Chapter 3.21
GAMBLING TAX*

Sections:

3.21.010    Gambling activities and tax.

3.21.020    Administration and collection.

3.21.030    Filing.

3.21.040    Tax due.

3.21.041    Administration and collection of tax.

3.21.042    Method of payment.

3.21.043    Failure to make timely payment of tax or fee.

3.21.050    Records required.

3.21.051    Overpayment or underpayment of tax.

3.21.052    Failure to make return.

3.21.053    Tax additional to others.

3.21.054    Finance director to make rules.

3.21.055    Taxes, penalties, service charges, and fees constitute debt to municipality.

3.21.060    Penalties.

*State law reference(s) – Gambling, RCW 9.46.010 et seq.; authority to tax certain gambling activity, RCW 9.46.110.

3.21.010 Gambling activities and tax.

A. Tax imposed. In accordance with RCW 9.46.110, the following taxes are levied upon all persons, associations, and organizations who have been duly licensed by the Washington State Gambling Commission to conduct or operate gambling activities:

1. For bingo games and raffles, a tax rate of five (5) percent of the gross receipts received therefrom less the amount awarded as cash or merchandise prizes;

2. For amusement games, a tax rate of two (2) percent of the gross receipts from any such amusement games less the amount awarded as prizes, which is an amount less than the actual amount of costs of enforcement by the city of the provisions of Chapter 9.46 RCW;

3. For punch boards and pull-tabs for bona fide charitable or nonprofit organizations and for commercial stimulant operators, a tax rate of ten (10) percent based on the gross receipts from the operation of the games less the amount awarded as cash or merchandise prizes;

4. Commencing July 1, 2013, for social card games not prohibited by subsection (D) of this section, a tax rate of seven (7) percent of the gross revenue from those games. Beginning January 1, 2017, this tax rate will return to eleven (11) percent of the gross revenue from those games.

B. Definitions. For the purposes of this chapter, the words and terms used herein shall have the same meaning given to each pursuant to Chapter 9.46 RCW, as same exist or may from time to time be amended; and as set forth under the rules of the Washington State Gambling Commission, WAC Title 230, as the same exists or may hereafter be amended, unless otherwise specifically provided herein.

C. Exemption from tax. No tax shall be imposed under the authority of this chapter on bingo or amusement games when such activities or any combination thereof are conducted by any bona fide charitable or nonprofit organization as defined in Chapter 9.46 RCW, which organization has no paid operating or management personnel and has gross receipts from bingo or amusement games, or any combination thereof, not exceeding five thousand dollars ($5,000) per year less the amount awarded as cash or merchandise prizes. For raffles conducted by bona fide charitable or nonprofit organizations, no tax shall be imposed under this chapter on the first ten thousand dollars ($10,000) per year of gross receipts, less the amount awarded as cash or merchandise for prizes.

D. Social card games – Prohibited – Exceptions. Pursuant to RCW 9.46.295 and to the city’s police power and legislative authority, the operation or conduct of social card games by any person, association, or organization as a commercial stimulant, as defined in Chapter 9.46 RCW, is prohibited within the city of Kent; provided, that house-banked social card game establishments licensed by the Washington State Gambling Commission, lawfully operating in an area as described in RCW 9.46.295 and annexed by the city of Kent, and which are in compliance with the provisions of this chapter, may continue to operate house-banked social card games as a commercial stimulant under said license and renewals thereto at the original licensed location or at another location within the same annexation area; provided, however, that a relocated establishment must otherwise comply with applicable land use and Gambling Commission regulations. It is further provided that bona fide charitable or nonprofit organizations, as defined in Chapter 9.46 RCW, may operate or conduct social card games if said social card games have been duly licensed by the Washington State Gambling Commission and if they are otherwise operated or conducted in compliance with the provisions of this chapter. A violation of this section shall not be subject to KCC 1.01.140.

(Ord. No. 1888, § 1; Ord. No. 2050, § 1; Ord. No. 3362, § 1, 9-16-97; Ord. No. 3460, § 1, 6-1-99; Ord. No. 3949, § 1, 4-6-10; Ord. No. 4084, § 1, 5-21-13. Formerly Code 1986, § 5.16.010)

State law reference(s) – Similar provisions, RCW 9.46.110.

