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Santa Clara County, CA November 4, 2014 Election
Measure C
Amend Utility Users Tax
City of Palo Alto

Majority Approval Required

Pass: 16988 / 85.08% Yes votes ...... 2978 / 14.92% No votes

See Also: Index of all Measures

Results as of Dec 28 11:41am, 100.0% of Precincts Reporting (41/41)
Information shown below: Yes/No Meaning | Impartial Analysis | Arguments | Full Text

To ensure continued funding for basic and essential services such as police, fire and street maintenance and repair, shall the City of Palo Alto maintain the telecommunications portion of the Utility Users Tax while reducing the rate from 5% to 4.75%; modernize its provisions to ensure equal treatment of taxpayers regardless of telecommunications technology used; and eliminate a discounted tax rate paid by a small number of commercial large users of gas, electric and water services?

Meaning of Voting Yes/No
A YES vote on this measure means:
A vote "For the Ordinance" will modernize the telecommunications language, reduce the telecommunications tax rate from 5% to 4.75% and eliminate the discount for large users of water, gas and electricity.

A NO vote on this measure means:
A vote "Against the Ordinance" will keep the UUT as it is.

Impartial Analysis from City Attorney
This measure would amend Palo Alto's Utility Users Tax ("UUT") ordinance to: (1) modernize the telecommunications part of the UUT; (2) reduce the telecommunications tax rate from 5% to 4.75%; and (3) eliminate an existing rate discount that applies to a small number of customers who use large volumes of water, gas and electricity.

Palo Alto voters approved the UUT in 1987. Since then there have been no amendments to the ordinance. The UUT represents 7% of the City's general fund revenue. These revenues cannot be taken away by the state. They are used for general local governmental purposes such as police, fire, public works, parks and recreation, library and capital improvements.

This measure would make three changes to the UUT.

First, the measure would modernize the telecommunication part of the UUT to reflect changes in federal law, account for technological advances and treat all technologies equally. In recent years, many cities have modernized the telecommunications part of their UUT ordinances to respond to changes in federal law and to reflect the shift from landline telephones to digital communication technologies such as wireless and VOIP. Federal law does not permit cities to tax internet access and this measure does not alter this. Most wireless carriers are already including the telecommunications tax on users' bills. This measure is not expected to result in significant changes to customer bills.

Second, the measure would reduce the telecommunications tax rate from 5% to 4.75%, for all users.

Third, the measure would eliminate an existing rate discount that benefits the nine largest users of water, gas and electric utilities. These nine "large users" are big businesses or institutions. Eliminating the discount will mean the nine "large users" will pay the same rate that everyone else in Palo Alto already pays.

Reducing the telecommunications tax rate from 5% to 4.75% would result in a small annual revenue reduction that is expected to be offset by revenue increases from elimination of the discount for large users of water, gas and electricity.

The ordinance will become effective if a majority of those voting on the measure vote for it.

A vote "For the Ordinance" will modernize the telecommunications language, reduce the telecommunications tax rate from 5%to 4.75% and eliminate the discount for large users of water, gas and electricity.

A vote "Against the Ordinance" will keep the UUT as it is.

Dated: August 19, 2014

/s/Molly S. Stump
City Attorney

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Arguments For Measure C Arguments Against Measure C
As a result of changes in federal law and advances in technology, Palo Alto's current Utility Users Tax (UUT) needs to be modernized.

NOT A NEW TAX: Our current UUT was enacted in 1987. It has been a steady source of local revenue that helps Palo Alto provide a high level of services to residents. However, the tax was enacted when communication technology was much simpler and the UUT applied primarily to landline telephones. While most cell phones are already covered by the existing ordinance, certain other modern telecommunications are not.

FAIR SHARE: Measure C will ensure that everyone pays, regardless of the telecommunication type or provider they choose.

REDUCES RATE: Although the current rate of 5% is already below the State average of 6%, Measure C reduces the rate to 4.75%.

