Chapter 4.12
UTILITIES TAX1 Revised 7/17

Sections:

4.12.010    Exercise of power to license and tax for revenue.

4.12.020    Occupation license requirements.

4.12.030    Tax levied. Revised 7/17

4.12.040    Gross income of the business defined.

4.12.050    Deductions.

4.12.060    Tax rate.

4.12.070    Due and payable when – Collection on tax applicable to cable television service, garbage refuse service, and cellular telephone business/service.

4.12.080    Due and payable when – Collection of tax applicable to telephone service, sale of electricity, and sale of natural gas.

4.12.090    Due and payable when – Collection of tax applicable to water, sewer, and storm water service.

4.12.100    Record of income.

4.12.110    Failure to pay.

4.12.120    Overpayment.

4.12.130    Administration and enforcement.

4.12.140    Violation – Penalty.

4.12.010 Exercise of power to license and tax for revenue.

The provisions of this chapter shall be deemed to be an exercise of the power of the city to license and tax for revenue. (Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.020 Occupation license requirements.

No person, firm, corporation, or legally recognized entity shall engage in or carry on any business, occupation, act or privilege for which a tax is imposed by MICC 4.12.030 without first having obtained, and being the holder of, a license so to do, to be known as a business license. Each such person, firm or corporation shall promptly apply to the city clerk for such license upon such forms as the clerk shall prepare and provide, giving such information as the clerk shall deem reasonably necessary to enable him or her to administer and enforce this chapter; and, upon acceptance of such application by the clerk, he or she shall thereupon issue such license to the applicant. Such occupation license shall be personal and nontransferable and shall be valid as long as the licensee continues in said business, and complies with this chapter, and renews it in accordance with other applicable ordinances. (Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.030 Tax levied. Revised 7/17

A tax is levied, in such amount as shall be determined by the city council from time to time by ordinance, said tax to be imposed upon and collected from every person, firm, corporation or other entity engaged in or carrying on the following types of businesses within or partly within the corporate limits of the city, said tax being for the privilege of being allowed to do business as defined in this section:

A. Upon everyone engaged in or carrying on a telephone business, a tax based on the total gross income from such business in the city. Gross income for this purpose shall not include charges which are passed on to the subscribers by a telephone company pursuant to tariffs required by regulatory order to compensate for the cost to the company of tax imposed by this chapter.

The term “telephone business” means the business of providing access to a local telephone network, local telephone network switching service, toll service, or coin telephone service, communication or transmission for hire via a local telephone network, toll line or channel, 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, nor the providing of cable television service. In determining gross income from such telephone business, including intrastate toll telephone service, the taxpayer shall include 100 percent of the gross income derived from such business in the city. The term “competitive telephone 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;

B. A tax on the sale, delivery or distribution of electricity and electrical energy and for the privilege of carrying on said business, said tax to be based on the total gross income from such business in the city; provided, however, that there shall not be any tax levied for installation charges of electrical units;

C. A tax on the sale, delivery, distribution or furnishing of natural gas for domestic, business or industrial consumption and for the privilege of carrying on said business, such tax to be based on the total gross income from such business in the city; provided, however, that there shall not be any tax levied for installation charges of gas energy units;

D. A tax based on the total gross income derived from the business of furnishing community antenna television (cable television) services in the city;

E. A tax based on the total gross income derived from the business of collecting, handling or transporting garbage and refuse within the city;

F. Upon everyone engaged in or carrying on a cellular telephone business or service, a tax based on the total gross income from such business. “Cellular telephone business or 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 a purpose similar to cellular mobile service. “Cellular telephone business or service” does not mean telephone business or competitive telephone service as previously defined.

1. There shall be excluded from the total gross income upon which the tax is computed the following:

a. That portion of the gross income derived from charges to another telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate services;

b. Charges by a taxpayer engaging in a telephone business to a telecommunications company, as defined in RCW 80.04.100, for telephone service that the purchaser buys for the purpose of resale;

c. Adjustments made to a billing or to a customer account or to a telecommunications company 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 a customer;

d. Charges to cellular telephone service subscribers passed on to compensate for the cost to the company of the tax imposed by this chapter;

2. 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. 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;

3. 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;

4. Dispute Resolution. If there is a dispute between or among the city and another 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 service 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;

5. The city manager or his/her appointed designee is authorized to represent the city in negotiations with other cities for the proper allocation of taxes due under this subsection F;

6. No change in the rate of tax upon persons engaging in providing cellular telephone service 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 city manager or his/her designee shall send to each cellular telephone service company, at the address on its license, a copy of any ordinance changing the rate of tax upon cellular telephone service promptly upon its enactment;

G. A tax equal to eight percent effective July 1, 2017, through December 31, 2018, and a tax equal to 5.3 percent effective on and after January 1, 2019, of the total gross income derived from the sale, delivery, distribution, furnishing or maintenance of water services for residential, commercial, or public consumption and for the privilege of carrying on said business, such tax to be based on the total gross income from such business in the city; provided, however, that there shall not be any tax levied for water service connection or installation charge;

H. A tax equal to eight percent effective July 1, 2017, through December 31, 2018, and a tax equal to 5.3 percent effective on and after January 1, 2019, of the total gross income derived from the furnishing, operation, or maintenance of sewer services for residential, commercial, or public consumption and for the privilege of carrying on said business, such tax to be based on the total gross income from such business in the city; provided, however, that there shall not be any tax levied for sewer service connection or installation charges;

I. A tax equal to eight percent effective July 1, 2017, through December 31, 2018, and a tax equal to 5.3 percent effective on and after January 1, 2019, of the total gross income derived from the furnishing, operation, or maintenance of storm water services for residential, commercial, or public use and for the privilege of carrying on said business, such tax to be based on the total gross income from such business in the city; provided, however, that there shall not be any tax levied for storm water service fee-in-lieu or installation charges. (Ord. 17C-11 § 1; Ord. 12C-12 § 1; Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.040 Gross income of the business defined.

