Chapter 3.25
TRANSIENT OCCUPANCY TAX
Sections:
3.25.050 Operator’s duties to collect and pay tax.
3.25.060 Remitting and reporting requirements upon cessation of business.
3.25.080 Operator’s duty to register.
3.25.090 Operator’s duty to report and remit.
3.25.100 Interest and penalties.
3.25.110 Interest and calculation.
3.25.120 Failure to collect and report tax – Determination of tax by Director of Finance.
3.25.130 Appeals from decisions of Director of Finance.
3.25.140 Operator’s duty to maintain and preserve records.
3.25.160 Actions to collect taxes and enforcement of fines.
3.25.180 Director of Finance’s regulations and enforcement authority.
3.25.010 Title.
This chapter shall be known as the transient occupancy tax chapter of the City of Santa Clara. (Ord. 1847 § 2, 10-20-09).
3.25.020 Definitions.
Except where the context otherwise requires, the definitions given in this section govern the construction of this chapter.
(a) “Days” means calendar days, or portions thereof.
(b) “Hotel” means any structure, or any portion of any structure, that is occupied or intended or designed for occupancy by transients for dwelling, lodging, or sleeping purposes, and includes, but is not limited to, any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home, or house trailer at a fixed location, or other similar structure or portion thereof.
(c) “Occupancy” means the use, or possession, or the right to the use or possession of any room or rooms or portions thereof, in any hotel for dwelling, lodging, or sleeping purposes.
(d) “Operator” means the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, or licensee, or in any other capacity. Where the operator performs his/her functions through a managing agent of any type or character other than as an employee of operator, the managing agent shall also be deemed an operator for the purposes of this chapter and shall have the same duties and liabilities as his/her principal. Compliance with the provisions of this chapter by either the principal or the managing agent shall, however, be considered to be compliance by both.
(e) “Person” means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit.
(f) “Rent” means the consideration received, whether or not actually charged by operator, for the occupancy of space in a hotel valued in money, whether said rent is received in money, goods, labor, or otherwise, including all receipts, cash, credits, and property and services of any kind or nature. An operator may provide complimentary nontaxable rooms for employee use, guest satisfaction or charitable purposes (by a qualified 501(c)3 charity) and an operator shall detail all complimentary nontaxable rooms in its regular reporting. Failure to accurately report complimentary rooms shall result in taxation of the rooms in question.
(g) “Transient” means any person who exercises occupancy (hereinafter the phrase “exercises occupancy,” or similar phrase, includes entitlement to occupancy) by reason of concession, permit, right of access, license, or other agreement for a period of thirty (30) consecutive days or less, counting portions of days as full days. Any such person exercising occupancy in a hotel shall be deemed to be a transient until the period of thirty (30) consecutive days has expired.
For a person to avoid being deemed a transient during a thirty (30) consecutive day period, the person exercising occupancy rights in a hotel must, prior to occupancy, enter into a written agreement with the hotel operator. The written agreement shall obligate the person to pay market rate for the occupancy for a period of at least thirty-one (31) consecutive days. The minimum substance of such written agreement shall be as provided in the sample agreement, as amended from time to time, available from the Finance Department. If the written agreement requirements are satisfied, the person exercising said occupancy rights shall not be considered a transient under this chapter and, therefore, shall not be subject to the tax imposed pursuant to SCCC 3.25.030. In the absence of said written agreement prior to the commencement of occupancy, the person shall be deemed a transient and subject to the transient occupancy tax until the qualifying period (thirty (30) consecutive days) for nontransient status has been satisfied. On the thirty-first (31st) consecutive day, and on each consecutive day thereafter, the transient occupancy tax shall not apply. (Ord. 1847 § 2, 10-20-09; Ord. 2033 § 1, ).
3.25.030 Tax imposed.
(a) For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax as imposed from time to time by City Council resolution. Said tax shall be a percentage of the rent charged by the operator to the occupant.
(b) On and as of January 1, 2024, and continuing thereafter until further change by City Council resolution, the amount of the tax imposed is twelve and one-half percent (12.5%) of the rent charged by the operator.
(c) Said tax constitutes a debt owed by the transient to the City, which is extinguished only by payment to the operator or to the City. The transient, or any person paying rent on the transient’s behalf, shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due upon the transient’s ceasing to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Director of Finance may require that such tax shall be paid directly to the Director of Finance. (Ord. 1847 § 2, 10-20-09; Ord. 2033 § 1, 10-19-21; Ord. 2064 § 1, 10-24-23).
3.25.040 Exemptions.
No tax shall be imposed upon:
(a) Any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the tax herein provided.
(b) Any officer or employee of a foreign government who is exempt by reason of express provision of Federal law or international treaty.
