3-05-007

DIVISION 3-05-007
REGULATIONS-PRIVILEGE AND EXCISE TAXES

SECTIONS:

3-05-007-0001 REGULATIONS-PRIVILEGE AND EXCISE TAXES:

3-05-007-0001 REGULATIONS-PRIVILEGE AND EXCISE TAXES

Reg. 3-5-100.1. BROKERS

Section 3-05-001-0100.1 replaces Regulation 3-5-100.1 Brokers with an effective date of October 1, 2019.

Section 3-05-001-0100.2 Delivery, Installation, or Other Direct Customer Services replaces Regulation 100.2 Delivery, Installation, or Other Direct Customer Services with an effective date of October 1, 2019.

Reg. 3-5-100.3. RETAILERS

Section 3-05-001-100.3 Retailers replaces Regulation 3-5-100.3 Retailers with an effective date of October 1, 2019.

Reg. 3-5-100.4. OUT-OF-CITY/OUT-OF-STATE SALES: SALES TO NATIVE AMERICANS

Section 3-05-001-0100.4 Out-of-City/Out-of-State Sales: Sales to Native Americans replaces Regulation 3-5-100.4 Out-of-City/Out-of-State Sales: Sales to Native Americans with an effective date of October 1, 2019.

Reg. 3-5-100.5. REMEDIATION CONTRACTING

Section 3-05-001-0100.5 Remediation Contracting replaces Regulation 3-5-100.5 Remediation Contracting with an effective date of October 1, 2019.

Reg. 3-5-115.1. COMPUTER HARDWARE, SOFTWARE, AND DATA SERVICES

A. Definitions.

1. "Computer hardware" (also called "computer equipment" or "peripherals") is the components and accessories which constitute the physical computer assembly, including but not limited to: central processing unit, keyboard, console, monitor, memory unit, disk drive, tape drive or reader, terminal, printer, plotter, modem, document sorter, optical reader and/or digitizer, and network.

2. "Computer software" (also called "computer program") is tangible personal property, and includes:

a. "Operating program (software)" (also called "executive program (software)"), which is the programming system or technical language upon which or by means of which the basic operating procedures of the computer are recorded. The operating program serves as an interface with user applied programs and allows the user to access the computer’s processing capabilities.

b. "Applied program (software)," which is the programming system or technical language (including the tape, disk, cards, or other medium upon which such language or program is recorded) designed either for application in a specialized use, or upon which or by means of which a plan for the solution of a particular problem is based. Typically, applied programs can be transferred from one (1) computer to another via storage media. Examples of applied programs include: payroll processing, general ledger, sales data, spreadsheet, word processing, and data management programs.

3. "Storage medium" is any hard disk, compact disk, floppy disk, diskette, disk pack, magnetic tape, cards, or other medium used for storage of information in a form readable by a computer, but not including the memory of the computer itself.

4. A "terminal arrangement" (also called "online arrangement") is any agreement allowing access to a remote central processing unit through telecommunications via hardware.

5. A "computer services agreement" (also called "data services agreement") is an agreement allowing access to a computer through a third-party operator.

B. For the purposes of this chapter, transfer of title and possession of the following are deemed sales of tangible personal property and any other transfer of title, possession, or right to use for a consideration of the following is deemed rental, leasing, or licensing of tangible personal property:

1. Computer Hardware or Storage Media. Rental, leasing, or licensing for use of computer hardware or storage media includes the lessee’s use of such hardware or storage media on the lessor’s premises.

2. Computer Software Which is Not Custom Computer Programming. Such prewritten ("canned") programs may be transferred to a customer in the form of punched cards, magnetic tape, or other storage medium, or by listing the program instructions on coding sheets. Transfer is deemed to have occurred whether title to the storage medium upon which the program is recorded, coded, or punched passes to the customer or the program is recorded, coded, or punched on storage medium furnished by the customer. Gross income from the transfer of such prewritten programs includes:

a. The entire amount charged to the customer for the sale, rental, lease, or license for use of the storage medium or coding sheets on which or into which the prewritten program has been recorded, coded, or punched.

b. The entire amount charged for the temporary transfer or possession of a prewritten program to be directly used or to be recorded, coded, or punched by the customer on the customer’s premises.

c. License fees, royalty fees, or program design fees; any fee present or future, whether for a period of minimum use or of use for extended periods, relating to the use of a prewritten program.

d. The entire amount charged for transfer of a prewritten ("canned") program by remote telecommunications from the transferor’s place of business to or through the customer’s computer.

e. Any charge for the purchase of a maintenance contract which entitles the customer to receive storage media on which prewritten program improvements or error corrections have been recorded or to receive telephone or on-site consultation services; provided, that:

(1) If such maintenance contract is not optional with the customer, then the charges for the maintenance contract, including the consultation services, are deemed gross income from the transfer of the prewritten program.

(2) If such maintenance contract is optional with the customer but the customer does not have the option to purchase the consultation services separately from the storage media containing the improvements or error corrections, then the charges for the maintenance contract, including the consultation services, are deemed gross income from the transfer of the prewritten program.

(3) If such maintenance contract is optional with the customer and the customer may purchase the consultation services separately from the storage media containing the improvements or error corrections, then only the charges for such improvements or error corrections are deemed gross income from the transfer of a prewritten program and charges for consultation are deemed to be charges for professional services.

