To assist utility Service Suppliers that perform the valuable public service of collecting the City's Utility Users Tax (UUT), City will assume the following responsibilities:
General City responsibilities
- Subsequent to adoption of these administrative rules, City will assure the accuracy of its boundary information needed for utility billing and tax collection purposes, by offering to review and correct the utility Service Supplier's computerized billing data no less than once a year. The City will also make available, upon request by a utility Service Supplier, its current boundary information. The utility Service Supplier shall not be responsible or liable for the collection or payment of any UUT taxes that were due prior to the adoption of these Administrative Rules that were not collected due to the inaccuracy of information provided by the City or due to the City's failure to make appropriate corrections to the utility Service Supplier's billing data to the extent that the City reviewed such data at the request of the utility Service Supplier.
- The City will provide utility Service Suppliers with accurate and timely ordinance information, including ordinance amendments, at a central location (currently the Municipal Resource Web site: http://www.mrc-usa.com). City will provide written notice of ordinance changes to persons designated by the utility Service Supplier. In the absence of special circumstances, as determined by the Tax Administrator in his or her sole discretion, the utility Service Supplier shall begin implementation of the UUT tax change within sixty (60) days from the date on which the utility Service Supplier receives the written notification from the City. If the 60th day is not the first day of a month, then the utility Service Supplier shall implement the changes no later than the first billing cycle of the month following the month in which the 60th day occurs. To "begin implementation" means to calculate and place the UUT tax in the customer billing.
- As provided in Public Utilities Code Section 799, the City will assume sole responsibility for defending any legal challenge regarding the validity of the City's UUT Ordinance, any part thereof, or any collection thereunder, and shall defend and hold harmless any tax collecting agent (utility Service Supplier) named in such action for properly performing its legal obligations set out in the UUT Ordinance.
- The City, in its sole discretion, will reimburse utility Service Suppliers for the reasonable costs associated with an extraordinary audit request (including, but not limited to modifications to existing billing software in order to respond to an audit request).
- The City will take reasonable steps to assure that all utility Service Suppliers, including new market entrants, are correctly applying and collecting the UUT tax.
- To the extent feasible, the City will permit utility Service Suppliers to follow the same payment and remittance protocol for UUT collections that is generally employed by other California public agencies, provided that such protocol is consistent with the City's UUT Ordinance. UUT taxes may be remitted by electronic funds transfer (EFT) in lieu of U.S. Mail, provided that such protocol is agreed to by the Tax Administrator. For example: The utility will initiate an Automated Clearinghouse (ACH) credit transfer on the due date that will be received by the City's bank on the following business day. The ACH will be in a format that identifies the type of payment being made. A monthly written report of amounts remitted, including amounts billed, write-offs, unpaid liability, adjustments and net tax payable will be provided by U.S. Mail.
- Following the effective date of these Administrative Rules, the Tax Administrator shall give notice to the utility Service Suppliers within the City that they may request that the Tax Administrator, in consultation with the City Attorney, render a determination of the application of the UUT tax to their various existing services. If such request is made within ninety (90) days of the notice by the Tax Administrator to the utility Service Supplier of these Administrative Rules, then any determination by the Tax Administrator shall apply prospectively. The Tax Administrator shall give the utility Service Supplier at least sixty (60) days written notice following the determination of tax application before implementation of such changes shall be required. If the 60th day is not the first day of a month, then the utility Service Supplier shall implement the changes on the first day of the month following the month in which the 60th day occurs. To "begin implementation" means to calculate and place the UUT tax in the customer billing. The Tax Administrator and City Attorney shall not be required to render a determination with prospective effect under this subsection where a utility Service Supplier fails to apply the UUT at all, or fails to apply the tax to a service that the utility Service Supplier, in good faith, believes to be taxable. A utility Service Supplier's failure to apply the UUT tax to a service shall not be deemed in good faith, for purposes of this subsection, if the service is predominantly viewed by the utility Service Supplier's industry as being subject to the UUT tax or, in the case of telecommunication services, has been directly determined by the IRS within the past six months or more, to be subject to the federal excise tax.
- Where new utility technologies are employed or new utility services are being offered, a utility Service Supplier may request that the Tax Administrator, in consultation with the City Attorney, render a determination of the application of the UUT tax to such new technology or service within ninety (90) days of providing such services or technologies. Upon rendering a determination of applicability, the Tax Administrator shall seek prospective application of the UUT tax Ordinance to such technologies or services. The Tax Administrator shall give the utility Service Supplier at least sixty (60) days written notice before implementation of such changes shall be required. If the 60th day is not the first day of the month, then the utility Service Supplier shall implement the changes on the first day of the month following the month in which the 60th day occurs. To "begin implementation" means to calculate and place the UUT tax in the customer billing.
