Utility Users Tax Ordinance

City of Los Angeles, CA
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Article 1.1

Telephone, Electricity and Gas Users Tax
(Added by Ord. No. 135,104, Eff. 10/2/67, Operative 11/1/67.)

Sec. 21.1.1 Definitions

The following words and phrases whenever used in this article shall be construed as defined in this
section:

(a) (Amended by Ord. No. 135,276, Eff. 10/30/67.) "Person" shall mean all domestic and foreign
corporations, associations, syndicates, joint stock companies, partnerships of every kind, joint
ventures, clubs, Massachusetts business or common law trusts, societies, and individuals, and
shall include a municipal corporation.

(b) "Month" shall mean a calendar month.

(c) "Service User" shall mean a person required to pay a tax imposed under the provisions of this
article.

Sec. 21.1.2 Constitutional Exemptions

(Amended by Ord. No. 135,276, Eff. 10/30/67.) Nothing in this article shall be construed as
imposing a tax upon any person when imposition of such tax upon that person would be in
violation of the Constitution of the United States or that of the State of California.

Sec. 21.1.3 Telephone Users Tax

(a) (Amended by Ord. No. 168,874, Eff. 8/9/93 and Ord. No. 171,436, Eff. 1/10/97.) There is
hereby imposed a tax upon every person in the City of Los Angeles using telephone
communication services including services for intrastate, interstate or international calls, services for
mobile cellular telephone communication when the owner or lessee of the telephone has a billing
address in the City, and using any teletypewriter exchange services in the City of Los Angeles. The
tax imposed by this section shall be at the rate of 10 percent of the charges made for such
services and shall be paid by the person paying for such services; provided, however, that as to
any non-profit educational institution, as defined in Subdivision 3 of Subsection (c) of Section
21.190 of this Code, and as to the charges made for services to any independent telemarketing
agency, as defined in Section 21.80 of this Code, incurred solely in performing the functions of an
independent telemarketing agency, the tax imposed by this section shall be at the rate of 5
percent of the charges made for such services. Interstate calls shall be deemed to include calls to
the District of Columbia.

(b) (Amended by Ord. No. 136,501, Eff. 6/8/68.) As used in this section, the term "charges" shall
not include charges for services paid for by inserting coins in coin-operated telephones 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 included in the
base for computing the amount of tax due nor shall the term "telephone communications services"
include land mobile services or maritime mobile services as defined in Section 2.1 of Title 47 of the
Code of Federal Regulations as such section existed on October 1, 1967.

(c) (Amended by Ord. No. 156,573, Eff. 5/10/82 and Ord. No. 162,586, Eff. 8/15/87.) The tax
imposed in this section shall be collected from the service user by the person providing the
telephone communication services or the teletypewriter exchange services. The amount of tax
collected from the 26th day of each month through the 25th day of the following month shall be
remitted to the City Clerk on or before the 26th day of such following month, or, at the option of the
person required to collect and remit the tax, an estimated amount of tax collected, measured by
the billings of the previous month, shall be remitted to the City Clerk on or before the 20th day of
each month.

The City Clerk is authorized, pursuant to Sections 21.1.9(b) and 21.15(h) of the Los Angeles
Municipal Code, to make a rule or regulation to provide the remittance of an estimated amount of
tax collected in any day or days for which the City Clerk determines it would be impracticable for the
person required to collect and remit the tax to know the actual amount collected and to provide for
the adjustment of any such estimated amount in subsequent remittances to reflect the actual
amount collected.

(d) (Amended by Ord. No. 162,586, Eff. 8/15/87.) Notwithstanding the provisions of Subsection (a),
the tax imposed under this section shall not be imposed upon any person for using telephone
communications services or teletypewriter exchange services, to the extent that the amounts paid
for such services are exempt from or not subject to the tax imposed under Sec. 4251 of Title 26 of
the United States Code, as such Section existed on November 1, 1967.

(e) (Added by Ord. No. 168,874, Eff. 8/9/93.) To prevent actual multiple taxation of any service
that is subject to tax under Subsection (a) of this section and which consists of a call that
originates or terminates outside of the City of Los Angeles, any service user, upon proof that such
service user has paid a tax in another taxing jurisdiction on such call, shall be allowed a credit
against the tax imposed in Subsection (a) of this section to the extent of the amount of such tax
properly due and paid in such other taxing jurisdiction. However, no credit may be allowed for any
tax paid to another taxing jurisdiction on any call to the extent that such call may not, under the
Constitution and statutes of the United States, be made the subject of taxation by such other
taxing jurisdiction.

(f) (Added by Ord. No. 171,436, Eff. 1/10/97.) Any person claiming to be an independent
telemarketing agency which has charges subject to tax at the 5 percent rate shall file an
application for rate adjustment with the City Clerk. Such application shall be made on forms
provided by the City Clerk and shall recite facts under oath which qualify the applicant for the 5
percent tax rate. Notwithstanding any other provision of this article, the 5 percent rate shall apply
only to charges for services which were necessarily incurred solely and exclusively for telemarketing
activities. The burden of maintaining records and establishing that any such charge is subject to
tax at the 5 percent rate shall be on the applicant. Charges for all other services shall be subject to
tax at the 10 percent rate.

