Chapter 4.78 UTILITY TAX

The provisions of this chapter shall be deemed an exercise of the power of the city to license for revenue and to levy a tax on utilities pursuant to the laws of the state of Washington. (Ord. 1341 § 1 (part), 2002)

4.78.020 Definitions.

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

A. “Gross income” means the value proceeding or accruing from the sale of tangible property or service, and receipts (including all sums equal or charged, whether received or not) by reason of investment of capital in the business engaged in (including rentals, royalties, receipts or proceeds from the use or sale of real property or any interest therein, and proceeds from the sale of notes, bonds, mortgages or other evidence of indebtedness, or stocks and the like) and without any deduction on account of the cost of the property sold, cost of materials used, labor costs, taxes, interest or discount paid, or any expenses whatsoever, and without any deduction on account of losses. Further deductions and exceptions from gross income upon which the fee or tax described in this chapter is computed are set forth in Section 4.78.100.

B. “Person or persons” means persons of either sex, firms, partnerships, co-partnerships, companies, corporations, public utility districts, municipal corporations or departments thereof, public or private utilities, and other associations, whether acting by themselves or by servants, agents, or employees.

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

D. “Tax year or taxable year” means the year commencing January 1st and ending on December 31st of such year, or in lieu thereof, the taxpayer’s fiscal year when permission is obtained from the finance officer to use the same as the tax period, or in lieu thereof, commencing December 15th and ending December 14th of the next following calendar year when permission is obtained from the finance officer to use the period as the tax year.

E. “Telephone business” means the business of providing access to a local telephone network, local telephone network switching service, toll service, or coin telephone services, or providing telephonic, video, data or similar communication or transmission for hire, via a local telephone network, toll line, or channel, cable, microwave, or similar communication or transmission system. It includes cellular telephone service and cooperative or farmer line telephone companies or associations operating an exchange. It does not include the providing of competitive telephone service, cable television service, or radio and television station broadcast service.

F. “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.

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

H. “Finance officer” means the clerk-treasurer or other chief financial officer of the city of Sumas.

I. “Solid waste” shall mean all putrescible and nonputrescible solid and semisolid wastes including but not limited to garbage, rubbish, refuse, industrial waste, swill, sewage sludge, demolition and construction wastes, abandoned vehicles or parts thereof, discarded commodities, or similar materials. This includes all public, private, industrial, commercial or agricultural operations. (Ord. 1657 § 1, 2015: Ord. 1341 § 1 (part), 2002)

4.78.030 License required—Violation.

No person subject to the payment of tax provided herein shall engage in any business, occupation or activity in the city without first having obtained and being the holder of a valid and existing license so to do, to be known as a “utility license.” There shall be no fee for such “utility license.” Such “utility license” shall expire at the end of the calendar year in which it is issued and a new license shall be required for each calendar year. Application for a “utility license” shall be made to the finance officer who shall provide the forms therefor and shall issue the license upon payment of the license fee, if any. The finance officer shall have the discretion to automatically renew a “utility license” and waive the requirement for submission of a new written application when the finance officer determines that all application information remains current, that all fees and taxes have been paid, and that the applicant is otherwise entitled to a “utility license.” There shall be no prorating of license fee for an applicant who makes application for part of any year or period. Any person engaging in or carrying on more than one such business, occupation, pursuit or privilege within the city shall make application for and procure a “utility license” for each of the same. Each “utility license” shall be numbered, shall show the name, place and character of business of the taxpayer, and such other information as the finance officer shall deem necessary, and shall be conspicuously posted in the place of business for which it is issued at all times. Such license shall be personal and nontransferable. No person to whom a “utility license” has been issued pursuant to this chapter shall suffer or allow any other person for whom a separate license is required to operate under or display the license; nor shall such other person operate under or display such license. Any taxpayer who engages in or carries on any business subject to tax hereunder without having a “utility license” so to do shall be guilty of a violation of this chapter for each day during which the business is so engaged in or carried on and the taxpayer who fails or refuses to pay the license fee or tax on any part thereof on or before the due date shall be deemed to be operating without having his license so to do. (Ord. 1590 § 1, 2012: Ord. 1341 § 1 (part), 2002)

4.78.040 Monthly periods.

On and after the first day of the month succeeding the month in which sixty days after passage of the ordinance codified in this chapter has occurred, there is levied upon and shall be collected from, and paid by as hereinafter provided, every person on account of transacting, carrying on, or engaging in such business activities within the city limits as are described in Section 4.78.050 of this chapter, a utility tax (sometimes herein referred to as “tax”) against the gross monthly income of the business. (Ord. 1341 § 1 (part), 2002)

4.78.050 Occupations subject—Rate.

There are levied and shall be collected annual license fee and utility taxes against the persons designated on account of the business activities, and in the amounts to be determined by the application of the respective rates as follows:

A. Telephone (Including Cellular Telephone) Business. Upon every person engaged in or carrying on any telephone (including cellular telephone) business within the city, a fee or tax equal to six percent of the total gross income, including revenues from intrastate long distance toll service from such business in the city commencing on March 1, 2008, and during the remainder of the 2008 calendar year, and six percent of such gross income during subsequent calendar years.