3.21.020 Administration and collection.

The administration and collection of the tax imposed by this chapter shall be by the finance director, pursuant to the rules and regulations of the state gambling commission. The city council shall adopt and publish such rules and regulations as may be reasonably necessary to enable the collection of the tax imposed herein.

(Ord. No. 1888, § 3; Ord. No. 3362, § 1, 9-16-97. Formerly Code 1986, § 5.16.020)

3.21.030 Filing.

For the purpose of identifying who shall be subject to the tax imposed by this chapter, any person, association, or organization intending to conduct or operate any gambling activity authorized by RCW 9.46.010 et seq. shall, prior to commencement of any such activity, file with the finance director a sworn declaration of intent to conduct or operate such activity, together with a copy of the license issued in accordance with RCW 9.46.010 et seq. Thereafter, for any period covered by such state license or any renewal thereof, any person, association, or organization shall, on or before the fifteenth day of the month following the end of the quarterly period in which the tax accrued, file with the finance director a sworn statement on a form to be provided and prescribed by the city council for the purpose of ascertaining the tax due for the preceding quarterly period.

(Ord. No. 1888, § 4; Ord. No. 3362, § 1, 9-16-97. Formerly Code 1986, § 5.16.030)

3.21.040 Tax due.

A. Quarterly tax reporting and payment. Except as provided in subsection (B) of this section for taxes due in excess of fifty thousand dollars ($50,000) annually, the tax imposed by this chapter shall be due and payable in quarterly installments and remittance therefor, together with the return forms, shall be made on or before the final day of the month immediately after the quarterly period in which the tax accrued. Such payments shall be due on January 31, April 30, July 31, and October 31 of each respective year.

1. Whenever any person, association, or organization taxed under this chapter quits business, sells out, or otherwise disposes of its business, or terminates the business, any tax due shall become due and payable immediately, and such taxpayer shall, within ten (10) days after the last date the establishment is open for business, file a return and pay the tax due.

2. Whenever it appears to the finance director that the collection of taxes from any person, association, or organization may be in jeopardy, the finance director, after not less than ten (10) days’ notice to the taxpayer, is authorized to require that the taxpayer remit taxes due and returns at such shorter intervals than otherwise provided, as the finance director deems appropriate under the circumstances.

B. Monthly tax reporting and payment. The tax imposed by this chapter shall be due and payable in monthly installments when the gambling taxes due in the previous calendar year were in excess of fifty thousand dollars ($50,000). In that event, the tax remittance, together with the return forms, shall be made on or before the final day of the month immediately after the month in which the tax accrued.

1. Whenever any person, association, or organization taxed under this chapter quits business, sells out, or otherwise disposes of its business, or terminates the business, any tax due shall become due and payable immediately, and such taxpayer shall, within ten (10) days after the last date the establishment is open for business, file a return and pay the tax due.

2. Whenever it appears to the finance director that the collection of taxes from any person, association, or organization may be in jeopardy, the finance director, after not less than ten (10) days’ notice to the taxpayer, is authorized to require that the taxpayer remit taxes due and returns at such shorter intervals than otherwise provided, as the finance director deems appropriate under the circumstances.

(Ord. No. 3362, § 1, 9-16-97; Ord. No. 3949, § 2, 4-6-10)

3.21.041 Administration and collection of tax.

A. Administration and collection of the various taxes imposed by this chapter shall be the responsibility of the finance director. Remittance of the amount due shall be accompanied by a completed return form prescribed and provided by the finance director. The taxpayer shall be required to swear and affirm that the information given in the return is true, accurate, and complete.

B. The finance director is authorized, but not required, to mail to taxpayers forms for returns. Failure of the taxpayer to receive such a form shall not excuse the taxpayer from making the return and timely paying all taxes due. The finance director shall have forms available to the public in reasonable numbers at the city hall customer services department during regular business hours.

