ORD 443 ORDINANCE NO. 443
AN ORDINANCE OF THE CITY OF RANCHO PALOS VERDES AMENDING
CHAPTER 3.30 OF THE RANCHO PALOS VERDES MUNICIPAL CODE
RELATING TO THE APPLICATION OF THE TELEPHONE USER TAX.
WHEREAS, the City of Rancho Palos Verdes has lawfully imposed a utility user
tax on telephone communication services since 1993; and
WHEREAS, for ease of administration and the convenience of the telephone
communication service providers, the Rancho Palos Verdes Municipal Code defines "telephone
communications services" by referring to federal excise tax law administered by the Internal
Revenue Service and has for many years administered its tax on telephone communication
services consistent with the application of the Federal Excise Tax; and
WHEREAS, administration and application of the Federal Excise Tax has been
and continues to be the purview of the Internal Revenue Service; and
WHEREAS, until May 25, 2006, the Internal Revenue Service had administered
and applied the Federal Excise Tax in a manner consistent with both Revenue Ruling 79-404
and the manner in which the City intended to administer and apply its tax on telephone
communication services, including applying the Federal Excise Tax to long-distance charges
which varied in amount with either distance or elapsed transmission time of the involved
communication; and
WHEREAS, on May 25, 2006, the Internal Revenue Service issued Notice 2006-
50 which announced that after July 31, 2006, the Internal Revenue Service would no longer
apply the Federal Excise Tax to long-distance charges and bundled long-distance unless the
charges vary in amount with both distance and elapsed transmission time; and
WHEREAS, it has always been and continues to be the City's intent that its tax
on telephone communication services be applied to: (1) long-distance charges which vary in
amount either by elapsed transmission time or with distance, or both, and (2) to bundled long-
distance and local charges provided under a single plan that does not separately state the
charges for local telephone services; and
WHEREAS, the interpretation of the Federal Excise Tax embodied in IRS Notice
2006-50 is inconsistent with both the original legislative intent of the City's telephone user tax
and the manner in which the City has historically imposed its telephone user tax; and
WHEREAS, the City Council wishes to continue to impose the utility user tax on
telephone communication services in a manner that is consistent with how it has been
historically imposed; and
WHEREAS, the ordinance merely clarifies and restates the type of telephone
service that is subject to the tax without reference to the Federal Excise Tax and does not
increase the tax or change or expand the type of telephone services that are subject to the tax;
and
WHEREAS, Rancho Palos Verdes Municipal Code Section 3.30.130 H expressly
requires application of the utility user tax to bundled charges, and that provision is not changed
by this ordinance;
NOW, THEREFORE THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY ORDAIN AS FOLLOWS:
Section 1. Title 2 of the Rancho Palos Verdes Municipal Code is hereby
amended by amending Section 3.30.020(I) of Chapter 3.30 to read as follows:
"I. `Telephone communication services' means any local or long-distance telephone service for
which there is a charge, regardless of the means or technology used to provide such service,
and shall include any telephonic type and quality of communication for the purpose of
transmitting messages or information [including but not limited to voice, both analog and digital,
including the use of the Internet Protocol ("IP") or other similar means for digitization or
packetization of telephonic quality communications for transmission via digital networks, in part
or in whole; telegraph; teletypewriter; data; facsimile; video; or text] by electronic, radio or
similar means through "interconnected service" with the "public switched network" [as these
terms are commonly used in the Federal Communications Act and the regulations of the
Federal Communications Commission], whether such transmission occurs by wire, cable, cable
modem or digital subscriber line ("DSL"), internet, fiber-optic, light wave, laser, microwave, radio
wave [including but not limited to mobile telecommunications service, cellular service,
commercial mobile service and commercial radio service, personal communications service
("PCS"), specialized mobile radio ("SMR") and other similar services, regardless of radio
spectrum used], switching facilities, satellite or any other similar facilities, and irrespective of
whether charges for such service are based on time, distance, or any other basis. `Telephone
communications services' shall not include "private mobile radio service" (as defined in Part
20.3 of Title 47 of the Code of Federal Regulations) or"private mobile service" (as defined in 47
U.S.C.A. Section 332(d)(3)) and any other service that is not interconnected to the public
switched network."
Section 2. Title 2 of the Rancho Palos Verdes Municipal Code is hereby
amended by amending Section 3.30.040 of Chapter 3.30 to read as follows:
"Section 3.30.040 Telephone user tax.
A. There is imposed a tax upon the amounts paid for intrastate, interstate, including
the District of Columbia, or international telephone communication services, including cellular
telephone services and other telephone services that gain access to the public switched
network by means of various technologies, by every person using such services in the city. The
tax imposed by this section shall be at the rate of three percent of the charges made for such
services and shall be paid by the person paying for such telephone services. Said tax shall
apply to all such charges billed to a telephone account having a situs in the city, irrespective of
whether a particular telephone service originates or terminates within the city. The situs shall be
the service address, if known, otherwise the situs shall be the billing address.
B. Notwithstanding the provisions of subsection A of this section, the tax imposed under
this section shall not be imposed upon any person for using the following intrastate, interstate,
or international telephone communications services :
Ordinance No. 443
Page 2 of 4
(1) Service paid for by inserting coins in coin-operated telephones available with
respect to local telephone service, or with respect to toll telephone service, except that where
such coin-operated telephone service is furnished for a guaranteed amount, the amounts paid
under such guarantee plus any fixed monthly or other periodic charge shall be subject to the
tax.
