G-816 - 11/14/2006 - TAXES - Ordinances Supporting DocumentsJr
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AGENDA ITEM
Regular Board of Trustees Meeting
of
November 14, 2006
SUBJECT: Extension of Utility Tax
FROM: Darrell Langlois
All'
I'I'1;1i 1 t).H.
BUDGET SOURCE/BUDGET IMPACT: Revenues are currently utilized in the General Fund
RECOMMENDED MOTION: I move that the Village Board adopt Ordinance G -816, "An
Ordinance Further Amending Ordinance G -470 Establishing a Utility Within the Village of
Oak Brook, Illinois" which extends the imposition of the utility tax on natural gas and
electricity at the rate of 5% through December 31, 2007.
Background/History:
The Village first imposed utility taxes on various utilities in 1991. When the tax was originally
imposed, the tax was assessed on electric, natural gas, and telephone services within the Village.
The enabling utility tax ordinance included a one year "sunset" provision so that the Village
Board could review both necessity and the rates of tax annually. The tax has been re- imposed
each year thereafter (at varying rates), and the current ordinance imposing this tax expires on
December 31, 2006.
In the mid- 1990's, the Village stopped assessing utility taxes on telephone service and instead
implemented a telecommunication tax, which effectively resulted in the Village receiving taxes
on long distance service instead of just local telephone service. Furthermore, due to deregulation
of the electric industry, beginning in 1998 the Village began implementation of an "electricity
tax ", which is a ten - tiered tax rate structure that resulted in the phasing out of the gross receipts
utility tax (at the present time the rates are designed to approximate a 5% gross receipts tax).
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Neither the telecommunications tax nor electricity tax carry a sunset provision with it; thus, as a
practical matter, extending the sunset date only impacts the current 5% utility tax on natural gas.
Receipts from the utility tax on natural gas are deposited in the General Corporate Fund and are
expected to amount to approximately $400,000 in 2006.
At the recent Committee -of -the -Whole meeting regarding the 2007 Budget, the financial
information provided to the Board included continuation of this tax for 2007. Due to the long list
of projects that staff had to defer in order to maintain the six -month reserve policy for 2007 as
well as the pending $5 million obligation for the Village's share of the 22nd Street /I -88 bridge
improvement, extending this tax for 2007 is strongly recommended.
Recommendation:
I recommended that the current utility tax be extended at the 5% rate through December 31,
2006.
Please let me know if you have any questions or comments.
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ITEM
AGENDA ITEM
Regular Board of Trustees Meeting
of
November 28, 2006
SUBJECT: Utility Tax - Sunset Clause
FROM: Richard B. Boehm, Village Manager
BUDGET SOURCE/BUDGET IMPACT: N/A
RECOMMENDED MOTION: For Discussion
Background/History:
At the November 14, 2006 Board of Trustees meeting, the Utility Tax was extended for the
2007 calendar year. At the time of the adoption of Ordinance G -470 Trustee Kennedy inquired if
it was necessary to retain the sunset clause in the Village Code as it relates to the Utility Tax. In
order to have a discussion on this matter, staff was requested to place this matter on the
November 28, 2006 meeting agenda. It has been opined that there is no legal requirement to have
an expiration date and revisit this matter on an annual basis.
Recommendation:
For discussion.
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Law Offices
KUBIESA, SPIROFF, GOSSELAR & ACKER, P.C.
533 WEST NORTH AVENUE, SUITE 204
ELMHURST, ILLINOIS 60126
TELEPHONE (630) 516 -1800
FAX (630) 516 -1808
MEMORANDUM
TO: Village President and Trustees
FROM: Kenneth T. Kubiesa, Village Attorney
DATE: November 17, 2006
RE: Utility Tax: Sunset Clause
As recently amended, Section 5 -1 -5 of the Village Code provides that the utility tax
imposed in Chapter 1 of Title 5 of the Code will be based on gross receipts paid to the taxpayer
for services billed on or after October 1, 1981, through and including December 31, 2007.
Trustee Kennedy inquired whether it was necessary to amend Section 5 -1 -5 (and related
provisions in Section 5- 1 -6(B) every year, recognizing that this practice has, in effect, created a
sunset clause for the utility tax.
