Chapter 5.08
BUSINESS AND OCCUPATION TAX

Sections:

5.08.010    Exercise of revenue license power.

5.08.020    Definitions.

5.08.030    Occupation license required.

5.08.040    License tax year.

5.08.050    Occupation subject to tax – Amount.

5.08.060    Repealed.

5.08.070    Exceptions and deductions.

5.08.075    Allocation of income – Cellular telephone service.

5.08.077    Rate change.

5.08.080    Application or return for license.

5.08.090    Monthly and quarterly payment of tax.

5.08.100    When tax based on current year – Commencement of business during tax year.

5.08.110    Monthly payments – License prerequisites.

5.08.120    Sale or transfer of business.

5.08.130    Taxpayer to keep books and records – Returns confidential.

5.08.140    Administrator to investigate returns.

5.08.150    Over or underpayment of tax.

5.08.160    Remedy for nonpayment of tax.

5.08.170    Appeals.

5.08.180    Repealed.

5.08.190    Licenses – Posting.

5.08.200    Repealed.

5.08.210    Repealed.

5.08.010 Exercise of revenue license power.

The provisions of this chapter shall be deemed an exercise of the power of the city to license for revenue. (Ord. 272 § 1, 1955).

5.08.020 Definitions.

Unless the context clearly indicates otherwise, the words, phrases and terms used in this chapter shall have the following meanings:

A. “Cellular telephone service” means a two-way voice and data telephone/telecommunications system based in whole or substantially in part on wireless radio communications and which is not subject to regulation by the Washington Utilities and Transportation Commission (WUTC). This includes cellular mobile service. The definition of cellular mobile service includes other wireless radio communications services such as specialized mobile radio (SMR), personal communications services (PCS), and any other evolving wireless radio communications technology which accomplishes a purpose similar to cellular mobile service.

B. “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. (Transmission of communication through cellular telephone service is classified as “telephone business” rather than “competitive telephone service.”)

C. “Gross income” means the value proceeding or accruing from the sale of tangible property or service, and receipts (including all sums earned or charged, whether received or not) by reason of investment of capital in the business engaged in (including rentals, royalties, receipts, or proceeds from the use or sale of real property or any interest therein, and proceeds from the sale of notes, bonds, mortgages or other evidence of indebtedness, or stocks and the like) and without any deduction on account of the cost of the property sold, cost of materials used, labor costs, taxes, interest or discount paid, or any expenses whatsoever, and without any deduction on account of losses. Further deductions and exceptions from gross income upon which the fee or tax described in this chapter is computed are set forth in Section 5.08.070.

D. “Network telephone service” means the providing by any person of access to a local telephone network, local telephone network switching service, toll service, or coin telephone services, or the providing of telephonic, video, data, 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 includes interstate service, including toll service, originating from or received on telecommunications equipment or apparatus in this state if the charge for the service is billed to a person in this state. It includes the provision of transmission to and from the site of an internet provider via a local telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. It does not include the providing of competitive telephone service, the providing of cable television service, the providing of broadcast services by radio or television stations, nor the provision of internet service as defined in RCW 82.04.297, including the reception of dial-in connection, provided at the site of the internet service provider.

E. “Person or persons” means individuals, firms, partnerships, corporations, and other associations of natural persons, whether acting by themselves or by servants, agents, or employees.

F. “Taxpayer” means any person liable for the license fee or tax imposed by this chapter.

G. “Tax year or taxable year” means the year commencing January 1st and ending on the last day of December of the same year, or, in lieu thereof, the taxpayer’s fiscal year when permission is obtained from the administrator to use the same as the tax period.

H. “Telephone business” means the business of providing network telephone service as defined herein or as may be subsequently amended by RCW 82.04.065. It includes cooperative or farmer line telephone companies or associations operating an exchange.

I. “Telephone service” means competitive telephone service or network telephone service, or both, as defined herein. (Ord. 1501 § 4 (Exh. C) (part), 2015; Ord. 1090 § 1, 1997: Ord. 1086 § 1, 1997: Ord. 272 § 2, 1955).

5.08.030 Occupation license required.

After the 1st day of January, 1956, no person shall engage in or carry on any business, occupation, pursuit or privilege for which a license fee or tax is imposed by this chapter without having first obtained, and being the holder of a valid and subsisting license so to do, to be known as an “Occupation License.”

