Chapter 5.08
UTILITY OCCUPATION TAX CODE

Sections:

5.08.010    Exercise of revenue license powers.

5.08.020    Definitions.

5.08.030    Occupation license required.

5.08.040    License tax year.

5.08.050    Utility occupations subject to tax—Amount.

5.08.060    Exceptions and deductions.

5.08.070    Application or return for license.

5.08.080    Monthly payment of tax.

5.08.090    When tax based on current year—Commencement of business during tax year.

5.08.100    Monthly payments—License prerequisite.

5.08.110    Sale or transfer of business.

5.08.120    Taxpayer—Books and records required—Returns confidential.

5.08.130    Director of finance and administration to investigate returns.

5.08.140    Cost of audit.

5.08.150    Income deposited in current expense fund.

5.08.160    Over or under payment of tax.

5.08.170    Remedy for nonpayment of tax.

5.08.180    Appeal.

5.08.190    City council to make rules.

5.08.200    Licenses—Posting—Unlawful use.

5.08.210    False returns, misrepresentations, evasion of payment.

5.08.010 Exercise of revenue license powers.

The provisions of this chapter shall be deemed an exercise of the power of the city to license for revenue. (Ord. 716 § 1, 1957)

5.08.020 Definitions.

In construing the provisions of this chapter, save when otherwise plainly declared or clearly apparent from the context, the following definitions shall be applied:

(1)    “Cable service” means, without limitation, (A) the one-way transmission to subscribers of (i) video programming, or (ii) other programming service, and (B) subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service;

(2)    “Gross income” means the value proceeding or accruing from the sale of tangible property or service, and receipts by reason of the investment of capital in the business engaged in, including rentals, royalties, fees or other emoluments, however designated (excluding receipts of proceeds from the use or sale of notes, bonds, mortgages, or other evidences of indebtedness, or stock and the like) and without any deduction on account of the cost of the property sold, the cost of materials used, labor costs, interest or discount paid or any expense whatsoever, and without any deduction on account of losses; provided, that there shall be excluded from the gross income subject to the tax imposed by Section 5.08.050 upon telephone service that portion of the receipts received which represent access to or charges for interstate services for which rates are contained in tariffs filed with the Federal Communications Commission, but only with respect to those businesses falling within subsection (7)(B) of this section;

(3)    “Person” or “persons” means persons of either sex, firms, copartnerships, corporations, including municipal corporations, and other associations of natural persons whether acting by themselves or by servants, agents or employees;

(4)    “Residential domestic activities” means those activities commonly occurring or required in the operation and day-to-day maintenance of a human family unit of one or more persons when carried on within the residence of such human family unit. “Residential domestic activities” shall not include activities directly relating substantially to gainful employment, the production of income, or the operation and maintenance of activities serving or benefitting more than one human family unit;

(5)    “Taxpayer” means any person liable for the license fee or tax imposed by this chapter;

(6)    “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 director of finance and administration to use the same as the tax period;

(7)    “Telephone service” as used in this chapter includes the providing by any person of:

(A)    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 transportation system; or

(B)    Interstate service, including toll service, originating from or received on telecommunications equipment or apparatus within the city of Kirkland if the charge for the service is billed to a person or a customer located within the city of Kirkland; or

(C)    The transmission of information data or other communication in either sound or visual patterns from a point of origin to a point of destination when such transmission includes the utilization of electromagnetic, light spectrum vibrations or waves as a carrier.

Telephone service does not include the providing by any person of telecommunications equipment, 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 not subject to regulation as telephone companies under RCW Title 80 and for which a separate charge is made. (Ord. 4416 § 7, 2013; Ord. 3941 § 1, 2004: Ord. 3573 § 24, 1997; Ord. 2832 § 1, 1984: Ord. 2610 § 1, 1981: Ord. 2501 § 1, 1979; Ord. 2284 § 1 (part), 1974; Ord. 716 § 2, 1957)

5.08.030 Occupation license required.

After May 1, 1957, 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 holder of, a valid and subsisting license to do so, to be known as an “occupation license.”

