Chapter 3.74
LICENSE FEE AND OCCUPATION TAX
Sections:
3.74.020 Occupation subject to tax—Amount.
3.74.030 Exceptions and deductions.
3.74.040 Monthly payment of tax.
3.74.050 Commencement of business during tax year.
3.74.060 Sale or transfer of business.
3.74.070 Taxpayer to keep books and records—Returns confidential.
3.74.080 Finance director to investigate returns.
3.74.100 Underpayment of tax, and interest.
3.74.120 Appeals to the city council.
3.74.010 Definitions.
In construing the provisions of this chapter, except when otherwise plainly declared or clearly apparent from the context, the following definitions shall be applied:
A. “Cable television service” means the business of delivery or distribution of cable television picture or signal.
B. “Telephone business” means the business of providing access to a local telephone network, local telephone network switching service, toll service, coin telephone services, telephonic, video, data, pagers, or similar communication, or transmission for hire, via a local telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. The term includes cooperative or farmer line telephone companies or associations operating exchanges. “Telephone business” does not include the providing of competitive telephone service, or providing of cable television service, or other providing of broadcast services by radio or television stations.
C. “Competitive telephone service” means the providing by any person of telecommunications equipment or apparatus, directory advertising and lease of telephone street directories, or service related to that equipment or apparatus such as repair or maintenance service, if the equipment or apparatus is of a type which may be provided by persons not subject to regulation as telephone companies under RCW Title 80, and for which a separate charge is made. Transmission of communication through cellular telephones is classified as “telephone business” rather than “competitive telephone service.”
D. “Cellular telephone service” is a two-way voice and data telephone/telecommunications system based in whole or substantial 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. 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 the same purpose as cellular mobile service. Cellular telephone service is included within the definition of “telephone business” for the purposes of the chapter.
E. “Gross income” means the value proceeding or accruing from the sale of tangible property or services, and receipts (including all sums earned or charged, whether received or not) by reason of the investment of capital in the business engaged in, including rentals, royalties, fees or other emoluments, however designated (excluding 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 or the like) and without any deduction on account of the property sold, the cost of materials used, labor costs, interest or discount paid or any expense whatsoever, without any deduction on account of losses.
F. “Person or persons” means all persons, firms, partnerships, corporations, limited liability companies, and all other associations of natural persons whether acting by themselves or by servants, agents or employees.
G. “Solid waste” shall mean all putrescible and nonputrescible solid and semisolid wastes including, but not limited to, garbage, rubbish, ashes, industrial waste, swill, sewage sludge, demolition and construction wastes, and abandoned vehicles or parts thereof, discarded commodities, wood waste, dangerous waste, and problem waste. This includes all public, private, industrial, commercial or agricultural operations.
H. “Taxpayer” means any person liable for the license fee and occupation tax imposed by this chapter.
I. “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 city clerk-finance director to use the same as the tax period. (Ord. 2807 § 1, 2013: Ord. 2719 § 1, 2011: Ord. 2392 § 1, 2003: Ord. 1629 § 1, 1993).
3.74.020 Occupation subject to tax—Amount.
There are levied upon and shall be collected from persons on account of the business activities annual license fees and occupation taxes, in the amounts to be determined by the application of the rates against gross income, as follows:
A. Upon every person engaged in or carrying on a telephone business, a license fee and occupation tax, equal to six percent of the total gross income including revenues from intrastate toll, derived from the operation of such businesses within the city, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month. Gross income for this purpose shall not include charges which are passed on to the subscribers by a telephone company pursuant to tariffs required by regulatory order to compensate for the cost to the company of the tax imposed by this chapter;
B. Upon every person engaged in or carrying on the business of selling or furnishing natural gas, a license fee and occupation tax, equal to six percent of the total gross income from such business in the city, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month; provided, that there shall not be any tax levied for installation charges;
C. Upon every person including, but not limited to, public utility districts engaged in or carrying on the business of selling or furnishing electric light and power or electrical energy, a license fee and occupation tax, equal to six percent of the total gross income from such business in the city, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month; provided, that there shall not be any tax levied for installation charges;
D. Upon every person engaged in the carrying on of the business of distributing and selling of water, a license fee and occupation tax, equal to twenty point six percent of the total gross income from such business conducted in the city, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month; provided, that there shall not be any tax levied for installation charges;
E. Upon every person engaged in the carrying on of the business of conducting a sewage disposal business, a license fee and occupation tax, equal to twenty-two point one percent of the total gross income from such business conducted in the city, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month; provided, that there shall not be any tax levied for installation charges;
F. Upon every person engaged in carrying on the business of delivery or distribution of cable television picture or signals, a license fee and occupation tax, equal to six percent of the total gross income from such business conducted in the city, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month; provided, that there shall not be any tax levied for installation charges;
G. Upon every person engaged in or carrying on the business of a cellular telephone service, a license fee and occupation tax equal to six percent of the total gross income derived from conducting such business within the city of Prosser, as indicated by billings and/or charges to Prosser customers, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month; provided, that there shall not be any tax levied for installation charges.
