Chapter 3.14
UTILITY OCCUPATION TAX1
Sections:
3.14.010 Exercise of revenue licensing power.
3.14.015 General administrative provisions apply.
3.14.030 Utility occupation tax.
3.14.040 Cellular telephone service – Income allocation and administration.
3.14.060 Cable television utility tax credit.
3.14.070 Due dates, payments – Return required.
3.14.080 Late payment, interest and penalties – Underpayment of tax.
3.14.100 Finance director authorized to promulgate rules.
3.14.110 Quitting business – Liability of successor.
3.14.120 Debt to the city – Unpaid tax.
3.14.130 Correction of tax – Administrative appeal.
3.14.140 Judicial review of hearing examiner decision.
3.14.010 Exercise of revenue licensing power.
The provisions of this chapter constitute an exercise of the power of the city to license for revenue. (Ord. 2025-939 § 2 (Exh. A))
3.14.015 General administrative provisions apply.
The provisions of Chapters 3.02 and 5.04 MCMC shall be fully applicable to the provisions of this chapter except that the definition of “person” set forth in MCMC 3.14.020(K) shall apply in place of the definition in MCMC 5.04.010(A). (Ord. 2025-939 § 2 (Exh. A))
3.14.020 Definitions.
The definitions set forth in Chapter 5.06 MCMC shall apply throughout this chapter, unless expressly provided otherwise herein. The following additional definitions shall apply throughout this chapter.
A. “Cable business” means every person in the business of constructing, operating and maintaining a coaxial cable subscriber system for television, radio, and other audio-visual electrical signal distribution within the Mill Creek city limits.
B. “Cellular telephone service” means the providing of mobile telecommunications service or mobile wireless service.
C. “Chapter” shall mean this chapter, as it may be amended or replaced from time to time.
D. “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.
E. “Finance director” means the city of Mill Creek finance director, the finance director’s designee or authorized agent.
F. “Gas business” means the selling, furnishing, distributing, or producing gaseous gas, whether manufactured or natural, for commercial or domestic use or purpose within the Mill Creek city limits.
G. “Gross income” means the value proceeding or accruing from the transaction of the business engaged in and includes the gross proceeds of sales, compensation for the rendition of services, gains realized from trading in stocks, bonds, or other evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and other emoluments however designated, sale of tangible personal property, without any deduction on account of the cost of property sold, the cost of materials used, labor costs, interest, discount paid, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses.
H. “Light or power business” means the business of operating a plant or system for the generation, production or distribution of electrical energy for hire or selling, furnishing, or distributing light and power within the Mill Creek city limits.
I. “Mobile wireless service” means a telecommunications service that is transmitted, conveyed, or routed regardless of the technology used, whereby the origination and/or termination points of the transmission, conveyance, or routing are not fixed, including, by way of example only, telecommunications services that are provided by a commercial mobile radio service provider.
J. “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. “Network telephone service” 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. “Network telephone service” does not include the providing of competitive telephone service, the providing of cable television service, or the providing of broadcast services by radio or television stations, nor the provision of internet access as defined in RCW 82.04.297, including the reception of dial-in connection, provided at the site of the internet service provider.
K. “Person” means any individual, receiver, administrator, executor, assignee, trustee in bankruptcy, trust, estate, firm, partnership, corporation, joint venture, club, company, joint stock company, business trust, public utility district, municipal corporation or department thereof, public or private utilities, and all other associations, whether acting by themselves or by servants, agents or employees.
L. “Recyclable materials” means those solid wastes that are separated for recycling or reuse, such as papers, metals, and glass, that are designated as recyclables pursuant to MCMC 8.04.010(J).
M. “Sewerage business” means and includes every person engaging in or carrying on the business of selling, furnishing, or distributing sanitary sewer or septic services for domestic or commercial purposes in the Mill Creek city limits.
N. “Solid waste” or “waste “means all putrescible and nonputrescible solid and semisolid wastes including, but not limited to, garbage, rubbish, ashes, industrial wastes, swill, sewage sludge, demolition and construction waste, abandoned vehicles or parts thereof, and recyclable materials. Solid waste or waste also includes special waste as determined by the city.
