Chapter 3.10
UTILITIES1

Sections:

3.10.010    Exercise of license revenue power.

3.10.020    Definitions.

3.10.030    Business license.

3.10.040    Occupations subject to tax – Amount.

3.10.050    Consumer gas tax.

3.10.060    Cellular telephone service – Income allocation and administration.

3.10.070    Tax rate change.

3.10.080    Exemption.

3.10.090    Tax year.

3.10.100    Deductions.

3.10.110    Monthly installments.

3.10.120    Taxpayer’s records.

3.10.130    Applications and returns confidential.

3.10.140    Failure to make returns or to pay the tax in full.

3.10.150    Penalty for delinquent payment.

3.10.160    Overpayment of tax.

3.10.170    Noncompliance – Penalty.

3.10.180    Subpoena power.

3.10.190    Appeal to hearing examiner.

3.10.200    Designated official to make rules.

3.10.210    False returns.

3.10.220    Utility tax relief.

3.10.230    Utility tax relief – Qualifications.

3.10.240    Claim filing procedures.

3.10.010 Exercise of license revenue power.

The provisions of this chapter shall be deemed an exercise of the power of the city of Federal Way to tax for revenue.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-170.)

3.10.020 Definitions.

The definitions in this section apply throughout this chapter unless the context clearly requires otherwise. Terms not defined here are defined according to FWRC 1.05.020.

“Cable service” means:

(1) A system providing service pursuant to a franchise issued by the city under the Cable Communications Policy Act of 1984 Public Law No. 98-549, 47 USC Section 521, as it may be amended or superseded; or

(2) Any system that competes directly with such franchised system by employing antennas, microwave, wires, wave guides, coaxial cables, or other conductors, equipment or facilities designed, constructed or used for the purpose of:

(a) Collecting and amplifying local and distant broadcast television signals and distributing and transmitting them;

(b) Transmitting original cablecast programming not received through television broadcast signals; or

(c) Transmitting television pictures, film and videotape programs not received through broadcast television signals, whether or not encoded or processed to permit reception by only selected receivers.

“Cable service” shall not include television entities that are subject to charges as commercial TV stations under 47 USC Section 158.

“Cellular telephone service” means 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 the same purpose as cellular mobile service.

“Competitive telecommunication service” means the providing by any person of telecommunications equipment or apparatus, or service related to that equipment or apparatus such as repair or maintenance service, if the equipment or apparatus 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.

“Designated official” means an agent or employee designated by the mayor.

“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 deduction 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, including the amount of credit losses actually sustained by the taxpayer whose regular books or accounts are kept upon an accrual basis.

“Network telecommunication service” means the providing by any person of access to a local telephone network, local telephone network switching service, toll service, or coin telephone services; or the providing of telephonic, video, data, pagers, or similar communication or transmission for hire, via a local telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. “Network telecommunication service” includes interstate service, including toll service, originating from or received on telecommunications equipment or apparatus in this state if the charge for the service is billed to a person in this state. “Network telecommunication service” does not include the providing of competitive telecommunication service, the providing of cable television service, nor the providing of broadcast services by radio or television stations.

“Solid waste” means garbage, trash, rubbish, or other materials discarded as worthless or not economically viable for further use. The term does not include hazardous or toxic waste, and does not include yard waste or material collected primarily for recycling or salvage.

“Telecommunication business” means the business of providing network telecommunication service, as defined in this section. It includes cooperative or farmer line telephone companies or associations operating an exchange.

“Telecommunication service” means competitive telecommunication service or network telecommunication service, or both, as defined in this section.

“Telecommunications company” includes every corporation, company, association, joint stock association, partnership and person, their lessees, trustees or receivers appointed by any court whatsoever, and every city or town owning, operating or managing any facilities used to provide telecommunications for hire, sale, or resale to the general public within this state.

(Ord. No. 10-669, § 22, 9-21-10; Ord. No. 09-600, § 15, 1-6-09; Ord. No. 07-562, § 1, 10-2-07; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-171.)