- Regarding Paragraphs G and H above, the Tax Administrator, in his or her sole discretion and upon consultation with the City Attorney, may participate in an advisory committee, comprised of representatives of public agencies with UUT ordinances, to develop and recommend to such public agencies (after meeting and conferring with utility representatives): uniform applications of the UUT tax to various utility services and technologies; uniform implementation protocols; and appropriate amendments to UUT ordinances to reflect industry, regulatory, and technological changes.
- The Tax Administrator shall not reduce or waive any obligation to collect any tax or any obligation to pay any penalty pursuant to Santa Monica Municipal Code Sections 6.72.070(d) and 6.72.090(e), unless the affected utility Service Supplier requests a determination as is provided for in Paragraphs G and H above. Pending completion of the requested determination, the utility Service Supplier shall continue to collect all applicable taxes.
- The Tax Administrator shall take reasonable steps to notify all Service Suppliers providing similar services of any determination made under paragraph G. or H.
Outside firm services
The Tax Administrator has the right and obligation to assure fair and reasonable compliance with the UUT Ordinance. Due to the complexity of utility services, technologies, and tax administration, the Tax Administrator may require special outside expertise to assist in performing compliance review of the UUT ordinance. Utility Service Suppliers have a legitimate interest in assuring that such outside firms maintain the confidentiality of utility customer information and conduct their compliance reviews in a professional and efficient manner. The Tax Administrator's use of special outside expertise shall therefore be subject to the following rules:
- The outside firm will provide, at the beginning of each and every audit engagement, a letter or resolution from the City to the Service Supplier that identifies the outside firm as an authorized agent of the City.
- The outside firm will execute a non-disclosure agreement (in a form acceptable to the City Attorney) in which the outside firm shall agree to maintain the confidentiality of customer information and not to use individual customer information for any purpose other than the UUT compliance review of this City.
- The outside firm will not initiate contact with a utility customer in the course of performing its compliance activities, except with the prior written consent of the utility Service Supplier.
- The outside firm shall fully disclose to the City any potential conflict of interest (e.g., prior or proposed representation of private utility customers within the City).
- The outside firm shall not make any data requests of a utility Service Supplier by subpoena unless the outside firm first receives the review and approval of the Tax Administrator prior to the request being made to the utility Service Supplier.
- The outside firm shall be authorized to perform any compliance review (including sampling audits and computerized reviews) which, in its professional opinion, is reasonably necessary to perform its contractual obligation to the City. If a utility Service Supplier refuses to cooperate in connection with such compliance review, the outside firm shall immediately advise the Tax Administrator so that the Tax Administrator may take appropriate remedial steps.
- The outside firm will use its best efforts to accurately identify all errors, whether such corrections are in favor of the customer, the City, another public agency, or the utility Service Supplier.
- The Tax Administrator shall make available to the utility Service Supplier a copy of any compliance report prepared by the outside firm regarding such utility Service Supplier. The utility Service Supplier shall be afforded an opportunity (at least thirty (30) days) to respond to any aspect of the report before such report becomes final. The final report will identify and address all substantive written comments on the draft report submitted by the utility Service Supplier.
Dispute Resolution Process
- If a utility Service Supplier disputes an application of these Administrative Rules, an interpretation of the UUT Ordinance, or any other action by the Tax Administrator (including its outside firm), the protesting utility Service Supplier may request a hearing pursuant to Paragraph B below and in addition to any other request for relief may request to the Tax Administrator that the matter be submitted to voluntary non-binding mediation within thirty (30) days of the Tax Administrator's actions. If the Tax Administrator in his or her sole discretion agrees to submit the matter to voluntary non-binding mediation, and if the matter is not resolved within thirty (30) days following the conclusion of any mediation, the protesting utility Service Supplier may request that the matter be set for a hearing before the City Council at the next available City Council meeting.
- If a hearing before the City Council is requested, the City Council or at the City Council's direction, a hearing officer, shall hear the matter pursuant to Santa Monica Municipal Code Section 6.16.010 et seq. If a hearing examiner hears the matter, the decision of the hearing examiner shall be reviewed by the City Council at the next available City Council meeting following the hearing examiner's decision and shall be accepted, rejected or modified following arguments from all parties concerned. The City Council's decision shall be final and subject to judicial review pursuant to CCP Section 1094.5.