“Gross income of the business” means the value proceeding or accruing by reason of the transaction of the business engaged in and includes gross proceeds of sales, compensation for the rendition of services, gains realized from trading in stocks, bonds, or other evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and other emoluments however designated, all without any deduction on account of the cost of tangible property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses, except as otherwise authorized in this chapter. (Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.050 Deductions.

In computing said annual tax, there shall be deducted from the gross income the following items:

A. The amount of credit losses and uncollectibles actually sustained by the taxpayer;

B. Amounts derived from transactions in interstate or foreign commerce or from any business which the city is prohibited from taxing under the Constitutions of the United States or the state. (Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.060 Tax rate.

The tax rate imposed on the gross income from conducting an electrical energy, natural gas, telephone, cellular phone business/services shall be six percent. Other tax rates shall be fixed by ordinance or resolution of the city council from time to time. (Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.070 Due and payable when – Collection on tax applicable to cable television service, garbage refuse service, and cellular telephone business/service.

The tax imposed by MICC 4.12.030(D), (E) and (F) on gross income derived from cable television service, garbage and refuse service, and cellular telephone business/service shall be due and payable quarterly on the fifteenth day of April, July, October and January of each year. On or before such due date, the taxpayer shall file with the city clerk a written return, upon such form and setting forth such information as the clerk shall reasonably require, together with payment of the amount of the tax. (Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.080 Due and payable when – Collection of tax applicable to telephone service, sale of electricity, and sale of natural gas.

The tax imposed by MICC 4.12.030(A), (B) and (C) on gross income derived from telephone business, electricity and electrical energy and natural gas shall be collected by the city on a monthly basis and shall be due and payable on the fifteenth day of the month following the month in which the revenue is received. On or before said due date, the taxpayer shall file with the city clerk a written return upon such form and setting forth such information as the clerk shall reasonably require, together with the payment of the amount of the tax. (Ord. 09C-13 § 1; Ord. 95C-002 § 1).

4.12.090 Due and payable when – Collection of tax applicable to water, sewer, and storm water service.

The tax imposed by MICC 4.12.030(G), (H), and (I) on gross income derived from water, sewer, or storm water service shall be collected by the city on a bi-monthly basis and shall be due and payable on the fifteenth day of the month following the month in which the revenue is received. On or before said due date, the taxpayer shall file with the city clerk a written return upon such form and setting forth such information as the clerk shall reasonably require, together with the payment of the amount of the tax. (Ord. 12C-12 § 1; Ord. 09C-13 § 1).

4.12.100 Record of income.

Each taxpayer shall keep records reflecting the amount of his/her gross operating income, and such records shall be open at all reasonable times to the inspection of the city clerk, or his/her duly authorized subordinates, for verification of said tax returns or for the fixing of the tax of a taxpayer who fails to make such returns. (Ord. 09C-13 § 1; Ord. 95C-002 § 1. Formerly 4.12.090).

4.12.110 Failure to pay.

If any person, firm or corporation subject to this chapter fails to pay any tax required by this chapter within 30 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 and 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. 09C-13 § 1; Ord. 95C-002 § 1. Formerly 4.12.100).

4.12.120 Overpayment.

Any money paid to the city through error or otherwise not in payment of the tax imposed in this chapter or in excess of such tax shall, upon request of the taxpayer, be credited against any tax due or to become due from such taxpayer under this chapter or, upon the taxpayer’s ceasing to do business in the city, be refunded to the taxpayer. (Ord. 09C-13 § 1; Ord. 95C-002 § 1. Formerly 4.12.110).

4.12.130 Administration and enforcement.

The city clerk is authorized to adopt, publish and enforce, from time to time, such rules and regulations for the proper administration of this chapter as shall be necessary, and it shall be a violation of this chapter to violate or to fail to comply with any such rule or regulation lawfully promulgated under this chapter. (Ord. 09C-13 § 1; Ord. 95C-002 § 1. Formerly 4.12.120).

4.12.140 Violation – Penalty.

Any person, firm, or corporation subject to this chapter who fails or refuses to apply for an occupation license or to make said tax returns or to pay said tax when due, or who makes any false statement or representation in or in connection with any such application for an occupation license or such tax return, or otherwise violates or refuses or fails to comply with this chapter, shall be guilty of a misdemeanor. (Ord. 09C-13 § 1; Ord. 95C-002 § 1. Formerly 4.12.130).


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Prior legislation: Ords. 240, 443, A-10, A-16, A-22, A-31 and A-62.