Sec. 21.1.4 Electricity Users Tax

(a) (Amended by Ord. No. 142,333, Eff. 9/30/71, Oper. 10/1/71 and Ord. No. 171,436, Eff.
1/10/97.) There is hereby imposed a tax upon every person in the City of Los Angeles using
electrical energy in the City of Los Angeles. The tax imposed by this section shall be the rate of 10
percent of the charges made for such energy and shall be paid by the person paying for such
energy, provided, however, that commercial or industrial users of electrical energy shall be subject
to tax and a tax is hereby imposed upon them at the rate of 12.5 percent of the charges made for
such energy, but as to any non-profit educational institution, as defined in Subdivision 3 of
Subsection (c) of Section 21.190 of this Code, the tax imposed by this section shall be at the rate
of 10 percent of the charges made for such energy. "Charges" as used in this section, shall
include charges made for (1) metered energy, and (2) minimum charges for service, including
customer charges, service charges, demand charges, standby charges, and annual and monthly
charges.

The term "commercial or industrial users" as used in this section, is intended to include, but shall
not be limited to, any person who qualifies as a "commercial or industrial" consumer of electrical
energy within the electric rate schedules of the Department of Water and Power of the City of Los
Angeles or the tariff schedules of the Southern California Edison Company, provided however, a
user of electrical energy shall not be considered a "commercial or industrial user" of any electrical
energy supplied to a single family accommodation separately metered or for energy to two or more
individual family accommodations supplied as a unit, upon application under the provisions of the
Department's Domestic Service Schedule D-1, devoted primarily to domestic, residential, household
and related purposes, as distinguished from commercial, professional, and industrial purposes.

(b) (Amended by Ord. No. 135,276, Eff. 10/30/67.) As used in this section, the term "using
electrical energy" shall not be construed to mean that storage of such energy by a person in a
battery owned or possessed by him for use in an automobile or other machinery or device apart
from the premises upon which the energy was received, provided, however, that the term shall
include the receiving of such energy for the purpose of using it in the charging of batteries, nor
shall the term include the mere receiving of such energy by an electric public utility or government
agency at a point within the City of Los Angeles for resale.

(c) (Amended by Ord. No. 156,573, Eff. 5/10/82) The tax imposed in this section shall be collected
from the service user by the person supplying such energy. The amount of tax collected from the
26th day of each month through the 25th day of the following month shall be remitted to the City
Clerk on or before the 26th day of such following month or, at the option of the person required to
collect and remit the tax, an estimated amount of tax collected in each month shall be remitted to
the City Clerk on or before the 26th day of such month.

The City Clerk is authorized, pursuant to Sections 21.1.9(b) and 21.15(h) of the Los Angeles
Municipal Code, to make a rule or regulation to provide for the remittance of an estimated amount
of tax collected in any day or days for which the City Clerk determines it would be impracticable for
the person required to collect and remit the tax to know the actual amount collected and to provide
for the adjustment of any such estimated amount in subsequent remittances to reflect the actual
amount collected.

Sec. 21.1.5 Gas Users Tax

(a) (Amended by Ord. No. 140,627, Eff. 8/1/70 and Ord. No. 169,245, Eff. 1/15/94 and Ord. No.
171,436, Eff. 1/10/97.) There is hereby imposed a tax upon every person in the City of Los
Angeles using in the City gas which is delivered through mains or pipes. The tax imposed by this
section shall be at the rate of 10 percent of the charges made for such gas and shall be paid by
the person paying for such gas, provided, however, that as to any non-profit educational
institution, as defined in subdivision 3 of Subsection (c) of Section 21.190 of this Code, the tax
imposed by this section shall be at the rate of 5 percent of the charges made for such gas. When
gas is transported by, but not purchased from, a transporter, the charges subject to tax shall be
measured by (1) the transportation cost and (2) the cost of the transported gas, which shall be
based on the volume of gas transported multiplied by the core subscription weighted average cost
of gas for the calendar month immediately preceding the calendar month in which the billing period
terminates.

Notwithstanding the foregoing, the tax on the cost of transported gas may be determined by
applying the tax rate to the actual purchase cost, either by the service user applying to the City
Clerk for a refund or the city Clerk billing the service user, for the amount which represents the
difference between the tax paid by the service user to the transporter and the tax determined by
the actual purchase cost of the gas. In a claim for refund, the service user shall provide the City
Clerk with satisfactory evidence of the quantity and cost of the gas purchased from a party other
than the transporter. When the City Clerk believes that direct collection of the tax from the service
user is in the best interest of the City, as provided in Subsection (b) of Section 21.1.10 of this
Code, the transporter, upon request from the City Clerk, shall furnish the City Clerk, with respect to
each service user for whom gas is transported, the name, mailing address, service address, gas
meter number, transportation cost, volume of gas transported and the core subscription weighted
average cost of gas for the calendar month immediately preceding the calendar month in which the
billing period terminates. This information shall be confidential and shall be used only for the
purpose of administering the tax.

(b) (Amended by Ord. No. 135, 276, Eff. 10/30/67.) There shall be excluded from the base on
which the tax imposed in this section is computed charges made for gas which is to be resold and
delivered through main or pipes, charges made for gas sold for use in the generation of electrical
energy by a public utility or a governmental agency; and charges made by a gas public utility for
gas used and consumed in the conduct of the business of gas public utilities.