C. Producing the following by means of computer hardware is deemed to be the activity of job printing for the purposes of this chapter:

1. Statistical reports, graphs, diagrams, microfilm, microfiche, photorecordings, or any other information produced or compiled by a computer; except as provided in subsection (E) of this section.

2. Additional copies of records, reports, manuals, tabulations, etc. "Additional copies" are any copies in excess to those produced simultaneously with the production of the original and on the same printer, whether such copies are prepared by running the same program, by using multiple printers, by looping the program, by using different programs to produce the same output, or by other means.

D. Charges for the use of communications channel in conjunction with a terminal arrangement or data services agreement are deemed gross income from the activity of providing telecommunication services.

E. The following transactions are deemed direct customer services; provided, that charges for such services are separately stated and maintained as provided by Section 3-05-001-0100.2(E):

1. "Custom (computer) programming," which is any computer software which is written or prepared for a single customer, including those services represented by separately stated charges for the modification of existing prewritten programs.

a. Customer computer programming is deemed a professional service regardless of the form in which the programming is transferred.

b. Custom programming includes such programming performed in connection with the sale, rental, lease, or license for use of computer hardware; provided, that the charges for such are separately stated from the charges for the hardware.

c. Custom computer programming includes a program prepared to the special order of a customer who will use the program to produce copies of the program for sale, rental, lease, or license. The subsequent sale, rental, lease, or license of such a program is deemed the sale, rental, lease, or license of a prewritten program.

2. Training services related to computer hardware or software; provided further, that:

a. The provider of such training services is deemed the ultimate consumer of all tangible personal property used in training others or provided to such trainees without separately itemized charge for the materials provided.

b. Training deemed a direct customer service does not include:

(1) Training materials, books, manuals, etc., furnished to customers for a charge separate from the charge for training services.

(2) Training provided to customers without separate charge as part of the sale, rental, lease, or license of computer hardware or software, or as part of a terminal arrangement or data services agreement.

3. The use of computer time through the use of a terminal arrangement or a data service agreement, but not charges for computer hardware located at the customer’s place of business (for example, the terminal, a printer attached to the terminal, a modem used to communicate with the remote central processing unit over a telephone line).

4. Compiling and producing, as part of a terminal arrangement or computer services agreement, original copies of statistical reports, graphs, diagrams, microfilm, microfiche, photorecordings, or other information for the same person who supplied the raw data used to create such reports.

F. The purchase, rental, lease, or license for use of computer hardware, storage media, or computer software which is not deemed custom programming is deemed the use or storage of tangible personal property for the purpose of this chapter, and the amount which may be subject to use tax shall be determined in the same manner as the determination of the gross income from the sale, rental, lease, or license for use of such. (Ord. 2014-16, Amended, 07/15/2014; Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-120.1. Repealed by Ord. 2013-26.

Reg. 3-5-200.1. WHEN DEPOSITS ARE INCLUDABLE IN GROSS INCOME

A. Refundable deposits shall be includable as gross income of the taxpayer for the month in which the deposits are forfeited by the lessee.

B. (Reserved). (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-250.1. EXCESS TAX COLLECTED

If a taxpayer collects taxes in excess of the combined tax from any customer in any transaction, all such excess tax shall be paid to the taxing jurisdictions in proportion to their effective rates. The right of the taxpayer to charge his customer for his own liability for tax does not allow the taxpayer to enrich himself at the cost of his customers. Tax paid on an activity that is not subject to tax or that qualifies for an exemption, deduction, exclusion or credit is not excess tax collected. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-270.1. PROPRIETARY ACTIVITIES OF MUNICIPALITIES ARE NOT CONSIDERED ACTIVITIES OF A GOVERNMENTAL ENTITY

The following activities, when performed by a municipality, are considered to be activities of a person engaged in business for the purposes of this chapter, and not excludable by reason of Section 3-05-002-0270:

A. Rental, leasing, or licensing for use of real property to other than another department or agency of the municipality.

B. Producing, providing, or furnishing electricity, electric lights, current, power, gas (natural or artificial), or water to consumers or ratepayers.

C. Sale of tangible personal property to the public, when similar tangible personal property is available for sale by other persons, as, for example, at police or surplus auctions.

D. Providing wastewater removal services to consumers or ratepayers by means of sewer lines or similar pipelines. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-270.2. PROPRIETARY CLUBS

A. Equity Requirements. In order to qualify for exclusion under Section 3-05-002-0270, a proprietary club must actually be owned by the members. For the purposes of qualification, a club will be deemed to be member-owned if at least eighty-five percent (85%) of the equity of the total amount of club-owned property is owned by bona fide individual members whose membership is represented in the form of shares, certificates, bonds, or other indicia of capital interest. A corporation may be considered an individual owner provided that it owns a membership solely for the benefit of one (1) or more of its employees and it is not engaged in any business activity connected with the operation of the club.

B. Gross Revenue Requirements. In computing gross revenue for the computation of this fifteen percent (15%) rule of Section 3-05-002-0270(C)(1),

1. The following shall be excluded:

a. Membership dues.

b. Membership fees which relate to the general admission to the club on a periodic (or perpetual) basis.

c. Assessments.

d. Special fund raising events, raffles, etc.

e. Donations, gifts, or bequests.

f. Gate receipts, admissions, and program advertising for not more than one (1) tournament in any calendar year.

