Chapter 6.06
OCCUPATION TAX AND LICENSE

Sections:

6.06.010    Exercise of revenue powers.

6.06.020    Definitions.

6.06.030    Occupation license – Required.

6.06.040    License tax year.

6.06.050    Occupations subject to tax – Amounts.

6.06.060    Deductions and exemptions.

6.06.070    Filing and payment.

6.06.080    Payment by fiscal year.

6.06.090    Sale or transfer of business – Liability of transferee.

6.06.100    Bookkeeping required – Confidentiality of returns.

6.06.110    Failure to file or report accurately subpoena power – Investigation.

6.06.120    Overpayments and underpayments.

6.06.130    Failure to apply for license – Failure to file or pay tax.

6.06.140    Appeals to council.

6.06.150    Finance director authorized to promulgate rules.

6.06.160    False returns – Evasion – Obstruction.

6.06.010 Exercise of revenue powers.

The provisions of this chapter shall be deemed an exercise of the power of the city to license for revenue. [Code 1980 at § 15.04.010].

6.06.020 Definitions.

In construing the provisions of this chapter, save when otherwise plainly or clearly apparent from the context, the following definitions shall be applied:

“Cellular telephone service” is a two-way voice and data telephone/telecommunications system based in whole or substantially in part on wireless radio communications and which is not subject to regulation by the Washington Utilities and Transportation Commission (WUTC). This includes cellular mobile service. The definition of “cellular mobile service” includes other wireless radio communications services such as specialized mobile radio (SMR), personal communications services (PCS), and any other evolving wireless radio communications technology which accomplishes a purpose similar to cellular mobile service.

“Competitive telephone service” means the providing by any person of telecommunications equipment or apparatus, or service related to that equipment or apparatus which is of a type which can be provided by persons that are not subject to regulation as telephone companies under RCW Title 80 and for which a separate charge is made. Transmission of communication through cellular telephones is classified as “telephone business” rather than “competitive telephone service.”

“Gross income” means the value proceeding or accruing from the sale of tangible property or service, and receipts, including all sums earned or charged, whether received or not, by reason of the investment of capital in the business engaged in, including rentals, royalties, fees or other emoluments, however designated, excluding receipts or proceeds from the use or sale of real property or any interest therein, and proceeds from the sale of notes, bonds, mortgages, or other evidences of indebtedness, or stocks and the like, and without any deductions on account of the cost of the property sold, the cost of materials used, labor costs, interest or discount paid, or any expense whatsoever, and without any deduction on account of losses.

“Tax year” or “taxable year” means the calendar year commencing January 1st and ending on the last day of December or, in lieu thereof, the taxpayer’s fiscal year when permission is obtained from the finance director to use the same as the tax period.

“Taxpayer” means any person liable to the license fee or tax imposed by this chapter.

“Telephone business” means the business of providing access to a local telephone network, local telephone network switching service, toll service, cellular telephone service, or coin telephone services, or providing telephonic, video, data, or similar communication or transmission for hire, via a local telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. It includes cooperative or farmer line telephone companies or associations operating an exchange. “Telephone business” does not include the providing of competitive telephone service, the providing of cable television service, nor the providing of broadcast services by radio or television stations. [Ord. 10611 § 1, 1995; Ord. 9040 § 2, 1981; Code 1980 at § 15.04.020].

6.06.030 Occupation license – Required.

A. No person shall engage in or carry on any business, occupation, pursuit, or privilege for which a license fee or tax is imposed by this chapter without having first obtained, and being the holder of, a valid and subsisting license so to do, to be known as an occupation license. Such license is in addition to the general business registration required by Chapter 6.05 BMC.

B. Any person engaging in or carrying on more than one such business, occupation, pursuit, or privilege shall pay the license tax so imposed upon each of the same.

C. Any taxpayer who engages in or carries on any business subject to tax under this chapter without having his occupation license so to do, shall be guilty of a violation of this chapter for each day during which the business is so engaged in or carried on, and any taxpayer who fails or refuses to pay the license fee or tax on any part thereof on or before the due date shall be deemed to be operating without having his license so to do. [Ord. 2012-10-047 § 6. Code 1980 at § 15.04.030].