(c) (Amended by Ord. No. 156,573, Eff. 5/10/82 and Ord. No. 169,245, Eff. 1/15/94.) The gas tax
imposed in this section shall be collected from the service user by the person selling gas or, when
purchased from and transported by separate persons, the tax shall be collected by the transporter.
The amount of tax collected from the 26th day of each month through the 25th day of the
following month shall be remitted to the City Clerk on or before the 26th day of such following
month, or, at the option of the person required to collect and remit the tax, an estimated amount of
tax collected, measured by the billings of the previous month, shall be remitted to the City Clerk on
or before the 26th day of each month.

(d) (Added by Ord. No. 171,119, Eff. 7/21/96, Oper. 1/1/96.) There shall be exempt from the base
on which the tax imposed in this section is computed charges made for gas used for non-utility
purposes. For the purposes of this subsection, the term "gas used for non-utility purposes" shall
mean gas used as a raw material in a manufactured product, and shall exclude gas used to
produce light, heat or power. Any service user claiming an exemption under this subsection shall
file an application with the City Clerk for such exemption. Such application shall be made upon
forms supplied by the City Clerk and shall recite under oath facts which qualify the applicant for an
exemption. The City Clerk shall review each such application, certify as exempt such service
determined to qualify therefor and notify each affected service supplier that such exemption has
been approved, stating the name of the applicant, the address to which such exempt service is
being supplied, the account number, if any, and such other information as may be necessary for
the service supplier to remove the exempt service from the tax billing procedure. Upon receipt of
such notice, the service supplier shall not be required to continue to bill any further tax imposed by
this section for such exempt service until given further notice by the City Clerk.

Sec. 21.1.6. Interest and Penalty

(a) Taxes collected from a service user which are not remitted to the City Clerk on or before the due
dates provided in this article are delinquent.

(b) Interest and penalties for delinquency in remittance of any tax collected, or any deficiency
determination shall attach and be paid by the person required to collect and remit at the rates and
in the same manner as is provided in Sec. 21.05 of this chapter for delinquency in payment of
Business Tax.

(c) The City Clerk shall have power to impose additional penalties upon persons required to collect
and remit taxes under the provisions of this article for fraud and negligence in reporting and
remitting in the same manner and at the same rates as are provided in Sec. 21.05 of this chapter
for such penalties upon persons required to pay Business Tax.

(d) Every penalty imposed and such interest as accrues under the provisions of this section shall
become a part of the tax required to be remitted.

Sec. 21.1.7 Actions to Collect

Any tax required to be paid by a service user under the provisions of this article shall be deemed a
debt owed by the service user to the City. Any such tax collected from a service user which has not
been remitted to the City Clerk shall be deemed a debt owed to the City by the person required to
collect and remit. Any person owing money to the City under the provisions of this article shall be
liable to an action brought in the name of the City for the recovery of such amount.

Sec. 21.1.8 Duty to Collect - Procedures

The duty to collect and remit the taxes imposed by this article shall be performed as follows:

(a) The tax shall be collected insofar as practicable at the same time as and along with the charges
made in accordance with the regular billing practice. If the amount paid by a service user is less
than the full amount of the charge and tax which has accrued for the billing period, a proportionate
share of both the charge and the tax shall be deemed to have been paid.

(b) (Amended by Ord. No. 140,627, Eff. 7/31/70.) The duty to collect tax at the rate of 4 percent
from a service user shall commence with the beginning of the first regular billing period applicable
to that person which starts on or after the operative date of this article. When the rate of the tax is
increased or decreased, the duty to collect at the new rate shall commence with the beginning of
the first regular billing period applicable to that person which starts on or after the effective date of
the new rate. Where a person receives more than one billing, one or more being for different
periods than another, the duty to collect shall arise separately for each billing period.

(c) (Amended by Ord. No. 162,586, Eff. 8/15/87.) The duty to collect the tax based on a measure
including charges for interstate and international communication services or interstate and
international teletypewriter exchange services shall commence with the first regular billing period of
each service user ending on or after October 1, 1987.

(d) (Added by Ord. No. 168,874, Eff. 8/9/93.) The provisions of Subsection (b) of this section
notwithstanding, the duty to collect the tax based on a measure including charges for services for
mobile cellular telephone communication shall commence with the first regular billing period of each
service user ending on or after August 1, 1993.

Sec. 21.1.9 Additional Powers and Duties of City Clerk, etc.

(a) The City Clerk shall have the power and duty, and is hereby directed to enforce each and all of
the provisions of this article.

(b) In administering and enforcing the provisions of this article the City Clerk shall have the same
powers and duties with respect to collecting the tax provided herein as he has under Sec. 21.15 of
this chapter with respect to collecting the Business Tax.

(c) The provisions of Sections 21.17, 21.20 and 21.21 of this chapter shall apply to the
administration and collection of the tax imposed under the provisions of this article in the same
manner as they apply to the administration and collection of the Business Tax.

Sec. 21.1.10 Assessment-Administrative Remedy

(Amended by Ord. No. 136,861, Eff. 8/19/68.)