O. “Solid waste collection business” means every person who receives solid waste or recyclable materials for transfer, storage, or disposal including but not limited to all collection services, public or private solid waste disposal sites, transfer stations, and similar operations.
P. “Storm and surface water business” means every person engaging in or carrying on the business of selling, furnishing or distributing storm and surface water drainage services for commercial or domestic use or purpose within the city of Mill Creek.
Q. “Taxable year” means January 1st through December 31st of each calendar year.
R. “Taxpayer” means any person liable for the tax imposed by this chapter.
S. “Telecommunications company” includes every corporation, company, association, joint stock association, partnership and person, their lessees, trustees or receivers appointed by any court whatsoever, and every city or town owning, operating or managing any facilities used to provide telecommunications for hire, sale, or resale to the general public within this state.
T. “Telecommunications services” means the electronic transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point or between or among points. “Telecommunications service” includes such transmission, conveyance, or routing in which computer processing applications are used to act on the form, code, or protocol of the content for purposes of transmission, conveyance or routing without regard to whether such service is referred to as voice over internet protocol services or is classified by the Federal Communications Commission as enhanced or value added. “Telecommunications service” does not include those activities expressly excluded from the definition in RCW 82.04.065(27).
U. “Telephone business” means the business of providing network telephone service, as defined in this section, telecommunications services, cooperative or farmer line telephone companies or associations operating an exchange within the Mill Creek city limits.
V. “Telephone service” means competitive telephone service or network telephone service, or both, as defined in this section.
W. “Utility service” or “utility services” means any of the activities engaged in by taxpayers subject to the utility occupation tax pursuant to MCMC 3.14.030.
X. “Water distribution business” means every person engaged in the business of selling, furnishing, or distributing water services for commercial or domestic use or purpose within the Mill Creek city limits. (Ord. 2025-939 § 2 (Exh. A))
3.14.030 Utility occupation tax.
In addition to the license fees provided elsewhere in MCMC Title 5 and the taxes provided for in this chapter, there is hereby levied upon every person engaging within the city of Mill Creek in the following activities the amount of tax due with respect to such businesses which shall be equal to the gross income multiplied by the following rates:
A. The gas business tax rate shall be five percent.
B. The water business tax rate shall be five percent.
C. The light or power business tax rate shall be five percent.
D. The water distribution business tax rate shall be five percent.
E. The sewerage business tax rate shall be five percent.
F. The storm and surface water business tax rate shall be zero percent.
G. The solid waste collection business tax rate shall be five percent.
H. The telephone business tax rate shall be five percent.
I. The cellular telephone business tax rate shall be five percent.
J. The cable business tax rate shall be five percent. (Ord. 2025-939 § 2 (Exh. A))
3.14.040 Cellular telephone service – Income allocation and administration.
A. Allocation of Income.
1. Service Address. Payments by a customer for cellular telephone service from telephones without a fixed location shall be allocated among taxing jurisdictions to the location of the customer’s principal service address during the period for which the tax applies.
2. Presumption. There is a presumption that the service address a customer supplies to the taxpayer is current and accurate, unless the taxpayer has actual knowledge to the contrary.
3. Roaming. When the cellular telephone 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.
B. Dispute Resolution. If there is a dispute between or among the city and another city or cities as to the service address of a customer who is receiving cellular telephone services and the dispute is not resolved by negotiation among the parties, then the dispute shall be resolved by the city and the other city or cities by submitting the issue for settlement to the Association of Washington Cities (AWC). Once taxes on the disputed revenues have been paid to one of the contesting cities, the cellular telephone service company shall have no further liability with respect to additional taxes, penalties, or interest on the disputed revenues, so long as it promptly changes its billing records for future revenues to comport with the settlement facilitated by the AWC.
C. Authority of the Finance Director. The finance director is authorized to represent the city in negotiations with other cities for the proper allocation of cellular telephone service taxes imposed pursuant to this chapter.