B. Waste Business.

Solid Waste. Upon every person, including the city, engaged in or carrying on the business or undertaking in the city, in whole or in part, of collecting, handling, transferring, loading, reloading, staging, holding, reselling and/or disposing of solid waste, a fee or tax equal to six percent of the total gross income derived from such business during the period for which the license fee or tax is due.

Persons engaged in or carrying on a solid waste business or undertaking in the city, who would otherwise be subject to the tax or fee on total gross income set forth in this subsection, where such business or undertaking involves only the transferring of solid waste in already loaded containers and does not involve the collection or disposal of solid waste in the city, may elect to pay an occupation and use of city services and facilities fee based on per ton basis at a rate of ten cents per ton of solid waste transferred. Those persons who qualify who elect and pay the occupation and use of city services and facilities fee shall be exempt from paying the tax or fee on total gross income set forth in this subsection. (Ord. 1691 § 1, 2016: Ord. 1670 § 1, 2016; Ord. 1659 § 1, 2015; Ord. 1657 § 2, 2015: Ord. 1492 § 1, 2007: Ord. 1349 §§ 1, 2, 2002: Ord. 1341 § 1 (part), 2002)

4.78.060 Return required—Due dates and payment.

The tax imposed by this chapter, except any annual license fee required to accompany the application for the utility license and renewal, shall be due and payable in monthly installments. The remittance shall be made as hereinafter provided and shall be accompanied by a return on a form to be provided and prescribed by the finance officer. The return and remittance shall be in the finance officer’s office by five p.m. Pacific time, on or before the last day of each month succeeding the end of the month in which the tax accrued. The taxpayer shall be required to swear or affirm in writing on the return that the information therein given is full and true and that the taxpayer knows it to be so. 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. (Ord. 1341 § 1 (part), 2002)

4.78.070 Payment procedure.

The tax shall be paid at the time the tax return is filed with the finance officer by bank draft, certified check, cashier’s check, personal check or money order. If payment is made by draft or check, the tax shall not be deemed paid until the check or draft is honored in the usual course of business; nor shall the acceptance of any sum by the finance officer be an acquittance or discharge of the tax due unless the amount of payment is in full and is the actual amount due. (Ord. 1341 § 1 (part), 2002)

4.78.080 More than one business.

Any person engaged in, or carrying on more than one such business, occupation, pursuit, or privilege shall pay the tax so imposed separately for each of the same. (Ord. 1341 § 1 (part), 2002)

4.78.090 Failure to pay—Violation.

Any taxpayer who engages in, or carries on, any business subject to the tax hereunder, and fails or refuses to pay the tax or any part thereof on or before the due date, shall be operating in violation of this chapter. (Ord. 1341 § 1 (part), 2002)

4.78.100 Exceptions and deductions.

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

1. That portion of the gross income derived from charges to another telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate services.

2. Charges by a taxpayer engaging in a telephone business or to a telecommunications company, as defined in RCW 80.04.010, for telephone service that the purchaser buys for the purpose of resale. Once a calendar year, as determined by the finance officer, the taxpayer shall provide the names and addresses of the purchasers for whom this deduction is claimed. Within thirty days of a request from the finance officer, the taxpayer shall provide the amount of this deduction claimed for each purchaser.

3. Adjustments made to a billing or to a customer account or to a telecommunications company accrual account in order to reverse a billing or charge that had been made as a result of third-party fraud or other crime and was not properly a debt of a customer.

4. Income derived from business done for the government of the United States, its officers or agents in their official capacity, and any amount paid by the taxpayer to the United States and the state of Washington as excise taxes levied or imposed on the sale or distribution of property or service.

5. All bad debts for services incurred, rendered or charged for during the tax year. Debts shall be deemed bad and uncollectible when they have been written off the books of the taxpayer. In the event debts are subsequently collected, the income shall be reported in the return for the quarter in which the debts are collected and at the rate prevailing in the tax year when collected.

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. (Ord. 1691 § 2, 2016: Ord. 1341 § 1 (part), 2002)

4.78.110 Allocation of income—Cellular telephone service.

(a) Service Address. Payments by a customer for the telephone service from telephones without a fixed location shall be allocated among taxing jurisdictions to the location of the customer’s principal service address during the period for which the tax applies.

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

(c) Roaming Phones. When the service is provided while a subscriber is roaming outside the subscriber’s normal cellular network area, the gross income shall be assigned consistent with the taxpayer’s account system to the location of the originating cell site of the call or to the location of the main cellular switching office that switched the call.