(a) The City Clerk may make an assessment for taxes not remitted by a person required to remit for
any reason specified in Sec. 21.16 of this chapter for making an assessment for unpaid Business
Tax. The manner of making and providing notice of such assessment; the right to a hearing and
the conduct of such hearing; the preparation and service of findings; filing exceptions; and passing
upon exceptions shall be the same as provided in Sec. 21.16 of this chapter.

(b) Whenever the City Clerk determines that a service user has deliberately withheld the amount of
the tax owed by him from the amount remitted to a person required to collect the tax, or that a
service user has failed to pay the amount of the tax to such person for a period of two or more
billing periods, or whenever the City Clerk deems it in the best interests of the City, he may relieve
such person of the obligation to collect taxes due under this article from certain named service
users for specified billing periods.

The Clerk shall notify the service user that he has assumed responsibility to collect the taxes due
for the stated periods and demand payment of such taxes. The notice shall be served on the
service user by handing it to him personally or by deposit of the notice in the United States mail,
postage prepaid thereon addressed to the service user at the address to which billing was made
by the person required to collect the tax; or, should the service user have changed his address, to
his last known address. If a service user fails to remit the tax to the City Clerk within fifteen days
from the date of the service of the notice upon him, which shall be the date of mailing if service is
not accomplished in person, a penalty of twenty-five percent of the amount of the tax set forth in
the notice shall be imposed, but not less that $5.00. The penalty shall become part of the tax
herein required to be paid.

Sec. 21.1.11 Records

It shall be the duty of every person required to collect and remit to the City any tax imposed by this
article to keep and preserve, for a period of three years, all records as may be necessary to
determine the amount of such tax as he may have been liable for the collection of and remittance
to the City Clerk, which records the Clerk shall have the right to inspect at all reasonable times.

Sec. 21.1.12 Senior Citizen Exemption - Refunds

(a) (Amended by Ord. No. 157,563, Eff. 5/2/83, Oper. 6/1/83.) The tax imposed by this article shall
not apply to any individual 62 years of age or older or any disabled individual who uses telephone,
electric, or gas services in or upon any premises occupied by such individual, provided the
combined adjusted gross income (as used for purposes of the California Personal Income Tax
Law) of all members of the household in which such individual resided was less than Ten
Thousand Nine Hundred and Fifty Dollars ($10,950) for the calendar year prior to the fiscal year
(July 1 through June 30) for which the exemption provided in this Article is applied for.
For the purposes of this section, an individual shall be considered to be disabled if he or she is
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or to be of long-continued
and indefinite duration.

The exemption granted by this section shall not eliminate the duty of the service supplier from
collecting taxes from such exempt individuals or the duty of such exempt individuals from paying
such taxes to the service supplier unless an exemption is applied for by the service user and
granted in accordance with the provisions of Subsection (b) hereof.

(Added by Ord. No. 157,563, Eff. 5/2/83, Oper. 6/1/83.) For each fiscal year commencing with the
1984-85 fiscal year the City Clerk is directed to determine, and utilize as the prior calendar year's
adjusted gross income limitation, the figure in effect on the preceding first day of April as the "very
low income" limitation for a family of two persons in the City of Los Angeles under the Section 8
housing programs of the United States Housing Act of 1937, as amended, as published by the
United States Department of Housing and Urban Development.

(b) (Amended by Ord. No. 146, 936. Eff. 3/10/75, Oper. 7/1/75.) Any service user exempt from the
taxes imposed by this Article because of the provisions of Subsection (a) above, may file an
application with the City Clerk for an exemption. Such applications shall be made upon forms
supplied by the City Clerk and shall recite facts under oath which qualify the applicant for an
exemption. The City Clerk shall review all such applications and certify as exempt those applicants
determined to qualify therefor and shall notify all service suppliers affected that such exemption
has been approved, stating the name of the applicant, the address to which such exempt service
is being supplied, the account number, if any, and such other information as may be necessary for
the service supplier to remove the exempt service user from its tax billing procedure. Upon receipt
of such notice, the service supplier shall not be required to continue to bill any further tax imposed
by this article from such exempt service user until further notice by the City Clerk is given. The
service supplier shall eliminate such exempt service user from its tax billing procedure no later than
60 days after the receipt of such notice from the City Clerk.

(Amended by Ord. No. 164,486, Eff. 4/2/89.) All applications for exemption for any given fiscal year
shall be filed with the City Clerk on or before the 30th day of April preceding such fiscal year. All
exemptions shall continue and be renewed automatically by the City Clerk so long as the
prerequisite facts supporting the initial qualification for exemption shall continue. Upon any change
in the service address or residence of the exempt individual, the service supplier, at its option, may
either terminate the exemption immediately or continue the exemption until notified by the City
Clerk that the exempt individual has not filed an application for continuation of exemption within 90
days after the change in the service address or residence. Each individual exempt from the tax
may apply to the City Clerk for a new or continued exemption with each change of address or
residence. Any individual exempt from the tax shall notify the City Clerk within 10 days of any
change of fact or circumstance which might disqualify such individual from receiving such
exemption. It shall be a misdemeanor for any person to knowingly receive the benefits of the
exemption provided by this section when the basis for such exemption does not exist or ceases to
exist.