LOCAL TAX: UUT revenues cannot be taken away by the State. This general tax has provided funds for important City services like fire and rapid emergency response, sidewalk, park, playgrounds, and athletic field maintenance. It also helped with payments to the School District for the historic lease agreement at the former Cubberley High School site which today offers recreation, playing fields, classes, child care and senior services in south Palo Alto.

Most neighboring cities have already modernized their UUT language, and it's time that Palo Alto does too. A NO vote keeps the tax at current levels. Please join Palo Alto City Council and community leaders in voting YES on Measure C to modernize the UUT.

/s/Richard Rosenbaum
Former Mayor

/s/ Liz Kniss
Vice Mayor, Former Mayor

/s/Carolyn Tucher
Former PAUSD President

/s/ Lydia Kou
Resident

/s/Greg Scharff
Council Member

Rebuttal to Arguments For
Proponents say Measure C is "NOT A NEW TAX", but it will be a new or an increased tax for those added to the list of utilities to be taxed.

Proponents say "Our current UUT was enacted in 1987" as though that's a reason to extend it. The Federal government imposed a 3% excise tax in 1898 to pay for the Spanish-American war. That tax ended in 2006 and so should Palo Altos' utility tax.

High taxes are causing businesses and employees to leave California by the droves (over 1,500,000 people left in the last 10 years).

One more tax will be just one more reason for businesses to leave California.

The governor of Texas has run radio and TV ADS in California urging businesses to leave California and move to Texas. And a number of high profile companies have done just that.

Tax proponents want to charge commercial customers a higher rate. But, all businesses have to pass all costs of doing business onto their customers, either locally here in Palo Alto or to other customers from around the world.

So, taxes on businesses are just a hidden tax on their customers, including you.

If so, lets defeat this "hidden" tax increase and send a message to the City Council to cut at least 2% fat from their bloated budget.

Please visit our website: http://www.SVTaxpayers.org/palo-alto-utilitytax

/s/Mark W.A. Hinkle
President: Silicon Valley Taxpayers Association

/s/ Edward Leo Wimmers
Chair, Libertarian Party of Santa Clara County

As a taxpayer, you pay for services provided by the City via a number of different taxes, one of them being a Utility User Tax.

As an individual, if you want a service or product, you would expect to have to pay for it with your money.

Being a person of good conscience, you wouldn't force anyone else to pay for the goods and services you want. Right?

And you wouldn't hire someone else to steal money to pay for those goods and services. Right?

But, isn't that what a Utility Tax essentially does?

Through taxation, aren't you hiring someone (government agents) to force other people to pay for goods and services you want?

And if it is wrong for you as an individual to take money from others, against their will, isn't also wrong to hire someone to do essentially the same thing on your behalf?

The Palo Alto Utility User Tax wants to increase the tax on "someone else" so they can continue to provide you with services you presumably want, i.e. police, fire, libraries, etc.

They want to charge commercial customers a higher rate. But, all businesses have to pass all costs of doing business onto their customers, either locally here in Palo Alto or to other customers from around the world.

So, taxes on businesses are just a hidden tax on their customers, including you.

The proponents say "The telecommunications portion of the total UUT revenue is $2.8 million annually or nearly 2 percent of the general fund revenue".

Do you think there's more than 2% waste in the City Government's operations?

If so, lets defeat this "hidden" tax increase and send a message to the City Council to cut at least 2% fat from their bloated budget.

Please visit our website: http://www.SVTaxpayers.org/palo-alto-utilitytax

/s/Mark W.A. Hinkle
President: Silicon Valley Taxpayers Association

/s/ Edward Leo Wimmers
Chair, Libertarian Party of Santa Clara County

Rebuttal to Arguments Against
In 1987 Palo Alto voted for the Utility Users Tax, and now the language needs to be modernized for advances in telecommunications.

This is not a new tax, a NO vote keeps the tax as-is.

A YES vote reduces the tax from 5% to 4.75%.

This tax has been a long-time source of funds for high quality Palo Alto services, totaling over $3 million in 2014.