3.10.030 Business license.

No person, firm or corporation shall engage in or carry on any business, occupation or act or privilege for which a tax is imposed by FWRC 3.10.040 without first having obtained, and being the holder of a business license as provided in FWRC Title 12.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-172.)

3.10.040 Occupations subject to tax – Amount.

There are levied upon and shall be collected from everyone, including the city, on account of certain business activities engaged in or carried on in the city, occupation taxes in the amounts to be determined by the application of rates given against gross income as follows:

(1) Upon everyone engaged in and carrying on a telegraph business, a tax equal to 7.75 percent of the total gross income from such business in the city during the period for which the tax is due;

(2) Upon everyone engaged in or carrying on a competitive telecommunication service or network telecommunication service, a tax equal to 7.75 percent of the total gross income from such business in the city during the period for which the tax is due. In determining gross income from such business, including intrastate toll service, the taxpayer shall include 100 percent of the gross income received from such business in the city;

(3) Upon everyone engaged in or carrying on the business of cellular telephone service, a tax equal to 7.75 percent of the total gross income from such business in the city during the period for which the tax is due;

(4) Upon everyone engaged in or carrying on the business of selling, brokering or furnishing natural gas for domestic, business or industrial consumption, a tax equal to 7.75 percent of the total gross income from such business in the city during the period for which the tax is due;

(5) Upon the city in respect to the conduct, maintenance, and operation of its municipal storm drainage system as a public utility, a tax equal to 7.75 percent of the total gross income from such business in the city during the period for which the tax is due;

(6) Upon everyone engaged in or carrying on the business of selling or furnishing electric energy, a tax equal to 7.75 percent of the total gross income from such business in the city during the period for which the tax is due;

(7) Upon everyone engaged in the business of collecting solid waste, a tax equal to 7.75 percent of the total gross income from the city during the period for which the tax is due, less income derived from collection and sales of materials not defined herein as solid waste; and

(8) Upon everyone engaged in or carrying on the business of cable communications, a fee or tax equal to 7.75 percent of the total gross income from gross subscriber revenues in the city during the period for which the fee or tax is due. For purposes of this chapter, “gross subscriber revenues” means and includes those revenues derived from the supplying of subscription services, that is, installation fees, disconnect and reconnect fees, fees for regular cable benefits including the transmission of broadcast signals and access and origination channels and per-program or per-channel charges; it does not include leased channel revenue, advertising revenue, or any other income derived from the system.

(Ord. No. 06-539, § 1, 12-5-06; Ord. No. 02-431, § 1, 11-19-02; Ord. No. 96-276, § 1, 12-3-96; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-173.)

3.10.050 Consumer gas tax.

(1) As authorized by RCW 82.14.230, there is hereby imposed on every person a use tax for the privilege of using natural gas or manufactured gas in the city as a consumer. The tax shall be in an amount equal to the value of the article used by the taxpayer multiplied by the rate of tax on the gas distribution business as set forth in FWRC 3.10.040(4). The “value of the article used” shall have the meaning set forth in RCW 82.12.010(1).

(2) Exemption. The tax imposed under this section shall not apply to the use of natural or manufactured gas if the person who sold the gas to the consumer has paid a tax under FWRC 3.10.040(4) with respect to the gas for which exemption is sought under this subsection.

(3) Credit. There shall be a credit against the tax levied under this section if allowed pursuant to RCW 82.14.230(4) as it now exists or may hereafter be amended.

(4) Administration Collection. The use tax hereby imposed shall be paid by the consumer. The administration and collection of the tax imposed by this section shall be in accordance with the provisions of RCW 82.14.050 as the same now exists or may hereafter be amended.

(Ord. No. 99-360, §§ 1 – 4, 12-21-99. Code 2001 § 14-173.1.)

3.10.060 Cellular telephone service – Income allocation and administration.

(1) Allocation of income.

(a) Service address. Payments by a customer for cellular 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. When the cellular telephone 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.

(2) Authority of administrator. The mayor or his or her designee is authorized to represent the city in negotiations with other cities for the proper allocation of cellular telephone service taxes imposed pursuant to this chapter.