Any person engaging in, or carrying on more than one such business, occupation, pursuit or privilege shall pay the license tax so imposed upon each of the same.

Any taxpayer who engages in, or carries on any business subject to tax hereunder without having his “Occupation License” so to do, shall be guilty of a violation of this chapter for each day during which the business is so engaged in or carried on, and any taxpayer who fails or refuses to pay the license fee or tax or any part thereof on or before the due date shall be deemed to be operating without having his license so to do. (Ord. 272 § 3, 1955).

5.08.040 License tax year.

All “Occupation Licenses” shall be for the tax year for which issued and shall expire at the end of such tax year.

Such “Occupation License” and the fee or tax therefor imposed shall be for the year commencing January 1st and ending on the last day of December of the following year; provided, however, that, if the taxpayer in transacting his business keeps the books reflecting the same for a fiscal year not based on the calendar year, he may, with the assent of the administrator, obtain his license for the period of his current fiscal year which shall be deemed his tax year, and pay the fee or tax computed upon his gross income made during his fiscal year (next preceding his tax year) covering his accounting period as shown by the method of keeping the books of the business. (Ord. 1501 § 4 (Exh. C) (part), 2015; Ord. 272 § 4, 1955).

5.08.050 Occupation subject to tax amount.

There are levied and shall be collected annual license fees, occupation taxes, payable monthly, against the persons on account of the business activities, and in the amounts to be determined by the application of the rates against gross income, as follows:

A. Upon any telephone business, there shall be levied a tax equal to six percent of the total gross operating revenues, including revenues from intrastate toll, derived from the operation of such businesses within the city. Gross operating revenues for this purpose shall not include charges which are passed on to the subscribers by a telephone business pursuant to tariffs required by regulatory order to compensate for the cost to the company of the tax imposed by this chapter.

“Telephone business” means the business of providing access to a local telephone network, local telephone network switching service, toll service, or coin telephone services, or providing telephonic, video, data, or similar 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.

“Competitive telephone service” means the providing by any person of telephone equipment, apparatus, or service, other than toll service, which 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. Upon every person, firm or corporation engaged in or carrying on the business of selling or furnishing electrical lights and power, within or partly within the corporate limits of the city, an annual tax for the privilege of so doing, such tax to be equal to six percent of the total gross income from such a business in the city;

C. Upon every person, firm or corporation engaged in or carrying on the business of selling or furnishing a television signal for hire within or partly within the corporate limits of the city, an annual tax for the privilege of so doing, such tax to be equal to one percent of the total gross income from such business in the city;

D. Upon every person, firm or corporation including the city, engaged in or carrying on the business of selling or furnishing water, sewer or garbage disposal within or partly within the corporate limits of the city, an annual tax for the privilege of so doing, such tax to be equal to nine and one-half percent of the total gross income from such business in the city. (Ord. 1133 § 1, 1998; Ord. 1086 § 2, 1997; Ord. 1080 § 1, 1997; Ord. 727 § 1, 1984: Ord. 715 § 1, 1983: Ord. 705 § 1, 1982: Ord. 686 § 1, 1981: Ord. 393 § 1, 1969: Ord. 274 § 1, 1955; Ord. 272 § 5, 1955).

5.08.060 Tax apportioned for year 1969.

Repealed by Ord. 1501. (Ord. 393 § 2, 1969: Ord. 272 § 7, 1955).

5.08.070  Exceptions and deductions.

A. There shall be excepted and deducted from the total gross income upon which the license fee or tax is computed the following:

1. 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.

2. Charges by a taxpayer engaging in a telephone business or to a telecommunications company, as defined in RCW 80.04.010, for telephone service that the purchaser buys for the purpose of resale.

3. 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.

4. There shall be excepted and deducted from the total gross income upon which the tax is computed all cash discounts allowed and actually granted to customers of the taxpayer during the tax year.

5. So much thereof as is derived from the transactions in interstate or foreign commerce, or from business done for the government of the United States, its officers or agents in their official capacity, and any amount paid by the taxpayer to the United States, the state of Washington, as excise taxes levied or imposed on the sale or distribution of property or service.