1. Service Address. Payments by a customer for the telephone service from telephones without a fixed location shall be allocated among jurisdictions to the location of the customer’s principal service address during the period for which the tax applies, regardless of the location of the facilities used to provide the service. The customer’s “principal service address” is, with respect to each telephone: (a) the customer’s plant, store, office, or other facility where the telephone is normally assigned for use in conjunction with the customer’s business activity; or (b) the customer’s place of residence if the telephone is for personal use.
2. Presumption. There is a presumption that the service address shown on the telephone service company’s records is current and accurate, unless the taxpayer has knowledge to the contrary and conveys such knowledge to the city and the telephone service company.
3. 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.
4. Dispute Resolution for Cities Regarding Cellular Service. If there is a dispute between or among the city of Prosser 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 city or cities 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 AWC.
H. Upon every person who both bills Prosser customers for collecting, handling, or processing solid waste and is engaged in or carrying on the business of collecting, handling or processing solid waste, either directly or through a subcontractor, a license fee and occupation tax equal to five percent of the total gross income derived from conducting such business within the city of Prosser, as indicated by billings and/or charges to Prosser customers, due hereunder, which shall be paid monthly on or before the twentieth day of each month following the close of each calendar month except such tax shall not apply to the amounts collected pursuant to the state solid waste collection tax which is remitted by the taxpayer to the state of Washington. If a general contractor pays a tax under this section that includes the services of a subcontractor, then the subcontractor shall not be obligated to pay a tax under this section for its bills to the general contractor.
I. In addition to the annual license fees and occupation taxes levied or imposed above in this section, a license fee and occupation tax equal to two percent of the total gross income upon every person engaged in or carrying on the following businesses:
1. Selling or furnishing water,
2. Selling or furnishing sewage disposal,
3. Every person who both bills Prosser customers for collecting, handling, or processing solid waste and is engaged in or carrying on the business of collecting, handling or processing solid waste, either directly or through a subcontractor.
The revenue from the annual license fees and occupation taxes paid under this section shall be restricted and only used for the construction or maintenance of city streets and shall be distributed to the Street Fund (Fund 102). The tax due under this subsection shall be paid monthly on or before the twentieth day of each month following the close of each calendar month; provided, that there shall not be any tax levied for installation charges. (Ord. 3128 § 1, 2020: Ord. 3074 § 1, 2018: Ord. 2807 § 2, 2013: Ord. 2719 § 2, 2011: Ord. 2643 § 1, 2008: Ord. 2517 § 1, 2005: Ord. 2392 § 2, 2003: Ord. 1898 § 1, 1996; Ord. 1629 § 1, 1993).
3.74.030 Exceptions and deductions.
A. A taxpayer may except and deduct from the total gross income upon which license fee and occupation tax is computed (and before 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 which must by federal or state laws be deducted before calculating the amount of the tax imposed by this chapter.
B. Nothing in this chapter shall be construed as requiring a license, or the payment of a license fee and occupation 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. (Ord. 2504 § 1, 2005: Ord. 1629 § 1, 1993).
3.74.040 Monthly payment of tax.
When the amount of the license fee and occupation tax is based upon gross income, the taxpayer shall pay his license fee and occupation tax in monthly installments on or before the twentieth day of the month. At the end of the year, he shall make a complete return and pay the balance of any found to be due. (Ord. 1629 § 1, 1993).
3.74.050 Commencement of business during tax year.
When a business, occupation or pursuit subject to tax upon gross income has not been carried on for a full month preceding the tax month for which license is required, the license fee and occupation tax shall be paid for the first full month of the commencement of business, 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 on or before the twentieth day of the month, under oath or affirmation covering the business of the previous month. (Ord. 1629 § 1, 1993).
3.74.060 Sale or transfer of business.
Upon the sale or transfer during any tax year of a business on account of which a license fee and occupation tax is required, the purchaser or transferee shall, if the license fee and occupation 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. 1629 § 1, 1993).