C. In addition to the return form, a copy of the taxpayer’s quarterly report to the Washington State Gambling Commission required by Chapter 230-08 WAC for the period in which the tax accrued, shall accompany remittance of the tax amount due.

(Ord. No. 3362, § 1, 9-16-97)

3.21.042 Method of payment.

Taxes payable hereunder shall be remitted to the finance director on or before the time required by bank draft, certified check, cashier’s check, personal check, money order, credit card, or cash. If payment is made by draft, credit card, or check, the tax shall not be deemed paid until the draft, credit card, or check is honored in the usual course of business, nor shall the acceptance of any sum by the finance director be an acquittance or discharge of the tax unless the amount paid is the full amount due. The return and copy of the quarterly report to the Washington State Gambling Commission shall be filed in the office of the finance director after notation by the finance director upon the return of the amount actually received from the taxpayer.

(Ord. No. 3362, § 1, 9-16-97)

3.21.043 Failure to make timely payment of tax or fee.

A. Penalty. For each payment due, if such payment is not made by the due date thereof, there shall be added a penalty as follows:

1. If not paid on or before the first day of the second month next succeeding the quarterly period in which the tax accrued, ten (10) percent of the total tax due with a minimum penalty of five dollars ($5).

2. If not paid on or before the first day of the third month next succeeding the quarterly period in which the tax accrued, fifteen (15) percent of the total tax due with a minimum penalty of ten dollars ($10).

3. If not paid on or before the first day of the fourth month next succeeding the quarterly period in which the tax accrued, twenty (20) percent of the total tax due with a minimum penalty of twenty dollars ($20).

4. Failure to make full payment of all taxes and penalties due by the final day of the third month next succeeding the quarterly period in which the tax accrued shall be deemed to be both a criminal and civil violation of this chapter.

B. Service charge. In addition to the penalties imposed under subsection (A) of this section, a service charge of one (1) percent of the amount of the unpaid balance or two dollars ($2.00), whichever amount is greater, will be imposed one (1) month from the date payment was due, and at the end of each succeeding monthly period, until all past due amounts are paid in full.

(Ord. No. 1888, § 5; Ord. No. 2034, § 1; Ord. No. 2602, § 1; Ord. No. 3059, § 1, 8-4-92; Ord. No. 3362, § 1, 9-16-97; Ord. No. 3949, § 3, 4-6-10. Formerly Code 1986, § 5.16.040)

3.21.050 Records required.

A. Each person, association, or organization engaging in an activity taxable under this chapter shall maintain records respecting that activity which truly, completely, and accurately disclose all information necessary to determine the taxpayer’s tax liability hereunder during each base tax period. Such records shall be kept and maintained for a period of not less than three (3) years. In addition, all information and items required by the Washington State Gambling Commission under Chapter 230-08 WAC, and the United States Internal Revenue Service, respecting taxation, shall be kept and maintained for the periods required by those agencies.

B. All books, records, and other items required to be kept and maintained under this section shall be subject to, and immediately made available for inspection and audit at any time, with or without notice, at the place where such records are kept upon the demand of the finance director or his designee for the purpose of enforcing the provisions of this chapter.

C. Where the taxpayer does not keep all of the books, records, or items required to be kept or maintained under this section within the jurisdiction of the city so that the auditor may examine them conveniently, the taxpayer shall either:

1. Produce and make available for inspection in this jurisdiction all of the required books, records, or other items within ten (10) days following a request by the auditor that he do so;

2. Bear the actual cost of inspection by the auditor or his designee at the location of which books, records or items are located; provided, that a taxpayer choosing to bear these costs shall pay in advance to the finance director the estimated costs thereof, including but not limited to, round trip fare by the most rapid means, lodging, meals, and incidental expenses. The actual amounts due or to be refunded for expenses shall be determined following the examination of the records.

D. A taxpayer who fails, neglects, or refuses to produce such books and records either within or without this jurisdiction, in addition to being subject to other civil and criminal penalties provided by this chapter, shall be subject to a jeopardy fee or tax assessment by the auditor which penalty fee or jeopardy assessment shall be deemed prima facie correct and shall be the amount of the fee or tax owing by the taxpayer unless he can prove otherwise. The taxpayer shall be notified by the finance director by posting in the mails of the United States, addressed to the taxpayer to the last address on file with the finance department, a statement of the amount of tax so determined by jeopardy assessment, together with any penalty and/or interest, and the total of such amounts shall thereupon become immediately due and payable.