Any person engaging, 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, carries on, any business subject to tax hereunder without having his occupation license to do so is 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 to do so. (Ord. 716 § 3, 1957)

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 hereby imposed shall be for the year commencing January 1st and ending on the last day of December of the same year; provided, however, that if the taxpayer in transacting his or her business keeps the books reflecting same for a fiscal year not based on the calendar year, he or she may, with the assent of the director of finance and administration, obtain his or her license for the period of his or her current fiscal year which shall be deemed his or her tax year, and pay the fee or tax computed upon his or her gross income made during his or her fiscal year covering his or her accounting period as shown by the method of keeping the books of the business. (Ord. 4416 § 8, 2013: Ord. 3573 § 25, 1997: Ord. 2284 § 1 (part), 1974: Ord. 716 § 4, 1957)

5.08.050 Utility occupations subject to tax—Amount.*

There are levied upon and shall be collected from every person engaging within this city in utility occupations annual license fees or occupation taxes in the amounts to be determined by the application of the rates against gross income as follows:

(1)    Upon every person engaged in or carrying on the business of providing telephone services, a fee or tax equal to six percent of the total gross income from such business in the city, including one hundred percent of the total gross revenues derived from toll service, during the tax year for which the license is required;

(2)    Upon every person engaged in or carrying on the business of selling or furnishing natural or manufactured gas, a fee or tax equal to six percent of the total gross income for such business in the city during the tax year for which the license is required;

(3)    Upon every person engaged in or carrying on the business of selling or furnishing electric light and power or electrical energy, a fee or tax equal to six percent of the total gross income from such business in the city for the tax year for which the license is required;

(4)    Upon every person engaged in or carrying on the business of furnishing sanitary collection services, including both sewage and refuse, a fee or tax equal to nine and one-half percent of the total gross income from such business in the city during the tax year for which the license is required;

(5)    Upon every person engaged in or carrying on the business of furnishing water collection services, a fee or tax equal to eleven and eight-tenths percent of the total gross income from such business in the city during the tax year for which the license is required;

(6)    Upon every person conducting or operating a storm water and/or surface water utility for any customer, including residential and commercial customers, a fee or tax equal to six and ninety-eight one-hundredths percent of the total gross income from such business in the city during the tax year for which the license is required;

(7)    Upon every person engaged in or carrying on the business of providing cable service, a fee or tax equal to six percent of the total gross income from such business in the city during each tax year. (Ord. 4375 § 1, 2012: Ord. 4283 § 1, 2011: Ord. 4261 § 1, 2010: Ord. 4162 § 1, 2008: Ord. 3995 § 1, 2005: Ord. 3941 § 2, 2004: Ord. 3875 § 2, 2002: Ord. 3820 § 1, 2001: Ord. 2773 § 1, 1983: Ord. 2703 § 1, 1982: Ord. 2610 § 2, 1981: Ord. 2501 § 2, 1979: Ord. 2284 § 1 (part), 1974: Ord. 853 § 1, 1962: Ord. 785 § 1, 1959: Ord. 716 § 5, 1957)

*    Code reviser’s note: This section reflects the percentages as amended by Section 1 of Ordinance 4375. Section 2 of Ordinance 4375 provides: “The percentages currently collected shall remain in effect until the 2013 rates for each utility take effect.” For more information, contact the city clerk’s office.

5.08.060 Exceptions and deductions.

(a)    There shall be excepted and deducted from the total gross income upon which the license fee or tax is computed (and before the computation of the tax) so much thereof as is derived from transactions in interstate or foreign commerce, or from business done for the government of the United States, its officers or agents, and any amount paid by the taxpayer to the United States, the state of Washington, or the city of Kirkland, as excise taxes levied or imposed upon the sale or distribution of property or services.

(b)    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.

(c)    Any person subject to the payment of tax under the provisions of any ordinance of the city, other than this chapter, on account of engaging in any activity for which he is liable for tax thereunder, may deduct the amount of such tax imposed by said other ordinance on account of such activity except when the tax therein imposed is paid by the customer. (Ord. 3941 § 3, 2004: Ord. 2610 § 3, 1981: Ord. 716 § 6, 1957)

5.08.070 Application or return for license.

(a)    On or before the first day of each tax year, every taxpayer shall apply to the director of finance and administration for an occupation license upon blanks or forms of return to be prepared and provided by the director requesting such information as may be necessary to enable the director 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 by affidavit at the foot thereof, shall swear or affirm that the information therein given is full and true and that he or she knows the same to be so.

(b)    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 city treasurer, or in cash, in the amount of the tax or fee or installment thereof required by the provisions hereof, and such return and payment shall be made on or before the tenth day of such tax year.