(Ord. No. 11-684, § 4, 1-18-11; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-174.)

3.10.070 Tax rate change.

No change in the rate of tax imposed by FWRC 3.10.040 shall apply to business activities occurring before the effective date of the change and, except for a change in the tax rate authorized by RCW 35.21.870, no change in the rate of the tax may take effect sooner than 60 days following the enactment of the ordinance establishing the change. The designated official shall send to each affected business at the address of record a copy of any ordinance changing the rate of tax promptly upon its enactment.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-175.)

3.10.080 Exemption.

The tax herein levied is in lieu of any excise, privilege or occupational tax under any chapters of this title with respect to activities specifically within the provisions of this chapter. Nothing herein shall be construed to exempt persons taxable under the provisions of this chapter from tax under any other chapters of this title with respect to activities other than those specifically within the provisions of this chapter.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-176.)

3.10.090 Tax year.

The tax year shall commence January 1st and shall end on December 31st.

(Ord. No. 07-562, § 1, 10-2-07; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-177.)

3.10.100 Deductions.

In computing the tax imposed by this chapter, the following items may be deducted from the measure of the tax:

(1) The amount of credit losses actually sustained by taxpayers whose regular books are kept upon an accrual basis.

(2) Charges by a taxpayer engaging in a telephone business to a telecommunications company for telephone service that the purchaser buys for the purpose of resale.

(3) That portion of the gross income derived from charges to another telecommunications company for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate services.

(4) Adjustments made to a billing or to a customer account or to an accrual account in order to reverse a billing or charge that had been made as a result of third-party fraud or other crime and was not properly a debt of the customer.

(5) Amounts derived from a business which the city is prohibited from taxing under the Constitution of this state or the Constitution or laws of the United States.

(6) Grants from governmental agencies.

(7) The utility tax charged by the city of Federal Way.

(Ord. No. 07-562, § 1, 10-2-07; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-178.)

3.10.110 Monthly installments.

The tax imposed by FWRC 3.10.040 shall be due and payable in monthly installments, and remittance therefor shall be made on or before the last day of the month following the end of the monthly period in which the tax is accrued. On or before said due date, the taxpayer shall file with the designated official a written return upon such form and setting forth such information as the designated official shall reasonably require, together with the payment of the amount.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-179.)

3.10.120 Taxpayer’s records.

(1) Each taxpayer shall keep records for up to six years reflecting the amount of his or her gross operating revenues on services within the city, and such records shall be open at all reasonable times to the inspection of the designated official, or his or her duly authorized subordinates for verification of said tax returns or for the filing of the tax of a taxpayer who fails to make such return.

(2) If a taxpayer does not keep the necessary books and records within the city, it shall be sufficient if such person (a) produces within the city such books and records as may be required by the designated official, or (b) bears the cost of examination by the designated official’s agent at the place where such books and records are kept; provided, that the taxpayer electing to bear such cost shall pay in advance to the city the estimated cost of the examination including round-trip fare, lodging, meals and incidental expenses, subject to adjustment upon completion of the examination.

(Ord. No. 04-478, § 1, 12-21-04; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-180.)

3.10.130 Applications and returns confidential.

The applications, statements or returns made to the designated official pursuant to this chapter shall not be made public, nor shall they be subject to the inspection of any person except the mayor, city attorney, designated official or authorized agent and to members of the city council; and it is unlawful for any person to make public or inform any other person as to the contents of or any information contained in or to permit inspection of any application or return; provided, however, that the foregoing shall not be construed to prohibit the designated official from making known or revealing names, addresses and telephone numbers of utilities operating within the city, facts or information contained in any return to any taxpayer or disclosed in any investigation or examination of the taxpayer’s books or records to the State Department of Revenue, for official purposes, but only if the statutes of the state grant substantially similar privileges to the proper officers of the city.

(Ord. No. 11-684, § 5, 1-18-11; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-181.)