6.06.040 License tax year.

A. All occupation licenses shall be for the tax year for which issued and shall expire at the end of such tax year.

B. Such occupation license and the fee or tax therefor imposed by this chapter shall be for the year commencing January 1st and ending on the last day of December of each year; provided, however, that if the taxpayer in transacting his business keeps the books reflecting the same for a fiscal year not based on the calendar year, he may, with the assent of the finance director, obtain his license for the period of his current fiscal year which shares his tax year, and pay the fee or tax computed upon his gross income made during his fiscal year (next preceding his tax year) covering his accounting period as shown by the method of keeping the books of the business. [Code 1980 at § 15.04.040].

6.06.050 Occupations subject to tax – Amounts.

There are levied and shall be collected annual license fees or occupation taxes against the persons on account of the business activities, and in the amounts to be determined by the application of the rates against gross income, as follows:

A. Telephone Business. Upon every person engaged in or carrying on a telephone business, there shall be levied a tax equal to the following percentages:

1. 7.614 percent in 1987;

2. 7.345 percent in 1988;

3. 7.076 percent in 1989;

4. 6.807 percent in 1990;

5. 6.538 percent in 1991;

6. 6.269 percent in 1992;

7. 6.000 percent in 1993 and each year thereafter of the total gross operating revenues, derived from the operation of such businesses within the city; provided, however, that the minimum fee shall not be less than $100.00 per tax year. Gross operating revenue for this purpose shall not include charges which are passed on to the subscribers by a telephone company pursuant to tariffs required by the regulatory order to compensate for the cost to the company of the tax imposed by this chapter.

B. Telegraph Business. Upon every person engaged in or carrying on the telegraph business, a fee or tax equal to three and one-half percent of the total gross income from such business in the city during this fiscal year next preceding the tax year for which the license is required; provided, however, that the minimum fee or tax shall not be less than $100.00 per tax year.

C. Gas Suppliers.

1. Upon every person engaged in or carrying on the business of selling or furnishing gas for hire, a fee or tax equal to the following percentages:

a. 6.6 percent in 1985;

b. 6.5 percent in 1986;

c. 6.4 percent in 1987;

d. 6.3 percent in 1988;

e. 6.2 percent in 1989;

f. 6.1 percent in 1990;

g. 6.0 percent in 1991 and each year thereafter of the total gross income from such business conducted within the city with a minimum fee or tax of $100.00 per tax year; provided, however, that a fee or tax of one percent shall apply to that portion of gross income derived from a single use site in excess of $250,000 per month. Suppliers claiming the reduced rate for volume sales to single users shall supplement monthly returns required by BMC 6.06.070(B) as required by the finance director.

2. a. In accordance with applicable state law, the tax of this subsection (C) of this section shall apply to every person for the privilege of using natural gas or manufactured gas in the city as a consumer. The rate of tax herein shall be applied to the value of the article used by the taxpayer for domestic, business, or industrial consumption.

b. The “value of the article used” shall have the meaning set forth in RCW 82.12.010(1) (as from time to time amended), and shall not include any amounts that are paid for the hire or use of a natural gas business in transporting the gas which are subject to and do pay the tax imposed by subsection (C)(1) of this section.

c. There shall be a credit against the tax levied under subsection (C)(1) of this section in an amount equal to any tax paid by:

i. The person who sold the gas to the consumer when that tax is a gross receipts tax similar to that imposed pursuant to this section by another state with respect to the gas for which a credit is sought; or

ii. The person consuming the gas upon which a use tax similar to the tax imposed by this subsection was paid to another state with respect to the gas for which a credit is sought.

d. The use tax hereby imposed shall be paid by the consumer. The administration and collection of the tax hereby imposed shall be by the Washington State Department of Revenue pursuant to RCW 82.14.050.

D. Upon every person engaged in or carrying on the business of selling or furnishing electric light and power, a fee or tax equal to the following percentages:

1. 6.6 percent in 1985;

2. 6.5 percent in 1986;

3. 6.4 percent in 1987;

4. 6.3 percent in 1988;

5. 6.2 percent in 1989;

6. 6.1 percent in 1990;

7. 6.0 percent in 1991 and thereafter of the total gross income from such business in the city; provided, however, that the minimum fee or tax shall not be less than $100.00 per tax year; and provided further, that this tax shall not apply to persons or entities selling electric power to a utility otherwise taxed under this subsection (D) which ultimately resells power to consumers.

