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HomeMy WebLinkAboutNS-2952 - Adding Article VII to Chapter 35 of Santa Ana Municipal Code Related to Transactions and Use TaxORDINANCE NO. NS -2952 AN ORDINANCE OF THE CITY OF SANTA ANA ADDING ARTICLE VII TO CHAPTER 35 OF THE SANTA ANA MUNICIPAL CODE RELATED TO A TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION The City Council of the City of Santa Ana does ordain as follows: SECTION 1. Authority. The City Council and the Voters of the City of Santa Ana enact this ordinance in accordance with the authority granted to cities by Article XI, Section 7 of the California Constitution and Section 7285.9 of the California Revenue and Taxation Code. SECTION 2. Addition of article. Article VII is hereby added to Chapter 35 of the Santa Ana Municipal Code to read as follows: CHAPTER 35- TAXATION ARTICLE VII. - TRANSACTIONS AND USE TAX, Sec. 35-200. - Short title. This article shall be known as the "Transactions and Use Tax" and shall be applicable in the incorporated territory of the City of Santa Ana ("city"). Sec. 35-201. - Definitions. For the purpose of this article the following words terms shall have the meaning given in this section: "In the city" means and includes all territory within the city limits. "Operative Date" means the first day of the first calendar quarter commencing more than 110 days after the later of the adoption of this chapter and the approval by the voters of the city of a measure approving the imposition of an increased transactions and use tax; provided that, if the city shall not have entered into a contract with the California Department of Tax and Fee Administration as required by section 35-203. prior to such date, the operative date shall be the first day of the first calendar quarter following the execution of such a contract. Sec. 35-202. - Purpose. This article of the Santa Ana Municipal Code has been adopted for the following purposes, and directs that the provisions hereof be interpreted in order to accomplish those purposes: Ordinance No. NS -2952 Page 1 of 8 (1) To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2, which authorizes the city to adopt this tax. This article shall be operative if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose. (2) To adopt a retail transactions and use tax that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code. (3) To adopt a retail transactions and use tax that imposes a tax and provides a measure therefor that can be administered and collected by the California Department of Tax and Fee Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes. (4) To adopt a retail transactions and use tax that can be administered in a manner that will, to the greatest degree possible, be consistent with the provisions of Parts 1.6 of Division 2 of the said Revenue and Taxation Code, and thereby minimize the cost of collecting city transactions and use taxes, and at the same time minimize the burden of record keeping upon person's subject to taxation under the provisions thereof. Sec. 35-203. - Contract with state. Prior to the operative date, the city shall contract with the California Department of Tax and Fee Administration to perform all functions incidental to the administration and operation of this transactions and use tax ordinance. If the city has not contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract. The city council may make any technical amendments to this chapter required by the California Department of Tax and Fee Administration, except for any changes affecting the tax rate, tax methodology, or its manner of collection. Sec. 35-204. - Imposition of transactions and use tax — Rate. Forthe privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the city at the rate of one and one half cents (1.5) of any gross receipts of the retailer from the sale of all tangible personal property sold at retail in the city on and after the operative date of this article until March 31, 2029 and then at the rate of one cent (1) until March 31, 2039. Ordinance No. NS -2952 Page 2 of 8 Sec. 35-205. - Place of sale. For the purposes of this article, all retail sales are consummated at the place of business of the retailer, unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the state or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration. Sec. 35-206.- Imposition of use tax — Use tax rate. An excise tax is hereby imposed on the storage, use, or other consumption in the city of tangible personal property purchased from any retailer on or after the operative date of this article, at the rate of one and one-half cents (1.5) of the sales price of the property subject to the tax until March 31, 2029 and then at the rate of one cent (1) of the sales price of the property subject to the tax until March 31, 2039. The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made. Sec. 35-207. - Adoption of provisions of state law — Generally. Except as otherwise provided in the article and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with § 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this article as though fully set forth herein. Sec. 35-208. - Adoption of provisions of state law — Limitations; Limitations on collection of use taxes. In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code: (1) Wherever the State of California is named or referred to as the taxing agency, the name of this city shall be substituted therefor. However, the substitution shall not be made when: (A) The word "State" is used as a part of the title of the State Controller, State Treasurer, State Board of Control, State Board of Equalization, State Treasury, or the Constitution of the State of California; (B) The result of that substitution would require action to be taken by or against this city or any agency, officer, or employee thereof rather than by or against the California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this article. Ordinance No. NS -2952 Page 3 of 8 (C) In those sections, including, but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to: (i) Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the state under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or; (ii) Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code. (D) In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code. (2) The word "city" shall be substituted for the word "State" in the phrase "retailer engaged in business in this State" in Section 6203 and in the definition of that phrase in Section 6203. Sec. 35-209. - Permit not