Title
a. Approve staff recommendation to amend Section 5.4.130 of the Code to establish "Abuse of Discretion" as the Standard for the Board of Supervisors to Consider Appeals of Taxes, Penalties and Interest for Delinquent Transient Occupancy Tax Remittances;
b. Direct Staff to Return Within Four Weeks with Proposed Amendments to the Transient Occupancy Tax Ordinance that Establishes "Abuse of Discretion" as the Standard of Review by the Board of Supervisors for Taxes, Penalties and Interest, and Additional Amendments as May be Recommended by the Treasurer-Tax Collector; and
c. Approve recommended interim "De Novo" Standard of Appeal for the procedure set forth in Article 5.40.130 of the County Code related to appeals by operators of transient occupancy taxes, penalties and interest for two current appeals.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a. Approve staff recommendation to amend Section 5.4.130 of the Code to establish "Abuse of Discretion" as the Standard for the Board of Supervisors to Consider Appeals of Taxes, Penalties and Interest for Delinquent Transient Occupancy Tax Remittances;
b. Direct Staff to Return Within Four Weeks with Proposed Amendments to the Transient Occupancy Tax Ordinance that Establishes "Abuse of Discretion" as the Standard of Review by the Board of Supervisors for Taxes, Penalties and Interest, and Additional Amendments as May be Recommended by the Treasurer-Tax Collector; and
c. Approve recommended interim "De Novo" Standard of Appeal for the procedure set forth in Article 5.40.130 of the County Code related to appeals by operators of transient occupancy taxes, penalties and interest for two current appeals.
SUMMARY:
The Tax Collector is charged with the duty of enforcing the County of Monterey Uniform Transient Occupancy Tax (TOT) Ordinance. The Ordinance states in part that the Tax Collector shall assess penalties and interest to operators whenever reports or remittances are delinquent and shall enforce collections (MCC. 5.40.065). Pursuant to Section 5.40.130 of the TOT Ordinance, the tax, interest, and/or penalties assessed by the Tax Collector may be appealed by operators to the Board of Supervisors. The TOT Ordinance, however, does not clearly set forth the standard of review for the Board to utilize in consideration of such appeals. There are two taxpayers which have filed appeals of penalty determinations before the Board, one of which is scheduled to be heard on March 19, 2013. It is recommended that your Board direct staff to amend the Monterey County Code to adopt the a clear legal standard known as "abuse of discretion" for reviewing future TOT appeals of tax, interest, and/or penalty determinations made by the Tax Collector, as well as make other changes as recommended by the Tax Collector. It is also recommended that your Board consider "interim standards of appeal" for TOT appeals heard before adoption of the amended Ordinance.
DISCUSSION:
Transient Occupancy Taxes (TOT) are collected by hotel/motel/resort operators from occupants and remitted by operators on a quarterly basis to the Tax Collector. Pursuant to the Ordinance, remittances are required to the made "
on or before the last day of the month following the close of each calendar quarter" (MCC. 5.40.080). Any operator who fails to remit the tax due within the time prescribed by the Ordinance "shall pay a penalty of ten (10) percent of the amount of the tax in addition to the amount of the tax" (MCC. 5.40.090 A). If the delinquency continues for more than 30 days beyond the date the tax was due, the delinquent tax is subject to a second delinquency penalty of an additional 10 percent of the tax due (MCC. 5.40.090 B). Interest on the amount due is also imposed for delinquencies beyond 30 days (MCC 5.440.090 D). Pursuant to MCC 5.40.130, an operator aggrieved by a decision of the Tax Collector with respect to the amount of tax, interest and/or penalties, may appeal the administrative decision of the Tax Collector to the Board of Supervisors. However, the current Ordinance sets forth no specifically stated standards for such a review.
Recently, two taxpayers were assessed penalties for the failure to make a required payment on or before the due date, as required by the Code. The Tax Collector administratively reviewed the documentation submitted in support of the various applications to waive the penalties and denied them. The operators have now filed the appeals to the Board of Supervisors. One of those appeals is scheduled to be heard on the afternoon of March 19. In order to properly establish procedures for future appeals, it is recommended that the Board consider the range of criteria under which they may consider an appeal, and direct staff to amend the County Code to adopt the standard of "abuse of discretion", clearly outlining the standard under which future appeals will be held (see Attachment A). Staff believes that this standard recognizes the importance of prompt receipt of tax revenues to the County, the authority the Ordinance provides the Tax Collector, an elected official, and sets forth a clear standard of performance and conditions precedent to appeal.
In order to avoid any procedural complaints from applicants with regard to conducting hearings on the two current appeals, however, it is recommended that the Board adopt an interim standard of "de novo review," as described in greater detail in Attachment B, until the Ordinance is amended to make clear the proper standard is "abuse of discretion."
OTHER AGENCY INVOLVEMENT:
County Counsel has worked with the Treasurer's Department to review and recommend the proposed standards to be established by amendment. County Counsel recommends the use of the proposed "interim standard" for the two current appeals.
FINANCING:
There are no General Fund impacts for adopting the "Abuse of Discretion" standard. Costs for preparing an amended ordinance are included in the FY 2012/13 Budget appropriations.
Prepared and Approved by:
Charles J. McKee, County Counsel
Attachments:
A. Considerations for Standards of Appeal of TOT Penalty Decisions
B. "De Novo Review" for Interim Appeals of TOT Penalty Decisions