Notwithstanding any of the provisions of this subsection, however, any service supplier who
determines by any means that a new or nonexempt service user is receiving service through a
meter or connection exempt by virtue of an exemption issued to a previous user or exempt user of
the same meter or connection, such service supplier shall immediately notify the City Clerk of such
fact and the City Clerk shall conduct an investigation to ascertain whether or not the provisions of
this section have been complied with, and where appropriate, order the service supplier to
commence collecting the tax from the nonexempt service user.

Applications for exemptions may be filed during any given fiscal year, for the remaining portion of
the fiscal year, provided such application is filed not later than the sixtieth day prior to the
commencement of the billing period for the affected utility companies for which the exemption is to
commence and shall be valid through the remainder of that fiscal year, as above set forth.

(c) (Amended by Ord. No. 153,323, Eff. 2/22/80, Oper. 4/1/80.) Commencing August 1, 1975 for
individuals 62 years of age or older, and May 1, 1980 for disabled individuals, any individual
entitled to be exempt from the taxes imposed by this article who used telephone, electric or gas
services and paid more than $3.00 in such taxes may, within twelve months of the date of
payment, apply for a refund thereof on forms provided by the City Clerk. Such refund application
shall contain a declaration of those facts, under oath, which qualify the applicant for a refund, and
shall also be accompanied by the customer's original bills showing the amount of such taxes billed
by service suppliers during the preceding year. Likewise, refund claims may be filed by an
individual who used telephone, electric and gas service and paid the taxes prescribed by this
article either directly or indirectly to the "service user" rather than the service supplier
In the event the applicant has lost or destroyed any relevant billings or statements showing the
amount of tax paid, or if the applicant indirectly paid such taxes in conjunction with the occupation
of any premises without receiving a specific billing therefor from the service user, or if the applicant
has been granted an exemption during the year preceding the filing of the refund claim, the
maximum refund shall be eighteen ($18.00), or one dollar and fifty cents ($1.50) for each full
month of service received by the applicant, whichever is less.
Except as otherwise provided in this section, refunds of overpaid taxes shall be made in the same
manner as is provided in Section 21.07 of this chapter for refunds of overpayment in Business
Taxes.

A person required to collect and remit taxes imposed under this article may claim a refund or take
as credit against taxes collected and remitted the amounts overpaid, paid more than once or
erroneously or illegally collected or received when it is established in a manner prescribed by the
City Clerk that the service user from whom the tax has been collected did not owe the tax;
provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax
so collected has either been refunded to the service user or credited to charges subsequently
payable by the service user to the person required to collect and remit.

If any application for an exemption or refund as permitted to be filed by this section is determined
to be deficient by the City Clerk for failure to set forth the facts necessary to qualify the applicant
for an exemption or refund or if the City Clerk has reason to believe the applicant has failed to
truthfully set forth such facts, he may deny such application by giving written notice thereof and by
stating therein the grounds for such denial and mailing such notice in a sealed envelope, postage
prepaid, addressed to such applicant at the address shown upon such application. The applicant
shall thereafter have a right to a hearing with the City Clerk in accordance with a hearing procedure
to be established by the City Clerk.

(d) (Added by Ord. No. 146,936, Eff. 3/7/75.) No exemption or refund shall be granted pursuant to
this section with respect to any tax imposed by this article which is or has been paid by a public
agency or where the applicant receives funds from a public agency specifically for the payment of
such tax.

(e) (Added by Ord. No. 146,936, Eff. 3/7/75.) If an individual is delinquent in the payment of any
utility users tax at the time his claim for refund is filed, the City Clerk shall apply the refund or as
much thereof as may be necessary to satisfy the delinquency.

(f) (Added by Ord. No. 164,373, Eff. 3/6/89.) The tax imposed by this article shall not apply to
telephone, electric and gas services acquired by any nonprofit corporation for the use of its
tenants in any housing project in which at least 80 percent of the dwelling units are occupied by a
person meeting the requirements for exemption under Subsection (a) of this section.

Sec. 21.1.13 Temporary Rates

(Repealed by Ord. No. 171,436, Eff. 1/10/97.)

Sec. 21.05 Delinquent Dates-Interest-Penalties

. . . (b) Penalties:
(Amended by Ord. No. 155,840, Eff. 10/17/81, Oper. 1/1/82.)

1. Original Delinquency. Any person who fails to pay any tax required to be paid by this article or
Article 1.5, excepting deficiency determinations made by the City Clerk under Subsection (i) of Sec.
21.15 of this article, within the time required shall pay a penalty of 20% of the amount of the tax in
addition to the amount of the tax.

2. Continued Delinquency. Any person who fails to pay any delinquent tax, excepting deficiency
determinations made by the City Clerk under Subsection (i) of Sec. 21.15 of this article or Article
1.5, on or before the last day of the fourth month following the date on which the tax first became
delinquent, shall pay a second penalty of 20% of the amount of the tax in addition to the amount
of the tax and the 20% penalty first imposed.

3. Deficiency Determinations. Any person who fails to pay a deficiency determination within 30
days after the City Clerk has notified him of the amount of the deficiency, shall pay a penalty of
20% of the amount of the deficiency determination in addition to the amount of the deficiency
determination. Notice of a deficiency determination shall be given in writing in the manner provided
for the service of notices of assessment in Subsection (b) of Sec. 21.16.