The history of this practice is not entirely clear, but I reviewed the statutory authority for
the Village's utility tax and have determined that State law does not require such a sunset clause.
The Village Board could, therefore, determine, in its discretion, to remove the dates from Section
5 -1 -5 altogether. If the Board chooses to take this action, there is no legal impediment to doing
so.
With the foregoing in mind, the Board may wish to discuss this issue again and, if the
Board determines to eliminate the sunset of the utility tax each year, our office can prepare the
necessary ordinance at the Board's direction.
'675QI
5 -1 -6
taxpayer as compensation for the use of its streets, alleys or other public
places, or installation and maintenance therein, thereon or thereunder of
poles, wires, pipes or other equipment used in the operation of the
taxpayer's business. (Ord. G -704, 10 -8 -2002)
5 -1 -5: EFFECTIVE DATE OF TAX: The tax provided for in this
chapter shall be based on the "gross receipts'' as herein
defined, actually paid to the taxpayer for services billed on or after October
19 1991, through and including December 31, 2006. (Ord. G -704,
10 -8 -2002; Ord. G -732, 10 -14 -2003; Ord. G -763, 10 -26 -2004; Ord. G -790,
10 -25 -2005)
5 -1 -6: TAXPAYER'S REPORT REQUIRED:
A. On or before November 30, 1991, each taxpayer shall make a return
to the village treasurer for the month of October 1991, stating:
1. Name;
2. Place of business;
3. Gross receipts during that month upon the basis of which the tax
is imposed;
4. Amount of tax; and
5. Such other reasonable and related information as the corporate
authorities may require.
B. On or before the last day of every month thereafter, each taxpayer
shall make a like return to the village treasurer for the month
preceding. The last such return shall be for the month of December
2006, which shall be due January 31, 2007.
C. The taxpayer making the return herein provided for shall, at the time
of making such return, pay to the village treasurer the amount of tax
herein imposed, provided, that in connection with any return the
taxpayer may, if the taxpayer so elects, report and pay an amount
based on the total billings of business subject to the tax during the
period for, which the return is made (exclusive of any amounts
previously billed) with prompt adjustments of later payments based
upon any differences between such billings and the taxable gross
December 2005
Village of Oak Brook
5 -1 -6 1 5 -1 -10
receipts. (Ord. G -704, 10 -8 -2002; Ord. G -732, 10 -14 -2003; Ord.
G -763, 10 -26 -2004; Ord. G -790, 10 -25 -2005)
5 -1 -7: MAINTAINING BOOKS AND RECORDS: Each taxpayer
shall keep accurate books and records of its business or
activity, including original source documents and books of entry denoting
the transactions that gave rise, or may have given rise, to any tax liability or
exemption. All such books and records shall be kept in the English
language and, upon not less than fourteen (14) days' prior written notice,
shall be subject to and available for inspection by the village treasurer or
his /her designee, at all- times during business hours of the day. (Ord.
G -704, 10 -8 -2002)
5 -1 -8: MISTAKES AND ERRORS: If it shall appear that an amount
of tax has been paid which was not due under the provisions
of this chapter, whether as the result of a mistake of fact or an error of law,
then such amount shall be credited against any tax due, or to become due,
under this chapter from the taxpayer who made the erroneous payment;
provided that no amounts erroneously paid more than three (3) years prior
to the filing of a claim therefor shall be so credited.
If a taxpayer under this chapter is unable to use a credit authorized by this
section solely because the tax imposed by this chapter has been replaced
by the tax imposed under chapter 4, "Municipal Electricity Tax ", of this title
then the taxpayer may apply such credit against any tax due under chapter
4 of this title. (Ord. G -704, 10 -8 -2002)
5 -1 -9: RECOVERY LIMITATION: No action to recover any amount
of tax due under the provisions of this chapter shall be
commenced more than three (3) years after the due date of such amount.
(Ord. G -704, 10 -8 -2002)
5 -1 -10: PENALTY: Any taxpayer who fails to make a return, or who
makes a fraudulent return, or who wilfully violates any other
provisions of this chapter is guilty of a misdemeanor and, upon conviction
thereof, shall be fined as provided in the general penalty in section 1 -3 -1 of
this code, and in addition shall be liable in a civil action for the amount of
tax due. (Ord. G -704, 10 -8 -2002)
December 2005
Village of Oak Brook