(c) Any Federal or State of California officer or employee on official business who shall provide one of the following:
(1) A warrant or check drawn on the Treasury of the United States; or
(2) A copy of the official travel orders indicating the issuing governmental agency and the employee’s full name; or
(3) A copy of a letter on the official letterhead of an exempt governmental agency requesting exemption and listing the employee’s name and stating that the stay is for official government business. The dates of occupancy must also be included;
(4) These requirements are listed on the approved City form, which must be completed by the guest at the time of registration. Failure to satisfy these requirements will result in no tax exemption.
Copies of the documentation for each exemption claimed must be submitted to the Director of Finance with each return made pursuant to SCCC 3.25.090.
(d) The provisions of this chapter shall not apply to occupancy of a transient occupancy facility owned or operated by a religious, educational or charitable group and used for religious, educational or charitable purposes, which is not conducted for profit and no part of the earnings of which inures to the benefit of any private shareholder or individual.
(e) No exemption shall be granted except upon a claim therefor made at the time rent is collected and under penalty of perjury upon a form prescribed by the Director of Finance. (Ord. 1847 § 2, 10-20-09).
3.25.050 Operator’s duties to collect and pay tax.
(a) Each operator shall collect the tax imposed by this chapter to the same extent and at the same time as the rent is collected from every transient or from any person paying rent on the transient’s behalf.
(b) Each transient shall receive a receipt for payment from the operator with the amount of tax separately stated from the amount of the rent charged.
(c) No operator of a hotel shall advertise or state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the operator, or that it will not be added to the rent, or that, if added, any part will be refunded by the operator to the transient.
(d) All tax collected by the operator under this chapter shall be held in trust for the account of the City until payment of the tax is made by the operator to the Director of Finance.
(e) Failure of the operator to collect the tax due from the transient shall not excuse the operator from the obligation to pay the tax to the City. (Ord. 1847 § 2, 10-20-09).
3.25.060 Remitting and reporting requirements upon cessation of business.
(a) An operator who is transferring, selling, or terminating the business shall notify the Director of Finance in writing of such sale, transfer, or termination and the name and address of the purchaser or transferee at least thirty (30) days in advance of the date of transfer, sale, or termination, unless the decision to sell, transfer, or terminate was made within less than a thirty (30)-day period prior to the transfer, sale, or termination, in which case the operator shall immediately notify the Director of Finance. The operator shall, at the same time, notify in writing the purchaser or transferee of their responsibility for unpaid collected taxes as set forth in this chapter and further submit to the Director of Finance a written acknowledgment from the purchaser or transferee of the requirements of this chapter regarding its responsibility for unpaid collected taxes.
(b) Cessation of Business. Each operator upon cessation of business for any reason shall, on or before the same day of the next month following the cessation of business or on the last day of that month if no corresponding day exists, make a return to the Director of Finance on approved forms of the total taxable rents charged, the amount of tax collected for the reporting period, remittances made, if any, and the balance of the tax due. The approved City form is available from the Director of Finance. At the time the return is filed, the full amount of the balance of the tax due, if any, shall be remitted to the Director of Finance. After filing the final return and remitting the balance due, the operator shall make his/her records of account available for a closeout audit by the Director of Finance, or duly authorized designee. Returns filed and taxes remitted and actually received by the Director of Finance on or before the same day of the next month following the cessation of business, or on the last day of that month if no corresponding calendar day exists, shall be deemed timely filed and remitted; otherwise, the taxes are delinquent and subject to the penalties imposed by this chapter. (Ord. 1847 § 2, 10-20-09).
3.25.070 Successor liability.
(a) If an operator who is liable for any tax or penalties under this chapter sells or otherwise disposes of his/her business, his/her successor shall notify the Director of Finance of the date of sale at least thirty (30) days before the date of sale or, if the decision to sell was made less than thirty (30) days prior to the actual sale, then immediately. The successor operator shall withhold a sufficient portion of the purchase price to equal the amount of such tax or penalty until the selling operator produces either a receipt from the Director of Finance showing that the tax or penalty has been paid or a tax clearance certificate from the Director of Finance stating that no tax or penalty is due. If the seller does not present a receipt or tax clearance certificate within thirty (30) days after such successor commences to conduct business, the successor shall deposit the withheld amount with the Director of Finance pending settlement of the account of the seller.
(b) If the successor to the business fails to withhold a portion of the purchase price as required, the successor shall be liable to the City for the payment of the amount required to be withheld. Within thirty (30) days after receiving a written request from the successor for a tax clearance certificate stating that no tax or penalty is due, the Director of Finance shall either issue the certificate or mail notice to the successor, at that person’s address as it appears on the records of the Director of Finance, of the estimated amount of the tax and penalty that must be paid as a condition of issuing the certificate.
(c) Either the seller or the purchaser may satisfy the tax obligation owed to the City, but the successor operator is ultimately responsible for the tax. (Ord. 1847 § 2, 10-20-09).