(Ord. No. 1888, § 8; Ord. No. 3362, § 1, 9-16-97. Formerly Code 1986, § 5.16.050)

3.21.051 Overpayment or underpayment of tax.

If, upon application by a taxpayer for a refund or for an audit of his records, or upon any examination of the returns or records of any taxpayer, it is determined by the finance director that within three (3) years immediately preceding receipt by the finance director of the application by the taxpayer for a refund or an audit, or in the absence of such an application, within three (3) years immediately preceding the commencement by the finance director of such examination:

A. A tax or other fee has been paid in excess of that properly due, the total excess paid over all amounts due to the city within such period of three (3) years shall be credited to the taxpayer’s account or shall be credited to the taxpayer at the taxpayer’s option. No refund or credit shall be allowed for any excess paid more than three (3) years before the date of such application or examination.

B. A tax or other fee has been paid which is less than that properly due, or no tax or other fee has been paid, the finance director shall mail a statement to the taxpayer, showing the balance due, including the tax amount or penalty assessments and fees, and it shall be a separate, additional violation of this chapter, both civil and criminal if the taxpayer fails to make payment in full within ten (10) calendar days of such mailing.

(Ord. No. 3362, § 1, 9-16-97)

3.21.052 Failure to make return.

If any taxpayer fails, neglects, or refuses to make and file his return as and when required under this chapter, the finance director is authorized to determine the amount of tax payable, together with any penalty and/or interest assessed under the provisions of this chapter and by mail to notify such taxpayer of the amount so determined, which amount shall thereupon become the tax and penalty and/or interest and shall become immediately due and payable.

(Ord. No. 3362, § 1, 9-16-97)

3.21.053 Tax additional to others.

The taxes levied herein shall be additional to any license fee or tax imposed or levied under any law or other ordinance of the city except as otherwise herein expressly provided.

(Ord. No. 3362, § 1, 9-16-97)

3.21.054 Finance director to make rules.

The finance director shall have the power, and it shall be his or her duty, from time to time, to adopt, publish and enforce rules and regulations not inconsistent with this chapter or other applicable laws for the purpose of carrying out the provisions hereof, and it is unlawful to violate or fail to comply with any such rule or regulation.

(Ord. No. 3362, § 1, 9-16-97)

3.21.055 Taxes, penalties, service charges, and fees constitute debt to municipality.

Any tax due and unpaid under this chapter and all penalties, service charges, or fees shall constitute a debt to the city. The city may, pursuant to Chapter 19.16 RCW, use a collection agency to collect outstanding debts, or it may seek collection by court proceedings, which remedies shall be in addition to all other existing remedies. Further, as provided for in RCW 9.46.110(4), as now enacted or hereafter amended, taxes and associated penalties and charges imposed under this chapter shall become a lien upon personal and real property used in the gambling activity in the same manner as provided for under RCW 84.60.010 for property taxes. The lien shall attach on the date the tax becomes due and shall relate back and have priority against real and personal property to the same extent as ad valorem taxes.

(Ord. No. 3362, § 1, 9-16-97; Ord. No. 3949, § 4, 4-6-10)

3.21.060 Penalties.

Any person who shall fail or refuse to pay the tax as required in this chapter, or who shall wilfully disobey any rule or regulation promulgated by the city council under this chapter, shall be guilty of a misdemeanor and upon conviction shall be punished by imprisonment for not more than ninety (90) days or by a fine of not more than two hundred fifty dollars ($250) or by both such fine and imprisonment. Any such fine shall be in addition to the tax required. Officers, directors, and managers of any organization conducting gambling activities shall be jointly and severally liable for the payment of the tax and for the payment of any fine imposed under this chapter.

(Ord. No. 1888, § 6; Ord. No. 3362, § 1, 9-16-97. Formerly Code 1986, § 5.16.060)