3.10.140 Failure to make returns or to pay the tax in full.

If any taxpayer fails, neglects or refuses to make its return as and when required herein the designated official is authorized to determine the amount of tax payable, and by mail to notify such taxpayer of the amount so determined. The amount so fixed shall thereupon be the tax and be immediately due and payable, together with penalty and interest. Delinquent taxes, including any penalty and interest, are subject to an interest charge of 12 percent per year on any unpaid balance from the date the tax became due as provided in FWRC 3.10.110 until paid.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-182.)

3.10.150 Penalty for delinquent payment.

If any person, firm or corporation subject to this tax fails to pay any tax required by this chapter within 15 days after the due date thereof, there shall be added to such tax a penalty of 10 percent of the amount of such tax, and any tax due under this chapter which is unpaid and all penalties thereon shall constitute a debt to the city and may be collected by court proceedings, which remedy shall be in addition to all other remedies.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-183.)

3.10.160 Overpayment of tax.

Any money paid to the city through error, or otherwise not in payment of the tax imposed by this chapter, or in excess of such tax, shall, upon the request of the taxpayer and upon appropriate proof provided by the taxpayer and approved by the designated official, be credited against any tax due or to become due from such taxpayer hereunder, or, upon the taxpayer ceasing to do business in the city, be refunded to the taxpayer. The following must be included with the credit or refund request:

(1) Name, address and UBI/tax registration number of taxpayer;

(2) Amount of refund or credit requested;

(3) Tax type and taxable period;

(4) Explanation for the overpayment; and

(5) Taxpayer signature.

No credit or refund shall be made for overpayment of tax unless a request is made within one year from the date of overpayment.

(Ord. No. 11-685, § 1, 2-1-11; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-184.)

3.10.170 Noncompliance – Penalty.

Any person who fails to apply for a business license, make a tax return, or pay any tax when due; who makes any false statement or representation in or in connection with an application for a business license or tax return; or who otherwise violates this chapter is guilty of a misdemeanor. Each day or portion of a day during which a violation occurs, continues, or is permitted is a separate violation.

(Ord. No. 09-601, § 38, 1-6-09; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-185.)

3.10.180 Subpoena power.

In addition to other remedies provided for herein, the city’s designated official or his or her agent may fix a time and place for an investigation of the correctness of any return and may issue a subpoena to the taxpayer or any other person to attend upon such investigation and there testify, under oath, in regard to the matters inquired into and may, by subpoena, require the taxpayer or any other person to bring with him or her such books, records and papers as may be required by the designated official.

(Ord. No. 04-478, § 2, 12-21-04. Code 2001 § 14-185.1.)

3.10.190 Appeal to hearing examiner.

Any taxpayer aggrieved by a determination of the designated official under the provisions of this chapter may appeal such determination pursuant to the following procedures. If the determination being appealed is the amount of the tax or fee due, the amount determined by the designated official must be paid to the city under protest prior to filing an appeal.

(1) Form of appeal. Any appeal must be in writing and must contain the following:

(a) Name, address and UBI/tax registration number of taxpayer;

(b) A statement identifying the determination of the designated official from which the appeal is taken;

(c) A statement setting forth the grounds upon which the appeal is taken and identifying specific errors the designated official is alleged to have made in making the determination;

(d) A statement identifying the requested relief from the determination being appealed; and

(e) An appeal fee of $500.00, which is refundable in the event the appellant prevails on the appeal.

(2) Time and place to appeal. An appeal shall be filed with the city clerk no later than 30 days following the date on which the determination of the designated official was mailed to the taxpayer. Failure to follow the appeal procedures in this section shall preclude the taxpayer’s right to appeal.

(3) Appeal hearing. The hearing examiner shall schedule a hearing date, notify the taxpayer and the designated official and shall then conduct an appeal hearing in accordance with this chapter and procedures developed by the hearing examiner, at which time the appellant taxpayer and the designated official shall have the opportunity to be heard and to introduce evidence relevant to the subject of the appeal.

(4) Burden of proof. The appellant taxpayer shall have the burden of proving by a preponderance of the evidence that the determination of the designated official is erroneous.

(5) Hearing record. The hearing examiner shall make an electronic sound recording of each appeal unless the hearing is conducted solely in writing.