3.25.080 Operator’s duty to register.
(a) Within thirty (30) days after the operative date of the ordinance codified in this chapter, or within thirty (30) days after commencing business, or within thirty (30) days after becoming an operator, whichever is later, each operator of any hotel renting occupancy to transients shall register as an operator of said hotel with the Director of Finance and obtain from the Director a “transient occupancy registration certificate” to be posted at all times in a conspicuous place on the premises. Said certificate shall, among other things, state the following:
(1) The name(s) of the operator(s).
(2) The address of the hotel.
(3) The address of the operator(s), if different from the address of the hotel.
(4) The date upon which the certificate was issued.
(5) “This Transient Occupancy Registration Certificate signifies that the person(s) named on the face hereof has fulfilled the requirements of the Transient Occupancy Tax Chapter by registering with the Director of Finance for the purpose of collecting from transients the transient occupancy tax and remitting said tax to the Director of Finance. This certificate does not authorize any person to conduct any unlawful business or to conduct any lawful business in an unlawful manner, nor to operate a hotel without strictly complying with all local applicable laws, including, but not limited to, those requiring a permit from any board, commission, department, or office of this City. This certificate does not constitute a permit.”
(b) Penalties. See SCCC 3.25.100. (Ord. 1847 § 2, 10-20-09).
3.25.090 Operator’s duty to report and remit.
(a) On or before the last day of the month following the close of each calendar quarter, or at the close of any shorter reporting period as established by the Director of Finance, each operator shall file a transient occupancy tax return with the Director of Finance by regular mail with a corresponding post mark or by remitting in person at City Hall Finance Department. Operators shall use forms provided by the Director for reporting the total rents charged and received and the amount of tax collected for transient occupancies within that previous quarter.
(b) At the time the return is filed, the full amount of the tax collected shall be remitted to the Director of Finance.
(c) The Director of Finance may establish shorter reporting periods for any certificate holder if the Director deems it necessary in order to ensure collection of the tax, and may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason.
(d) All taxes collected by operators pursuant to this chapter shall be held in trust for the account of the City until payment thereof is made to the Director of Finance.
(e) If an operator fails to report and remit taxes in compliance with this section, penalties and/or interest will be assessed. (Ord. 1847 § 2, 10-20-09).
3.25.100 Interest and penalties.
(a) Delinquency Interest. Any operator who fails to remit any tax imposed by this chapter within the time required shall pay interest as determined by SCCC 3.25.110.
(b) Penalty for willful noncompliance or repeated delinquencies. If the Director of Finance determines that the nonpayment of any remittance due under this chapter is due to willful noncompliance or repeated delinquencies, a penalty of twenty-five percent (25%) of the amount of the tax shall be added thereto in addition to the interest as required by SCCC 3.25.110. (Ord. 1847 § 2, 10-20-09).
3.25.110 Interest and calculation.
(a) Calculation of Interest. In addition to the penalties imposed, any operator who fails to remit any tax imposed by this chapter shall pay interest at the rate of the United States government T-Bills sold at the latest sale prior to the date of the delinquency plus three percent prorated per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid.
(b) Penalties and Interest Merged with Tax. Except for the purpose of calculation of interest and penalties, every penalty imposed and such interest as accrues under the provisions of this section shall become a part of the tax herein required to be paid on the date of imposition or accrual. (Ord. 1847 § 2, 10-20-09).
3.25.120 Failure to collect and report tax – Determination of tax by Director of Finance.
(a) Estimate of Tax Due. If any operator shall fail or refuse to collect said tax and to make, within the time provided in this chapter, any report and remittance of said tax or any portion thereof required by this chapter, the Director of Finance shall proceed in such manner as the Director may deem best to obtain facts and information on which to base an estimate of the tax due, including, but not limited to, an audit of the operator’s records. If an audit is deemed necessary by the Director, the operator shall be liable for such costs of the audit. As soon as the Director of Finance shall procure such facts and information upon which to base the assessment of any tax imposed by this chapter, the Director shall assess against such operator the tax, interest, and penalties provided for by this chapter. Regular periodic audits will also be conducted by the Director of Finance and the notice and hearing provisions of this section shall apply.
(b) Notice. The Director of Finance shall give a notice of the amount of tax, penalties, and interest assessed by serving the notice on the operator by deposit in the United States mail, postage prepaid, return receipt requested, addressed to the operator so assessed at his/her last-known place of address, and by posting the notice at the hotel.
(c) Request for Hearing. Operator may, within thirty (30) days of the date of service and posting of the notice, request a hearing in writing on the amount assessed.
(d) No Timely Request for Hearing. If the operator fails to request a hearing in writing within the time prescribed, the tax, interest, and penalties, if any, assessed by the Director of Finance shall become conclusive and immediately due and payable.