(2) Except with respect to local telephone service, services used in the collection of
news for the public press, or a news ticker service furnishing a general news service similar to
that of the public press, or radio broadcasting, or in the dissemination of news through the public
press, or a news ticker service furnishing a general news service similar to that of the public
press, or by means of radio broadcasting, if the charge for such service is billed in writing to
such person.
(3) Services furnished to an international organization, or to the American National
Red Cross.
(4) Any toll telephone service which originates within a combat zone and is from a
member of the Armed Forces of the United States performing service in such combat zone;
provided a certificate, setting forth such facts as the Secretary may by regulations prescribe, is
furnished to the person receiving such payment.
(5) Any toll telephone service which entitles the subscriber, upon payment of a
periodic charge (determined as a flat amount or upon the basis of total elapsed transmission
time), to the privilege of an unlimited number of telephonic communications to or from all or a
substantial portion of the persons having telephone or radio telephone stations in a specified
area which is outside the local telephone system area in which the station provided with this
service is located, that is for use by a common carrier, telephone or telegraph company, or radio
broadcasting station or network in the conduct of its business as such.
(6) The installation of any instrument, wire, pole, switchboard, apparatus, or
equipment as is properly attributable to such installation.
(7) Amounts paid by a nonprofit hospital for services furnished to such organization.
(8) Services or facilities furnished to the government of any State, or any political
subdivision thereof, or the District of Columbia.
(9) Services or facilities paid for by a nonprofit educational organization and
furnished to such organization. For purposes of this subsection, the term NONPROFIT
EDUCATIONAL ORGANIZATION means an educational organization described in Section 1
70(b)(1 )(A)(ii) of the Internal Revenue Code which is exempt from income tax under Section
501(a) of the same code. The term also includes a school operated as an activity of an
organization described in Section 501 (c)(3) of the Internal Revenue Code which is exempt from
income tax under Section 501(a) of the same code, if such school normally maintains a regular
faculty and curriculum and normally has a regularly enrolled body of pupils or students in
attendance at the place where its educational activities are regularly carried on."
Section 3. Because the provisions of the Rancho Palos Verdes Municipal
Code, as amended by this ordinance, do not alter the amount of the City's telephone user tax,
Ordinance No. 443
Page 3 of 4
do not expand the application of the tax, and are substantially the same as the previous
provisions of the Code as they read immediately prior to the adoption of this ordinance, the
amendments made by this ordinance shall be construed as continuations of the earlier
provisions and not as new enactments.
Section 4. The City Council declares that, should any provision, section,
paragraph, sentence, or word of this ordinance be rendered or declared invalid by any final
action in a court of competent jurisdiction, or by reason of any preemptive legislation, the
remaining provisions, sections, paragraphs, sentences and words of this ordinance shall remain
in full force and effect.
Section 5. The City Clerk shall cause this Ordinance to be posted in three (3)
public places in the City within fifteen (15) days after its passage, in accordance with the
provisions of Section 36933 of the Government Code. The City Clerk shall further certify to the
adoption and posting of this Ordinance, and shall cause this Ordinance and its certification,
together with proof of posting, to be entered in the Book of Ordinances of the Council of this
City.
PASSED, APPROVED and ADOPTED this 5th day of September 2006.
v
► .yor
Attest:
Cit Clerk
State of California )
County of Los Angeles )ss
City of Rancho Palos Verdes)
I, Carolynn Petru, City Clerk of the City of Rancho Palos Verdes, do hereby certify that
the whole number of members of the City Council of said City is five; that the foregoing
Ordinance No. 443 passed first reading on August 15, 2006, was duly and regularly adopted by
the City Council of said City at a regular meeting thereof held on September 5, 2006, and that
the same was passed and adopted by the following roll call vote:
AYES: Clark, Gardiner, Long, and Mayor Wolowicz
NOES: None
ABSENT: Stern
ABSTAIN: None
Cit lerk
Ordinance No. 443
Page 4 of 4
RANCHO
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS AFFIDAVIT OF POSTING
CITY OF RANCHO PALOS VERDES )
The undersigned, being first duly sworn, deposes and says:
That at all times herein mentioned, she was and now is the appointed City Clerk
of the City of Rancho Palos Verdes;
That on September 7, 2006, she caused to be posted the following document
entitled:
ORDINANCE NO. 443 — AN ORDINANCE OF THE CITY OF RANCHO PALOS
VERDES AMENDING CHAPTER 3.30 OF THE RANCHO PALOS VERDES
MUNICIPAL CODE RELATING TO THE APPLICATION OF THE TELEPHONE
USER TAX, a copy of which is attached hereto, in the following locations:
City Hall Ladera Linda Community Center
30940 Hawthorne Blvd. 32201 Forrestal Drive
Rancho Palos Verdes Rancho Palos Verdes
Hesse Park
29301 Hawthorne Blvd.
Rancho Palos Verdes
I certify under penalty of perjury that the foregoing is a true and correct affidavit of
posting.
y Clerk
W:\City Council Ordinances\affidavits\Ordinance 443-Telephone User Tax.doc