FAQs • Menlo Park, CA • CivicEngage

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.

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Utility User Tax - Utility Customers

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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).

7. 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).