A YES vote means all users pay their fair share.

Neighboring cities have already updated their ordinance language. Its time Palo Alto did too.

Vote YES and support Measure C

/s/Carolyn Tucher
Former PAUSD President

/s/Greg Scharff
Councilmember & Former Mayor

/s/ Liz Kniss
Vice Mayor

Full Text of Measure C
Ordinance of the Council of the City of Palo Alto Amending Chapter 2.35 of Title 2 of the Palo Alto Municipal Code Relating to the Utility Users Tax

The People of the City of Palo Alto do ordain as follows:

SECTION 1. Chapter 2.35 of the Palo Alto Municipal Code is hereby amended by amending Chapter 2.35 as follows:

Chapter 2.35
UTILITY USERS TAX

2.35.010 Short title.
2.35.020 Tax imposed.
2.35.030 Disposition of tax revenue.
2.35.040 Definitions.
2.35.050 Constitutional exemption.
2.35.060 Electricity users tax.
2.35.070 Gas users tax.
2.35.080 Water users tax.
2.35.090 Telephonecommunications users tax.
2.35.100 Tax rate for high volume service users.
2.35.110 Council authorization to suspend collection of a portion of tax for limited periods of time.
2.35.120 Collection of tax.
2.35.130 Reporting and remitting.
2.35.140 Penalty for delinquency.
2.35.150 Records.
2.35.160 Failure to pay tax-Administrative remedy.
2.35.170 Actions to collect.
2.35.180 Administrative rules, regulations and agreements.
2.35.190 Refunds.
2.35.200 Bundling Taxable Items with Nontaxable Items.

2.35.010 Short title.

This chapter shall be known as the "Utility Users Tax."
(Ord. 3781 1 (part), 1987)

2.35.020 Tax imposed.

There is established and imposed, commencing on the effective date of the ordinance codified in this chapter, a utility users tax at the rate set forth in this chapter.
(Ord. 3781 1 (part), 1987)

2.35.030 Disposition of tax revenue.

The tax imposed by this chapter is for the purpose of raising revenues for the general governmental purposes of the city. All of the proceeds from the tax imposed by this chapter shall be placed in the city's general fund.
(Ord. 3781 1 (part), 1987)

2.35.040 Definitions.

(a) Except where context otherwise requires, the definitions given in this section govern the construction of this chapter:

(1) "City" means the city of Palo Alto.
(2) "Month" means a calendar month.
(3) "Person" means any natural person, firm, association, joint venture, joint stock company, partnership of any kind, club, Massachusetts business or common law trust or society, organization, corporation (foreign and domestic), business trust of any kind, or the manager, lessee, agent, servant, officer or employee of any of them.
(4) "Service supplier" means a person required to collect and remit a tax imposed by this chapter and includes the city's utilities department with respect to a tax imposed on the use of gas, electricity and water and any telephone corporation with respect to the tax imposed on the use of telephone services.
(5) "Service user" means a person required to pay a tax imposed by this chapter.
(6) "Utility tax year" means the period beginning on the effective date of the ordinance codified in this chapter and ending June 30, 1988, for the initial utility tax year. Thereafter, the utility tax year shall be the twelve-month period beginning July 1st and ending June 30th of the next succeeding calendar year.
(7) "Telephone corporaton" means the same as defined in Section 234 of the Public Utilities Code of the state.
(Ord. 3781 1 (part), 1987)

2.35.050 Constitutional exemption.

Nothing in this chapter shall be construed as imposing a tax upon the city of Palo Alto or any other person if imposition of such tax upon that person would be in violation of the Constitution of the United States or that of the state of California or any other statute or regulation that applies to charter cities. The City may adopt an administrative policy to implement this provision.
(Ord. 3781 1 (part), 1987)

2.35.060 Electricity users tax.

(a) There is imposed a tax upon every person in the city using electricity in the city. The tax imposed by this section shall be at the rate of five percent of the charges to a service user made for such electricity by a service supplier, except as provided in Section 2.35.100. Said tax shall be paid by the person paying for such electricity.