(d) Dispute Resolution. If there is a dispute between or among the city and one or more other cities, as to the service address of a customer who is receiving cellular telephone services and the dispute is not resolved by negotiation among the parties, then the dispute shall be resolved by the city and the other city or cities by submitting the issue for settlement to the Association of Washington Cities (AWC). Once the taxes on the disputed revenues have been paid to one of the contesting cities, the cellular telephone service company shall have no further liability with respect to additional taxes on the disputed revenues so long as it changes its billing records for future revenues to comport with the settlement facilities. (Ord. 1341 § 1 (part), 2002)

4.78.120 Books and records required—Returns confidential.

It shall be 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 gross income, which account shall always be open at the principal place of business to the inspection of the finance officer, or the finance officer’s duly authorized agent, and from which the officer or agent may verify the return made by the taxpayer. Such records shall be preserved for a period of five years. The finance officer, or the finance officer’s duly authorized agent, shall not publicly reveal any facts or information contained in any return filed by any taxpayer or disclosed in any investigation or examination of the taxpayer’s books and records; provided, the finance officer, or the finance officer’s duly authorized agent, may disclose such information pursuant to exceptions authorized by state law. (Ord. 1341 § 1 (part), 2002)

4.78.130 Investigation and audit regarding tax liability.

If any taxpayer fails to apply for a “utility license” or make a return as required hereunder, or if the finance officer is dissatisfied as to the correctness of the statements made in the application or return of any taxpayer, the finance officer or authorized agent may enter the premises of such taxpayer at any reasonable time for the purpose of inspecting the 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 finance officer or his/her agent, touching the matters inquired into, or the finance officer or his/her 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 finance officer or his/her agent, in regard to the matters inquired into and may, by subpoena, require the taxpayer or any person, to bring such books, records and papers as may be necessary. (Ord. 1341 § 1 (part), 2002)

4.78.135 Deficiency.

If, upon examination of any returns or from other information obtained by the finance officer, it appears that a tax or penalty has been paid less than that properly due, the finance officer shall assess against the taxpayer such additional amount found to be due and shall add thereto interest as set forth in Section 4.78.190. The finance officer shall notify the taxpayer by mail of the additional amount, and the same shall become due and shall be paid within ten days from the date of the notice. If payment is not received by the finance officer by the due date specified in the notice, the finance officer shall add a penalty as set forth in Section 4.78.190.

No assessment or correction of an assessment for additional taxes due may be made by the finance officer more than four years after the close of the tax year, except upon a showing of fraud or of misrepresentation of a material fact by the taxpayer, or where a taxpayer has executed a written waiver of such limitation. (Ord. 1657 § 3, 2015)

4.78.140 Overpayment.

If, upon application by a taxpayer for a refund or for an audit of his records, or upon an examination of the returns or records of any taxpayer, it is determined by the finance officer that within the two years immediately preceding the receipt by the city of the application by the taxpayer for a refund or for an audit, or, in the absence of such an application, within the two years immediately preceding the commencement by the finance officer of such examination, a tax has been paid in excess of that properly due, the excess amount paid within such period of two years shall be credited to the taxpayer’s account or shall be refunded to the taxpayer, at his option. No refund or credit shall be allowed with respect to any payments made to the city more than two years before the date of such application or examination. Where a refund or credit may not be made because of the lapse of the two-year period, the amount of the refund or credit which would otherwise be allowed for the portion of the statutory assessment period preceding the two-year period may be offset against the amount of any tax deficiency which may be determined by the finance officer for such statutory assessment period. Any such refunds shall be made by means of warrants drawn upon and payable from the general fund.

Any judgment for which a recovery is granted by any court of competent jurisdiction, not appealed from, for tax, penalties, and interest which were paid by the taxpayer, and costs, in a suit by any taxpayer shall be paid in like manner upon the filing with the city of a certified copy of the order or judgment of the court. (Ord. 1657 § 4, 2015: Ord. 1341 § 1 (part), 2002)

4.78.150 Failure to file return.

If any taxpayer fails, neglects or refuses to make a return as and when required, the finance officer is authorized and directed to determine the amount of tax payable and by mail to notify the taxpayer of the amount so determined. The amount so fixed shall thereupon become the tax and shall be immediately due and payable unless the taxpayer shall file a true and correct return with full payment within seven days of the date such notification is sent. (Ord. 1341 § 1 (part), 2002)

4.78.160 Sale of business.

Upon the sale or transfer during a quarterly period of a business or account of which a tax is required, the purchaser or transferee shall, if the tax has not been paid in full for the quarterly period, be responsible for the payment of the tax for that portion of the quarterly period. (Ord. 1341 § 1 (part), 2002)

