means any cigarette which has not yet been distributed in such manner as to result in a tax liability under this Part 2.

• J. "Use or consumption" includes the exercise of any right or power over cigarettes incident to the ownership thereof, other than the sale of cigarettes or the receiving, handling or holding thereof for the purpose of sale.

(Prior code §§ 14000.1 - 14000.11.)

An excise tax, at the rate of one and one-half mills ($0.0015) per cigarette, is hereby imposed upon the privilege of distributing cigarettes to retail outlets in the city. Any cigarette with respect to which a tax has once been imposed under this Part 2 shall not be subject upon a subsequent distribution to the tax imposed by this part. Unless the contrary is established, it shall be presumed that all cigarettes distributed in the city are untaxed cigarettes. It shall be unlawful knowingly to sell, transfer, distribute, or give away untaxed cigarettes in the city. (Prior code § 14000.12.)

Within thirty days after the operative date of this part, within thirty days after commencing business, or within thirty days after a change in ownership of a business registered under this part, whichever is later, each distributor of cigarettes shall register with the director of finance on a form provided by him.

(Prior code § 14000.13.)

• A. Every distributor shall keep a complete and accurate record of all cigarettes distributed by

  • him in the city. Such records shall, with respect to each separate distribution, include a written statement containing the name and address of the retail outlet to which distribution is made, the name of the persons who own or operate such retail outlet and to whom title or possession of the distributed cigarettes is transferred, the date of delivery, the quantity of cigarettes, the sales price, the amount of tax imposed under this part, and such other information as the director of finance may reasonably require. All statements and records required by this section shall be in a form satisfactory to the director of finance. They shall be preserved for a period of three years and shall be offered for inspection at any time upon oral or written demand by the director of finance, or his authorized agent.

• B. The director of finance is hereby authorized and directed to offset and deduct from the total amount of tax moneys which may become owing and payable by a distributor to the city under the provisions of this Chapter 4.50 for any calendar month an amount of money equal to one and one-third percent (1.333%) of such total amount of tax moneys owing and payable by such distributor to the city for such month, if such distributor has complied with, and done all things required of him by the provisions of this section to the satisfaction of the finance director. Such offset and deduction shall be deemed reimbursement to the distributor for costs and expenses incurred by him in complying with and doing all things required of him by this section.

• (Prior code § 14000.14.)

• A. The tax imposed under this part shall be due and payable monthly on or before the last day of the calendar month following the calendar month in which the distribution of cigarettes occurs.

  • B. Each distributor shall make a return to the director of finance, on forms provided by said

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§ 4.50.100

• director, of the total number of cigarettes distributed to retail outlets in the city by the distributor during each calendar month, and the amount of tax due thereon. Each such return shall be filed with the director of finance on or before the last day of the calendar month following the close of the calendar month for which the return is made.

• C. At the time the return is filed, the full amount of the tax imposed by this part shall be remitted to the director of finance. The director of finance may establish a shorter reporting period for any distributor if he deems it necessary in order to ensure collection of the tax. Returns and payments are due immediately upon cessation of business for any reason. All returns and payments submitted by each distributor shall be treated as confidential by the director of finance and shall not be released by him except by order of a court of competent jurisdiction or to an official or agent of the United States, the state, the county or the city, for official use only.

(Prior code § 14000.15.)

• A. Original Delinquency Period. Any distributor who fails to remit any tax imposed by this part within the time required shall pay a penalty of ten percent of the amount of the tax in addition to the amount of the tax.

• B. Continued Delinquency. Any distributor who fails to remit any delinquent remittance within one month following the date on which the remittance first became delinquent shall pay a second delinquency penalty of ten percent of the amount of the tax in addition to the amount of the tax and the ten percent penalty first imposed.

• C. Fraud. If the director of finance determines that the nonpayment of any remittance due under this part is due to fraud, a payment of twenty-five 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. Interest. In addition to the penalties imposed, any distributor who fails to remit any tax imposed by this part 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 to be paid by this Part 2.

• F. Penalties During Pendency of Hearing or Appeal. No penalty provided under the terms of this part shall be imposed during the pendency of any hearing which is provided for in Section 4.50.100, nor during the pendency of any appeal to the city council which is provided for in Section 4.50.110.

(Prior code § 14000.16.)

If any distributor fails or refuses, within the time provided for in this part, to make any report and remittance of said tax or any portion thereof required by this part, the director of finance shall proceed to obtain facts and information on which to base his estimate of the tax due. As soon as the director of finance shall procure such facts and information as he is able to obtain upon which to base the assessment of any tax imposed by this part and payable by any distributor who has failed or refused to make such report and remittance, he shall proceed to determine and assess against such distributor the tax, interest and penalties provided for by this part. In case such determination is made, the director of finance 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 distributor so assessed at his last known place of address. Such distributor may, within ten days after the service or mailing of such notice, make application in writing to the director of finance for a hearing on such amount assessed. If application by the distributor for a

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§ 4.50.100

hearing is not made within the time prescribed, the tax, interest and penalties, if any, determined by the director of finance shall become final and conclusive and immediately due and payable. If such application is made, the director of finance shall give not less than five days' written notice in the manner prescribed herein to the distributor to show cause at a time and place fixed in said notice why said amount specified therein should not be fixed for such tax, interest and penalties. At such hearing, the distributor may appear and offer evidence why such specified tax, interest and penalties should not be so fixed. After such hearing, the director of finance shall determine the proper tax to be remitted and shall thereafter give written notice to the distributor 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 days unless an appeal is taken as provided in Section 4.50.110. (Prior code § 14000.17.)

Any distributor aggrieved by any decision of the director of finance with respect to the amount of such tax, interest and penalties, if any, may appeal to the council by filing a notice of appeal with the city clerk within fifteen days of the serving or mailing of the determination of tax due. The council shall fix a time and place for hearing such appeal and the city clerk shall give notice in writing to such distributor at his last known place of address. The findings of the council shall be final and conclusive and shall be served upon the appellant in the manner prescribed above in the service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice.

(Prior code § 14000.18.)

• 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 city under this part, it

may be refunded as provided in subsection B. of this section, provided a claim in writing therefor, stating under penalty of perjury the specific ground upon which the claim is founded, is filed with the director of finance within three years of the date of payment. The claim shall be on forms furnished by the director of finance.

• B. A distributor may claim a refund or take as credit against taxes due but never 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 director of finance that the amount claimed has been overpaid or paid more than once or has been erroneously or illegally collected or received by the city.

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

• (Prior code § 14000.19.)

Any tax required to be paid by a distributor under the provisions of this Part 2 shall be deemed a debt owed to the city. Any person owing taxes under the provisions of this part shall be liable to an action brought in the name of the city for the recovery of such amount. (Prior code § 14000.20.)

• A. Any person violating any provision of this Part 2 shall be guilty of a misdemeanor and shall be punishable by a fine of not more than five hundred dollars or by imprisonment in the county jail for not more than six months or by both such fine and imprisonment.

• B. Any distributor who fails or refuses to register as required in this part, or to furnish any return required to be made, or who fails to furnish or refuses to furnish other data required by the director of finance, or who ren-

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§ 4.52.060

ders a false or fraudulent return or claim, is guilty of a misdemeanor, and is punishable as aforesaid.

Any person required to make, render, sign or verify any report or claim who makes a false or fraudulent report or claim with intent to defeat or evade the determination of any amount due under this part is guilty of a misdemeanor and is punishable as aforesaid.

(Prior code § 14000.21.)