In a recent interview, Cupertino City Manager Pamela Wu shared insights on how the COVID-19 pandemic led to an unexpected increase in tax revenues from online sales. “As consumers transitioned from in-store shopping to online purchases, we experienced a substantial rise in tax revenues,” Wu remarked. This surge was a surprise for both Cupertino and Apple when they initially signed their tax agreement.
In 2023, Cupertino found itself under audit by the California Department of Tax and Fee Administration concerning the online sales tax generated from Apple’s headquarters. The state required the city to return previous online tax revenues and also enforced changes in how taxes would be collected moving forward.
On October 3, 2024, Wu announced that the city had reached a settlement with the state government. “We are relieved to retain millions in projected sales tax revenue and to avoid returning the taxes collected during the retroactive period,” she explained. This agreement helped Cupertino dodge what could have turned into a protracted and expensive legal dispute.
Wu emphasized the teamwork between her office and the city council in navigating the financial ramifications of the audit. “Our entire budget is only $120 million. Given the potential size of the tax refund, it was crucial that we found a way to maintain fiscal balance,” she noted.
She also highlighted her team’s unwavering dedication in negotiations with state officials. “I made multiple trips to Sacramento, often starting at 5 a.m. Just being there to connect with any representative was vital for us,” Wu reflected, detailing her relentless pursuit of a favorable outcome for Cupertino.
Cupertino Mayor Sheila Mohan spoke to the long-term effects of the settlement. “We’ve been in negotiations with the California Tax Board for over two years. This was a significant and challenging process for our city,” she stated. While future revenues may fall short of earlier expectations, Mohan remains hopeful. “We now have a more stable foundation, and we won’t have the added pressure of repaying past taxes.”
Both Wu and Mohan expressed their appreciation for the cooperative efforts among city staff, legal advisors, and the city council that led to this positive resolution. “Achieving a settlement like this—the result we all hoped for,” Mohan concluded.