2. The following must be included:

a. Green fees, court use fees, and similar charges for the actual use of a facility or part thereof.

b. Pro shop sales if the shop is owned by the club.

c. Golf cart rental if the carts are owned by the club.

d. Rentals, percentages, or commissions received for permitting the use of the premises or any portion thereof by a caterer, concessionaire, professional, or any other person for sales, rental, leasing, licensing, catering, food or beverage service, or instruction.

e. All receipts from food or beverage sales, room use or rental charge, corkage and catering charges, and similar receipts.

f. Locker and locker room fees and attendants charges if paid to the club.

g. Tournament entry fees other than entry fees for the one annual tournament exempt under subsection (B)(1)(f) of this section. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-405.1. LOCAL ADVERTISING EXAMPLES

For the purposes of illustration only, and not by way of limitation, the following are provided as examples of local advertising subject to the tax:

A. Retail sales and rental establishments doing business within the State when only one (1) commonly designated business entity is identified by name in the advertisement.

B. Financial institutions doing business within the State whether part of a national chain or local business only.

C. Sales of real estate located within the State.

D. Health care facilities located within the State.

E. Hotels, motels, and apartments, whether a national chain or local so long as the advertisement identifies any location within the State.

F. Brokers doing business within the State whether stockbrokers, real estate brokers, insurance brokers, etc.

G. Nonprofit organizations, which even though tax exempt, have an office, whether national, local, or branch, within the State.

H. Political activity, except United States Presidential and Vice Presidential candidates.

I. Restaurants or food service establishments which have one (1) or more branches, outlets, or franchises within the State even though the local franchisee or licensee may not be responsible for the placement of the advertisement.

J. Services provided by individuals or entities within the State such as doctors, lawyers, architects, hairdressers, auto repair shops, counseling services, utilities, contractors, auction houses, etc.

K. Coupons redeemable only at a single commonly designated business entity within the State.

L. Theater, sports, and other entertainment events held at locations within the State. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-405.2. ADVERTISING ACTIVITY WITHIN THE CITY

A. In General. Except as provided elsewhere in this regulation, a person engaged in advertising activity shall be considered to be doing business entirely within the City if all or a major portion of the dissemination facilities such as broadcasting studios, printing plants, or distribution centers are located within the City limits. Remote studios patched to an in-City studio and subject to engineering modulation or control at the in-City studio are considered studios doing business in the City.

B. Billboards and other outdoor advertising companies shall be considered to be doing business within the City to the extent they have billboards or similar displays within the City.

C. Publishers and distributors of newspaper and other periodicals shall be subject to the tax upon advertising imposed by Section 3-05-004-0405 and such tax shall be allocated in the manner prescribed by Section 3-05-004-0435(E). (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-407.1. RESERVED

Reg. 3-5-415.1. DISTINCTION BETWEEN THE CATEGORIES OF CONSTRUCTION CONTRACTING

For the purposes of this chapter, transactions involving improvements to, or sales of, real property are designated into one of the following categories, and these categorizations shall apply, whether or not a person designates himself as a contractor, construction manager, developer, or otherwise:

A. A person performing improvements to real property is one (1) of the following:

1. An "owner-builder" when the work is performed by the owner or lessor or lessee-in-possession. An "owner-builder" may also be a "speculative builder."

2. A "construction contractor" when performing work for the owner or lessor or lessee-in-possession of the real property, unless that person has provided a written declaration stating that:

a. The owner-builder is improving the property for sale; and

b. The owner-builder is liable for the tax for such construction contracting activity; and

c. The owner-builder has provided the contractor his city privilege license number.

3. A "subcontractor" as provided in Section 3-05-004-0415(C).

B. An owner or lessor ("owner-builder") of improved real property is one of the following:

1. A "speculative builder" as provided in Section 3-05-001-0100; or

2. An "owner-builder who is not a speculative builder" in all other cases.

C. The terms "owner," "lessor," and "lessee-in-possession" shall be deemed to include any authorized agent for such person. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-415.2. DISTINCTION BETWEEN CONSTRUCTION CONTRACTING AND CERTAIN RELATED ACTIVITIES

A. Certain Rentals, Leases, and Licenses for Use in Connection With Construction Contracting. Rental, leasing, or licensing of earthmoving equipment with an operator shall be deemed construction contracting activity. Rental, leasing, or licensing of any other tangible personal property (with or without an operator) or of earthmoving equipment without an operator shall be deemed rental, leasing, or licensing of tangible personal property. For example:

1. Rental of a backhoe, bulldozer, or similar earthmoving equipment with operator is construction contracting. Rental of these items without an operator is rental of tangible personal property.

2. Rental of scaffolding, temporary fences, or barricades is rental of tangible personal property.

3. Rental of pumps or cranes is rental of tangible personal property, whether or not an operator is provided with the equipment rented.

B. Distinction Between Construction Contracting, Retail, and Certain Direct Customer Service Activities.

1. When an item is attached or installed on real property, it is a construction contracting activity and any subsequent repair, removal, or replacement of that item is construction contracting.

2. Items attached or installed on tangible personal property are retail sales.

3. Transactions where no tangible personal property is attached or installed are considered direct customer service activities (for example: carpet cleaning, lawn mowing, landscaping maintenance).

4. Demolition, earth moving, and wrecking activities are considered construction contracting.

C. Sale of consumable goods incorporated into or applied to real property is considered a retail sale and not construction contracting. Examples of consumable goods are lubricants, faucet washers, and air conditioning coolant, but not paint.

D. Installation or removal of tangible personal property which has independent functional utility is considered a retail activity.

