ORDINANCE 1438ORDINANCE NO. 1438
AN INITIATIVE MEASURE AMENDING EL SEGUNDO MUNICIPAL CODE
CHAPTER 3 -7 AND REPLACING THE TELEPHONE TAX REGULATIONS
WITH MODERN COMMUNICATION SERVICES TAX REGULATIONS
AFFECTING COMMERCIAL AND INDUSTRIAL SERVICE USERS.
The people of the city of El Segundo do hereby ordain as follows:
SECTION 1: El Segundo Municipal Code ( "ESMC ") § 3 -7 -1 is amended in its entirety to
read as follows:
"3 -7 -1: DEFINITIONS:
Unless the contrary is stated or clearly appears from the context, the following
definitions govern the construction of the words and phrases used in this
chapter. Words and phrases not defined by this chapter have the meanings
stated elsewhere in this Code, or in accordance with applicable law.
A. "Ancillary telecommunication services" means services associated with or
incidental to providing, use or enjoyment of telecommunication services,
including, without limitation, the following:
"Conference bridging service" means an ancillary service that links
two or more participants of an audio or video conference call and
may include providing a telephone number. Conference bridging
service does not include the telecommunication services used to
reach the conference bridge.
2. "Detailed telecommunication billing service" means an ancillary
service of separately stating information pertaining to individual
calls on a customer's billing statement.
3. "Directory assistance" means an ancillary service of providing
telephone number information or address information.
4. "Vertical service" means an ancillary service offered in connection
with one or more telecommunication services, which offers
advanced calling features that allow customers to identify callers
and to manage multiple calls and call connections, including
conference bridging services.
5. "Voice mail service" means an ancillary service that enables
customers to store, send or receive recorded messages. Voice mail
service does not include any vertical services that the customer
may be required to have in order to utilize the voice mail service
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B. "Billing Address" means the mailing address of the service user where the
service supplier submits invoices or bills for payment by the customer.
C. COGENERATOR: Any corporation, including an electrical corporation, or
commercial or industrial utility user employing cogeneration technology for
producing power from other than a conventional power source for the
generation of electricity.
D. COMMERCIAL OR INDUSTRIAL UTILITY USER: Any commercial or
industrial utility user conducting business as described in title 4, chapter 2
of this code, sections 4 -2 -4, 4 -2 -9, 4 -2 -11, 4 -2 -13, 4 -2 -14, 4 -2 -15, 4 -2 -16,
4 -2 -17, 4 -2 -25, 4 -2 -28, 4 -2 -29, 4 -2 -31, 4 -2 -32, 4 -2 -36, 4 -2 -37, 4 -2 -38, 4 -2-
41, 4 -2 -43, and subsections 4- 2 -20C, 4 -2 -20F and 4 -2 -23C and means
"electrical corporation ", "gas corporation ", and "water corporation ".
E. "Communication Services" means "telecommunication services" and
"ancillary telecommunication services."
F. ELECTRICAL CORPORATION, GAS CORPORATION, AND WATER
CORPORATION: The same meaning as defined in sections 218, 222,
and 241, respectively, of the state Public Utilities Code as said sections
existed on January 1, 1975, except "electrical corporation" is construed to
include any municipality, franchised agency, or cogenerator.
G. "Mobile Telecommunications Service" has the same meaning and usage
as set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. §
124) and the regulations promulgated thereto or any successor statutes or
regulations.
H. MONTH: A calendar month.
"Person" means, without limitation, any natural individual, firm, trust,
common law trust, estate, partnership of any kind, association, syndicate,
club, joint stock company, joint venture, limited liability company,
corporation (including foreign, domestic, and non - profit), municipal district
or municipal corporation (other than the City) cooperative, receiver,
trustee, guardian, or other representative appointed by order of any court.
J. "Place of Primary Use" means the street address representative of where
the service user's use of a communication service primarily occurs, which
must be the business street address of the service user.
K. "Post -paid telecommunication service" means a telecommunication
service obtained by making a payment on a communication-by -
communication basis either through the use of a credit card or payment
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mechanism such as a bank card, travel card, credit card, or debit card, or
by charge made to a service number which is not associated with the
origination or termination of the telecommunication service.
