Laserfiche WebLink
<br />JWF 7/5/06 <br /> <br />ORDINANCE NO. NS-2721 <br /> <br />AN ORDINANCE OF THE CITY COUNCil OF THE CITY <br />OF SANTA ANA AMENDING SECTIONS 35-153(n) AND <br />35-155 OF THE SANTA ANA MUNICPAl CODE MAKING <br />CERTAIN TECHNICAL MODIFICATIONS TO THE UTILITY <br />USERS TAX ON TELEPHONE SERVICES DUE TO <br />CHANGES IN INTERPRETATION OF FEDERAL LAW <br /> <br />THE CITY COUNCil OF THE CITY OF SANTA ANA DOES ORDAIN AS <br />FOllOWS: <br /> <br />Section 1. The City Council of the City of Santa Ana hereby finds, determines <br />and declares as follows: <br /> <br />A. Since 1975 the City of Santa Ana has collected a Users Utility Tax ("UUT") <br />on telephone communication services. Since 1991, the tax rate has been <br />6%. <br /> <br />B. When first adopted, the UUT was enacted with reference to Federal <br />Excise Tax, 26 United States Code SS 4251,4252 and 4253, ("FET") upon <br />local and long distance telephone communication services, as the FET <br />was interpreted by the IRS the Internal Revenue Service's ("IRS"). <br /> <br />C. The reference to the FET in the UUT was intended to be used as a <br />benchmark for purposes of identifying the types of telephone <br />communication services subject to the tax, and those taxpayers exempt <br />from the tax. The FET was not a basis or authority for the City's imposition <br />of the UUT. <br /> <br />D. On May 25, 2006, the IRS issued its Revenue Notice 2006-50 which <br />announced that the IRS was no longer interpreting the FET as applying to <br />wireless communications which were billed based on time only, and not <br />both time and distance. This revenue ruling reversed the historical <br />interpretation and practice of the IRS as it relates to wireless telephone <br />services and further reversed prior IRS Revenue Ruling 79-404 which held <br />that telephone services which are billed based only on time are subject to <br />the FET, and upon which the City relied in collecting the UUT. As a result <br />of Revenue Notice 2006-50, effective August 31, 2006, the FET will no <br />longer be applicable to long distance calls billed on time only, and certain <br />other "bundled" services. <br /> <br />E. The City of Santa Ana does not want to apply the new IRS interpretation <br />to the UUT, but rather continue to apply its UUT to all telephone services <br />as it has historically and consistent with the IRS Ruling 79-404. <br /> <br />Ordinance No. NS-2721 <br />Page 1 of 4 <br />