(6) Decision of the hearing examiner. Following the hearing, the hearing examiner shall enter a decision on the appeal, supported by written findings and conclusion in support thereof. A copy of the findings, conclusions and decision shall be mailed to the appellant taxpayer and the designated official.

(7) Judicial review. The decision of the hearing examiner may be appealed to the superior court of King County by the appellant taxpayer or by the designated official, which must be filed within 30 days of mailing of the hearing examiner’s decision.

(Ord. No. 11-685, § 2, 2-1-11; Ord. No. 09-594, § 10, 1-6-09; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-186.)

3.10.200 Designated official to make rules.

The designated official or designee has the authority to adopt rules and regulations to carry out the provisions of this chapter and has the authority to administer and enforce this chapter and any such rules and regulations. It is unlawful to violate or fail to comply with any provision of this chapter or any such rule or regulation.

(Ord. No. 09-597, § 36, 1-6-09; Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-187.)

3.10.210 False returns.

It is unlawful for any person subject to 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 return or any false statement or representation in, 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 to testify falsely upon any investigation of the correctness of a return upon the hearing of any appeal or in any manner hinder or delay the city or any of its officers in carrying out the provisions of this chapter.

(Ord. No. 96-262, § 1, 2-20-96; Ord. No. 95-257, § 1, 12-19-95. Code 2001 § 14-188.)

3.10.220 Utility tax relief.

There is granted to persons who meet the qualifications and requirements of FWRC 3.10.230 and 3.10.240 relief from the city utility tax as follows:

(1) For all utility bills billed to and paid by the person directly during a calendar year for utility service charges from any utility company who is subject to the utility tax of the city, the city shall pay to such person a reimbursement in an amount equal to the utility tax which applied to such bills.

(Ord. No. 03-436, § 1, 1-21-03. Code 2001 § 14-189.)

3.10.230 Utility tax relief – Qualifications.

To qualify for the relief set forth in FWRC 3.10.220, a person must be requesting reimbursement for the amount of city utility taxes imposed during the previous calendar year and must:

(1) Be 65 years of age or older at all times during any period for which reimbursement is requested, and meet the criteria of subsection (3) of this section; or

(2) Be disabled and unable to work, as defined under RCW 84.36.381 and WAC 458-16A-130 as they currently exist or are hereafter amended; and

(3) Have an income during the calendar year, or part thereof, for which a reimbursement is requested from all sources whatsoever, not exceeding the low income guidelines for the King County area as published by the Secretary of Housing and Urban Development. As used in this subsection, “income” means:

(a) “Disposable income,” as that term is defined in RCW 84.36.383, as it may be amended or replaced from time to time; and

(b) The aggregate value of gifts and receipts received from all sources during the calendar year for which a reimbursement is requested; and

(4) Have been a resident of the dwelling unit within the city at all times during any period for which a reimbursement is requested, and have made the payment of city utility taxes from his or her income or resources.

(Ord. No. 06-535, § 1, 11-7-06; Ord. No. 03-436, § 1, 1-21-03. Code 2001 § 14-190.)

3.10.240 Claim filing procedures.

(1) All claims for relief under FWRC 3.10.220 must be made annually and filed by April 30th of the calendar year following the calendar year, or portion thereof, for which a reimbursement is requested; and

(2) All bills for which claim is made under FWRC 3.10.220 shall be submitted to the director as part of the claim for relief; and

(3) All claims for relief shall be submitted in writing on forms provided by the director and certified by the claimant that, under the penalty of perjury, all information provided in the claim is true and correct; and

(4) The director may require documents deemed necessary to establish proper proof of income level and/or disability status of the claimant, including, but not limited to, the two most recent months’ bank statements, two most recent years’ income tax statements, and a current physician’s statement or Supplemental Security Income award letter.

The director shall adopt rules and regulations to implement and enforce this chapter.

(Ord. No. 06-535, § 1, 11-7-06; Ord. No. 03-436, § 1, 1-21-03. Code 2001 § 14-191.)


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Cross reference: Utilities generally, FWRC Title 11.