4. Overpayment. For the purpose of allowing overpayments as credit against underpayments of
the aforementioned taxes, whenever such overpayment has been received by the City within the
three years next preceding, or during any year for which the taxpayer, at the request of the City
Clerk, has executed a waiver of the defense of the statute of limitations with regard to any claim
the City may have for business, sales or use taxes, the City Clerk, when making determinations of
the amount of taxes due the City, shall make an allowance of credit for any such overpayment.
Whenever an overpayment has been made prior to an underpayment, no penalty or interest shall
apply upon the amount of the underpayment satisfied by the prior overpayment.

(c) Negligence. If the City Clerk determines that the nonpayment of any tax due under this article or
Article 1.5 is due to negligence or wilful disregard of the provisions of this article or Article 1.5, a
penalty of 10% of the amount of the tax shall be added thereto in addition to the penalties stated
in Subdivisions 1 and 2 of Subsection (b) of this section. If the City Clerk determines that any part
of the deficiency of a deficiency determination is due to negligence or wilful disregard of the
provisions of this article or Article 1.5, a penalty of 10% of the amount of the deficiency
determination shall be added thereto in addition to the penalties stated in Subdivision 3 of
Subsection (b) of this section.

(d) Fraud. If the City Clerk determines that the nonpayment of any tax due under this article or
Article 1.5 is due to fraud, a penalty of 25% of the amount of the tax shall be added thereto in
addition to the penalties stated in Subdivisions 1 and 2 of Subsection (b) of this section. If the City
Clerk determines that any part of the deficiency of a deficiency determination is due to fraud, a
penalty of 25% of the amount of the deficiency determination shall be added thereto in addition to
the penalties stated in Subdivision 3 of Subsection (b) of this section.

(e) Interest. (Amended by Ord. No. 155,840, Eff. 10/17/81, Oper. 1/1/82.) In addition to the
penalties imposed, any person who fails to pay any tax required to be paid by this article, Article
1.1, Article 1.2, Article 1.3 or Article 1.7 shall pay interest at the rate of one and one-quarter (1.25)
percent per month, or fraction thereof, on the amount of the tax, exclusive of penalties, from the
date on which the tax first became delinquent until paid. Any person who is required to pay any
deficiency determination shall pay interest at the rate of one and one-quarter (1.25) percent per
month, or fraction thereof, on the amount of the deficiency of the tax, exclusive of any penalty
imposed, from the first day of delinquency following the period for which the tax or any portion
thereof should have been paid until the date of payment. Interest shall run during any period of
time for which an extension of time has been granted by the City Clerk. Interest required by any of
the provisions of this section shall not be subject to waiver or compromise other than in accordance
with the provisions of Subsections (f) and (g) of Sec. 21.15 of this article, or as the Council may
direct.

(f) Newly Established Business. In the case of a newly established business for which the payment
of a quarterly or monthly business tax is required, no penalty shall be imposed if the tax is paid
within 30 days after the commencement of operations; otherwise, interest and penalties shall be
imposed as in the case of any other business.

(g) Existing Provisions Continued. Whenever a liability for principal amount of any tax accrues prior
to January 1, 1953, penalties shall be computed in accordance with the provisions of this Code as
they existed prior to such date.

(h) Penalties Merge With Tax. Every penalty imposed and such interest as accrued under the
provisions of this section shall become a part of the tax herein required to be paid.

Sec. 21.15 City Clerk-Duty to Enforce-Powers-Rules and Regulations

(a) Duty to Enforce. It shall be the duty of the City Clerk, and he is hereby directed, to enforce
each and all of the provisions of this article and Article 1.5, and the Chief of Police shall render
such assistance in the enforcement of this article and Article 1.5 as may from time to time be
required by the City Clerk.

(b) Inspection and Examination of Places of Business. The City Clerk, in the exercise of the duties
imposed upon him, and acting through his deputies, shall inspect and examine all places of
business in the City to ascertain whether or not the provisions of this article and Article 1.5 have
been complied with.

(c) Audit and Examination of Records and Equipment. The City Clerk and the City Controller, and
deputies of each of them, shall have the power to audit and examine all books and records, and,
where necessary, all equipment, of any person engaged in business in the City for the purpose of
ascertaining the amount of business tax, sales or use tax, if any, required to be paid by the
provisions hereof, and for the purpose of verifying the statements, or any item thereof, when filed
by any taxpayer pursuant to the provisions of Sections 21.13, 21.14 or 21.199, or Article 1.5. If
such person, after written demand by the City Clerk or City Controller, or a deputy of either, refuses
to make available for audit, examination or verification such books, records or equipment as the
City Clerk, City Controller, or deputy of either, requests, the City Clerk may, after full consideration
of all information within his knowledge concerning the business and activities of the person so
refusing, make an assessment in the manner provided in Sec. 21.16 of any taxes estimated to be
due.

(d) Inspection of Registration Certificates, etc. The City Clerk and all of his deputies shall have the
power and authority to enter, free of charge, during business hours, any place of business
required to be registered and taxed by the provisions of this article or Article 1.5, and to demand
exhibition of a business tax registration certificate and sales or use tax permit and evidence of
amount of tax paid. Any person having any such business tax registration certificate, or sales or
use tax permit, heretofore issued in his possession or under his control who fails to exhibit the
same as well as evidence of amounts of tax paid on demand shall be guilty of a misdemeanor and
subject to the penalty provided for by the provisions of this Code.