6. Grants, investment interest and other miscellaneous revenue of any city-owned utility unrelated to the sales and rentals of the city-owned utility’s services.

B. There shall be excepted and deducted from the total gross income upon which the tax is computed all bad debts for services incurred, rendered or charged for during the tax year. Debts shall be deemed bad and uncollectible when they have been written of the books of the taxpayer. In the event debts are subsequently collected, the income shall be reported in the return for the quarter in which the debts are collected and at the rate prevailing in the tax year when collected.

C.  Nothing in this chapter shall be construed as requiring a license, or the payment of a license fee or tax, or the doing of any act, which would constitute an unlawful burden or interference in violation of the Constitution or laws of the United States or which would not be consistent with the Constitution or laws of the state of Washington. (Ord. 1559 § 1, 2019; Ord. 1086 § 3, 1997: Ord. 272 § 8, 1955).

5.08.075  Allocation of income – Cellular telephone service.

A. 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.

B. Presumption. There is a presumption that the service address a customer supplies to the taxpayer is current and accurate, unless the taxpayer has actual knowledge to the contrary.

C. Roaming 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.

D. Dispute Resolution. If there is a dispute between or among the city and one or more other 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 the 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 on the disputed revenues so long as it changes its billing records for future revenues to comport with the settlement facilitated by AWC. (Ord. 1086 § 4, 1997).

5.08.077 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 sixty days following the enactment of the ordinance establishing the change. The city 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. 1086 § 5, 1997).

5.08.080 Application or return for license.

On or before the 1st day of January 1956 and thereafter on or before the first day of each tax year, every taxpayer shall apply to the administrator for an “Occupation License” upon blanks or forms of return to be prepared and provided by him requesting such information as may be necessary to enable him to arrive at the lawful amount of the fee or tax. The taxpayer shall, in a legible manner, write in such blank or form of return the information required and shall sign the same and by affidavit at the foot thereof shall swear or affirm that the information therein given is full and true and that he knows the same to be so.

Every such application or return shall be accompanied by a remittance by bank draft, certified check, cashier’s check or money order, payable to the administrator, or in cash, in the amount of the tax or fee or installment thereof required by the provisions of this chapter.

If the applicant be a partnership, the application or return must be made by one of the partners; if a corporation, by one of the officers thereof; if a foreign corporation, a copartnership or nonresident individual, by the resident agent or local manager of said corporation, copartnership or individual. (Ord. 1501 § 4 (Exh. C) (part), 2015; Ord. 272 § 9, 1955).

5.08.090 Monthly and quarterly payment of tax.

Where the amount of the license fee or tax is based upon gross income, the taxpayer may pay his fee or tax in equal monthly installments during the life of his license, each such installment to be paid on or before the 10th day of the month. In all other cases, the taxpayer may pay his fee or tax in equal installments during the life of his license, each such installment to be paid on or before the 1st day of March, the 1st day of June, the 1st day of September, and the 1st day of December, respectively. (Ord. 272 § 10, 1955).

5.08.100 When tax based on current year – Commencement of business during tax year.

Where a business, occupation or pursuit subject to tax upon gross income has not been carried on for the full calendar or fiscal year next preceding the tax year for which license is required, the license fee or tax shall be paid monthly in installments during the life of the license on or before the 10th day of the month, and shall be based upon the gross income for the month next preceding that in which payment is due. In such cases the taxpayer shall make monthly returns similar to the annual returns provided for herein on or before the 10th day of the month, under oath or affirmation, covering the business of the previous month.

In all other cases where a person commences during any tax year to engage in any business, occupation, pursuit or privilege, he shall be entitled to a license for the remainder of such tax year for the required fee apportioned in the ratio of said remainder to a full tax year. (Ord. 272 § 11, 1955).

5.08.110 Monthly payments – License prerequisites.

In any case where the taxpayer pays his license fee or tax monthly, he shall nevertheless first procure his “Occupation License” in the manner herein required before commencing or continuing in business. (Ord. 272 § 12, 1955).

5.08.120 Sale or transfer of business.

Upon the sale or transfer during any tax year of a business on account of which a fee or tax is required, the purchaser or transferee shall, if the fee or tax has not been paid in full for said year, be responsible for its payment for that portion of said year during which he carried on such business. (Ord. 272 § 13, 1955).

