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What
is the Communications Users Tax ordinance?
The communications Users Tax ("CUT") ordinance is an
amended version of the Utility Users Tax ordinance contained in Article
1.1 of Chapter II of the Los Angeles Municipal Code. The CUT
ordinance amends the previous Telephone Users Tax ("TUT").
Why
did I receive a letter from the Office of Finance Concerning the CUT
ordinance?
You may have received a letter from the Office of Finance because we
have reason to believe that you are a service provider under the terms
of the CUT. It is important that you either comply with the CUT or
respond promptly as requested in the letter.
Were
all sections of the previous TUT ordinance amended?
No. Some sections were not amended and remain in effect in
conjunction with the sections amended or added by the CUT
ordinance. Please see the CUT web page for the CUT chapter of the
Municipal Code as amended. Other provisions of the Municipal Code
may apply and can be found at http://www.lacity.org/finance/finD10.htm.
Why
was the TUT ordinance amended?
The TUT ordinance was amended to reduce, modernize and clarify the
Telephone Users Tax establishing the broad coverage of the CUT to
current technologies, updating the terminology and reducing the tax rate
from 10% to 9%.
Were
these changes approved by the voters of the City of Los Angeles?
Yes. The CUT ordinance, contained in Measure S on the February
5, 2008 ballot, was approved by the voters.
What
are some of the communications services subject to the CUT?
For example, the CUT ordinance is applicable to usage charges for
VoIP, Private Communications Services (such as T-1 lines), custom
calling features, text messaging, instant messaging, ancillary services,
prepaid and post-paid services, paging services and 800 services as well
as other covered charges such as monthly service fees, feature charges,
equipment rentals, deaf trust surcharges, State PUC users fees,
Universal Life Trust Fund, late payment charges and charges for non
taxable services billed together with taxable services. Please see
the ordinance for the full extent of communications services and charges
covered by the CUT.
What
is the effective date of the CUT ordinance?
All provisions of the CUT ordinance are effective March 15,
2008. This includes the tax rate reduction to 9%, as well as the
full application of the users tax to all services and charges identified
in the ordinance.
I
am required to register with the California Public Utilities Commission
(CPUC) in order to provide communication services in California.
When am I required to implement the provisions of the CUT ordinance?
You must implement the CUT ordinance in accordance with Section 799
of the State PUC Code.
How
should I file my CUT remittance form for users taxes collected for the
month of March 2008?
For those who are not covered by the timeframes under Section 799 of
the State PUC Code, the applicable users tax rate is 10% for the period
beginning March 1, 2008 and ending March 14, 2008. Effective March
15, 2008, the users tax rate is reduced to 9%.
I
am currently not registered with the City of Los Angeles Office of
Finance as a communications service provider. What steps must I
take to comply with the CUT ordinance if I am providing communications
services subject to the CUT?
Please reference the CUT Discovery letter at the following Office of
Finance web link, http://www.lacity.org/finance/comtax.htm.
This link can also be utilized to download the CUT application form to
register with the Office of Finance. In addition, you may download
a CUT remittance form using the same link. Please complete the
application and remittance forms and send to the designated mailing
address with your payment.
The
CUT ordinance states that Universal Service Fund charges are subject to
taxation. Does this apply to both Federal and State USF charges?
Yes, charges for either Federal or State USF are subject to the CUT.
I
am a communications services user and have been subject to the
TUT. When will my service provider reduce the CUT tax rate to 9%?
The earliest that your service provider may reduce the tax rate to
9% is on March 15, 2008. However, the CPUC Section 799 allows
certain service providers additional time to implement the provisions of
the CUT ordinance.
Is
my cell phone usage taxed based on area code or billing address?
Taxation of charges for cell phone service is not based upon area
code. Cell phone carriers typically use the customer's billing address
to determine taxation.
What
happens when Los Angeles and another jurisdiction both attempt to tax
the same customer for the same service?
Although it would be unusual for there to be a situation where two
jurisdictions impose a valid tax on the same usage, subdivision (e) of
§ 21.1.3 provides an exemption and rules for obtaining a tax credit
where there might be double taxation. To the extent that a tax is
validly imposed and paid in another jurisdiction, the customer may
receive a credit against taxes owed to the City of Los Angeles, but the
credit cannot exceed the amount that is actually owed to Los Angeles.
