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<br />CITY COUNCIL MEETING DATE: <br /> <br /> <br />CLERK OF COUNCIL USE ONLY: <br /> <br />REQUEST FOR <br />COUNCIL ACTION <br /> <br />JULY 17, 2006 <br /> <br />TITLE: <br /> <br />APPROVED <br /> <br />ORDINANCE AMENDING UTILITY USERS' <br />TAX DUE TO CHANGE IN INTERNAL <br />REVENUE SERVICE INTERPRETATION OF <br />FEDERAL <br /> <br /> <br />D As Recommended <br />D As Amended <br />D Ordinance on 1" Reading <br />D Ordinance on 2Cd Reading <br />D Implementing Resolution <br />D Set Public Hearing For <br /> <br />CONTINUED TO <br /> <br />--- <br /> <br />FILE NUMBER <br /> <br />RECOMMENDED ACTION <br /> <br />Adopt an ordinance amending Sections 35-153 and 35-155 of the Santa Ana <br />Municipal Code related to the Utility Users' Tax for telephone services. <br /> <br />DISCUSSION <br /> <br />In 1975, the City of Santa Ana first adopted a Utility Users' Tax <br />("UUT") . The impetus for the tax was the need to implement an enhanced <br />crime prevention program and to establish the City's first paramedic <br />service. The UUT was imposed on the use of telephone, electrical, and <br />gas utility services in the City. Since 1991, the tax rate has been 6%. <br /> <br />The telephone tax portion of the UUT references the Federal Excise Tax on <br />telephone services found in 26 United States Code !l!l 4251, 4252, and <br />particularly the exemptions found in !l4253 (the "FET"). The FET is levied <br />upon local and long distance telephone communication services, and the <br />reference to the FET was for the purpose of adopting by reference the <br />limitations and exemptions found in the FET in 1975. It is important to <br />point out that the FET is not a basis or authority for the City's <br />imposition of the UUT. The UUT is levied pursuant to the City's inherent <br />powers as a charter city found in Article XI, Section 7 of the California <br />Constitution. <br /> <br />Over the years, the UUT has been amended to address evolutionary changes <br />in the delivery of particular utility services subject to the tax. In <br />the case of telephone communication services, the tax was amended in 1991 <br />to encompass wireless telephone technologies and to tax interstate and <br />international telephone communications as well as intrastate calls. <br /> <br />With the growth of wireless communications, <br />regarding the application of the FET to long <br />The FET defined long distance or "toll" calls <br />varied according to both the elapsed time of <br />between the persons on the call. Unlike <br /> <br />a national dispute arose <br />distance cell phone calls. <br />as those for which charges <br />the call and the distance <br />traditional "land line" <br /> <br />508-1 <br />