City Council
MEETING DATE: 8/26/2015
TITLE:
Title
Utility Users Tax (UUT) on Wireless Prepaid Mobile Telephony Services, AB 1717
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FROM:
Tami Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
Staff recommends the City Council adopt two resolutions to contract with the State Board of Equalization (BOE) and authorize the City Manager and the City Attorney to execute documents required by BOE to collect the City's UUT on prepaid wireless service; and authorize the City to examine prepaid mobile telephone services surcharge and local charge records.
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BACKGROUND:
The City's UUT is collected by wireless service providers who include the charge on their customers' monthly invoices. For customers purchasing prepaid wireless services, they avoid paying any UUT, because there is no contract, no monthly invoices, and the prepaid wireless services are usually sold by retailers. It is estimated that approximately 70% of all prepaid wireless services are sold by retailers resulting in a significant loss of revenue. As a result, traditional phone plan users are treated disparately and the burden of the UUT is not equally shared among all telephone users (traditional versus prepaid).
DISCUSSION:
Beginning January 1, 2016, AB 1717 will take effect and require California retailers and online sellers to collect the local UUT at the point of sale when they collect sales tax on other retail products. Under this new law, all local jurisdictions have to contract with the State BOE in order to receive UUT imposed on consumers of prepaid wireless phone service. It should be noted that AB 1717 has a sunset provision of 2020; however, it is expected the Legislature will permanently renew AB 1717 if the actual collection proves costs are reasonable and the expected revenue levels are achieved.
In order to receive the UUT collected by the BOE commencing on January 1, 2016, the City Manager and the Attorney must execut...
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