City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council adopt the Ordinance amending Chapter 3.08 of
the Culver City Municipal Code, “Utility Users Tax” relating to application of the
Telephone Users Tax.
BACKGROUND/DISCUSSION:
At the City Council meeting of July 24, 2006, the Council introduced the Ordinance
by a unanimous vote (5-0).
The Ordinance is brought back tonight for adoption.
FISCAL ANALYSIS:
None
ATTACHMENTS:
1. Ordinance
MOTIONS:
That the City Council:
Adopt the Ordinance the Ordinance amending Chapter 3.08 of the Culver City
Municipal Code, “Utility Users Tax” relating to application of the Telephone Users
Tax.
Meeting Date: 08/14/06 Item Number: C-8
AGENDA ITEM: Adoption of Ordinance Amending Chapter 3.08 of the Culver City
Municipal Code, “Utility Users Tax” relating to application of the Telephone Users
Tax.
Contact Person/Dept.: Crystal C.
Alexander, City Treasurer
Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: [X]
Public Notification: Master Notification List (08/09/06)
Department Approval: Crystal Alexander
(08/02/2006)
City Manager Approval:
Jerry B. Fulwood (08/09/2006)
City Controller Approval:
Marlee Chang (08/09/2006)
MEETING DATE: August 14, 2006
AGENDA ITEM: Adoption of Ordinance Amending Chapter 3.08 of the Culver
City Municipal Code, "Utility Users Tax" relating to application of the Telephone
Users Tax.
ATTACHMENTS
Pages|109| Ordinance 1-7ORDINANCE NO. 2006-
AN ORDINANCE OF THE CITY OF CULVER CITY,
CALIFORNIA, AMENDING CHAPTER 3.08 OF THE CULVER
CITY MUNICIPAL CODE "UTILITY USERS TAX" RELATING TO
APPLICATION OF THE TELEPHONE USERS TAX.
WHEREAS, the City of Culver City has for many years imposed a tax on
telephone communication services since 1969;
WHEREAS, for ease of administration by the telephone communication
service providers, the Culver City Municipal Code defines "telephone communications
services" by referring to federal excise tax law administered by the Internal Revenue
Service and has for many years administered its tax on telephone communication
services consistent with the application of the Federal Excise Tax;
WHEREAS, administration and application of the Federal Excise Tax has
been and continues to be the purview of the Internal Revenue Service;
WHEREAS, until May 25, 2006, the Internal Revenue Service had
administered and applied the Federal Excise Tax in a manner consistent with both
Revenue Ruling 79-404 and the manner in which the City of Culver City intended to
administer and apply its tax on telephone communication services, including applying
the Federal Excise Tax to long-distance charges which varied in amount with either
distance or elapsed transmission time of the involved communication;
WHEREAS, on May 25, 2006, the Internal Revenue Service issued Notice
2006-50 which announced that after July 31, 2006, the Internal Revenue Service would
no longer apply the Federal Excise Tax to long-distance charges and bundled long-|101010101010101010 10
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28distance unless the charges vary in amount with both distance and elapsed
transmission time;
WHEREAS, it has always been and continues to be the City of Culver City's
intent that its tax on telephone communication services be applied to long-distance
charges which vary in amount with either distance or elapsed transmission time and to
bundled long-distance and local charges provided under a single plan that does not
separately state the charges for local telephone service;
WHEREAS, the City Council does not wish to adopt the Internal Revenue
Service's new interpretation of the definitions of the F.E.T., but rather wishes to continue
to impose the UUT as it has been historically imposed;
WHEREAS, Culver City Municipal Code Section 3.08.210(C) expressly
requires application of the utility users tax to bundled charges and that provision is not
changed by this ordinance; and
WHEREAS, this ordinance is important to the City because the above-
referenced facts increase the possibility of an unplanned reduction of the tax on
telephone communication services, which would result in a reduction in revenues that
are critical to the ensuring the public peace, health and safety, including public safety
services.