4.78.170 Failure to comply, unlawful acts.

It is unlawful for any person liable for tax to fail or refuse to secure the utility license, to make the returns when required, or to pay any license fee or tax when due. It is unlawful for any person to make any false or fraudulent application or return, to make any false statement or representation in, or in connection with, any application or return, to aid or abet another in an attempt to evade payment of the fee or tax, or any part thereof, to fail to appear and/or testify in response to subpoena issued pursuant hereto, to testify falsely upon any investigation of the correctness of a return, or upon the hearing of any appeal, or to hinder or delay the city or any of its officers in carrying out the provisions of this chapter. (Ord. 1341 § 1 (part), 2002)

4.78.180 Not exclusive.

The license fee or tax levied in this chapter shall be additional to any license fee or tax imposed or levied under any law or any other ordinance of the city. (Ord. 1341 § 1 (part), 2002)

4.78.190 Penalty for late payment—Interest.

For each payment due, if such payment is not made by the due date and time, there shall be added penalties and interest as follows:

(1) 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 shall not exceed a total of twenty-five percent.

(2) In addition to the penalties imposed, interest on the amount due shall accrue at the rate of ten percent per annum from the date of the delinquency.

The finance officer is authorized to waive all or any portion of the penalties and interest if the finance officer determines that late payment was the result of excusable neglect or extreme hardship. (Ord. 1341 § 1 (part), 2002)

4.78.200 Debt to city when unpaid.

Any license fee or 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 similar debt, which remedy shall be in addition to all other remedies. (Ord. 1341 § 1 (part), 2002)

4.78.210 Rate change.

No change in the rate of tax imposed by 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 passage of the ordinance establishing the change. The city shall send to each business at the address on its license, a copy of any ordinance changing the rate of tax promptly upon its enactment. (Ord. 1341 § 1 (part), 2002)

4.78.220 Rules and regulations.

The finance officer shall have the power and authority, and it shall be the finance officer’s duty from time to time, to adopt, publish and enforce rules and regulations consistent with this chapter and applicable law to carry out its provisions, and it shall be unlawful for any person to violate or fail to comply with any such rule or regulation. (Ord. 1341 § 1 (part), 2002)

4.78.225 Administrative determinations.

Any taxpayer requesting a refund or a reduction of tax shall first file a written request with the finance officer. The taxpayer shall provide the finance officer with such documents and other materials that the taxpayer is relying upon for the refund or reduction request. The finance officer may request the taxpayer to provide additional information if needed to arrive at a decision. The finance officer shall render a decision in writing and send the decision to the taxpayer at the address on file. (Ord. 1657 § 5, 2015)

4.78.230 Appeals.

(a) Any taxpayer aggrieved by the amount of the fee or tax determined by the finance officer to be due under the provisions of this chapter, or denial of a refund or a reduction of taxes paid, may appeal such determination to the city council.

(b) The appeal shall be in writing and shall contain the following:

(1) The name and address of the taxpayer;

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

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

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

(5) The appeal fee, if any, as provided by city council resolution.

(c) The appeal must be filed with the city clerk-treasurer within ten days from the date the taxpayer was mailed notice of the finance officer’s decision.

(d) The city council shall within thirty days of the date the appeal was received by the clerk-treasurer hold a public hearing to consider the appeal. The appellant taxpayer shall be provided at least seven days’ written notice of the date of the hearing. The city council’s review shall be de novo.

(e) Appeal proceedings before the city council shall be tape recorded and all exhibits admitted shall be made part of the record.

(f) Following the hearing, the city council shall render a decision on the appeal, entering written findings and conclusions in support thereof. A copy of the findings, conclusions, and decision shall be mailed to the appellant taxpayer. The decision shall state the correct amount of tax owing as determined by the city council.

(g) The decision of the city council shall be final.

(h) Any and all actions seeking judicial review of a city council decision under this section must be filed in the Whatcom County superior court within fourteen calendar days following the date of the decision. Any action not brought within this time limit is barred. (Ord. 1657 § 6, 2015: Ord. 1341 § 1 (part), 2002)

4.78.240 Penalty.

Any person violating any of the provisions of this chapter shall be guilty of a misdemeanor and, upon conviction, shall be punished by a fine not to exceed one thousand dollars or imprisonment in jail not to exceed ninety days or by both such fine and imprisonment. (Ord. 1341 § 1 (part), 2002)

4.78.250 Additional remedies.

In addition to the remedies and penalties provided in this chapter, and in addition to any other remedies, the city may seek an injunction prohibiting a person from engaging in any business or other conduct in violation of this chapter. In any action or suit brought under this section, the city, if it prevails, shall recover a reasonable attorney fee to be set by the court, in addition to its costs and disbursements. (Ord. 1341 § 1 (part), 2002)