required. If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor's permit shall not be required by this article. Sec. 35-210. - Exemptions and exclusions. (1) Measure of Tax. There shall be excluded from the measure of the transactions and use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city and county, or county pursuant to the Bradley - Burns Uniform Local Sales and Use Tax Law or the amount of any state - administered transactions or use tax. (2) Transactions Tax Exemptions. There are exempted from the computation of the amount of transactions tax the gross receipts from: (A) Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government. (B) Sales of property to be used outside the city which is shipped to a point outside the city, pursuant to the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this paragraph, delivery to a point outside the city shall be satisfied: Ordinance No. NS -2952 Page 4 of 8 (i) With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code by registration to an out -of -city address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and (ii) With respect to commercial vehicles, by registration to a place of business out -of -city and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address. (C) The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date. (D) A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date. For the purposes of subsections (2)(C) and (2)(D) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised. (3) Use Tax Exemptions. There are exempted from the use tax imposed by this chapter, the storage, use or other consumption in this city of tangible personal property: (A) The gross receipts from the sale of which have been subject to a transactions tax under any state -administered transactions and use tax ordinance. (B) Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California. (C) If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date. (D) If the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase Ordinance No. NS -2952 Page 5 of 8 of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date. For the purposes of subsections (3)(C) and (3)(D) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised. (4) Exemption from Collection of Use Tax. Except as provided in subsection (5), a retailer engaged in business in the city shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the city or participates within the city in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the city or through any representative, agent, canvasser, solicitor, subsidiary, or person in the city under the authority of the retailer. (5) Retailer Not Exempt from Collection of Use Tax. "A retailer engaged in business in the city" shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the city. (6) Credit Against Use Tax for Transactions Tax Paid Elsewhere. Any person subject to use tax under this chapter may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax. Sec. 35-211. - Adoption of amendments to state law. All amendments subsequent to the effective date of this chapter to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this article, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this article. Sec. 35-212. - Enjoining collection prohibited. No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against the State or the city, or Ordinance No. NS -2952 Page 6 of 8 against any officer of the State or the city, to prevent or enjoin the collection hereunder, or Parts 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected. Sec. 35-213. —Termination. The authority set forth in this Article VII to impose a retail transactions and use tax shall continue until March 31, 2039. Sec. 35-214. - Oversight committee. The City Council shall, by resolution establish as citizen oversight committee to act in an advisory role to the City Council in reviewing the annual revenue and expenditures of funds from the tax authorized by this article. The resolution shall establish the committee members' terms, qualifications and duties, and the committee's scope of authority. Sec. 35-215. - Annual Audit. An annual audit of the revenue generated by the sales and use tax and the expenditures made will be conducted by an independent certified public accountant. Sec. 35-216. - Annual Expenditures Disclosure. The City of Santa Ana will publically disclose on an annual basis a list of expenditures made with sales and use tax monies for the preceding fiscal year. Sec. 35-217. — Sunset Provision. On March 31, 2029, the rate of one and one half cents (1.5) will be reduced to one cent (1) until March 31, 2039 for a total of twenty (20) years. SECTION 3. Effective Date. Pursuant to the California Constitution Article XIIIC(2)(b) and California Elections Code 9217, if the requisite number of qualified voters voting in the election on Measure "X" vote in favor of the adoption of such measure, this ordinance shall be deemed valid and binding and shall be considered adopted upon the date that the vote is declared by the City Council, and shall go into effect ten (10) days after that date. SECTION 4. Severability. If any section, sentence, clause or phrase of this ordinance is for any reason held to be invalid or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining provisions of this Ordinance. The People of the City of Santa Ana hereby declare that they would have adopted this Ordinance irrespective of the invalidity of any particular portion thereof and intends that the invalid portions should be severed and the balance of the Ordinance be enforced. SECTION 5. Certification/Summary. Following the City Clerk's certification that the citizens of Santa Ana have approved this Ordinance, the Mayor shall sign this Ordinance and the City Clerk shall cause the same to be entered in the book or original Ordinance No. NS -2952 Page 7 of 8 ordinance of said City; and shall cause the same, or a summary thereof, to be published as required by law. PASSED, APPROVED, and ADOPTED by the People of the City of Santa Ana this 6th day of November, 2018. APPROVED AS TO FORM: Sonia R. Carvalho City Attorney AYES Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers Benavides, Martinez Pulido Sarmiento, Solorio, Tinaiero Villeaas (7) None (0) None (0) NOT PRESENT: Councilmembers None (0 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS -2952 to be the original ordinance adopted by the voters of the City of Santa Ana on November 6, 2018 and certified by the City Council on December 11, 2018. Date:—L7 � & Maria D. Huizar Clerk of the Council City of Santa Ana Ordinance No. NS -2952 Page 8 of 8