D. Rate Change. No change in the rate of tax upon persons engaging in providing cellular telephone service shall apply to business activities occurring before the effective date of the change and, except for a change in the tax rate authorized by RCW 35.21.870, no change in the rate of the tax may take effect sooner than 60 days following the enactment of the ordinance establishing the change. The finance director shall send to each cellular telephone service company at the address of record a copy of any ordinance changing the rate of tax upon cellular telephone service promptly upon its enactment. (Ord. 2025-939 § 2 (Exh. A))
3.14.050 Deductions.
In computing the tax imposed by this chapter, the following items may be deducted from the measure of the tax; provided, however, that such deductions may be subject to tax under other chapters of this title, MCMC Title 5, including but not limited to Chapter 3.20 MCMC, Sales and Use Tax.
A. The amount of credit losses actually sustained by taxpayers whose regular books are kept upon an accrual basis.
B. Charges by a taxpayer engaging in any utility occupation activity subject to this chapter for sales of utility services to any purchaser engaged in the same utility occupation activity that the purchaser buys for the purpose of resale.
C. 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.
D. 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 which was not properly a debt of the customer.
E. Amounts derived from business including transactions in interstate and foreign commerce which the city is prohibited from taxing under the Constitution or laws of this state or of the United States. (Ord. 2025-939 § 2 (Exh. A))
3.14.060 Cable television utility tax credit.
Every person providing cable television service within this city will receive a credit toward the utility tax imposed pursuant to MCMC 5.06.040 in the amount of the cable television franchise fee paid to the city. Provided, however, in no case shall the credit exceed the dollar amount of the utility tax due on the same revenue by the cable television service provider. (Ord. 2025-939 § 2 (Exh. A))
3.14.070 Due dates, payments – Return required.
A. The tax imposed by this chapter shall be due and payable in monthly installments. Remittance shall be made as hereinafter provided and shall be accompanied by a return on a form to be provided by the finance director. Returns shall be due by the twenty-fifth day following month’s end of when the tax accrued and shall be in the finance director’s office by 5:00 p.m. Pacific time. The person filing the form shall be required to swear or affirm in writing on the return that the information provided on the form is true and correct. Whenever the total tax for which any person who is liable under this chapter does not exceed the sum of $25.00 for any monthly period, an annual return may be made upon written request and subject to the approval of the finance director. Whenever a taxpayer commences to engage in business during any monthly period, the taxpayer’s first return and tax shall be based upon and cover the portion of the month during which the taxpayer engaged in business.
1. The finance director may require verified annual returns or other information from any taxpayer setting forth such additional information as it may deem necessary to correctly determine the tax liability.
2. Each taxpayer shall maintain all records necessary to calculate the tax due under this chapter and such records shall be retained for at least five years to enable any audit or examination. All of the taxpayer’s books, records, and invoices shall be available for examination at any time by the finance director. All returns and tax information as defined in RCW 82.32.330(1) are confidential and privileged, subject to the exceptions set forth in RCW 82.32.330(3).
3. If a person does not keep the necessary books and records within the city, it shall be sufficient if such person (a) produces within the city such books and records as may be required by the finance director or (b) bears the cost of examination by the finance director’s agent at the place where such books and records are kept; provided, that the person electing to bear such cost shall pay in advance to the finance director the estimated amount thereof including round-trip transportation costs, lodging, meals and incidental expenses, subject to adjustment upon completion of the examination.
4. Any person who fails, or refuses a finance department request, to provide or make available records, or to allow inspection or examination of the business premises, shall be forever barred from questioning in any court action, the correctness of any assessment of taxes made by the city for any period for which such records have not been provided, made available or kept and preserved, or in respect of which inspection or examination of the business premises has been denied. The finance director is authorized to determine the amount of the tax or fees payable by obtaining facts and information upon which to base the estimate of the tax or fees due. Such fee or tax assessment shall be deemed prima facie correct and shall be the amount of tax owing the city by the taxpayer. The finance director shall notify the taxpayer by mail the amount of tax so determined, together with any penalty, interest, and fees due; the total of such amounts shall thereupon become immediately due and payable. The cost to the city, whether in staff time, or the use of professionals hired by the city, of researching and calculating such tax or fee shall be added to the taxpayer’s assessment and paid by the taxpayer.