5.08.130 Taxpayer to keep books and records – Returns confidential.

It shall be the duty of each taxpayer taxed upon his gross income to keep and enter in a proper book or set of books or records an account which shall accurately reflect the amount of his gross income, which account shall be open at reasonable times to the inspection of the administrator, or his duly authorized agent, and from which said officer or his agent may verify the return made by the taxpayer.

The applications, statements or returns made to the administrator, pursuant to this chapter shall not be made public, nor shall they be subject to the inspection of any person except the mayor, the city attorney, the administrator, the city treasurer, or his authorized agent, and members of the city council. (Ord. 1501 § 4 (Exh. C) (part), 2015; Ord. 272 § 14, 1955).

5.08.140 Administrator to investigate returns.

If any taxpayer fails to apply for license or make his return, or if the administrator is dissatisfied as to the correctness of the statements made in the application or return of any taxpayer, said officer, or his authorized agent, may enter the premises of such taxpayer at any reasonable time for the purpose of inspecting his books or records of account to ascertain the amount of the fee or tax or to determine the correctness of such statements, as the case may be, and may examine any person under oath administered by said officer, or his agent, touching the matters inquired into, or said officer, or his authorized agent, may fix a time and place for an investigation of the correctness of the return and may issue a subpoena to the taxpayer, or any other person, to attend upon such investigation and there testify under oath administered by said officer, or his agent, in regard to the matters inquired into and may, by subpoena, require him, or any person, to bring with him such books, records and papers as may be necessary. (Ord. 1501 § 4 (Exh. C) (part), 2015; Ord. 272 § 15, 1955).

5.08.150 Over or underpayment of tax.

If the administrator upon investigation or upon checking returns finds that the fee or tax paid on any of them is more than the amount required of the taxpayer, he shall refund the amount overpaid by a warrant upon the general fund. If the administrator finds that the fee or tax paid is less than required, he shall send a statement to the taxpayer showing the balance due, who shall within ten days pay the amount shown thereon. (Ord. 1501 § 4 (Exh. C) (part), 2015; Ord. 272 § 16, 1955).

5.08.160 Remedy for nonpayment of tax.

If any taxpayer fails to apply for license, or make his return, or to pay the fee or tax therefor, he shall be liable therefor in any suit or action by the city for the collection thereof. The administrator shall also notify the city attorney in writing of the name of such delinquent taxpayer and the amount due from him, and said officer shall, with the assistance of the administrator collect the same by any appropriate means or by suit or action in the name of the city. (Ord. 1501 § 4 (Exh. C) (part), 2015; Ord. 272 § 17, 1955).

5.08.170 Appeals.

A. Appeal of Amount of the License Fee.

1. Appeal under Chapter 2.80. Any taxpayer aggrieved by the amount of the fee or tax determined by the administrator may appeal the decision under the uniform code of enforcement, Chapter 2.80.

2. At such hearing, the appellant shall be entitled to be heard and to introduce evidence on its own behalf.

3. The hearing officer may, by subpoena, require the attendance thereat of any person, and may also require him to produce any pertinent books and records. Any person served with such subpoena shall appear at the time and place therein stated and produce the books and records required, if any, and shall testify truthfully under oath administered by the hearing officer as to any matter required of him pertinent to the appeal, and it shall be unlawful for him to fail or refuse so to do.

4. The hearing officer shall ascertain the correct amount of the license fee or tax which amount, together with costs of the appeal, if appellant is unsuccessful, must be paid within ten days after notice of the amount is given.

B. All other violations of this chapter shall be enforced under the uniform code enforcement, Chapter 2.80. (Amended during January 2016 update; Ord. 1501 § 4 (Exh. C), 2015: Ord. 272 § 18, 1955).

5.08.180 City clerk to make rules.

 Repealed by Ord. 1501. (Ord. 272 § 19, 1955).

5.08.190 Licenses – Posting.

All licenses issued pursuant to the provisions of this chapter shall be kept posted by the licensee in a conspicuous place in his principal place of business in the city. (Ord. 272 § 20, 1955).

5.08.200 False returns, etc.

Repealed by Ord. 1501. (Ord. 272 § 21, 1955).

5.08.210 Penalty.

Repealed by Ord. 1501. (Ord. 272 § 23, 1955).