L. "Prepaid telecommunication service" means the right to access
telecommunication services, which must be paid for in advance and which
enables the origination of communications using an access number or
authorization code, whether manually or electronically dialed, and that is
sold in predetermined units or dollars of which the number declines with
use in a known amount.
M. "Private telecommunication service" means a telecommunication service
that entitles the customer to exclusive or priority use of a communications
channel or group of channels between or among termination points,
regardless of the manner in which such channel or channels are
connected, and includes switching capacity, extension lines, stations, and
any other associated services that are provided in connection with the use
of such channel or channels. A communications channel is a physical or
virtual path of communications over which signals are transmitted
between or among customer channel termination points (i.e., the location
where the customer either inputs or receives the communications).
N. "Service Address" means either:
The location of the service user's communication equipment from
which the communication originates or terminates, regardless of
where the communication is billed or paid; or,
2. If the location in Subsection (1) of this definition is unknown (e.g.,
mobile telecommunications service or VoIP service), the service
address means the location of the service user's place of primary
use.
3. For prepaid telecommunication service, "service address" means
the location associated with the service number.
O. SERVICE SUPPLIER: Any entity which receives taxes paid and remits
same as imposed by this chapter.
P. SERVICE USER: A commercial or industrial utility user required to pay a
tax imposed by this chapter.
Q. TAX ADMINISTRATOR: The finance director of the city of El Segundo.
R. "Telecommunication services" means:
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The transmission, conveyance, or routing of voice, data, audio, or
any other information or signals to a point, or between or among
points, whatever the technology used, and includes broadband
services (e.g., T -1, digital subscriber line (eDSQ, fiber optic, coaxial
cable, and wireless broadband, including Wi -Fi, WiMAX, and
Wireless MESH) to the extent federal or state law permits taxation
of such broadband services, now or in the future. The term
telecommunication services includes such transmission,
conveyance, or routing in which computer processing applications
are used to act on the form, code or protocol of the content for
purposes of transmission, conveyance or routing without regard to
whether such services are referred to as voice over internet
protocol (VoIP) services or are classified by the Federal
Communications Commission as enhanced or value added, and
includes video or data services that are functionally integrated with
telecommunication services.
2. Telecommunication services include, without limitation the following
services, regardless of the manner or basis on which such services
are calculated or billed: ancillary telecommunication services:
broadband service (to the extent federal and /or state law permits
taxation of such service); mobile telecommunication service;
prepaid telecommunication service (to the extent that it is
practicable for the service supplier to collect the correct tax
imposed under this Article from the service supplier); post -paid
telecommunication service; private telecommunication service;
paging service; 800 service (or any other toll -free numbers
designated by the Federal Communications Commission); and 900
service (or any other similar numbers designated by the Federal
Communications Commission for services whereby subscribers
who call in to pre- recorded or live service).
3. Telecommunication services also include, without limitation,
charges for connection, reconnection, termination, movement, or
change of telecommunication services; late payment fees; detailed
billing; central office and custom calling features (including without
limitation call waiting, call forwarding, caller identification and three -
way calling); voice mail and other messaging services; directory
assistance; access and line charges; universal service charges;
regulatory, administrative and other cost recovery charges; local
number portability charges; and text. Telecommunication services
do not include digital downloads that are not ancillary
telecommunication services, such as video programming, music,
ringtones, games, and similar digital products."
SECTION 2: ESMC § 3 -7 -7 is amended in its entirety to read as follows:
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"3 -7 -7: Communication services user tax:
A. A tax is imposed upon every service user in the City using communication
services. The maximum tax imposed by this Section is two percent (2 %)
of the charges made for such services and must be collected from the
service user by the communication services supplier or its billing agent.
There is a rebuttable presumption that communication services billed to a
billing or service address in the City are used, in whole or in part, within
the City's boundaries and such services are taxable under this Chapter. if
the billing address of the service user is different from the service
address, the service address of the service user must be used for
purposes of imposing the tax. As used in this Section, the term "charges"
include the value of any other services, credits, property of every kind or
nature, or other consideration provided by the service user in exchange
for the communication services.