1. "Tangible personal property which has independent functional utility" must be able to substantially perform its function(s) without attachment to real property. "Attachment to real property" must include more than connection to water, power, gas, communication, or other service.

2. Examples of tangible personal property which has independent functional utility include artwork, furnishings, "plug-in" kitchen equipment, or similar items installed by bolts or similar fastenings.

3. Examples of tangible personal property which does not have independent functional utility include wall-to-wall carpeting, flooring, wallpaper, kitchen cabinets, or "built-in" dishwashers or ranges.

4. The installation of window coverings (drapes, mini-blinds, etc.) is always a retail activity. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-0415.3. CONSTRUCTION CONTRACTING; TAX RATE EFFECTIVE DATE

A. In the event of a tax rate change, the rate imposed on gross income from construction contracting shall be computed based upon the rate in effect when the contract was executed, subject to the "enactment date" as defined in this section. Gross income from a contract executed prior to the enactment date shall not be subject to the tax rate change, provided the contract contains no provision that entitles the construction contractor to recover the amount of the tax.

B. In the event of a rate increase, in order to qualify for the lower rate, the construction contractor shall, upon request, provide sufficient documentation, in a manner and form prescribed by the Tax Collector, to verify that a contract was entered into before the enactment date.

C. For the purposes of this section, "enactment date" shall be:

1. In the event an election is held, the date of election.

2. In the event no election is held, the date of final adoption by the Mayor and Council.

3. Notwithstanding the above, nothing in this section shall be construed to prevent the City from establishing a later enactment date. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-416.1. SPECULATIVE BUILDERS: HOMEOWNER’S BONA FIDE NON-BUSINESS SALE OF A FAMILY RESIDENCE

Section 3-05-004-416.1 Speculative Builders: Homeowner’s Bona Fide Non-Business Sale of a Family Residence replaces Regulation 3-5-416.1 Speculative Builders: Homeowner’s Bona Fide Non-Business Sale of a Family Residence with an effective date of October 1, 2019. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-416.2. RECONSTRUCTION CONTRACTING

Section 3-05-004-416.2 Reconstruction Contracting replaces Regulation 3-5-416.2 Reconstruction Contracting with an effective date of October 1, 2019. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-425.1. DISTINCTION BETWEEN JOB PRINTING AND CERTAIN RELATED ACTIVITIES

A. Computerized Printing. Computerized versions of all items which would be taxable under Section 3-05-004-0425 if performed without computerized assistance are considered taxable under that section, and therefore, are not exempt services.

B. Book Publishing. The printing of books shall be deemed job printing. Sales of books shall be deemed retail sales.

C. Publication of newspapers, magazines, or other periodicals shall not be considered job printing for the purposes of this chapter. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-435.1. DISTINCTION BETWEEN PUBLISHING OF PERIODICALS AND CERTAIN RELATED ACTIVITIES

A. Book publishing shall not be considered publication of newspapers, magazines, or other periodicals for purposes of this chapter. Sales of books shall be deemed retail sales. The printing of books shall be deemed job printing.

B. Publication of newspapers, magazines, or other periodicals shall not be considered job printing for the purposes of this chapter. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-435.2. ADVERTISING INCOME OF PUBLISHERS AND DISTRIBUTORS OF NEWSPAPERS AND OTHER PERIODICALS

Publishers and distributors of newspapers and other periodicals shall be subject to the tax upon advertising imposed by Section 3-05-004-0405 and such tax shall be allocated in the manner prescribed by Section 3-05-004-0435(E). (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-445.1. WHEN THE RENTAL, LEASING, AND LICENSING OF REAL PROPERTY IS EXEMPT AS "CASUAL" [RESERVED]

Reg. 3-5-445.3. RENTAL, LEASING, AND LICENSING OF REAL PROPERTY AS LODGING: ROOM AND BOARD; FURNISHED LODGING

A. Room and Board.

1. Rooming houses, lodges, or other establishments providing both lodging and meals, shall maintain a record of the separate charges made for the lodging and the meals.

2. The charge for lodging shall be subject to the tax imposed by Section 3-05-004-0444 or 3-05-004-0445. The charge for meals is subject to the tax upon restaurants and bars prescribed by Section 3-05-004-0455.

B. Furnished Lodging. A person who provides lodging with furnishings shall be deemed to be only in the business of rental, leasing, and licensing of lodging, and not in the business of rental, leasing, and licensing of such furnishings as tangible personal property, unless:

1. Any tenant of any lodging space may choose to rent, lease, or license such lodging space either furnished or unfurnished; and

2. The lessor separately charges tenants for lodging and for furnishings; and

3. The lessor separately maintains his gross income from lodging and from furnishings separately in his accounting books and records.

If all of the above conditions are met, such person shall report both sources of income separately to the City. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-450.1. DISTINCTION BETWEEN RENTAL, LEASING, AND LICENSING FOR USE OF TANGIBLE PERSONAL PROPERTY AND CERTAIN RELATED ACTIVITIES

1. Rental of a backhoe, bulldozer, or similar earthmoving equipment with operator is construction contracting. Rental of these items without an operator is rental of tangible personal property.

2. Rental of scaffolding, temporary fences, or barricades is rental of tangible personal property.

3. Rental of pumps or cranes is rental of tangible personal property, regardless of whether or not an operator is included with the equipment rented.

