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Discussion of Penalty Amounts for Late Business Tax Filings and for Late Commercial Refuse Bill Payments
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Meeting Date: October 11, 2017
Contact Person/Dept: Jeff Muir/Finance Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [] Attachments: []
Public Notification: (E-Mail) Meetings and Agendas - Finance Advisory Committee (10/06/2017)
Department Approval: Jeff Muir, Chief Financial Officer (10/05/2017)
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RECOMMENDATION
Staff recommends that the Finance Advisory Committee (FAC) discuss the existing late charges for delinquent business tax filings and for late commercial refuse bill payments and provide recommendations to staff.
BACKGROUND/DISCUSSION
The City of Culver City relies upon the payment of taxes and charges for services to fund its operations. Like any other city or business, it is important for the City to receive payments due to it in a timely manner. Late fees are a common strategy, used by both governments and businesses, to encourage timely payments. Aggressive late fees can obviously serve as even more of a deterrent against late payments. In two areas, the City’s late fees seem a little out of step with surrounding (or further) cities. Staff would like to discuss these with the FAC.
Business Tax
Section 11.01.205 of the Culver City Municipal Code (CCMC) states:
“Penalty for nonpayment of a business tax shall be established by resolution of the City Council. This penalty provision shall not be construed to preclude or limit the enforcement of the penal provision of this Chapter.”
As part of the proposed Cannabis Tax Ordinance, staff will also be proposing to establish late penalties for tax filings by City Council resolution, and intends that there would be consistency with the business tax late penalties.
In October 2000, the City Council adopted Resolution 2000-R101. The resolution provides for a late fee of 20% each month up to 100%. Meaning within five months of delinquency, the amount due is doubled. This is an aggressive late fee structure, to say the least, and Finance Department staff is frequently told this by taxpayers. The following is a survey of late fees for business tax filings/payments for surrounding jurisdictions:
Municipality Amount
Culver City 20% per month to 100%
Santa Monica 20% first month, 10% per month after, to 100%
Beverly Hills 10% per month to 50%
WeHo 15% per month to 50%
Inglewood 10% per month to 50%
Los Angeles 5% per month to 20%
El Segundo 20% per month to 100%
Redondo Beach 20% per month to 60%
Manhattan Beach 10% per month
Carson 25% per month after two months, to 50%
Hermosa Beach 10% first month, 5% per month after, to 70%
Torrance 1% every 3 days, up to 50%
Hawthorne 25% per month to 100%
Only Hawthorne and El Segundo are as aggressive as Culver City. Santa Monica ultimately gets to 100% after eleven months. None of the remaining cities reach 100%. Staff would like to solicit feedback and a recommendation from the FAC on a potential revision to the late fees for business tax filings/payments, that would also be applied to Cannabis Tax filings, if it is placed on the ballot and approved by voters.
Commercial Refuse Late Fees
While the City places the bills for residential refuse on the property tax bill, approximately 2,000 commercial accounts are billed monthly. Bills for the preceding month are typically generated on or before the 10th of the following month, and pursuant to CCMC Section 5.01.075, are due by the last day of the month. CCMC Section 5.01.080 established a late charge of 50% for any bill that is not paid by the end of the month. Meaning a payment made one day late is subject to the 50% late fee. Staff cannot find another jurisdiction or utility company with this level of late fee. Again, as one might imagine, this can result in irate customers that Finance Department staff have to deal with.
In 2011, staff did add a provision to the CCMC which allows for a late fee waiver once per year, assuming all other payments were made on time.
Not all surrounding cities provide or bill for trash or utility service, so the following list of late fees was compiled using a survey:
Municipality Amount
Santa Monica 10%
Inglewood 1.50%
Beverly Hills 1.5% / 3%
Seal Beach 10%
Long Beach Greater of $6.00 or 6%
Huntington Beach $7.00
San Clemente 10%
Oceanside 10%
San Luis Obispo Greater of $15.00 or 15%
Oxnard 10%
Chino Hills Greater of $10.00 or 10%
Humboldt 10%
City of Cotati $15.00
Lemoore 10%
Morro Bay 10%
Paso Robles 10%
Rialto $15
Santa Paula 10%
Tehachapi 10%
Vacaville Greater of $10 or 10%
Elk Grove 10% & 1.5% on any amt. Past due 60 days
Galt 10%
Staff would like to solicit feedback and a recommendation from the FAC on a potential revision to the late fees for commercial refuse.
ATTACHMENTS
None
MOTION
That the FAC:
1. Discuss the penalty amounts for late Business Tax filings and for late Commercial Refuse bill payments and provide recommendations to staff.