USE TAX DIRECT PAYMENT PERMIT REQUIREMENT

Los Angeles Administrative Code div. 10, ch. 1, art. 16

in effect

Los Angeles Administrative Code § 10.42 Definitions.

Sec. 10.42. Definitions. (a) “City” means the City of Los Angeles. (b) “Contract” means any agreement for the performance of any work or service, the provision of any goods, equipment, materials or supplies, or the rendition of any service to the City or to the public, which is let, awarded or entered into by, or on behalf of, the City of Los Angeles. (c) “Contractor” means any person, firm, corporation, partnership, association or any combination thereof, which enters into a Contract with the City of Los Angeles. (d) “Designated Administrative Agency (DAA)” means the City department, board or office which has administrative responsibility under this article. For purposes of this article, it is the Office of Finance. (e) “Invitation for Bid” means the process through which the City solicits Bids, including but not limited to, Requests for Proposals and Requests for Qualifications. (f) “Permit” means a State of California Use Tax Direct Payment Permit issued by the State Board of Equalization allowing certain vendors to self-assess and remit use taxes directly to the State. (g) “Tangible Property” means any property for which a sales or use tax is required to be paid or collected pursuant to California law. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.1 Purpose.

Sec. 10.42.1. Purpose. Each year the City spends millions of dollars contracting for the delivery of products and services from private sector Contractors. Many of these Contracts provide funds for the purchase and/or lease of Tangible Property within the City. The California State Board of Equalization allows business that have a California Seller or Consumer Use Tax Account Number to obtain a Permit for remitting use tax when certain conditions are met. The Permit allows purchasers and lessees of Tangible Property to self-assess and pay use taxes directly to the State Board of Equalization instead of paying use taxes to the vendor or lessor from whom the Tangible Property is purchased or leased. To qualify for a Permit, the Tangible Property purchased or leased must have a total value of $500,000 or more annually, and must be purchased from in-state retailers or leased from in-state or out-of-state lessors during the years preceding the application for the program. The Permit holder must allocate local use taxes to the local jurisdiction in which the Tangible Property acquired under the Permit is first functionally used. It is in the City’s interest to require that eligible Contractors obtain a Permit and properly designate use taxes to the City when the Tangible Property acquired under the Permit is first functionally used within the City. To that end, the City adopted Los Angeles Municipal Code Section 21.6.10 which establishes a Use Tax Direct Payment Permit incentive program to provide for a rebate of a certain percentage of any net use tax gain received by the City as a result of the use of a Permit by any qualified person or entity. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.2 Contractor Requirement.

Sec. 10.42.2. Contractor Requirement. If otherwise eligible, and whenever a Contractor may legally designate the City as the jurisdiction entitled to the Use Tax, a Contractor who acquires Tangible Property under a City Contract shall apply for and obtain a Permit and shall designate all use taxes to the City, including but not limited to instances when the property is first used functionally within the City. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.3 Exemptions.

Sec. 10.42.3. Exemptions. (a) The following Contracts are exempt from application of this Article: (1) Contracts with a governmental entity such as the United States of America, the State of California, a county, city or public agency of such entities, or a public or quasi-public corporation located therein and declared by law to have such public status. (2) Contracts for the investment of trust moneys or agreements relating to the management of trust assets. (3) Banking contracts entered into by the Treasurer pursuant to California Government Code Section 53630 et seq. (4) Contracts where the goods or services are proprietary or only available from a single source. (5) Contracts awarded on the basis of exigent circumstances whenever any awarding authority finds that the City would suffer a financial loss or that City operations would be adversely impacted unless exempted from the provisions of this article. This finding must be approved by the DAA prior to contract execution. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.4 Administration.

Sec. 10.42.4. Administration. (a) The DAA shall promulgate rules and regulations for implementation of this article. Said rules shall be submitted to City Council for consideration within sixty days after the effective date of this ordinance. (b) The DAA shall monitor compliance with this article including investigation of alleged violations. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.5 Enforcement.

Sec. 10.42.5. Enforcement. (a) Contracts shall provide that violation of this Article shall constitute a material breach thereof and entitle the City to terminate the Contract and otherwise pursue legal remedies that may be available. (b) Violations of this article shall be reported to the DAA. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.6 Application of this Article.

Sec. 10.42.6. Application of this Article. (a) The requirements of this article shall be applicable to Contracts awarded pursuant to Invitations for Bids issued after the rules and regulations are adopted by the City Council. (b) This article shall be applicable to Contracts entered into after the rules and regulations have been adopted by the City Council, unless the contract is awarded pursuant to an Invitation for Bid issued prior to adoption of the rules and regulations by the City Council. (c) This article shall be applicable to contract amendments entered into after the rules and regulations have been adopted by the City Council, if the initial contract was not subject to the provisions of this article. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.7 Consistency with Federal or State Law.

Sec. 10.42.7. Consistency with Federal or State Law. The provisions of this Article shall not be applicable to those instances in which its application would be prohibited by federal or state law or where the application would violate or be inconsistent with the terms or condition of a grant or contract with an agency of the United States, the State of California or the instruction of an authorized representative of any such agency with respect to any such grant or contract. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Los Angeles Administrative Code § 10.42.8 Severability.

Sec. 10.42.8. Severability. If any provision of this Article is declared legally invalid by any court of competent jurisdiction, the remaining provisions shall remain in full force and effect. SECTION HISTORY Added by Ord. No. 178,869, Eff. 7-24-07.

Source: City of Los Angeles, Charter and Codes (American Legal Publishing, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/los_angeles/latest/laac/0-0-0-66442Fetched: 10/24/2026