Chapter 3.36
UTILITY TAXES
Sections:
3.36.030 Business license required.
3.36.050 Businesses subject to tax.
3.36.060 Exceptions and deductions from gross income.
3.36.070 Monthly/quarterly returns and payment.
3.36.080 Allocation of income for cellular telephone service.
3.36.090 Books and records—Inspection and confidentiality.
3.36.100 Investigation of returns.
3.36.110 Overpayment or underpayment.
3.36.120 Failure to apply for license or make return.
3.36.130 Appeal to city council.
3.36.140 Rules and regulations.
3.36.150 License posting and display—Nontransferable.
3.36.170 Penalty for violation.
3.36.010 Purpose.
The provisions of this chapter shall be deemed to be an exercise of the power of the city to license for revenue, as authorized by RCW 35.21.865, 35A.82.020, and other applicable state laws. (Ord. 2003-32 § 2 (part), 2003)
3.36.020 Definitions.
Where used in this chapter, the following words and terms shall have the meanings as defined in this section, unless, from the context, a more limited or different meaning is clearly defined or apparent:
A. “Cable service” means (1) the one-way transmission to subscribers of (a) video programming, or (b) other programming service, and (2) subscriber interaction, if any, which is required for selection or use of video programming or other programming services.
B. “Cellular telephone service” means a one- or two-way telecommunications system used to transmit voice and/or data-based signals or content 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, pager services, 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, including paging. Cellular telephone service shall not include competitive telephone service.
C. “Director” shall mean the finance director of the city of Poulsbo, or such other person as appointed by the mayor to administer this chapter.
D. “Gross income” means the value proceeding or accruing from the distribution or sale of tangible property or service, and receipts (including all sums earned or charged, whether received or not) by reason of the investment of capital of the business engaged in, including rentals, royalties, fees or other emoluments, 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 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, taxes, or any expense whatsoever, and without any deduction on account of losses.
E. “Person” or “persons” means natural persons of either gender, firms, co-partnerships, corporations, municipal corporations, and other associations of natural persons whether acting by themselves or by servants, agents or employees.
F. “Solid waste collection service” means receiving solid waste for transfer, processing, treatment, storage, or disposal, including but not limited to all collection services. “Solid waste,” for purposes of this subsection, means garbage, trash, rubbish or
other material discarded by the generator thereof as worthless or not economically viable for further use. “Solid waste” includes infectious, hazardous, or toxic wastes, and recyclable or reusable materials collected in whole or part for recycling or salvage as part of a general solid waste collection service to the public.
G. “Taxpayer” means any person liable for the license fee or taxes imposed by this chapter.
H. “Tax year” or “taxable year” means the twelve-month period commencing January 1st and ending December 31st of the same year. (Ord. 2015-01 § 1, 2015: Ord. 2003-32 § 2 (part), 2003)
3.36.030 Business license required.
A. No person shall engage in or carry on any business, occupation, pursuit or privilege for which a tax is imposed under this chapter, without having first obtained and being the holder of a valid and subsisting license to do so, to be known as a “business license.”
B. Any person engaging in, or carrying on, more than one such business, occupation, pursuit or privilege shall obtain a separate business license for each such business and pay all license fees and taxes imposed upon each of the same.
C. Every person subject to taxation under this chapter shall submit an annual application to the city clerk for a business license. The application shall be upon a form prescribed by the city clerk and accompanied by an initial application and annual renewal fee as set forth in Section 3.12.040(D). Said applications shall be submitted prior to commencement of business activities subject to taxation under this chapter and by January 31st in all subsequent years, except as otherwise provided in this chapter. (Ord. 2003-32 § 2 (part), 2003)
3.36.040 License year.
All business licenses and the fee therefor shall be for the year commencing January 1st and ending on December 31st of the same year. (Ord. 2003-32 § 2 (part), 2003)
3.36.050 Businesses subject to tax.
There is hereby levied upon all persons engaged in the business activities set forth below a tax in the amounts to be determined by the application of the respective rates for each type of business against the gross income of such taxpayer. Taxpayers engaged in or carrying on the business shall be charged with collection of the tax as a condition of doing business, and the tax shall be levied thereafter upon their subscribers at the rate set forth below:
A. Upon every person engaged in or carrying on a telephone business, as defined in RCW 82.04.065(4), as said statute presently exists or is hereafter amended, a tax equal to six percent of the total gross income, including revenues for intrastate toll, derived from the operation of such business within the city. To the extent permitted by applicable federal and state law, any telecommunications services provided by a cable operator (as defined in 47 U.S.C. Section 522(5)) or other persons over cable television facilities owned or controlled by a cable operator shall be taxable hereunder.