B. Distinction Between Equipment Rental, Leasing, or Licensing for Use and Transporting for Hire. The hiring of mobile equipment (cranes, airplanes, limousines, etc.) is considered rental, leasing, or licensing of tangible personal property whenever the charge is for a fixed sum or hourly rate. By comparison, the activity of a common carrier conveying goods or persons for a fee based upon distance, and not time, shall be considered transporting for hire. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-450.2. RENTAL, LEASING, AND LICENSING FOR USE OF TANGIBLE PERSONAL PROPERTY: MEMBERSHIP FEES; OTHER CHARGES

A. Membership, admission, or other fees charged by any rental club or limited access lessor are considered part of taxable gross income.

B. Gross income from rental, leasing, or licensing for use of tangible personal property must include all charges by the lessor to the lessee for repair, maintenance, or other service upon the tangible personal property rented, leased, or licensed.

C. Sale of a warranty, maintenance, or service contract as a requirement of, or in conjunction with, a rental, leasing, or licensing contract is exempt. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-450.3. RENTAL, LEASING, AND LICENSING FOR USE OF EQUIPMENT WITH OPERATOR

In cases where the tangible personal property is rented, leased, or licensed with an operator provided by the lessor, the charge for the operator shall not be includable in the gross income from the rental, lease, or license of such tangible personal property if the charge for the operator and the charge for the use of the equipment are separately itemized to the lessee and separately maintained on the books and records of the lessor. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-450.4. RENTAL, LEASING, AND LICENSING FOR USE OF TANGIBLE PERSONAL PROPERTY: SEMI-PERMANENTLY OR PERMANENTLY INSTALLED TANGIBLE PERSONAL PROPERTY

A. The term "semi-permanently or permanently installed" means that the item of tangible personal property has and is expected to have at the time of installation a permanent location at the site installed, as under a long-term lease agreement, except that the person using or applying said property may eventually replace it because it has become worn out or has become obsolete or the person ceases to have the right to possession of said property.

B. An item of tangible personal property is deemed permanently installed if its installation requires alterations to the premises.

C. Examples of "semi-permanently or permanently installed tangible personal property" include, but are not limited to: computers, duplicating machines, furniture not of portable design, major appliances, store fixtures.

D. The term does not include mobile transportation equipment or tangible personal property designed for regular use at different locations or customarily used at different locations, as under numerous short-term rental, lease, or license agreements, whether or not such property is in fact so used.

1. For example, use of a mobile crane, trencher, automobile, or other similar equipment shall be considered a rental, lease, or license transaction subject to taxation only by the city or town in which such business office of the lessor is based.

2. Other similar examples include, but are not limited to: camping equipment, contracting equipment, chain saw, forklift, household items, invalid needs, janitorial equipment, reducing equipment, furniture of portable design, trucks or trailers, tools, towbars, sump pumps, arc welders.

E. A rental, lease, or license agreement which specifies that the item in question shall remain, under the terms of the agreement, located within the same city or town for more than one hundred eighty (180) consecutive days shall be sufficient evidence that such rented, leased, or licensed item is "permanently or semi-permanently installed" in said city or town, except when the item is mobile transportation equipment or one (1) of the other types of portable equipment or property described in subsection (D) of this section. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-450.5. RENTAL, LEASING, AND LICENSING FOR USE OF TANGIBLE PERSONAL PROPERTY: DELIVERY, INSTALLATION, REPAIR, AND MAINTENANCE CHARGES

A. Delivery and installation charges in connection with the rental, leasing, and licensing of tangible personal property are exempt from the tax imposed by Section 3-05-004-0450; provided, that the provisions of Section 3-05-001-0100.1 have been met.

B. Gross income from the sale of a warranty, maintenance, or similar service contract in connection with the rental, leasing, and licensing of tangible personal property shall be exempt.

C. Separately stated charges for repair not included as part of a warranty, maintenance, or similar service contract relating to the rental, leasing, or licensing of tangible personal property are exempt from the tax imposed by Section 3-05-004-0450; however, such income is subject to the provisions of Sections 3-05-004-0460 and 3-05-004-0465, and the provisions of Regulation 3-5-465.1. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-455.1. GRATUITIES RELATED TO RESTAURANT ACTIVITY

Gratuities charged by or collected by persons subject to the tax imposed by Section 3-05-004-0455 may be excluded from gross income if:

A. Such charge is separately stated upon the bill, invoice, etc. provided the customer, and such amounts are maintained separately in the books and records of the taxpayer; and

B. Such gratuities are distributed in total to employees of the taxpayer in addition to customary and regular wages. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-460.1. DISTINCTION BETWEEN RETAIL SALES AND CERTAIN OTHER TRANSFERS OF TANGIBLE PERSONAL PROPERTY

A. Charges for transfer of tangible personal property included in the gross income of the business activity of persons engaged in the following business activities shall be deemed only as gross income from such business activity and not sales at retail taxed by Section 3-05-004-0460:

1. Tangible personal property incorporated into real property as part of reconstruction or construction contracting, per Sections 3-05-004-0415 through 3-05-004-0417.

2. Sales of feed at wholesale, per Section 3-05-004-0420.

3. Job printing, per Section 3-05-004-0425.

4. Mining, timbering, and other extraction, but not sales of sand, gravel, or rock extracted from the ground, per Section 3-05-004-0430.