E. Water Suppliers. Upon every person, including any water department, engaged in or carrying on the business of selling or furnishing water for domestic or commercial purposes, a fee or tax equal to 18.25 percent of the total gross income from such activity, such tax to be paid covering each month’s business activity and to be paid within 30 days following the conclusion of the next preceding month. Such tax shall be applicable to the extraterritorial revenues of such businesses if their principal place of business is situated within the corporate limits of Bellingham and if the system which generates the extraterritorial revenue is interconnected with a portion of the system located within the city and at least 75 percent of the total system (by value) is located within the city of Bellingham. If the water utility collects a fee to acquire and preserve land within the Lake Whatcom watershed to protect the water quality of Lake Whatcom, the fees collected for that program shall only be subject to a fee or tax equal to 11.5 percent.

F. Upon every person engaged in or carrying on the business of community antenna TV, also known as cable TV, there is provided a fee or tax to be levied and collected as provided herein, equal to six percent of the total gross income from such business from any source whatsoever, commencing on the first day of January, 1983.

G. Sewer Collection and Treatment. Upon every person, including any sewer utility, engaged in or carrying on the business of collecting and creating sewerage waste within the city, a fee or tax equal to 11.5 percent of the total gross income from such activities, such tax to be paid covering each month’s business activities, and to be paid within 30 days following the conclusion of such month.

H. Municipal Golf Course. Upon every person or organization, including any parks and recreation department, engaged in or carrying on the business of a municipal golf course, a fee or tax equal to four percent of the total gross green fee and trail fee income from such activity. The tax herein shall be paid on account of each month’s business activity and shall be paid within 30 days of the end of such month.

I. Cellular Telephone Business.

1. With regard to cellular telephone businesses, which are taxes in accordance with subsection (A) of this section, a deduction from gross income shall be allowed, only to those companies which keep their regular books of account on an accrual basis, for cash discounts, credit losses actually sustained, or to reverse a billing or charge that had been made as a result of third-party fraud or other crime not properly a debt of a customer to be phased in as follows: 20 percent for those occurring in 1995, 40 percent for those occurring in 1996, 60 percent for those occurring in 1997, 80 percent for those occurring in 1998, and a complete deduction for those occurring in 1999 and thereafter.

2. With regard to allocation among taxing jurisdictions based on service address:

a. Service Address. Payments by a customer for the telephone service from telephones without a fixed location shall be allocated among taxing jurisdictions to the location of the customer’s principal service address during the period for which the tax applies.

b. Presumption. There is a presumption that the service address a customer supplies to the taxpayer is current and accurate, unless the taxpayer has actual knowledge to the contrary.

c. Roaming Phones. When the service is provided while a subscriber is roaming outside the subscriber’s normal cellular network area, the gross income shall be assigned consistent with the taxpayer’s accounting system to the location of the originating cell site of the call, or to the location of the main cellular switching office that switched the call.

d. Dispute Resolution. If there is a dispute between or among the city and other city or cities as to the service address of a customer who is receiving cellular telephone services and the dispute is not resolved by negotiation among the parties, then the dispute shall be resolved by the city and the other city or cities by submitting the issue for settlement to the Association of Washington Cities (AWC). Once taxes on the disputed revenues have been paid to one of the contesting cities, the cellular telephone company shall have no further liability with respect to additional taxes, penalties, or interest on the disputed revenues so long as it promptly changes its billing records for future revenues to comport with the settlement facilitated by AWC.

J. Storm and Surface Water. The city’s storm and surface water utility shall pay a tax equal to 11.5 percent of the total gross income from the utility, such tax to be paid covering each month’s business and to be paid within 30 days following the conclusion of such month. [Ord. 2010-12-081; Ord. 2002-12-101; Ord. 2001-02-009; Ord. 2000-11-070; Ord. 2000-05-022; Ord. 1998-05-024; Ord. 10800 § 1, 1996; Ord. 10611 § 2, 1995; Ord. 10503, 1994; Ord. 10412, 1993; Ord. 10277 § 1, 1992; Ord. 10170, 1991; Ord. 10164 § 1, 1991; Ord. 9760 § 1, 1988; Ord. 9616, 1986; Ord. 9537, 1986; Ord. 9376 §§ 1 – 3, 1984; Ord. 9366 § 1, 1984; Ord. 9268 § 1, 1983; Ord. 9260 §§ 1 – 3, 1983; Ord. 9214 § 1, 1983; Ord. 9154 §§ 1 – 3, 1982; Ord. 9122 § 1, 1982; Ord. 9040 § 3, 1981; Ord. 8988 § 1, 1981; Ord. 8954 § 1, 1981; Ord. 8921 § 1, 1980; Ord, 8886 § 2, 1980; Ord. 8630 § 1, 1977; Ord. 8629 § 1, 1977; Code 1980 at §§ 15.04.050, 15.04.060].