(b) "Charges," as used in this section, shall include charges made for metered energy and charges for service, including customer charges, service charges, standby charges, charges for temporary services, demand charges, and annual and monthly charges.

(c) As used in this section, the term "using electricity" shall not be construed to mean the storage of such electricity by a person in a battery owned or possessed by him for use in an automobile or other machinery or device apart from the premises upon which the electricity was received; provided, however, that the term shall include the receiving of such electricity for the purpose of using it in the charging of batteries; nor shall the term include the mere transmission or receiving of such electricity by a governmental agency at a point within the city for resale.
(Ord. 3781 1 (part), 1987)

2.35.070 Gas users tax.

(a) There is imposed a tax upon every person in the city using gas in the city which is delivered through mains or pipes. The tax imposed by this section shall be at the rate of five percent of the charges to a service user made for such gas by a service supplier, except as provided in Section 2.35.100. Said tax shall be paid by the person paying for such gas.

(b) "Charges," as used in this section, shall include charges made for metered gas and charges for service, including customer charges, service charges, demand charges, standby charges, charges for temporary service, and annual and monthly charges.

(c) There shall be excluded from the base on which the tax imposed in this section is computed charges made for gas which is to be resold and delivered through mains or pipes and charges made for gas to be used in the generation of electrical energy by a governmental agency.
(Ord. 3781 1 (part), 1987)

2.35.080 Water users tax.

(a) There is imposed a tax upon every person in the city using water which is delivered through mains or pipes in the city. The tax imposed by this section shall be at the rate of five percent of the charges to a service user made for such water by a service supplier, except as provided in Section 2.35.100. Said tax shall be paid by the person paying for such water.

(b) "Charges," as used in this section, shall include charges for metered water and charges for service, including customer charges, service charges, standby charges, charges for temporary service, and annual and monthly charges.

(c) There shall be excluded from the base on which the tax imposed in this section is computed charges made for water which is to be resold and delivered through mains or pipes and charges made for water used in the generation of electrical energy by a governmental agency.
(Ord. 3781 1 (part), 1987)

2.35.090 Telecommunicationsphone users tax.

(a) There is imposed a tax upon every person in the city, using intrastate telephone communication services in the city, other than a telephone corporation. The tax imposed by this section shall be at the rate of five 4.75 percent of the charges made to a service user for such services by a service supplier and shall be paid by the person paying for such services.

(b) As used in this section, the term "charges" shall not include charges for services paid for by inserting coins in a coin-operated telephone except that where such coin-operated services are furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; nor shall the term "telephone communications services" include land mobile services or maritime mobile services as defined in Section 2.1 of Title 47 of the Code of Federal Regulations, or any amendment or replacement thereof.

(c) The telephone users tax imposed by this section is intended to, and does, apply to all charges billed to a telephone account having a situs in the city, irrespective of whether a particular communication service originates and/or terminates within the city. The situs shall be the service address, if known; otherwise the billing address.

(d) The term "telephone communication services" means refers to that service which provides access to a telephone system and the privilege of telephonic quality communication with substantially all persons having telephone stations which are part of such telephone system. The term "telephone communication services" also refers to that service which provides access to a telephone system for data and/or video to the extent permitted by law. the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points, whatever the technology used, including, but not limited to, traditional telephone service, mobile telecommunications service, and broadband service (e.g., digital subscriber line (DSL), fiber optic, coaxial cable, and wireless broadband, including Wi-Fi, WiMAX, and Wireless MESH) to the extent not prohibited by Federal and/or State law, now or in the future. "Telephone communication services" includes transmission, conveyance, or routing in which computer processing applications are used to act on the form, code or protocol of the content for purposes of transmission, conveyance or routing without regard to whether such service is referred to as voice over internet protocol (VoIP) services or is classified by the Federal Communications Commission as enhanced or value added, and includes video and/or data service that is functionally integrated with "telephone communication services."

