Chapter 5.10
BUSINESS AND OCCUPATION TAXES – TELEPHONE BUSINESS
Sections:
5.10.010 Power to license for revenue.
5.10.040 Exemptions and deductions.
5.10.050 Allocation of income – Cellular telephone service.
5.10.055 Authority of director.
5.10.080 Applicability of Chapter 5.08 PMC.
5.10.010 Power to license for revenue.
The provisions of this chapter shall be deemed to be an exercise of the power of the city to license for revenue. (Ord. 3216 § 2, 2020; Ord. 2416 § 2, 1994).
5.10.020 License required – Application.
Repealed by Ord. 3178. (Ord. 2416 § 2, 1994).
5.10.025 Definitions.
Where these terms are used, they will have the following meaning:
(1) “Gross income” means the value proceeding or accruing from the performance of the particular business service involved, including operations incidental thereto, but without any deduction on account of the cost of the commodity furnished or 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, unless specifically allowed in this chapter.
(2) “Telephone business” means the business of providing access to a local telephone network, local telephone network switching service, toll service, cellular telephone service, coin telephone services, 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 further 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 stations or television.
(3) “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.
(4) “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 may be provided by persons 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.” (Ord. 3216 § 2, 2020; Ord. 2416 § 2, 1994).
5.10.030 Tax designated.
From and after January 1, 2023, there shall be levied an annual tax equal to three and two-tenths percent of the total gross income derived from the operation of a telephone business within the city. From and after January 1, 2024, such tax will be four and two-tenths percent. (Ord. 3262 § 2, 2022; Ord. 3216 § 2, 2020; Ord. 2950 § 2, 2010; Ord. 2416 § 2, 1994).
5.10.040 Exemptions and deductions.
(1) The city is exempted from the payment of any taxes imposed by this chapter on services actually used by the city.
(2) There shall be excluded from the total gross income upon which the license fee or 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 80.04.010, 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 subscribers passed on to compensate for the cost to the company of the tax imposed by this chapter.
(3) A deduction from gross income shall be allowed only for the following:
(a) Those companies which keep their regular books of account on an accrual basis; for credit losses actually sustained by a taxpayer as a result of the service business being taxed.
(b) Amounts derived from payments by the city for service actually used by the city. (Ord. 3216 § 2, 2020; Ord. 2416 § 2, 1994).
5.10.050 Allocation of income – Cellular telephone service.
(1) 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.
(2) 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.
(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 dispute 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. (Ord. 3216 § 2, 2020; Ord. 2416 § 2, 1994).
5.10.055 Authority of director.
(1) The director is authorized to represent the city in negotiations with other cities for the proper allocation of taxes due under PMC 5.10.050.
(2) The director shall have the power to adopt and enforce rules and regulations not inconsistent with this chapter or with the law for the purposes of carrying out the provisions thereof. (Ord. 3216 § 2, 2020; Ord. 3178 § 1 (Exh. A), 2018; Ord. 2416 § 2, 1994).
5.10.060 Rate change.
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 clerk 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. (Ord. 3216 § 2, 2020; Ord. 2416 § 2, 1994).
5.10.070 Due date.
The tax imposed by PMC 5.10.030 shall be due and payable bimonthly as follows: On March 31st of each year for the months of January and February; on May 31st of each year for the months of March and April; on July 31st of each year for the months of May and June; on September 30th of each year for the months of July and August; on November 30th of each year for the months of September and October; and on January 31st of the subsequent year for the months of November and December. As used in this chapter, “due date” of a tax and the date a tax becomes “due” shall be the date on which the tax becomes due and payable as specified above. On or before the 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 due. (Ord. 3216 § 2, 2020; Ord. 2416 § 2, 1994).
5.10.080 Applicability of Chapter 5.08 PMC.
The procedures and requirements contained in PMC 5.08.060 through 5.08.140 shall apply to any tax payments made or imposed by this chapter. (Ord. 3216 § 2, 2020).