city of Chula Vista
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File #: 14-0482    Name: TUT
Type: Consent Item Status: Passed
In control: City Council
On agenda: 8/12/2014 Final action: 8/12/2014
Title: ORDINANCE NO. 3318 OF THE CITY OF CHULA VISTA AMENDING CHAPTER 3.44 OF THE CHULA VISTA MUNICIPAL CODE TO FORMALIZE A RATE REDUCTION IN THE CITY'S TELEPHONE USERS TAX ("TUT") FROM 5% TO 4.75%, TO CLARIFY THAT THE TUT APPLIES TO WIRELESS TELEPHONE USAGE, AND TO ADD STATE LAW VALIDATION PROVISIONS (SECOND READING AND ADOPTION)
Attachments: 1. Item 1 - NOTICE OF PUBLIC HEARING - TUT, 2. Item 1 - TUT Memo from Scott Noya 7-25-2014, 3. Item 1 - Ordinance, 4. Item 1 - Exhibit A - TUT, 5. Item 1 - Exhibit B - TUT, 6. Item 1 - Exhibit C - TUT, 7. Item 1 - Exhibit D - TUT, 8. Item 1 - Exhibit E - TUT, 9. Item 1 - Exhibit F - TUT
Related files: 14-0439
Title
ORDINANCE NO. 3318 OF THE CITY OF CHULA VISTA AMENDING CHAPTER 3.44 OF THE CHULA VISTA MUNICIPAL CODE TO FORMALIZE A RATE REDUCTION IN THE CITY'S TELEPHONE USERS TAX ("TUT") FROM 5% TO 4.75%, TO CLARIFY THAT THE TUT APPLIES TO WIRELESS TELEPHONE USAGE, AND TO ADD STATE LAW VALIDATION PROVISIONS (SECOND READING AND ADOPTION)

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RECOMMENDED ACTION
Recommended Action
Council adopt the ordinance.

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SUMMARY
As you know, the City recently settled a class action lawsuit challenging the City's intrastate telephone communications services tax as it applies to "wireless" telephone usage. This tax is commonly known as the "TUT". In consideration for the dismissal of the case, the City agreed to fund a limited rebate program for TUT amounts paid on wireless telephone service over a three year period, to reduce the TUT rate from 5% to 4.75% starting March 1, 2014, and to clarify the TUT's application to wireless telephone services.

To complete the implementation of the TUT settlement, and to reduce the chances of further misunderstandings regarding the TUT's lawful application to "wireless" telephone usage, this item proposes three revisions to the City's TUT ordinance. The first revision formalizes the agreed upon reduction in the TUT rate from 5% to 4.75%. (This was done administratively back in February, 2014, but still needs to be codified.) The second revision clarifies language in Section 3.44.030(B) of the City's Municipal Code regarding the applicability of the TUT to "mobile telephone service." This proposed revision makes it clear that in 1970, when the City Council excluded "mobile telephone" service from the TUT, their intent was to exclude only "mobile telephone service" as it existed at that time, and as it was then defined under federal law. The third revision adds language that allows the City to legally "validate" the TUT under Chapter 9 of the California Code of Civil Procedure, with any challenges to the TUT also to b...

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