(e) The tax imposed by this section applies to all telephone communication services however charged or billed, including, but not limited to prepaid services, post-paid services, 800 services (or any other toll-free numbers), or 900 services.

(f) The tax imposed by this section applies to ancillary telephone communication services, which are those services that enable or enhance access to telephone communication services. Ancillary telephone communication services include, but are not limited to, charges for connection, reconnection, termination, movement, or change of telephone communication services; detailed billing; central office and custom calling features (including but not limited to call waiting, call forwarding, caller identification and three-way calling); voice mail and other messaging services; directory assistance; access and line charges; local number portability charges; text and instant messaging; and conference calls.

(g) "Mobile telecommunication service" means commercial mobile radio service, as defined in Section 20.3 of Title 47 of the Code of Federal Regulations and as set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124) and the regulations thereunder.

(h) "Place of primary use" means the street address representative of where the customer's use of the telephone communications service primarily occurs, which must be the residential street address or the primary business street address of the customer.

(i) "Service address" means either (1) the location of the service user's telephone communication equipment from which the communication originates or terminates, regardless of where the communication is billed or paid; or (2) if the location of the equipment is unknown (e.g., mobile telecommunication service or VoIP service), the service address means the location of the service user's place of primary use; or (3) for prepaid telephone communication service "service address" means the point of sale of the services where the point of sale is within the city, or if unknown, the known address of the service user (e.g., billing address or location associated with the service number), which locations shall be presumed to be the place of primary use.

(j) There is a rebuttable presumption that a telephone communication service, which is billed to a billing or service address in the city, is used, in whole or in part, within the city's boundaries, and such service is subject to taxation under this section. There is also a rebuttable presumption that a prepaid telephone communication service sold within the city is primarily used, in whole or in part, within the city and is therefore subject to taxation under this section. If the billing address of the service user is different from the service address, the service address of the service user shall be used for purposes of imposing the tax. As used in this section, the term "charges" shall include the value of any other services, credits, property of every kind or nature, or other consideration provided by the service user in exchange for the telephone communication service.

(c) Notwithstanding the provisions of subsection (a) of this section, the tax imposed under this section shall not be imposed upon any persons for using intrastate telephone communication services to the extent that the amounts paid for such services are exempt from or not subject to the tax imposed under Division 2, Part 20 of the California Revenue and Taxation Code, or the tax imposed under Section 4251 of the Internal Revenue Code, any amendment or any replacement thereof.
(Ord. 3781 1 (part), 1987)

2.35.100 Tax rate for high volume service users.

(a) The tax rate imposed on electricity, gas and water users in Sections 2.35.060, 2.35.070 and 2.35.080 respectively shall be three percent on all utility charges to a service user exceeding the cumulative amount of $800,000.00 for water, gas and electricity or any combination thereof during any utility tax year and shall be two percent of the amount of utility charges exceeding the cumulative amount of $2,400,000.00 for water, gas or electricity or any combination thereof during any utility tax year.

(b) Commencing on July 1, 1988, and every July 1st thereafter, the director of finance shall annually adjust the three percent and two percent tax rate thresholds specified in subsection (a) of this section by the annual change in the Consumer Price Index, All Urban Consumers, for the San Francisco-Oakland-San Jose Metropolitan Area published by the Bureau of Labor Statistics or any replacement index published by said Bureau ("Index") for the preceding year as illustrated by the following formula:
NT=T (A)/(B)
NT=New threshold for the upcoming utility tax year
T=Current threshold
A=The Index for April preceding the upcoming utility tax year
B=The Index for the previous April.

For example, on July 1, 1988, the thresholds shall be adjusted by multiplying them by the April, 1988, Index divided by the April, 1987, Index.