6.06.060 Deductions and exemptions.

A. There shall be excepted and deducted from the total gross income upon which the license fee or tax is computed so much thereof as is derived from transactions in interstate or foreign commerce, or on any amount paid by a taxpayer to the United States, the state of Washington, or the city as excise taxes levied or imposed upon the sale or distribution of property or services.

B. Nothing in this chapter shall be construed as requiring a license, or the payment of a license fee or tax, or the doing of any act which would constitute an unlawful burden or interference in violation of the Constitution or laws of the United States, or which would not be consistent with the Constitution or laws of the state of Washington.

C. Any person subject to the payment of a license fee or tax under the provisions of any city ordinance, other than this chapter, on account of engaging in any activity for which he is liable to tax under this chapter, may deduct the amount of such fee or tax from the amount of fee or tax imposed by this chapter on account of such activity, and may further deduct therefrom any money paid to the city, pursuant to provisions in any franchise or contract conferring privileges in connection with the business of such person, but such person shall, nevertheless, in the manner provided for under this chapter, apply for and procure an occupation license. [Ord. 9533, 1986; Code 1980 at § 15.04.070].

6.06.070 Filing and payment.

A. On or before February 15th of each tax year, every taxpayer shall apply to the finance director for an occupation license upon blanks or forms of return to be prepared and provided by him requesting such information as may be necessary to enable him to arrive at the lawful amount of the fee or tax. The taxpayer shall, in a legible manner, write in such blank or form of return the information required and shall sign the same and by affidavit at the foot thereof shall swear or affirm that the information therein given is full and true and that he knows the same to be so.

B. Notwithstanding any other provisions of this chapter, the taxpayer shall file monthly returns of the gross income arising on and after the first day of April, said returns and the remittances covering the same to be filed with the finance director not later than 30 days after the termination of the preceding month.

C. Every such application or return shall be accompanied by a remittance by bank draft, certified check, cashier’s check or money order, payable to the city finance director, or in cash in the amount of the tax or fee required by the provisions of this chapter.

D. If the applicant is a partnership, the application or return must be made by one of the partners; if a corporation, by one of the officers thereof; if a foreign corporation, copartnership or nonresident individual, by the resident agent or local manager of said corporation, copartnership or individual.

E. The finance director shall impose, and there shall be immediately due and payable, a late charge of one percent per month, applied against the tax amount then due, for failure to timely file returns or make remittance as required herein. [Ord. 9760 §§ 2 – 4, 1988; Code 1980 at § 15.04.080].

6.06.080 Payment by fiscal year.

If the fiscal year of any taxpayer, as reflected by the books of his business, is not based upon the calendar year, with the assent of the finance director first obtained, such taxpayer may apply for occupation license, make returns, and pay his license fee or tax on or before 45 days after the close of his fiscal year, as shown by the method of keeping the books of the business, in the same manner as provided in BMC 6.06.070(B), except as changed in this chapter. [Code 1980 at § 15.04.090].

6.06.090 Sale or transfer of business – Liability of transferee.

Upon the sale or transfer during any tax year of a business on account of which a fee or tax is required by this chapter, the purchaser or transferee shall, if the fee or tax has not been paid in full for said year, be responsible for its payment for that portion of said year during which he carries on such business. [Code 1980 at § 15.04.100].

6.06.100 Bookkeeping required – Confidentiality of returns.

A. It shall be the duty of each taxpayer taxed upon his gross income to keep and enter in a proper book or set of books or records an account which shall accurately reflect the amount of his gross income, which account shall always be open to the inspection of the finance director or his duly authorized agent, and from which said officer or agent may verify the return made by the taxpayer.

