CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Pass the Ordinance amending Section 2, of Chapter 11, of Title 3, of the Naperville Municipal Code increasing the local simplified municipal telecommunications tax rate to six percent (Item 2 of 4).
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Finance Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
Effective July 1, 2002, the State of Illinois enacted the Simplified Municipal Telecommunications Tax Act (the "SMTT") that replaced other telecommunication taxes imposed under the Illinois Municipal Code. Prior to the SMTT, the General Assembly had authorized municipalities to impose various fees and taxes on the privilege of originating or receiving telecommunications, and on retailers engaged in the business of transmitting such telecommunications, all of which were remitted by such retailers directly to the imposing municipality. To simplify the imposition and collection of municipal telecommunications taxes and to reduce complication and burden, the General Assembly repealed those acts and enacted the SMTT which provides for a single municipally imposed telecommunications tax which, is collected by the Illinois Department of Revenue.
This tax is applied on cell phones and land lines and is charged based upon the taxpayer's service address. Additionally, the rate is only applied to the total bill associated with telecommunications, which does not include data packages or communication through Internet-based services.
The SMTT imposes a 7.00% tax rate on behalf of the State of Illinois and allows municipalities to impose up a local tax rate of up to 6.00%. Effective January 1, 2003, the City of Naperville imposed a 5.00% SMTT rate. Staff's research shows all but one comparable community impose a rate at the 6.00% maximum.
The SMTT may be imposed only in 0.25% increments and there is a deadline for filing ordinances making changes to the rate. Municipalities must file any ordinance changin...
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