5. Publication of newspapers, magazines, and other periodicals, per Section 3-05-004-0435.

6. Rental, leasing, and licensing of real or tangible personal property, per Section 3-05-004-0445 or 3-05-004-0450.

7. Restaurants and bars, per Section 3-05-004-0455.

8. Food for home consumption, per Section 3-05-004-0462.

9. Telecommunications services, per Section 3-05-004-0470.

10. Utility services, per Section 3-05-004-0480.

11. Wastewater removal services, per Section 3-05-004-0485.

B. Distinction Between Construction Contracting, Retail, and Certain Direct Customer Service Activities.

1. When an item is attached or installed on real property, it is a construction contracting activity and any subsequent repair, removal, or replacement of that item is construction contracting.

2. Items attached or installed on tangible personal property are retail sales.

3. Transactions where no tangible personal property is attached or installed are considered direct customer service activities (for example: carpet cleaning, lawn mowing, landscape maintenance).

4. Demolition, earth moving, and wrecking activities are considered construction contracting.

C. The sale of sand, rock, and gravel extracted from the ground shall be deemed a sale of tangible personal property and not mining or metallurgical activity.

D. Sale of consumable goods incorporated into or applied to real property is considered a retail sale and not construction contracting. Examples of consumable goods are lubricants, faucet washers, and air conditioning coolant, but not paint.

E. Installation or removal of tangible personal property which has independent functional utility is considered a retail activity.

4. The installation of window coverings (drapes, mini-blinds, etc.) is always a retail activity. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-460.2. RETAIL SALES: TRADING STAMP COMPANY TRANSACTIONS

A trading stamp transaction is defined as follows: The trading stamp company issues stamps to a vendor; the vendor then provides them to its customers; and the customer then exchanges the stamps for merchandise from the trading stamp company.

The exchange transaction for the merchandise shall be deemed a retail sale and the trading stamp company a retailer. All taxes imposed by this chapter applicable to retail transactions are therefore applicable to such exchange transactions.

The rate of tax shall be the retail rate based upon the retail dollar value of the redeemed merchandise as expressed in the redemption dollar value per book of stamps or portion thereof. The tax imposition described herein is in lieu of any privilege or use tax upon the business of issuing stamps, redeeming the same, or using or storing property redeemed. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-460.3. Repealed effective October 1, 2019.

Reg. 3-5-460.4. RETAIL SALES: PROFESSIONAL SERVICES

A. "Professional services" refers to services rendered by such persons as doctors, lawyers, accountants, architects, etc., for their customers or clients where the services meet particular needs of a specific client and only apply in the factual context of the client and the final product has no retail value in itself. For example, opinion letters, workpapers, reports, etc., are not in a form which would be subject to retail sales to customers. However, transfer of items in a form which would be subject to retail sales (e.g., artwork, forms, manuals, etc.) would not be considered professional services. The issue is one of fact which must be resolved in each situation.

B. Creative ("idea") labor and design labor that do not result in tangible personal property that will be or can be sold are deemed professional services and, if charged separately and maintained separately in the taxpayer’s books and records, are not includable in gross income.

C. "Professional services" shall be deemed to include those items of tangible personal property which are incidental to the services rendered, provided such tangible personal property is "inconsequential."

1. Incidental transfers of tangible personal property shall be regarded as "inconsequential" if:

a. The purchase price of the tangible personal property to the person rendering the professional services represents less than fifteen percent (15%) of the charge, billing, or statement rendered to the purchaser in connection with the transaction, and

b. The tangible personal property transferred is not itself in a form which is subject to retail sale.

2. In cases where the tangible personal property transferred is deemed inconsequential, the provider of the tangible personal property so transferred is deemed the ultimate consumer of such tangible personal property, and subject to all applicable taxes imposed by this chapter upon such transfer.

D. Examples.

1. The transfer of paper embodying the result or work product of the services rendered by an attorney or certified public accountant is regarded as inconsequential to the charges for professional services.

2. An appraisal report issued by an appraiser, reflecting such appraiser’s efforts to appraise real estate, is regarded inconsequential.

3. Use of a hair care product on a client’s hair by a barber or beautician in connection with performing professional services is usually inconsequential. On the other hand, if the barber or beautician supplies the customer with a bottle of the product for the client’s use thereafter and without the professional’s assistance, the transfer of the bottle of hair care product is deemed not inconsequential.

4. If a mortician properly segregates his professional services from other taxable activities on his bill (invoice, contract), his gross income would include only the income derived from the sale of tangible personal property (casket, cards, flowers, etc.) and rental, leasing, or licensing of real and tangible personal property. His charges for professional services (embalming, cosmetic work, etc.) would not be includable in gross income. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-460.5. RETAIL SALES: MONETIZED BULLION; NUMISMATIC VALUE OF COINS

A. "Monetized bullion" means coins or other forms of money manufactured or minted from precious metals or other metals and issued as legal tender or a medium of exchange by or for any government authorized to do so.

B. Any coin shall be considered to have been transferred or acquired primarily for its "numismatic value" if the sale or acquisition price:

1. Is equal to or greater than twice (two (2) times) the value of the metallic content of the coin as of the date of transfer or acquisition; and

(2) Is equal to or greater than twice (two (2) times) its face value, in the case of a coin which, at the time of transfer or acquisition, was legal tender or a medium of exchange of the government issuing or authorizing its issuance. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-460.6. Repealed effective October 1, 2019.