B. Upon every person engaged in a gas distribution business, as defined in RCW 82.16.010(7), as said statute presently exists or is hereafter amended, tax equal to six percent of the total gross income derived from the operation of such business within the city.
C. Upon every person engaged in a light or power business, as defined in RCW 82.16.010(5), as said statute presently exists or is hereafter amended, tax equal to six percent of the total gross income derived from such business within the city.
D. Upon every person engaged in or carrying on the sale of cellular telephone service, a tax equal to six percent of the total gross income derived from the operation of such business within the city.
E. Upon every person engaged in the sale, delivery, distribution, or furnishing of water for domestic, farm, and other uses or the provision of sewage collection and disposal, a tax equal to twelve percent of the total gross income derived from the operation of such business within the city. The tax shall also apply to all revenues from the sale, delivery, distribution, or furnishing of water for domestic, farm, and other uses to customers located outside the city when said service is provided by the city.
F. Upon every person engaged in the sale, delivery, distribution, or furnishing of cable service, a tax equal to six percent of the total gross income derived from the operation of such business within the city.
G. Upon every person engaged in the solid waste collection service, a tax equal to six percent of the total gross income derived from the operation of such business within the city.
H. Upon every person engaged in the sale, delivery, distribution, or furnishing of stormwater collection and disposal, a tax equal to twelve percent of the total gross income derived from the operation of such business within the city. The tax rate established by this subsection shall apply to all gross income received on or after October 1, 2020. (Ord. 2022-17 § 1, 2022; Ord. 2020-12 § 1, 2020; Ord. 2016-22 § 1, 2016; Ord. 2016-01 § 1, 2016; Ord. 2015-01 §§ 2, 3, 2015; Ord. 2014-04 § 1, 2014; Ord. 2013-09 § 1, 2013; Ord. 2012-22 § 1, 2012; Ord. 2010-17 § 1, 2010; Ord. 2003-32 § 2 (part), 2003)
3.36.060 Exceptions and deductions from gross income.
There shall be excluded from the total gross income upon which the tax is computed the following:
A. Revenues derived from transactions in interstate or foreign commerce, or from business done for the United States and the state, or their officers or agents or any amounts paid by the taxpayer to the United States and the state, the city or to any political subdivision of the state, as excise taxes levied or imposed upon the sale or distribution of property or services, or as a utility tax.
B. That portion of gross income derived from charges to another telecommunications company for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate service.
C. Charges incurred by a taxpayer engaging in a telephone business and paid to a telecommunications company for telephone service that the taxpayer purchases for the purpose of resale.
D. Adjustments made to a billing or to a customer account or a telecommunications company accrual account in order to reverse a billing or a charge that has been made as a result of third party fraud or other crime and was not properly a debt of a customer.
E. Cash discounts and credit losses actually sustained by a taxpayer on an accrual basis.
F. Charges to subscribers or customers passed on to compensate for the cost to the company of the taxes imposed by this chapter.
G. Revenues from transactions which the city is prohibited from taxing under the laws and/or Constitutions of the United States or the State of Washington. (Ord. 2003-32 § 2 (part), 2003)
3.36.070 Monthly/quarterly returns and payment.
A. On or before the twentieth day following the end of each month or calendar quarter (i.e., April 20th, July 20th, October 20th, and January 20th),
each taxpayer shall remit payment for the preceding month or quarter’s tax, accompanied by a monthly or quarterly statement showing the manner in which the payment is calculated. The statement shall contain such information as may be necessary to enable the director to arrive at the lawful amount of the tax. The taxpayer shall, in a legible manner, provide all information required by the director on such returns, shall sign the same, and by affidavit shall swear or affirm that the information therein given is full and true and that the taxpayer knows the same to be so.