(c)    If the applicant is 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, copartnership or nonresident individual by the resident agent or local manager of the corporation, copartnership or individual. (Ord. 4416 § 9, 2013; Ord. 3573 § 26, 1997; Ord. 716 § 7, 1957)

5.08.080 Monthly payment of tax.

Where the amount of the license fee or tax is based upon gross income, the taxpayer shall pay his fee or tax in monthly installments during the life of his license, each such installment to be paid on or before the tenth day of the month and shall be based upon the gross income for the month next preceding that in which the payment is due and at the end of the year make a complete return with such adjustments in payments as may be found to be due. (Ord. 2284 § 1 (part), 1974: Ord. 716 § 8, 1957)

5.08.090 When tax based on current year—Commencement of business during tax year.

(a)    When a business, occupation or pursuit subject to tax upon gross income has not been carried on for the full calendar 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 tenth day of the month, and shall be based upon the gross income for the month next preceding that which payment is due.

(b)    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 the remainder to a full tax year, at the minimum rate. (Ord. 2284 § 1 (part), 1974: Ord. 716 § 9, 1957)

5.08.100 Monthly payments—License prerequisite.

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 and shall pay the minimum fee or tax therefor, which shall be credited against future installments. (Ord. 716 § 10, 1957)

5.08.110 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 hereby required, the purchaser or transferee shall, if the fee or tax has not been paid in full for the year, be responsible for its payment for that portion of the year during which he carried on such business. (Ord. 716 § 11, 1957)

5.08.120 Taxpayer—Books and records required—Returns confidential.

(a)    It shall be the duty of each taxpayer taxed upon his or her 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 or her gross income, which account shall always be open to the inspection of the director of finance and administration or his or her duly authorized agent, and from which the officer or his or her agent may verify the return made by the taxpayer.

(b)    The applications, statements or returns made to the director of finance and administration 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 director of finance and administration or his or her authorized agent, and members of the city council. (Ord. 4416 § 10, 2013: Ord. 3573 § 27, 1997: Ord. 716 § 12, 1957)

5.08.130 Director of finance and administration to investigate returns.

If any taxpayer fails to apply for license or make return, or if the director of finance and administration is dissatisfied as to the correctness of the statements made in the application or return of any taxpayer, the officer or his authorized agent may enter the premises of such taxpayer at any reasonable time for the purpose of inspecting his or her 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 the officer, or his agent, touching the matters inquired into, or the 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 the officer, or his agent, in regard to the matters inquired into and may, by subpoena, require him, her, or any person, to bring with him such books, records and papers as may be necessary. (Ord. 4416 § 11, 2013: Ord. 3573 § 28, 1997: Ord. 716 § 13, 1957)

5.08.140 Cost of audit.

Upon the failure or refusal of the taxpayer to furnish the information called for by the director of finance and administration, or if the books and records of the taxpayer are complicated, or do not readily disclose the information required for making a complete or satisfactory return without the assistance of a skilled accountant, then the director of finance and administration may in his or her discretion employ a skilled accountant and such clerical assistance as is necessary to make an audit of the books and records of the taxpayer and such expenses shall be collected from the taxpayer in the manner provided for the collection of the license or tax. (Ord. 4416 § 12, 2013: Ord. 3573 § 29, 1997: Ord. 716 § 14, 1957)

5.08.150 Income deposited in current expense fund.

The income derived by the city from the tax hereby imposed shall be deposited in the current expense fund for the city. (Ord. 973 § 1, 1965: Ord. 720 § 2, 1957: Ord. 716 § 15, 1957)

5.08.160 Over or under payment of tax.

If the director of finance and administration upon investigation or upon checking returns finds that the fee or tax paid or any of them is more than the amount required of the taxpayer, he shall refund the amount overpaid by a warrant upon the current expense fund. If the director of finance and administration finds that the fee or tax paid is less than required, he or she shall send a statement to the taxpayer showing the balance due, who shall within three days pay the amount shown thereon. (Ord. 4416 § 13, 2013: Ord. 3573 § 30, 1997: Ord. 720 § 3, 1957: Ord. 716 § 16, 1957)