Reg. 3-5-465.1. RETAIL SALES: REPAIR SERVICES

A. Fair Market Value of Parts and Labor Charges. The Tax Collector may examine the reporting of all transactions covered by this section to determine if an "arms-length" price is charged for the parts and materials. The applicable tax may not be avoided by pricing a part, which ordinarily sells to the customer at ten dollars ($10.00), at five dollars ($5.00) and including the difference as "service" or "labor." In the absence of satisfactory evidence supplied by the taxpayer as to industry or business practice, the Tax Collector may use the cost of the part or materials to the taxpayer marked up by a reasonable profit, to estimate the gross income subject to tax.

B. Notwithstanding Regulation 3-5-350.1(E):

1. In the case where the taxpayer does not normally and regularly sell items of tangible personal property apart from a repair transaction, the taxpayer may determine the sale price of the tangible personal property transferred by means of a "computed charge." The "computed charge" shall be the sum of the cost of the item of tangible personal property transferred, plus a "reasonable markup." The "reasonable markup" shall be that amount needed to achieve a representative retail price for which such items of tangible personal property are normally sold at retail by comparable businesses within the State (not under circumstances involving the combination of such sale with the providing of repair services). The taxpayer shall have the initial responsibility of determining such reasonable markup, and providing to the Tax Collector, if requested, the basis for his determination.

2. In the event that there is a disagreement between the Tax Collector and the taxpayer as to the proper determination of the "computed charges," the burden shall be upon the taxpayer to satisfy the Tax Collector, the Hearing Officer in the event of a hearing, or the court in any subsequent court action involving an assessment, of the validity of the taxpayer’s method of determination of such "computed charges." The determination by the Tax Collector as to the proper "computed charge" shall be considered valid, and shall be sustained unless it is proven by the taxpayer that such determination is arbitrary and unreasonable. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-465.2. RETAIL SALES: WARRANTY, MAINTENANCE, AND SIMILAR SERVICE CONTRACTS

A. Gross income from sales of warranty, maintenance, and service contracts is exempt from the tax imposed by Section 3-05-004-0460.

B. Transfers of tangible personal property in connection with a service, warranty, guaranty, or maintenance agreement between a vendor and a vendee shall be subject to tax under Section 3-05-004-0460 only to the extent of gross income received from separately itemized charges made for the items of property transferred.

C. The gross income derived from a maintenance insurance agreement, which agreement is entered into between the purchaser and any person other than the seller is not subject to tax imposed by Section 3-05-004-0460. If the provider of the maintenance insurance agreement pays for tangible personal property on behalf of the insured in the performance of the agreement, such sales are subject to all applicable taxes imposed by this chapter.

D. Charges for tangible personal property provided under the terms of a warranty, maintenance, or service contract exempted under Section 3-05-004-0465 are subject to tax as retail sales.

E. However, gross income received by a dealer from a manufacturer for work performed under a manufacturer’s warranty is not taxable under Section 3-05-004-0460. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-465.3. RETAIL SALES: SALE OF CONTAINERS, PAPER PRODUCTS, AND LABELS

A. The sale of a container or similar packaging material which contains personal property and which is transferred to the customer with the sale of the product is not taxable as a sale for resale. Examples of such nontaxable containers include but are not limited to:

1. Packaging materials sold to a manufacturer of video equipment for containment of the product during shipment.

2. Cellophane-type wrap sold to a meat department or butcher for containment of the individually wrapped or contained meat.

3. Bags used to contain loose fungible goods such as fruits, vegetables, and other products sold in bulk, where such bags or containers are used to contain and measure the amount purchased by the customer.

4. Shopping bags and similar merchandising bags sold to grocery stores, department stores or other retailers.

5. Gift wrappings and gift boxes sold to department stores or other retailers.

B. Sales of nonreturnable or disposable paper (and similar products such as plastic or styrofoam) cups, lids, plates, bags, napkins, straws, knives, forks and other similar food accessories to a restaurant or others taxable under Section 3-05-004-0455 for transfer by the restaurant to its customer to contain or facilitate the consumption of the food, drink or condiment are sales for resale and not taxable.

C. Where a retailer imposes a charge for gift wrapping and the charge includes the container, paper, and other appropriate materials, the wrapping charge shall be considered a sale.

D. Charges for returnable containers, where the charges are imposed on the customer, are subject to tax at the time of the transaction. A credit may be taken for the amount of refund after such refund is made.

E. The sale of labels to a purchaser who affixes them to a primary container is a sale for resale and not taxable. Directional or instructional material included with products sold are considered to be part of the product and a sale for resale. However, the sale of items such as price tags, shipping tags, and advertising matter delivered to the customer in connection with the retail sale is taxable to the retailer as a retail sale to it, and is not exempt as a sale for resale. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-465.4. Repealed effective October 1, 2019.

Reg. 3-5-470.1. TELECOMMUNICATION SERVICES

A. Gross income from the business activity of providing telecommunication services to consumers within this City shall not include:

1. Charges for installation, maintenance, and repair of telecommunication equipment which are subject to the provisions of Sections 3-05-004-0415, 3-05-004-0416, or 3-05-004-0417 (construction contracting); 3-05-004-0445 (real property rental); 3-05-004-0450 (tangible personal property rental); or 3-05-004-0460 (retail sales); depending upon the nature of the work performed.

2. Separately billed advertising charges which are subject to the provisions of Section 3-05-004-0405 or 3-05-004-0435.

B. Mobile Equipment: In cases where the customer is being provided telecommunication services to receiving/transmission equipment designed to be mobile in nature (for example, mobile telephones, portable hand-held two-way radios, paging devices, etc.), the provider shall, for the purposes of the tax imposed by this section, determine whether such provider’s customers are "within this City" as follows:

1. By the billing address of the customer; provided, that such address is a permanent residence or business location of the consumer within the State.