(c) Where any person can establish to the satisfaction of the director of finance that be is a person responsible for the payment of one or more taxes under this chapter, he may aggregate charges for gas, electricity or water or any combination thereof for purposes of determining the application of the reduced rate pursuant to this section. The city manager shall develop and publish written regulations for determining which person(s) is a service user for the purposes of implementing the lower rates authorized by this section. Such regulations may be amended from time to time.
(Ord. 3781 1 (part), 1987)

2.35.110 Council authorization to suspend collection of a portion of tax for limited periods of time.

The city council may from time to time determine to collect less than the five percent tax imposed by Sections 2.35.060, 2.35.070, 2.35.080 and 2.35.090 from all service users and may suspend a portion of the maximum rates by passage of an ordinance stating:

(a) The council's intention to suspend collection of a portion of said tax;

(b) The duration of the suspension, which in no event shall exceed one year;

(c) The exact portion of the tax, collection of which is being suspended.

This rate suspension shall apply to all service users across the board and shall be in effect for one year from the effective date of said ordinance.
(Ord. 3781 1 (part), 1987)

2.35.120 Collection of tax.

(a) Every service supplier shall collect the amount of tax imposed by this chapter from the service user.

(b) The tax shall be collected insofar as practicable at the same time as, and along with, the collection of charges made in accordance with the regular billing practice of the service supplier. Except in those cases where a service user pays the full amount of said charges but does not pay any portion of a tax imposed by this chapter, or where a service user has notified a service supplier that he is refusing to pay a tax imposed by this chapter which said service supplier is required to collect, if the amount paid by a service user is less than the full amount of the charge and tax which has accrued for the billing period, a proportionate share of both the charge and tax shall be deemed to have been paid.

(c) The duty to collect the tax from a service user shall commence thirty days after the effective date of the ordinance codified in this chapter. If a person receives more than one billing, one or more being for a different period than another, the duty to collect shall arise separately for each billing period.
(Ord. 3781 1 (part), 1987)

2.35.130 Reporting and remitting.

Each service supplier, shall, on or before the last day of each month, make a return to the director of finance, on forms provided by him, stating the amount of taxes billed by the service supplier during the preceding month. At the time the return is filed, the full amount of the tax collected shall be remitted to the director of finance. The director of finance may require further information in the return. Returns and remittances are due immediately upon cessation of business for any reason.
(Ord. 3781 1 (part), 1987)

2.35.140 Penalty for delinquency.

(a) Taxes collected from a service user which are not remitted to the tax administrator on or before the due dates provided in this chapter are delinquent.

(b) Penalties for delinquency in remittance of any tax collected or any deficiency in remittance, shall attach and be paid by the person required to collect and remit at the rate of ten percent of the total tax collected or imposed herein.

(c) The director of finance shall have power to impose additional penalties upon persons required to collect and remit taxes under the provisions of this chapter for fraud or negligence in reporting or remitting at the rate of ten percent of the amount of the tax collected or as recomputed by the director of finance.

(d) Every penalty imposed under the provisions of this section shall become a part of the tax required to be remitted.
(Ord. 3781 1 (part), 1987)

2.35.150 Records.

It shall be the duty of every service supplier required to collect and remit to the city any tax imposed by this chapter to keep and preserve, for a period of three years, all records as may be necessary to determine the amount of such tax as such service supplier may have been required to collect and remit to the city, which records the director of finance shall have the right to inspect at all reasonable times.
(Ord. 3781 1 (part), 1987)

2.35.160 Failure to pay tax-Administrative remedy.

Whenever the director of finance determines that a service user has deliberately withheld the amount of the tax owed by him from the amounts remitted to a service supplier, or that a service user has failed to pay the amount of the tax for a period or four or more billing periods, or whenever the director of finance deems it in the best interest of the city, he shall relieve the service supplier of the obligation to collect taxes due under this chapter from certain named service users for specified billing periods. The director of finance shall notify the service user that he has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes. The notice shall be served on the service user by handing it to him personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to the service user at the address to which billing was made by the service supplier, or, should the service user have changed his address, to his last known address. If a service user fails to remit the tax to the director of finance within fifteen days from the date of the service of the notice upon him, which shall be the date of mailing if service is not accomplished in person, a penalty of twenty-five percent of the amount of the tax set forth in the notice shall be imposed, but not less than $5.00. The penalty shall become part of the tax herein required to be paid.
(Ord. 3781 1 (part), 1987)