B. Mobile Telecommunications Service is sourced in accordance with the
sourcing rules set forth in the Mobile Telecommunications Sourcing Act (4
U.S.C. § 124), regulations promulgated thereto, and any successor
statute or regulation. The Tax Administrator may issue and disseminate
to communication service suppliers, which are subject to the tax collection
requirements of this Chapter, sourcing rules for the taxation of other
communication services including, without limitation, post -paid
communication services, prepaid communication services, and private
communication services, provided that such rules are based upon industry
custom and common practice that further administrative efficiency and
minimize multi - jurisdictional taxation.
C. To prevent actual multi - jurisdictional taxation of communication services
subject to tax under this Section, any service user, upon proof to the Tax
Administrator that the service user previously paid the same tax in another
state or city on such communication services, is allowed a credit against
the tax imposed to the extent of the amount of such tax legally imposed in
such other state or city; provided, however, the amount of credit cannot
exceed the tax owed to the City under this Section.
D. Except as otherwise provided by applicable federal or state law, if any
nontaxable charges are combined with and not separately stated from
taxable service charges on the customer bill or invoice of a service
supplier, the combined charge is subject to tax unless the service supplier
identifies, by reasonable and verifiable standards, the portions of the
combined charge that are nontaxable and taxable through the service
supplier's books and records kept in the regular course of business and in
accordance with generally accepted accounting principles, and not
created and maintained for tax purposes. The service supplier has the
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burden of proving the proper apportionment of taxable and non - taxable
charges.
E. For purposes of imposing a tax or establishing a duty to collect and remit
a tax under this Section, "substantial nexus" and "minimum contacts" are
construed broadly in favor of the imposition, collection or remittance of the
tax to the fullest extent permitted by state and federal law and as it may
change from time to time by judicial interpretation or by statutory
enactment. Any communication service (including VoIP) used by a
person with a service address in the City, which service is capable of
terminating a call to another person on the general telephone network, is
subject to a rebuttable presumption that "substantial nexus /minimum
contacts" exists for purposes of imposing a tax, or establishing a duty to
collect and remit a tax, under this Chapter. A service supplier is deemed
to have sufficient activity in the City for tax collection and remittance
purposes if its activities include, without limitation, any of the following:
maintains or has within the City, directly or through an agent or subsidiary,
a place of business of any nature; solicits business in the City by
employees, independent contractors, resellers, agents or other
representatives; solicits business in the City on a continuous, regular,
seasonal or systematic basis by means of advertising that is broadcast or
relayed from a transmitter with the City or distributed from a location with
the City; or advertises in newspapers or other periodicals printed and
published within the City or through materials distributed in the City by
means other than the United States mail. Upon request, the City must
make available an accurate description of its jurisdictional boundaries
based on street addresses or ZIP Plus Four, in an electronic format. If a
service supplier relies upon such information provided by City, it is not
responsible for any errors in taxation that may result.
F. Satisfaction of Tax Obligation by Service Users. Any person who pays the
tax levied pursuant to this Section with respect to any charge for a
communication service is deemed to have satisfied that person's
obligation to pay the tax levied pursuant to former Section 3 -7 -7 as
codified immediately before adoption of this regulation with respect to that
charge. Likewise, before October 1, 2010, any person who pays the tax
levied pursuant to former Section 3 -7 -7 as codified immediately before
adoption of this regulation is deemed to have satisfied the person's
obligation to pay the tax levied pursuant to this Section with respect to that
charge. The intent of this paragraph is to prevent the imposition of
multiple taxes upon a single utility charge during the transition period from
the previous telephone tax to the new tax (which transition period ends
October 1, 2010) and to permit communication service providers during
that transition period to satisfy their collection obligations by collecting
either tax.
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G. Collection of Tax by Service Supplier. Service Suppliers must begin to
collect the tax imposed by this Section as soon as feasible after the
effective date of the Section, but in no event later than permitted by Public
Utilities Code § 799."