B. Returns shall be accompanied by a remittance by bank draft, certified check, cashier’s check or money order payable to the city of Poulsbo, or in cash, in the amount of the fee or tax owed, including delinquencies and installments.
C. Payment made by draft or check shall not be deemed a payment of the fee or tax unless and until the same has been honored in the usual course of business, nor shall acceptance of any such check or draft operate as an acquittance or discharge of the fee or tax unless and until the check or draft is honored.
D. If the applicant is a partnership, returns must be made by one of the partners; if a corporation, by one of the officers thereof, if a foreign corporation, co-partnership or nonresident individual, by the resident agent or local manager of said corporation, co-partnership or individual. (Ord. 2003-32 § 2 (part), 2003)
3.36.080 Allocation of income for cellular telephone service.
A. Service Address. Payments by a customer for the telephone service from telephones without a fixed location (i.e., cellular telephone service) shall be allocated among taxing jurisdictions to the location which is 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 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 among one or more other cities, and/or the taxpayer, 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). The taxpayer shall have no further liability with respect to additional taxes on the disputed revenues, but will charge his or her billing records for future revenues to comply with the settlement facilitated by AWC.
E. Authority of Director. The 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. (Ord. 2003-32 § 2 (part), 2003)
3.36.090 Books and records—Inspection and confidentiality.
A. It is the duty of each taxpayer to keep and enter in a proper book or set of books or records an account which shall accurately reflect the amount of its gross income, which account shall be open to inspection by the director, or his or her designee, at a reasonable time, and from which said officer, the director or his or her designee may verify returns made by the taxpayer.
B. To the extent permitted by Chapter 42.17 RCW and other applicable statutes, the applications, statements or returns made to the director 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, or his or her authorized agent. (Ord. 2003-32 § 2 (part), 2003)
3.36.100 Investigation of returns.
If any taxpayer fails to apply for a license or make his or her return, or if the director is dissatisfied as to the correctness of the statements made in the application or return of any taxpayer, the director, or his or her designee, may: (1) enter the premises of such taxpayer at any reasonable time for the purpose of inspecting and auditing the taxpayer’s books or records to ascertain the amount of the fee or tax or to determine the correctness of such statements, as the case may be; (2) examine any person under oath administered by the director, or his or her designee, touching the matters inquired into; or (3) fix a time and place for an investigation of the correctness of the return, and issue a subpoena to the taxpayer, or any other person, to attend such investigation and testify, under oath administered by the director, or his or her agent, in regard to the matters inquired into and may, by subpoena, require him or her, or any person, to bring with him or her such books, records and papers as may be necessary. In the event that any such audit reveals an underpayment of ten percent or more, the taxpayer shall, in addition to the penalties provided by this chapter, be responsible for all of the costs associated with the audit, including, but not limited to, staff time and overhead, accounting fees, professional service fees, and attorneys’ fees. (Ord. 2003-32 § 2 (part), 2003)
3.36.110 Overpayment or underpayment.
A. Overpayment. If the director, upon investigation or upon checking returns, finds that the fee or tax paid by a taxpayer is more than the amount required of the taxpayer, he or she shall return the amount overpaid, upon the written request of the taxpayer. Any refund request not submitted within three years of the alleged overpayment shall be forever barred and waived.
B. Underpayment. If the director finds that the fee or tax paid by a taxpayer is less than required, he or she shall send a statement to the taxpayer showing the balance due, together with a penalty of ten percent of the amount due, and the taxpayer shall, within ten calendar days, pay the amount shown thereon. If payment is not received by the director by the due date specified in the notice, the director shall add a penalty of an additional twenty-five percent of the amount of the additional tax found due. In the event that the balance due, including all penalties, is not paid in full within thirty calendar days from the date specified, the penalty shall be increased by fifteen percent of the amount due and the total amount due shall accrue interest at the rate of twelve percent per annum. If the director finds that all, or any part of, the deficiency resulted from an intent to evade the tax payable hereunder, a penalty of fifty percent of the additional tax found to be due shall be added and the amounts due, including penalties, shall accrue interest at the rate of twelve percent per annum from the date the tax became due until the date payment is actually made. (Ord. 2003-32 § 2 (part), 2003)