2. In all other cases, the business location of the telecommunications provider. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-475.1. DISTINCTION BETWEEN TRANSPORTING FOR HIRE AND CERTAIN RELATED ACTIVITIES

The hiring of mobile equipment (cranes, airplanes, limousines, etc.) is deemed rental, leasing, or licensing for use of tangible personal property whenever the charge is for a fixed sum or hourly rate. By comparison, the activity of a common carrier conveying goods or persons for a fee based upon distance, and not time, shall be considered transporting for hire. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-520.1. REPORTS MADE TO THE CITY

A. Each taxpayer shall provide, as a minimum, all of the following when reporting taxes due as provided in this chapter:

1. Legal business name of the taxpayer or his agent.

2. Mailing address of the taxpayer.

3. City privilege license number of the taxpayer.

4. Period of time for which the report is intended.

5. For each category of income to which the taxpayer is subject, for the reporting period, as provided on the official City tax return:

a. All amounts subject to, excluded from, exempt from, or deductible from the tax imposed upon that category of business activity, summarized in total as "gross receipts" of that category of business activity.

b. The total amount claimed as excludable, exempted, or deducted from such "gross receipts," itemized as provided on the official City tax return, and summarized in total as "total deductions" for that category.

c. The difference between such "gross receipts" and "total deductions" as "net taxable" for that category.

d. The tax due and payable for that category.

6. That total amount subject to use tax, summarized as "net taxable," and the use tax due and payable for that reporting period.

7. Any excess tax collected which is due and payable.

8. Any claimed tax credits against taxes due and payable.

9. Total amount remitted with the return.

10. A statement verifying that the information provided on the return is accurate to the best of the preparer’s knowledge. Such statement must be accompanied by a dated signature of the preparer, and also show the preparer’s title or relationship to the taxpayer.

11. The Tax Collector may prescribe and will notify taxpayers of alternative methods for signing, subscribing or verifying any report or statement required to be filed, including, but not limited to, electronic signatures and/or security codes, and such methods shall have the same validity and consequence as the actual signature or written declaration of the taxpayer or other person required to sign, subscribe or verify the return, statement, or other document. (Ord. No. 2004-25, Amended, 01/10/05; Ord. 2014-16, Amended, 07/15/2014; Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-520.2. CHANGE OF METHOD OF REPORTING

A. Any taxpayer electing to change his reporting method shall be permitted to do so only upon filing a written request to the Tax Collector and after receiving written approval of the Tax Collector. The approval shall state the effective date of the change.

B. The Tax Collector may postpone such approval to allow for examination of the records of the taxpayer and may further require that all tax liability be satisfied up to the effective date of the change.

C. Failure of the taxpayer to notify the Tax Collector and await approval before changing the method of reporting will subject the taxpayer to interest and penalties if his original method of reporting would produce higher taxes due the City. When a person makes such change without the consent of the Tax Collector, the Tax Collector may audit his books and records to verify the tax liability as of the date of the change.

D. Any taxpayer who has failed to indicate a choice of reporting method upon the application for a privilege license shall be deemed to have chosen the accrual method of reporting. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-555.1. ADMINISTRATIVE REQUEST FOR THE ATTENDANCE OF WITNESSES OR THE PRODUCTION OF DOCUMENTS; SERVICE THEREOF; REMEDIES AND PENALTIES FOR FAILURE TO RESPOND

A. If a taxpayer refuses or fails to comply in whole or in part with a request to provide records authorized by Section 3-05-005-0555, the Tax Collector may issue his written administrative request which shall:

1. Designate the individual to provide information.

2. Describe specifically or generally the information to be provided, and any documents sought to be examined.

3. State the date, time, and place in which the individual shall appear before the Tax Collector to provide the information and to produce the documents sought.

4. Be directed to:

a. Any director, officer, employee, agent, or representative of the person sought to be examined; or

b. Any independent accountant, accounting firm, bookkeeping or financial service retained or employed by such person for any purpose connected with business activity subject to taxation; or

c. Any other person who, in the opinion of the Tax Collector, has knowledge of facts bearing upon any tax liability of the person or taxpayer from whom information is sought.

B. The failure of a taxpayer to comply with reasonable requests for records without good reason or cause may, in the exercise of judicial discretion by a court, be held to constitute a failure to exhaust administrative remedies. (Ord. 2025-11, Amended, 05/20/2025)

Reg. 3-5-571.1. COLLECTION OF TAX IN JEOPARDY

Evidence that collection of tax due is in jeopardy shall include documentation that:

A. The taxpayer is going out of business.

B. The taxpayer has no City privilege license or has no permanent business location in the State.

C. The taxpayer has failed to timely pay any tax (or penalties and interest thereon) due to the City on three (3) or more occasions within the previous thirty-six (36) calendar months.

D. The taxpayer has remitted payment by check, which has been dishonored.

E. The taxpayer has failed to comply with a formal written request of the Tax Collector made pursuant to Regulation 3-5-555.1. (Ord. 2008, Amended, 11/02/1999; Ord. 2007-28, Amended, 05/01/2007; Ord. 2013-26, Amended, 01/07/2014; Ord. 2025-11, Amended, 05/20/2025)