5.08.170 Remedy for nonpayment of tax.

If any taxpayer fails to apply for license or make his or her return, or to pay the fee or tax therefor, or the cost of any audit required by the director of finance and administration or any part thereof within three days after the same shall have become due, the director of finance and administration shall ascertain the amount of the fee or tax or installment thereof and/or cost of audit due, and shall notify such taxpayer thereof, who shall be liable therefor in any suit or action by the city for the collection thereof. The director of finance and administration shall also notify the city attorney in writing of the name of such delinquent taxpayer and the amount due from him or her and the officer shall, with the assistance of the director of finance and administration, collect the same by any appropriate means or by suit or action in the name of the city. (Ord. 4416 § 14, 2013: Ord. 3573 § 31, 1997: Ord. 716 § 17, 1957)

5.08.180 Appeal.

(a)    Any person aggrieved by a determination of the director of finance and administration (“director”) may appeal such determination to the hearing examiner pursuant to this section.

(b)    Form of Appeal. An appeal must be in writing and must contain the following:

(1)    The name and address of the appellant;

(2)    A statement identifying the determination of the director from which the appeal is taken;

(3)    A statement setting forth the grounds upon which the appeal is taken and identifying specific errors the director is alleged to have made in making the determination; and

(4)    A statement identifying the requested relief from the determination being appealed.

(c)    Time and Place to Appeal. An appeal shall be filed with the director with a copy to the city clerk’s office no later than fourteen calendar days following the date on which the city mailed the notice of the determination. Failure to follow the appeal procedures in this section shall preclude the taxpayer’s right to appeal.

(d)    Appeal Hearing. The director shall transmit the appeal to the hearing examiner. The hearing examiner shall schedule a hearing date and notify the appellant and the director of such hearing date. The hearing examiner shall conduct an appeal hearing in accordance with this chapter and procedures developed by the hearing examiner, at which time the appellant and the director shall have the opportunity to be heard and to introduce evidence relevant to the subject of the appeal.

(e)    Burden of Proof. The appellant shall have the burden of proving by a preponderance of the evidence that the determination of the director is erroneous.

(f)    Hearing Record. The hearing examiner shall make an electronic sound recording of each appeal hearing unless the hearing is conducted solely in writing.

(g)    Decision of the Hearing Examiner. Following the hearing, the hearing examiner shall enter a decision on the appeal, supported by written findings and conclusions in support thereof. A copy of the findings, conclusions and decision shall be mailed to the appellant and to the director.

(h)    Appeal Not a Stay. Filing an appeal will not stay the effect of the director’s determination. Interest and/or penalties shall continue to accrue on all unpaid amounts, notwithstanding the fact that an appeal has been filed.

(i)    A writ of review regarding the decision of the hearing examiner may be sought from King County superior court by the appellant or by the city. A proper request for a writ of review must be filed with the superior court within twenty calendar days following the date that the decision of the hearing examiner was mailed to the parties. Review by the superior court shall be on, and shall be limited to, the record on appeal created before the hearing examiner. Filing with the court does not automatically stay the effect of the city’s decision. (Ord. 4478 § 1, 2015: Ord. 4416 § 15, 2013: Ord. 3573 § 32, 1997: Ord. 716 § 18, 1957)

5.08.190 City council to make rules.

The city council shall have the power, and it shall be its duty, from time to time, to adopt, publish, and enforce rules and regulations not inconsistent with this chapter or with law for the purpose of carrying out the provisions thereof, and it is unlawful for any taxpayer to violate or fail to comply with any such rule or regulation. (Ord. 716 § 19, 1957)

5.08.200 Licenses—Posting—Unlawful use.

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.

No persons to whom a license has been issued pursuant to this chapter shall suffer or allow any other person chargeable with a separate license to operate under or display such license. (Ord. 716 § 20, 1957)

5.08.210 False returns, misrepresentations, evasion of payment.

It is unlawful for any person liable to tax hereunder to fail or refuse to make application for return for license or to pay the fee or tax or installment thereof when due, or for any person to make any false or fraudulent application on return or any false statement or representation in, or in connection with, any such application or return, or to aid or abet another in any attempt to evade payment of the fee or tax, or any part thereof, or for any person to fail to appear, and/or testify in response to subpoena issued pursuant hereto, or to testify falsely upon an investigation of the correctness of a return, or upon the hearing of any appeal, or in any manner to hinder or delay the city or any of its officers or auditors in carrying out the provisions of this chapter. (Ord. 716 § 21, 1957)