3.36.120 Failure to apply for license or make return.
If any taxpayer fails to obtain a license or make a return or pay the fees or taxes therefor, or any part thereof, the director shall ascertain the amount of the fee or tax or installment thereof due and shall notify the taxpayer thereof, who shall be liable therefor in any suit or action by the city for the collection thereof. In the event that any taxes imposed by this chapter remain unpaid, the director may refer such claims to a collection agency or to the city prosecutor or city attorney for collection. If referred to the city prosecutor or city attorney for collection, the city prosecutor or city attorney shall, with the assistance of the director, collect the same by any appropriate means or by suit or action in the name of the city. In the event that the city prevails on any claim that a taxpayer is in noncompliance with the terms of this chapter, the city shall be entitled to an award of its reasonable attorneys’ fees and other professional expenses associated with prosecuting the action. (Ord. 2003-32 § 2 (part), 2003)
3.36.130 Appeal to city council.
A. Any taxpayer aggrieved by the amount of the fee, tax, or penalty found by the director to be required under the provisions of this chapter may appeal to the city council from such finding by filing a written notice of appeal with the director within five days from the time such taxpayer was given notice of such amount and paying an appeal fee as established by the city council by resolution from time to time. The city council shall, as soon as prac-
ticable, fix a time and place for the hearing of such appeal, which time shall be not more than thirty days after the filing of the notice of appeal, and the city clerk shall cause a notice of the time and place thereof to be delivered or mailed to the appellant. At such hearing the taxpayer shall be entitled to be heard and to introduce evidence on his or her own behalf. The city council shall thereupon ascertain the correct amount of the fee, tax, or penalty and the director shall immediately notify the appellant thereof, which amount, together with costs of the appeal including outside legal, accounting, and other expenses, if the appellant is unsuccessful therein, must be paid within ten calendar days after such notice is given.
B. Any judicial appeal of the city council’s final determination of such an appeal shall be filed and served within twenty-one days of the date of the city council’s final vote on the matter, and the taxpayer shall be responsible for payment of the costs associated with producing the city’s administrative record therein. (Ord. 2003-32 § 2 (part), 2003)
3.36.140 Rules and regulations.
The director shall have the power to adopt, publish and enforce rules and regulations not inconsistent with this chapter or with applicable law for the purpose of carrying out the provisions of this chapter. (Ord. 2003-32 § 2 (part), 2003)
3.36.150 License posting and display—Nontransferable.
A. All licenses issued pursuant to the provisions of this chapter shall be kept posted by the licensee in a conspicuous place in his or her principal place of business, if such location is within the city.
B. No person 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 his or her license, nor shall such other person operate under or display such license. (Ord. 2003-32 § 2 (part), 2003)
3.36.160 Unlawful acts.
A. It is unlawful: (1) for any person liable for taxes or fees hereunder to fail or refuse to make application for a license, file returns, or to pay any fee or tax or installment thereof when due; (2) for any person to make any false or fraudulent application or return or any false statement or representation in, or in connection with, any such application or return; (3) to aid or abet another in any attempt to evade payment of the fee or tax, or any part thereof; (4) for any person to fail to appeal and/or testify in response to subpoena issued pursuant hereto; (5) to testify falsely upon any investigation of the correctness of a return, or upon the hearing of any appeal; or (6) in any manner to hinder or delay the city or any of its officers in carrying out the provisions of this chapter.
B. Any taxpayer who engages in, or carries on, any business subject to tax hereunder without having a business license shall be in violation of this chapter. (Ord. 2003-32 § 2 (part), 2003)
3.36.170 Penalty for violation.
Any person violating any of the provisions or failing to comply with any of the requirements of this chapter shall, in addition to being liable for the monetary penalties set forth herein, be guilty of a misdemeanor and upon conviction of such violation or failure be punished by a fine of not more than one thousand dollars or by imprisonment not to exceed ninety days or by both such fine and imprisonment. (Ord. 2003-32 § 2 (part), 2003)
3.36.180 Rate change.
No change in the rate of tax upon persons engaging in providing services taxable under this chapter 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 director, or his or her designee, shall send to each registered taxpayer a copy of any ordinance changing the rate or tax upon taxable services promptly upon its enactment. (Ord. 2003-32 § 2 (part), 2003)