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28NOW, THEREFORE, the City Council of the City of Culver City DOES ORDAIN
as follows:
SECTION 1. Section 3.08.210(B) of Chapter 3.08 of the Culver City
Municipal Code is hereby amended to read as follows:
B. Except as otherwise provided herein, TELEPHONE COMMUNICATION
SERVICES shall include local and long-distance telephone service for which there is a
charge, regardless of the means or technology used to provide such services. The tax
imposed under subsection (a), above, shall not be imposed upon any person for using
the following TELEPHONE COMMUNICATION SERVICES:
1. Service paid for by inserting coins in coin-operated telephones
available with respect to local telephone service, or with respect to toll
telephone service if the charge for such toll telephone service is less
than 25 cents; except that where such coin-operated telephone
service is furnished for a guaranteed amount, the amounts paid under
such guarantee plus any fixed monthly or other periodic charge shall
be subject to the tax.
2. Except with respect to local telephone service, services used in the
collection of news for the public press, or a news ticker service
furnishing a general news service similar to that of the public press, or
radio broadcasting, or 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,
if the charge for such service is billed in writing to such person.
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283. Services furnished to an international organization, or to the American
National Red Cross.
4. Any toll telephone service which originates within a combat zone and
is from a member of the Armed Forces of the United States
performing service in such combat zone; provided a certificate, setting
forth such facts as the Secretary may by regulations prescribe, is
furnished to the person receiving such payment.
5. Any toll telephone service which entitles the subscriber, upon
payment of a periodic charge (determined as a flat amount or upon
the basis of total elapsed transmission time), to the privilege of an
unlimited number of telephonic communications to or from all or a
substantial portion of the persons having telephone or radio telephone
stations in a specified area which is outside the local telephone
system area in which the station provided with this service is located,
that is for use by a common carrier, telephone or telegraph company,
or radio broadcasting station or network in the conduct of its business
as such.
6. The installation of any instrument, wire, pole, switchboard, apparatus,
or equipment as is properly attributable to such installation.
7. Amounts paid by a nonprofit hospital for services furnished to such
organization.
-4-8. Services or facilities furnished to the government of any State, or any
political subdivision thereof, or the District of Columbia.
9. Services or facilities paid for by a nonprofit educational organization
and furnished to such organization. For purposes of this subsection,
the term NONPROFIT EDUCATIONAL ORGANIZATION means an
educational organization described in Section 170(b)(1)(A)(ii) of the
Internal Revenue Code which is exempt from income tax under
Section 501(a) of the same code. The term also includes a school
operated as an activity of an organization described in Section
501(c)(3) of the Internal Revenue Code which is exempt from income
tax under Section 501(a) of the same code, if such school normally
maintains a regular faculty 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.
SECTION 2. Pursuant to Section 619 of the City Charter, this
Ordinance shall take effect thirty (30) days after the date of its adoption. Pursuant to
Section 616 of the City Charter, prior to the expiration of fifteen (15) days after the
adoption, the City Clerk shall cause this Ordinance, or a summary thereof, to be
published in the Culver City News and shall post this Ordinance or a summary thereof
in at least three places within the City.
SECTION 3. To the extent the provisions of the Culver City
Municipal Code as amended by this ordinance are substantially the same as the
provisions of that Code as they read immediately prior to the adoption of this ordinance,
then those provisions shall be construed as continuations of the earlier provisions and
not as new enactments.
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28SECTION 4. If any section, subsection, sentence, clause, phrase
or portion of this ordinance is for any reason held to be invalid or unconstitutional by the
decision of any court of competent jurisdiction, such decision shall not affect the validity
of the remaining portions of this ordinance.
SECTION 5. The amendments herein are not intended to make
any change in the way in which the tax is calculated, imposed or administered.
Therefore the changes made by this ordinance do not constitute an increase in the tax
for purposes of Proposition 218. Further, if for any reason any section, subsection,
sentence, clause, phrase or portion of this is held to constitute an increase for purposes
of Proposition 218 or is otherwise held invalid or cannot be implemented according to
its terms, the City Council intends that the ordinance provisions which would have been
amended or affected by this ordinance shall remain in effect as if this ordinance had not
been adopted.
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28SECTION 6. The City Council hereby declares that it would have adopted
this ordinance and each section, subsection, sentence, clause, phrase, or portion
thereof, irrespective of the fact that any one or more sections, subsections, phrases, or
portions be declared invalid or unconstitutional.
APPROVED and ADOPTED this day of , 2006.
GARY SILBIGER, Mayor
City of Culver City, California
ATTEST: APPROVED AS TO FORM:
CHRISTOPHER ARMENTA, CAROL A. SCHWAB,
City Clerk City Attorney
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