(e) Extensions of Time for Filing. The City Clerk may upon receipt of the written request of a
taxpayer, and for good cause, extend the time for filing any statement required under the
provisions of Section 21.13, 21.14 or 21.199, or Article 1.5 for a period of not to exceed 45 days,
provided that the time for filing the required statement has not already passed when the request is
received. No penalty for delinquent payment shall accrue by reason of such extension. Interest
shall accrue during said extension in the manner provided herein.

(f) Compromise of Claims. (Amended by Ord. No. 152,158, Eff. 5/10/79.) The City Clerk, with the
written approval of the City Attorney and subject to the provisions of the Charter, may compromise
a claim for business, sales and use taxes where the portion of the claim proposed to be released is
less than $5,000.00; and with the approval of the City Attorney and the City Council, may
compromise such a claim where the portion proposed to be released amounts to $5,000.00 or
more.

(g) Minor Errors in Payments. In the event a discrepancy exists between the amount of tax paid
and the amount of tax due under this article or Article 1.5, resulting in the underpayment or
overpayment of the tax in an amount of $3.00 or less, the City Clerk may accept and record such
underpayment or overpayment without other notification to the taxpayer.

(h) Rules and Regulations-Apportionment. The City Clerk may make such rules and regulations as
are not inconsistent with the provisions of this article or Article 1.5 as may be necessary or
desirable to aid in the enforcement of the provisions of this article and Article 1.5. When, by reason
of the provisions of the Constitution of the United States or the Constitution of California, the
business tax imposed by this article cannot be enforced without there being an apportionment
according to the amount of business done in the City of Los Angeles, or in the State of California,
as the case may be, the City Clerk may make such rules and regulations for the apportionment of
the tax as are necessary or desirable to overcome the constitutional objections. Such rules and
regulations shall be approved by the City Attorney prior to becoming effective.

(i) Deficiency Determinations. If the City Clerk is not satisfied that any statement filed as required
under the provisions of this article or Article 1.5 of Chapter 2 of this Code is correct, or that the
amount of tax is correctly computed, he may compute and determine the amount to be paid and
make a deficiency determination upon the basis of the facts contained in the statement or upon
the basis of any information in his possession or that may come into his possession. One or more
deficiency determinations of the amount of tax due for a period or periods may be made. When a
person discontinues engaging in a business, a deficiency determination may be made at any time
within three years thereafter as to any liability arising from engaging in such business whether or
not a deficiency determination is issued prior to the date the tax would otherwise be due.
Whenever a deficiency determination is made, a notice shall be given to the person concerned in
the same manner as notices of assessment are given under Sec. 21.16.

(j) Payments, etc., Made by Mail. Whenever any payment, statement, report, request or other
communication received by the City Clerk is received after the time prescribed by this article or
Article 1.5 for the receipt thereof, but is in an envelope bearing a postmark showing that it was
mailed prior to the time prescribed in this article or Article 1.5 for the receipt thereof, or whenever
the City Clerk is furnished substantial proof that the payment, statement, report, or request for
other communication was in fact deposited in the United States mail prior to the time prescribed for
receipt thereof, the City Clerk may regard such payment, statement, report, request or other
communication as having been timely received.

(k) Earthquake Related Extension. (Added by Ord. No. 169,515, Eff. 4/8/94, Oper. 2/28/94 and
amended by Ord. No. 169,853, Eff. 7/4/94, Oper. 2/28/94.) Upon the receipt on or before August
31, 1994 of the written request of a taxpayer showing that such taxpayer's business has been
impacted by the earthquake of January 17, 1994 to the extent of preventing the filing of any
statement required under the provisions of Sections 21.13 or 21.14 or Article 1.11 of this Code or
the payment of any tax required in connection therewith for such business prior to the delinquency
date, the City Clerk shall extend the delinquency date for filing any such statement and paying any
such tax for such business to September 1, 1994. No penalty or interest shall accrue prior to
September 1, 1994 by virtue of such extension of the delinquency date. The relief provided in this
subsection shall be an alternative to the relief provided in subsection (e) of this section and not in
addition thereto, and shall be applicable only to annual taxes due in 1994.

Sec. 21.16 Assessment-Administrative Remedy

(Amended by Ord. No. 138,968, Eff. 8/9/69.)

(a) Assessment of Taxes.

Whenever the City Clerk determines that any tax is due or may be due to the City of Los Angeles
under the provisions of this Chapter, he may make and give notice of an assessment of such tax.
The notice of assessment shall separately set forth the amount of any tax known by the City Clerk
to be due or estimated by the City Clerk, after full consideration of all information within his
knowledge concerning the business and activities of the person assessed, to be due under each
applicable section of this Chapter and shall include the amount of any penalties or interest accrued
on each amount to the date of the notice of assessment.

(b) Service of Assessment; Right to Hearing.

