Utility users tax

Tax rates

As part of the 2006 general election, Menlo Park voters passed a ballot measure imposing a maximum 3.5% tax on gas, electrical, and water usage, and a maximum 2.5% tax on cable, telephone, and wireless services. These maximum tax rates became effective on April 1, 2007.

Tax procedures

This tax, known as a utility user tax, will be paid by Menlo Park residents and businesses and will be collected and remitted by the utility service providers who serve them. The utility service providers will then remit the tax payments on a monthly basis to the city's Finance Division. On June 19, 2007, and with each year since, the City Council has annually adopted a resolution to reduce the tax rate on all utilities to 1% (effective beginning Oct. 1, 2007).

Utility customers
View information about how the utility users' tax affects the customers.

Utility providers
View information about how the utility users' tax affects providers.

Utility users' tax ordinance

 

FAQs

Utility User Tax - Ordinance

Is the utility user tax new?

No. Measure K, establishing a Utility User Tax for the City of Menlo Park, was passed in the General Election of November 7, 2006.

What is the purpose of the tax?

The purpose of the UUT is to support valuable services within the City's General Fund. Proceeds of the tax helps fund general city services including police, emergency preparedness, street and storm drain maintenance, and libraries.

Will the tax ever be increased?

The utility user tax cannot be increased without the voter-approved passage of a new ordinance. However, the City Council has previously reduced the tax percentage temporarily upon annual review as part of the budget process. This reduction is implemented if it is determined that the reduction will not adversely affect the city's financial health.

Utility User Tax - Utility Customers

Who must pay the utility user tax?

Utility users pay the tax to the utility services suppliers, who assess the tax on their customer bills, collect the tax and remit it to the city.

Who is exempt from the utility user tax?

Federal, state and local government departments, bureaus and agencies do not have to pay the tax. State law exempts insurance companies and insurance brokers (but not agents) and federal credit unions from the tax. In addition, individuals that qualify, and have been accepted, for the California Alternate Rates for Energy Program (CARE) are exempt from the tax.

How much is the tax?

The tax is 3.5% of the charges billed to the utility user for electric, gas, and water services. The tax is 2.5% of telecommunication and video services.

Effective October 1, 2007, the tax rates were temporarily reduced to 1% of the charges billed to the utility user for electric, gas, and water services and 1.0% of telecommunication and video services. This reduction is reviewed annually as part of the budget process.

Is there a maximum tax that can be paid?

Yes. A utility user is limited to combined electric, gas, and water utility user taxes (a "cap") of $12,000 per year.

How is the maximum tax, or "cap" applied?

A customer who has electric, gas and water utility bills that typically exceed $120,000 annually should apply for the maximum tax by pre-paying the cap amount 45 days prior to the utility user tax period. Upon receipt of the pre-payment and the application, the City will inform the service provider that the customer should be excluded from further UUT assessments for the remainder of the tax period.

When was the UUT implemented?

The UUT assessment on utilities and services provided to consumers began April 1, 2007. Starting July 1, 2007, the UUT tax year became the same as the city's fiscal year, (July 1 through June 30).

Where can I get more information?

If you have any questions regarding the city's Utility User Tax, you can contact the city's Finance Office (see contact info at right).

Utility User Tax - Utility Providers

What are the duties of utility/service providers with customers in Menlo Park?

  • To accurately assess and collect the utility user tax from the users
  • To file a return and remit the tax to the City of Menlo Park
  • To keep for 3 years all records necessary to determine the amount of such tax that the utility/service provider may have been required to collect and remit.

When must the utility user tax be remitted?

The service supplier must remit the full amount of the tax collected for each month to the city on or before the last day of the following month. The return must be in the format supplied by the city (Remittance Form(PDF, 17KB) ).

What if the utility supplier fails or refuses to collect the tax from the utility user?

The utility/service supplier will be liable for the tax and for penalties (15% of the total tax due) and interest (at the rate of .75% per month until paid).

How long do records need to be kept?

Each person required to collect and remit the UUT must keep records for a period of 3 years. The city has the right to inspect these records at all reasonable times.

Where can I get more information?

If you have any questions regarding the city's Utility User Tax, you can contact the City's

Finance Division.