B. Payment shall be payable to the city of Mill Creek, shall be filed with the finance director by bank draft, certified check, cashier’s check, personal check or money order. The tax shall not be deemed paid until the check or draft is honored in the usual course of business; nor shall acceptance of any sum by the finance director be deemed a discharge of the tax due unless the amount paid is in full and is the actual amount due. (Ord. 2025-939 § 2 (Exh. A))
3.14.080 Late payment, interest and penalties – Underpayment of tax.
A. Late Payment. For each payment due, if such payment is not made by the due date and time thereof, there shall be added penalties and interest as follows:
1. Penalties. For each month or portion thereof that the payment is overdue, a penalty of five percent of the tax due shall be imposed; provided, that the total penalty imposed shall not exceed a total of 25 percent.
2. In addition to the penalties imposed, interest on the amount due shall accrue at the rate of one percent per month from the date of delinquency.
The finance director is authorized to waive all or any portion of the penalties and interest provided for herein in the event that the finance director determines that late payment, including any payment made to cure an underpayment, was the result of excusable neglect or extreme hardship.
B. Underpayment. If upon examination of any returns or from other information obtained by the finance director it appears that a tax or penalty has been paid less than that properly due, the finance director shall assess against the taxpayer such additional amount found to be due and shall add thereto interest at the rate of one percent for each 30 days or portion thereof, compounded monthly, from the respective due dates of such additional amount until date of such assessment. The finance director shall notify the taxpayer by mail of the additional amount and the same shall become due and shall be paid within 10 days from the date of notice, or within such further time as the finance director may provide. If payment is not received by the finance director by the due date specified in the notice, the finance director shall add a penalty of 10 percent of the amount of the additional tax found due. If the finance director finds that all or any part of the deficiency resulted from an intent to evade the tax payable hereunder, a further penalty of 50 percent of the additional tax found to be due shall be added.
No assessment or correction of assessment for additional taxes due may be made by the finance director more than five years after the close of the tax year, except (1) against a taxpayer who has not registered as required by this chapter, (2) upon a showing of fraud or misrepresentation of a material fact by the taxpayer, or (3) where a taxpayer has executed a written waiver of such limitation. (Ord. 2025-939 § 2 (Exh. A))
3.14.090 Overpayment of tax.
If, upon application by a taxpayer for a refund or for an audit of his/her records, or upon an examination of the returns or records of any taxpayer, it is determined by the finance director that within five years immediately preceding the receipt by the finance director of the application by the taxpayer for a refund or for an audit, or, in the absence of such an application, within the five years immediately preceding the commencement by the finance director of such examination, a tax has been paid in excess of that properly due, the excess amount paid within such period of five years shall be credited to the taxpayer’s account or shall be refunded to the taxpayer, at his/her option. No refund or credit shall be allowed with respect to any payment made to the finance director more than five years before the date of such application or examination. Where a refund or credit may not be made because of the lapse of said five-year period, the amount of the refund or credit which would otherwise be allowable for the portion of the statutory assessment period preceding the five-year period may be offset against the amount of any tax deficiency which may be determined by the finance director for such preceding period. Interest upon any such refund or credit shall be allowed by the finance director at the rate of three percent per annum. (Ord. 2025-939 § 2 (Exh. A))
3.14.100 Finance director authorized to promulgate rules.
The finance director is authorized to prescribe forms, prepare, publish and enforce rules not inconsistent with this chapter or with law for the purpose of administering the provisions of this chapter. It shall be unlawful to violate or fail to comply with any promulgated rule. (Ord. 2025-939 § 2 (Exh. A))
3.14.110 Quitting business – Liability of successor.
A. Whenever any taxpayer quits business, sells out, exchanges, or otherwise disposes of his business or his stock of goods, any tax payable hereunder shall become immediately due and payable. Such taxpayer shall, within 10 days thereafter, make a return and pay the tax due.