B. The applications, statements, or returns made to the finance director, pursuant to this chapter, shall not be made public, nor shall they be subject to the inspection of any person except the mayor, the city attorney, the finance director or his authorized agent, and members of the city council. [Code 1980 at § 15.04.110].

6.06.110 Failure to file or report accurately subpoena power – Investigation.

If any taxpayer fails to apply for license or make his return, or if the finance director is dissatisfied as to the correctness of the statements made in the application or return of any taxpayer, said officer or his authorized agent may enter the premises of such taxpayer at any reasonable time for the purpose of inspecting his books or records of account to ascertain the amount of the fee or tax or to determine the correctness of such statement, as the case may be, and examine any person under oath administered by said officer, or his agent, touching the matters inquired into, or said officer or his authorized agent may fix a time and place for an investigation of the correctness of the return and may issue a subpoena to the taxpayer or any other person to attend upon such investigation and there testify, under oath administered by said officer or his agent, in regard to the matters inquired into and may, by subpoena, require him or any person to bring with him such books, records, and papers as may be necessary. [Code 1980 at § 15.04.120].

6.06.120 Overpayments and underpayments.

If the finance director, upon investigation or upon checking returns, finds that the fee or tax paid on any of them is more than the amount required of the taxpayer, he shall refund the amount overpaid by a warrant upon the general fund. If the finance director finds that the fee or tax paid is less than required, he shall send a statement to the taxpayer showing the balance due, who shall within three days pay the amount shown thereon. [Code 1980 at § 15.04.130].

6.06.130 Failure to apply for license – Failure to file or pay tax.

If any taxpayer fails to apply for license, or make his return, or to pay the fee or tax therefor, or any part thereof, within three days after the same shall have become due, the finance director shall ascertain the amount of the fee or tax or installment thereof due and shall notify such taxpayer thereof, who shall be liable therefor in any suit or action by the city for the collection thereof. The finance director shall also notify the city attorney in writing of the name of such delinquent taxpayer and the amount due from him and said officer shall, with the assistance of the finance director, collect the same by any appropriate means or by suit or action in the name of the city. [Code 1980 at § 15.04.140].

6.06.140 Appeals to council.

A. Any taxpayer aggrieved by the amount of the fee or tax found by the finance director to be required under the provisions of this chapter may appeal to the hearing examiner from such finding by filing a written notice of appeal with the hearing examiner within five days from the time such taxpayer was given notice of such amount. The hearing examiner shall schedule a hearing and cause a notice of the time and place thereof to be delivered or mailed to the appellant. At such hearing the taxpayer shall be entitled to be heard and to introduce evidence in his own behalf. The hearing examiner shall thereupon ascertain the correct amount of the fee or tax in an order supported by findings of fact and conclusions of law and shall immediately notify the appellant thereof, which amount, together with costs of the appeal if appellant is unsuccessful therein, must be paid within three days after such notice is given.

B. The hearing examiner may, by subpoena, require the attendance thereat of any person, and may also require him to produce any pertinent books and records. Any person served with such subpoena shall appear at the time and place therein stated and produce the books and records required, if any, and shall testify truthfully under oath administered by the hearing examiner as to any matter required of him pertinent to the appeal; and it is unlawful for him to fail or refuse so to do. [Ord. 2002-10-069 § 7; Code 1980 at § 15.04.150].

6.06.150 Finance director authorized to promulgate rules.

The finance director shall have the power, and it is his duty, from time to time, to adopt, publish, and enforce rules and regulations not inconsistent with this chapter or with law for the purpose of carrying out the provisions thereof; and it is unlawful to violate or fail to comply with any such rule or regulation. [Code 1980 at § 15.04.160].

6.06.160 False returns – Evasion – Obstruction.

It is unlawful for any person liable to tax under this chapter to fail or refuse to make application or return for a license or to pay the fee or tax or installment thereof when due or for any person to make any false or fraudulent application; or in connection with, any such application or return; or to aid or abet another in any attempt to evade payment of the fee or tax, or any part thereof; or for any person to fail to appear and/or testify in response to subpoena issued pursuant hereto, or to testify falsely upon any investigation of the correctness of a return; or, upon the hearing of any appeal, or in any manner, to hinder or delay the city or any of its officers in carrying out the provisions of this chapter. [Code 1980 at § 15.04.170].