3.74.070 Taxpayer to keep books and records—Returns confidential.
A. 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 always be open to the inspection of the city finance director or his/her duly authorized agent, and from which such officer or his agent may verify the return made by the taxpayer.
B. The applications, statement or returns made to the city finance 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 corporation counsel, the city finance director or his/her authorized agent, and member of the city council. (Ord. 1629 § 1, 1993).
3.74.080 Finance director to investigate returns.
If any taxpayer fails to apply for or make his return or if the city finance director is dissatisfied as to the correctness of the statements made in the application or the 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 license fee and occupation 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 upon 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 regards 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. 1629 § 1, 1993).
3.74.090 Cost of audit.
Upon the failure or refusal of the taxpayer to furnish the information called for by the city finance director, 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 city finance director 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 fee and occupation tax. (Ord. 1629 § 1, 1993).
3.74.100 Underpayment of tax, and interest.
A. If upon examination of any returns, or from other information obtained by the finance director, it appears that a tax or penalty less than that properly due has been paid, the finance director shall assess the additional amount found to be due and shall add thereto interest on the tax only. The finance officer shall notify the person by mail of the additional amount, which shall become due and shall be paid within thirty days from the date of the notice, or within such time as the finance director may provide in writing.
B. For the purpose of this chapter the rate of interest that may be charged shall be one percent per month of all taxes and fees due.
C. The finance officer shall not assess, or collect an assessment for, additional taxes or interest due more than four years after the close of the calendar year in which they were due, except that the finance officer may issue an assessment:
1. Against a person that has committed fraud or who misrepresented a material fact; or
2. Against a person that has executed a written waiver of such limitations. (Ord. 2807 § 4, 2013).
3.74.105 Overpayment of tax.
A. If, upon receipt of an application for refund for any tax paid under protest, the finance director determines that the amount of tax or interest paid is in excess of that properly due, the excess amount shall be credited to the taxpayer’s account or shall be refunded to the taxpayer. No refund or credit shall be made for taxes or interest paid more than one year prior to the beginning of the calendar year in which the refund application is made or examination of records is completed. No refund or credit shall be made for tax paid without concurrent protest.
B. Refunds shall be made by means of voucher approved by the finance director and by the issuance of a city check or warrants drawn upon and payable from such funds as the city may provide or by a credit to future tax due by the taxpayer, at the discretion of the finance director.
C. Any final judgment for which a recovery is granted by any court of competent jurisdiction for tax, interest, or cost paid by any person shall be paid in the same manner as provided in subsection B of this section upon the filing with the finance director of a certified copy of the order or judgment of the court.
D. For refunds or credits of amounts paid or the recovery allowed to a taxpayer, the city shall pay no interest. (Ord. 2807 § 5, 2013).
3.74.120 Appeals to the city council.
A. Any taxpayer aggrieved by the amount of the license fee and occupation tax found by the city finance 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 city clerk within five days from the time such taxpayer was given notice of such amount. The city clerk shall, as soon as practicable, fix a time and place for the hearing of such appeal, which time shall not be less than ten days after the filing of the notice of appeal, nor more than thirty days, and 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 in his own behalf. The city council shall thereupon ascertain the correct amount of the license fee and occupation tax by resolution and the city clerk shall immediately notify the appellant thereof, which amount, together with the costs of appeal, if appellant is unsuccessful therein, must be paid within three days after such notice is given.
B. The mayor of the city, or any councilman, acting at the direction of the city council of the city, 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 a person qualified to administer oaths, and it shall be unlawful for him to fail or refuse so to do. (Ord. 1629 § 1, 1993).
3.74.130 False returns, etc.
It shall be unlawful for any person liable to tax hereunder to fail or refuse to make application or return or make 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 license fee and occupation 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 any 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 auditor in carrying out the provisions of this chapter. (Ord. 1629 § 1, 1993).
3.74.140 Violation—Penalty.
Any person violating or failing to comply with any of the provisions of this chapter or any lawful rule or regulation adopted by the city clerk pursuant thereto shall be deemed guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine in any sum not to exceed one thousand dollars, or by punishment in the county jail for a term not exceeding ninety days, or by both such fine and imprisonment. (Ord. 1629 § 1, 1993).
3.74.900 Severability.
The provisions of this chapter are hereby declared to be severable. If any section, subsection, sentence, clause, or phrase of this chapter or its application to any person or circumstance is for any reason held to be invalid or unconstitutional, the remainder of this chapter shall not as a result of said section, subsection, sentence, clause, or phrase be held unconstitutional or invalid. (Ord. 2504 § 2, 2005).