B. Any person who becomes a successor shall become liable for the full amount of any tax owing. The successor shall withhold from the purchase price a sum sufficient to pay any tax due to the city from the taxpayer until such time as:
1. The taxpayer shall produce a receipt from the city showing payment in full of any tax due or a certificate that no tax is due; or
2. More than six months have passed since the successor notified the finance director of the acquisition and the finance director has not issued and notified the successor of an assessment.
C. Payment of the tax by the successor shall, to the extent thereof, be deemed a payment upon the purchase price. If such payment is greater in amount than the purchase price, the amount of the difference shall become a debt due such successor from the taxpayer.
D. Notwithstanding the above, if a successor gives written notice to the finance director of the acquisition, and the finance director does not within six months of the date it received the notice issue an assessment against the taxpayer and mail a copy of that assessment to the successor, the successor shall not be liable for the tax. (Ord. 2025-939 § 2 (Exh. A))
3.14.120 Debt to the city – Unpaid tax.
Any tax due and unpaid under this chapter, and all penalties and interest thereon, shall constitute a debt to the city and may be collected by court proceedings in the same manner as any other debt in like amount, which remedy shall be in addition to all other existing remedies. (Ord. 2025-939 § 2 (Exh. A))
3.14.130 Correction of tax – Administrative appeal.
A. Any person aggrieved by the amount of any fee, tax, interest or penalty determined by the finance director to be due under the provisions of this chapter may pay the full amount due and appeal to the hearing examiner from such determination by filing a written notice of appeal with the city clerk pursuant to the following procedure:
1. Filing Fee. A $1,750 plus actual cost of hearing examiner filing fee shall be submitted with the appeal, which filing fee is required to process the appeal.
2. Form of Appeal. Any appeal must be in writing and must contain the following:
a. The taxpayer’s name, business address, and phone number;
b. A statement identifying the determination of the finance director from which the appeal is taken;
c. A receipt or other proof of payment of the assessment in the amount determined by the finance director;
d. A statement setting forth the grounds upon which the appeal is taken and identifying specific errors the finance director is alleged to have made in making the determination; and
e. A statement identifying the requested relief from the determination being appealed;
f. A receipt from the finance department, as proof of payment “under protest,” for the amount of the fee, tax, interest and penalty determined to be owing by the finance director. Such payment shall be a condition precedent to the right to appeal to the hearing examiner.
3. Time and Place to Appeal. Any appeal shall be filed with the office of the city clerk with a copy to the finance director no later than 10 days following the date on which the determination of the finance director was mailed to the taxpayer. Failure to follow the appeal procedures in this section, including paying the filing fee and payment “under protest,” shall preclude the taxpayer’s right to appeal.
4. Appeal Hearing. The hearing examiner shall schedule a hearing date, notify the taxpayer and the finance director of such hearing date and shall then conduct an appeal hearing in accordance with this chapter and procedures developed by the hearing examiner pursuant to Chapters 4.34 and 14.09 MCMC, at which time the appellant taxpayer and the finance director shall have the opportunity to be heard and to introduce evidence relevant to the subject of the appeal.
5. Burden of Proof. The appellant taxpayer shall have the burden of proving by a preponderance of the evidence that the determination of the finance director is erroneous.
6. Hearing Record. The hearing examiner shall preserve a record of the hearing in such a form and manner as he/she deems proper.
7. 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 taxpayer and to the finance director. The decision shall state the correct amount of the fee, tax, interest or penalty owing. If the hearing examiner determines that the taxpayer is owed a refund, such refund amount shall be paid to the taxpayer in accordance with MCMC 3.14.090. If the hearing examiner finds in favor of the city or determines that the taxpayer owes additional taxes, the taxpayer shall pay the additional amount owed by the taxpayer, plus actual cost for the hearing examiner, any additional interest and penalties, shall be paid to the city in accordance with MCMC 3.14.080. (Ord. 2025-939 § 2 (Exh. A))
3.14.140 Judicial review of hearing examiner decision.
The decision of the hearing examiner is final, subject to review by either party so long as the appealing party files its appeal in Snohomish County superior court within 10 calendar days following the date of the hearing examiner’s decision. (Ord. 2025-939 § 2 (Exh. A))
Code reviser’s note: Per Ord. 2025-939, this chapter is effective June 1, 2026.