The notice of assessment shall be served upon the person either by handing it to him personally,
or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the
person at the address of the location of the business appearing on the face of the registration
certificate issued to him or to such other address as he shall register with the City Clerk for the
purpose of receiving notices provided under this Chapter; should the person have no registration
certificate issued to him and should he have no address registered with the City Clerk for such
purpose, then to such person's last known address. For the purpose of this section, a service by
mail is complete at the time of deposit in the United States mail. Within 15 days after the date of
service, the person assessed may either apply in writing to the City Clerk for a hearing on the
assessment or may file a written request that such hearing be waived. If the person neither
requests a hearing upon the assessment nor requests a waiver of hearing within the prescribed
time, the amount of the assessment shall be final and the amount thereof shall immediately be due
and owing to the City of Los Angeles, but penalties and interest as provided by this Chapter shall
continue to accrue until paid.

(c) Waiver of Hearing.

If the person requests that the hearing be waived, the City Clerk may either grant such request
and notify the person thereof in writing or may, in his discretion, deny the request and set the
assessment for hearing at the time and in the manner prescribed by Subsection (d) hereof. If the
City Clerk grants the request for waiver of hearing, the administrative proceedings prescribed by
this section shall be deemed exhausted and the City shall have the right to bring an action in any
court of competent jurisdiction to collect the amount of the assessment, plus such penalties and
interest as may have accrued thereon as provided by this Chapter.

(d) Time of Hearing; Notice.

If the person requests a hearing upon the assessment or if the City Clerk denies his request for
waiver of hearing, the City Clerk shall cause the matter to be set for hearing before a Board of
Review not later than 90 days after the date of the application, or as the case may be, the date of
the City Clerk's denial of the request for waiver of hearing. Notice of the time and place of the
hearing shall be mailed to the person assessed not later than 15 days before the date set for
hearing and, if the City Clerk desires said person to produce specific records at such hearing, such
notice may designate the records required to be produced.

(e) Administrative Hearing.

The hearing prescribed by this section shall be before a Board of Review. The Board of Review
shall be composed of the City Controller, the City Clerk, and the City Attorney, or the duly
appointed representative of each. At the hearing, the person assessed and the City Clerk may
submit such evidence as they believe to be relevant to their respective positions. The Board of
Review may require the presentation of additional evidence from either the person assessed or
from the City Clerk, or from both, and may continue the hearing from time to time for the purpose of
allowing the presentation of additional evidence.

(f) Decision of the Board of Review.

Upon completion of the hearing, the Board of Review may (i) affirm the assessment, (ii) increase
the assessment, or (iii) decrease the assessment, as the evidence may require; but the amount of
the assessment shall not be increased unless the claim for the increase is asserted on behalf of
the City either before or during the hearing. Written notice of the decision of the Board of Review
shall be given to the person assessed in the same form and in the same manner as the notice of
assessment.

(g) Exceptions.

Within 15 days from the date of service of the notice of decision of the Board of Review, the
person assessed may file written exceptions to the decision of the Board of Review, but he shall
not be required to do so. If he does not do so, he shall nevertheless be deemed to have
exhausted the administrative proceedings provided by this section. Upon filing of written
exceptions, the Board of Review may either deny the exceptions or modify its decision, as it deems
appropriate. If the Board of Review modifies its decision, it shall cause a written notice of decision
as required by Subsection (f) hereof, to be given to the person assessed at the time, and in the
manner provided therein. If the Board of Review does not modify its decision within 30 days from
the service of said exceptions, the exceptions shall be deemed denied.

(h) Effect of Delay in Administrative Proceedings.

Failure of the City Clerk to set any hearing within the time prescribed in this section and failure of
the Board of Review to complete any procedure prescribed in this section within the period stated
shall not effect the validity of any proceedings taken hereunder.

(i) Effect of Payment of an Assessment.

Acceptance of any payment upon an assessment, the validity of which has not previously been
passed upon by the Board of Review, shall not preclude the City Clerk from subsequently levying
another assessment in any case where the original assessment does not truly reflect the correct
tax liability.

Sec. 21.80. Independent Telemarketing Agency. (Added by Ord. No. 171,436, Eff. 1/10/97.)

. . . (b) "Independent Telemarketing Agency" shall mean any person who engages in the business
of marketing services or goods, wares or merchandise on behalf of 3 or more clients continuously,
none of which has any ownership interest in said person, by use of a telecommunications device at
a call center. An Independent Telemarketing Agency shall not include a person who sells his or her
own services or goods, wares or merchandise. A call center shall mean a location in which 25 or
more persons are continuously employed or utilized to make and/or receive telephone calls by
means of a centralized telecommunications system.

Sec. 21.190. Professions and Occupations.

. . . (c) As used in this section, the term "gross receipts" does not include:

. . . 3. Receipts of non-profit educational institutions of collegiate grade, defined herein to mean
institutions incorporated as colleges or seminaries under the laws of the State of California, which
require for regular admission the completion of a four-year high school course, or its equivalent,
and which confer upon their graduates at least one academic or professional degree, based on a
course of at least four years in liberal arts and sciences, or on a course of at least three years in
professional studies such as law, theology, education, medicine, pharmacy, architecture, fine arts,
commerce, or journalism; receipts of non-profit secondary schools which are duly accredited by the
University of California; and receipts of non-profit elementary schools in which instruction is given to
students in the pre-primary and primary grades in the several branches of studies required to be
taught in the public schools of the State of California;