2.35.170 Actions to collect.

Any tax required to be paid by a service user under the provisions of this chapter shall be a debt owed by the service user to the city. Any such tax collected from a service user which has not been remitted to the director of finance shall be deemed a debt owed to the city by the person required to collect and remit. Any person owing money to the city under the provisions of this chapter shall be liable to an action brought in the name of the city for the recovery of such amount including applicable penalties and attorneys' fees.
(Ord. 3781 1 (part), 1987)

2.35.180 Administrative rules, regulations and agreements.

The city manager has the authority to adopt rules and regulations not inconsistent with the provisions of this chapter for the purpose of carrying out and enforcing the payment, collection and remittance of any tax herein imposed, and the city manager may also make administrative agreements to vary the strict requirements of this chapter so that the collection of any tax imposed herein may be made in conformance with the billing procedures of a particular service supplier so long as the overall results of such agreements result in collection of the tax in conformance with the general purpose and scope of this chapter. A copy of such rules and regulations and a copy of any such agreement shall be on file and available for public examination in the office of the city clerk. Failure or refusal to comply with any such rules, regulations or agreements promulgated under this section shall be deemed a violation of this chapter.
(Ord. 3781 1 (part), 1987)

2.35.190 Refunds.

(a) Claim Required. Prior to seeking judicial relief with respect to a dispute regarding whether the amount of any tax has been overpaid, paid more than once or erroneously or illegally collected or received by the city under this chapter, an aggrieved taxpayer, fee payer, service supplier, service user or any other person must comply with the provisions of section
2.28.230 of this code.

(b) Service Suppliers. A service supplier may claim a refund or take as credit against taxes collected and 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 service user from whom the tax has been collected did not owe the tax; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charges subsequently payable by the service user to the service supplier.
(Ord. 5078 5, 2010: Ord. 3781 1 (part), 1987)

2.35.200 Bundling Taxable Items with Nontaxable Items.

If any nontaxable charges are combined with and not separately stated from taxable service charges on the customer's bill or invoice of a service supplier, the combined charges are subject to tax unless the service supplier identifies, by reasonable and verifiable standards, the portions of the combined charges that are nontaxable and taxable through the service supplier's books and records kept in the regular course of business, and in accordance with generally accepted accounting principles, and not created and maintained for tax purposes. If the service supplier offers a combination of taxable and non-taxable services, and the charges are separately stated, then for taxation purposes, the values assigned the taxable and non-taxable services shall be based on its books and records kept in the regular course of business and in accordance with generally accepted accounting principles, and not created and maintained for tax purposes. The service supplier has the burden of proving the proper valuation and apportionment of taxable and non-taxable charges.

SECTION 2. General Tax. Proceeds of the tax imposed by this Ordinance shall be deposited in the general fund of the City and shall be available for any legal purpose.

SECTION 3. Amendment or Repeal. The City Council may repeal Chapter 2.35 of the Palo Alto Municipal Code or amend that Chapter without a vote of the people except that any amendment to Chapter 2.35 that increases the amount or rate of tax due from any Person beyond the inflation-adjusted amounts and rates authorized by this Ordinance may not take effect unless approved by a vote of the people.

SECTION 4. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, the remaining portions of this Ordinance shall nonetheless remain in full force and effect. The people hereby declare that they would have adopted each section, subsection, sentence, clause, phrase, or portion of this Ordinance, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions of this Ordinance be declared invalid or unenforceable.

SECTION 5. Effective Date. This ordinance shall be effective only if approved by a majority of the voters and shall go into effect immediately after the vote is declared by the City Council and the duty of service providers to collect the tax shall commence as provided in California Public Utilities Code Section 799.

SECTION 6. Execution. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the voters of the City by signing where indicated below.


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