(e) Notice of Hearing. Upon a timely written request from the operator, the Director of Finance shall give not less than thirty (30) days’ written notice by mail to the operator to show cause, at a time and place fixed in said notice, why the assessed amount should not be fixed for tax, interest, and penalties.
(f) Conduct of Hearing. The operator may appear and offer evidence why the assessed tax, interest, and penalties should not be fixed. The operator may be represented by counsel.
(g) Determination. The Director of Finance shall determine the proper tax, interest, and penalties to be remitted and shall give written final-determination notice to the operator by mail of the determination and the amount of tax, interest, and penalties due. The amount determined to be due shall be delinquent fifteen (15) days following notice of determination, unless an appeal is taken to the City Council as provided in SCCC 3.25.130. (Ord. 1847 § 2, 10-20-09).
3.25.130 Appeals from decisions of Director of Finance.
Any operator not in agreement with the decision of the Director of Finance with respect to the amount of such tax, interest, and penalties, if any, may appeal the decision under the procedures set forth in Chapter 2.115 SCCC. (Ord. 1847 § 2, 10-20-09; Ord. 2007 § 2, 11-19-19).
3.25.140 Operator’s duty to maintain and preserve records.
It shall be the duty of every operator liable for the collection and payment to the City of any tax imposed by this chapter 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 payment to the City, which records the Director of Finance shall have the right to inspect at all reasonable times.
The records maintained by the operator under this section shall include, but not be limited to, the following:
(a) A daily record of room occupancies.
(b) A written record of each occupancy charge for which an exemption is claimed, including the name of the person occupying the room, dates of occupancy, and reason(s) for exemption. (Ord. 1847 § 2, 10-20-09).
3.25.150 Refunds.
(a) Refunds by Director of Finance. Whenever the amount of any tax, interest, or penalty has been overpaid, paid more than once, or erroneously or illegally collected or received by the City under this chapter, it may be refunded by the Director of Finance as specified in subsections (b) and (c) of this section, provided a claim in writing therefor is filed with the Director of Finance within three years of the date of payment, stating, under penalty of perjury, the specific grounds upon which the claim is founded. The claim shall be on forms furnished by the Director of Finance.
(b) Claim of Refund or Credit by Operator. When the Director of Finance has established that the person from whom the tax has been collected was not a transient, an operator may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid more than once, or erroneously or illegally collected or received. However, neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator.
(c) Claim of Refund by Transient. A transient may obtain a refund of taxes overpaid, paid more than once, or erroneously or illegally collected or received by the City by filing a claim with the Director of Finance in the manner provided in subsection (a) of this section, but only when the tax was paid by the transient directly to the Director of Finance, or when the transient, having paid the tax to the operator, establishes to the satisfaction of the Director of Finance that the transient has been unable to obtain a refund from the operator who collected the tax.
(d) Documentation Required for Refunds. No refund shall be paid under the provisions of this section unless the claimant establishes his/her right thereto by written records showing entitlement thereto or by order of the City Council in the event of an appeal and overpayment ruling.
(e) No Refunds for Occupancy Extending Over Thirty (30) Days. No refund shall be paid under the provisions of this section when the claim for refund is made solely on the ground that the transient has extended his/her occupancy beyond thirty (30) consecutive days. (Ord. 1847 § 2, 10-20-09).
3.25.160 Actions to collect taxes and enforcement of fines.
(a) Any tax required to be paid by any transient under the provisions of this chapter shall be deemed a debt owed by the transient to the City.
(b) Failure of an operator to collect tax required to be paid by a transient shall not excuse the operator from the operator’s obligation under this chapter. Any such tax collected by an operator that has not been paid to the City shall be deemed a debt owed by the operator to the City. Any tax required to be paid by any transient that is not collected by the operator is deemed a debt owed by the operator to the City.
(c) Any person owing money to the City under the provisions of this chapter shall be liable to an action brought in the name of the City of Santa Clara for the recovery of such amount.
(d) If any amount required to be paid to the City under this chapter is not paid when due, the Director of Finance may, within four years after the amount is due, file an action to collect any unpaid amount and seek a judgment to enforce collection of the debt. All lawful means of judgment collection shall be available to the Director of Finance, including but not limited to a lien on real property. (Ord. 1847 § 2, 10-20-09).
3.25.170 Reserved.
(Ord. 1847 § 2, 10-20-09).
3.25.180 Director of Finance’s regulations and enforcement authority.
The Director of Finance may promulgate reasonable rules, interpretations, and regulations to implement and enforce the provisions of this chapter. Pursuant to California Penal Code Section 836.5, the City Manager is authorized to designate certain employees to arrest without a warrant any person who commits a misdemeanor in violation of this chapter in his/her presence and to issue notices to appear pursuant to the provisions of Penal Code Section 836.5. (Ord. 1847 § 2, 10-20-09).