San Jose Municipal Code Ch. 4.86 Use Tax Incentive Program

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

A. The person or business is enrolled in the City's Business Cooperation 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 seller's permit pursuant to State Board of Equalization Operations Memo No. 1023 ("Permit").

C. The City of San José 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 San José in business to business transactions.

(Ord. 29408.)

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

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. 29408.)

A. The director of finance 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 business cooperation 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 business cooperation 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 business cooperation 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. 29408.)

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. 29408.)

The use tax incentive program as set forth in this chapter shall be in effect until October 15, 2019, or until such time as the city council takes action to modify this termination date.

(Ord. 29408.)