SECTION 3: AMENDMENT OR REPEAL. ESMC § 3 -7 -7 may be repealed or
amended by the City Council without voter approval. However, voter approval is
required for any amendment that would increase the rate of any tax levied pursuant to
this Initiative as required by California Constitution Article XIIIC. Should the provisions
of Government Code §§ 53720 et seq. or California Constitution Article XIIIC be
repealed or amended, or interpreted by the courts so that voter approval is not required
for enacting this Initiative, then this Initiative will take effect as provided for all other City
ordinances and may be amended in the same manner as all other City ordinances.
SECTION 4: RATIFICATION OF PREVIOUS TAX. The People ratify and approve the
past collection of the Telephone Users Tax under ESMC Chapter 3 -7 as it existed
before the effective date of this Initiative.
SECTION 5: INTERPRETATION. This Initiative must be interpreted so as to be
consistent with all federal and state laws, rules, and regulations. If any section, sub-
section, sentence, clause, phrase, part, or portion of this Initiative is held to be invalid or
unconstitutional by a final judgment of a court of competent jurisdiction, such decision
does not affect the validity of the remaining portions of this Initiative. The voters
declare that this Initiative, and each section, sub - section, sentence, clause, phrase,
part, or portion thereof, would have been adopted or passed irrespective of the fact that
any one or more sections, sub - sections, sentences, clauses, phrases, part, or portion is
found to be invalid. If any provision of this Initiative is held invalid as applied to any
person or circumstance, such invalidity does not affect any application of this Initiative
that can be given effect without the invalid application.
SECTION 6: SEVERABILITY. If any portion of this Initiative is held by a court of
competent jurisdiction to be invalid, the remainder of the initiative and the application of
such provision to other persons or circumstances will not be affected thereby. We the
People indicate our strong desire that: (i) the City Council use its best efforts to sustain
and reenact that portion, and (ii) the City Council implement this Initiative by taking all
steps possible to cure any inadequacies or deficiencies identified by the court in a
manner consistent with the express and implied intent of this Initiative, and then
adopting or reenacting such portion as necessary or desirable to permit the planning
and development of the Project.
SECTION 7: CONSTRUCTION. This Initiative must be broadly construed in order to
achieve the purposes stated in this Initiative. It is the intent of the voters that the
provisions of this Initiative be interpreted or implemented by the City and others in a
manner that facilitates the purposes set forth in this Initiative.
SECTION 8: ENFORCEABILITY. Repeal of any provision of the El Segundo Municipal
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Code does not affect any penalty, forfeiture, or liability incurred before, or preclude
prosecution and imposition of penalties for any violation occurring before this Initiative's
effective date. Any such repealed part will remain in full force and effect for sustaining
action or prosecuting violations occurring before the effective date of this Initiative.
SECTION 9: VALIDITY OF PREVIOUS CODE SECTIONS. If this entire Initiative or its
application is deemed invalid by a court of competent jurisdiction, any repeal or
amendment of the ESMC or other city ordinance by this Initiative will be rendered void
and cause such previous ESMC provision or other the city ordinance to remain in full
force and effect for all purposes
SECTION 10: EFFECTIVE DATE. This Initiative will enact and impose a general
tax. Accordingly, it will be submitted to a general election on April 13, 2010 for voter
approval. If a majority of voters vote in favor of this Initiative, it will become valid and
binding ten days after the date that the City Council certifies the election results in
accordance with Elections Code § 9217.
SECTION 11: The Mayor will sign this Initiative and the City Clerk will attest and
certify to the passage and adoption of this Ordinance if a majority of the voters voting in
the City's general election on April 13, 2010 approve the proposition asking whether the
voters approve this Initiative.
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ATTEST:
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS
CITY OF EL SEGUNDO )
I, Cindy Mortesen, City Clerk of the City of El Segundo, California, do hereby
certify that the foregoing Ordinance No. 1438 was duly passed and adopted by
the Ele ^`orate of the City of El Segundo at the General Municipal Election held
on April 13, 2010 by the following vote: YES: 1654; NO: 699.
Cindy McWtesen, City Clerk
...
Mark D. Hensley4ty Attorney
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