ORD 97-33 UTILITY LICENSES ON TELEPHONE AND POWERORDINANCE NO. 97-33
AN ORDINANCE of the City of Bainbridge Island, Washington,
regarding utility licenses for and utility taxes on telephone
(including cellular telephone) and electric light and power
businesses, and adding a new chapter to title 3 of the Bainbridge
Island Municipal Code.
WHEREAS, the City is authorized to require the licensing of and to impose taxes on the
business of providing telephone (including cellular telephone) service and furnishing electric light
and power within the City pursuant to RCW 35A.82.020, 35.21.865, and 35.21.870; and
WHEREAS, the City Council desires to license and impose utility taxes on such business
in the City; now, therefore
THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON,
DO ORDAIN as follows:
Section 1. A new chapter is added to title 3 of the Bainbridge Island Municipal Code as
follows:
3.__.010 Purpose and effect. 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.
3.__.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 3.__. 100.
B. "Person or persons" means persons of either sex, firms,
copartnerships, 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.
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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 Director 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 Director 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 Title 80 RCW 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.
3. .030 License Required -- Violation. On and after the first day of the month
succeeding the month in which 60 days after passage of this ordinance has
occurred, 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" for which the applicant shall pay the sum of fifty dollars; provided, that
there shall be no fee if the person has obtained a business license pursuant to
chapter 5.04 of this code. 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
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calendar year, unless the taxpayer is transacting business on a fiscal year and not
on a calendar year and with the consent of the Finance Director, obtains the license
for the period of the current fiscal year which shall be deemed the tax year for such
taxpayer.
Application for a "utility license" shall be made to the Finance Director who
shall provide the forms therefor and shall issue the license upon payment of the
license fee. There shall be no prorate 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
Director 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 non-
transferrable.
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.
3.__.040 Monthly periods. On and after the first day of the month succeeding
the month in which 60 days after passage of this ordinance 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 3.__.050, a utility tax
(sometimes herein referred to as "tax") against the gross monthly income of the
business.
3. .050 Occupations subject -- Rate. There are levied and shall be collected
annual license fees 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 against gross income 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 two percent of the total gross income,
including revenues from intrastate long distance toll service, from such business in
the city during the 1998 calendar year, four percent of such gross income during
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the 1999 calendar year, and six percent of such gross income during subsequent
calendar years.
B. Electric Light and Power. Upon every person engaged in or
carrying on the business of furnishing electric light and power within the city, a fee
or tax equal to two percent of the total gross income from such business in the city
during the 1998 calendar year, four percent of such gross income during the 1999
calendar year, and six percent of such gross income during subsequent calendar
years.
3.__.060 Return required -- Due dates and payment. The tax imposed by this
chapter, except the 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 Director. The
return and remittance shall be in the Finance Director's office by 5:00 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 the total tax for which any person is liable under this
chapter (1) does not exceed the sum of twenty-five dollars for any monthly period,
an annual return may be made upon written request and subject to the approval of
the Finance Director, and (2) does not exceed the sum of five-hundred dollars for
any monthly period, a quarterly 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.
3.__.070 Payment procedure. The tax shall be paid at the time the tax return is
filed with the Finance Director 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 Director be an
acquittance or discharge of the tax due unless the amount of payment is in full and
is the actual amount due.
3.__.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.
3.__.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.
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3.__.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 Director, the taxpayer shall
provide the names and addresses of the purchasers for whom this deduction
is claimed. Within 30 days of a request from the Finance Director, 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. Case discounts allowed and actually granted to customers of
the taxpayer during the tax year.
5. Income derived from transactions in interstate or foreign
commerce, or 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.
6. 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.
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3. .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.
3.__.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 by open at the principal place of business to the inspection of
the Finance Director, or the Finance Director'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 Director, or the Finance Director'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 Director, or the Finance Director's duly
authorized agent, may disclose such information pursuant to exceptions authorized
by state law.
3. .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 Director is dissatisfied as to the correctness of the statements made in the
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application or return of any taxpayer, the Finance Director 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 Director or his agent,
touching the matters inquired into, or the Finance Director or his 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 Director or his 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.
3.__.140 Overpayment or deficiency. If the Finance Director upon investigation
or upon checking returns finds that the tax paid on any of them is more than the
amount required of the taxpayer, the Finance Director shall refund the amount by
a treasurer's check upon the general fund; provided, that if the taxpayer in all
probability will have a tax liability in the ensuring quarter, such overpayment may
be held and applied by the Finance Director as a credit against the tax to become
due. If the Finance Director finds that the tax is less than required, the Finance
Director shall mail a statement to the taxpayer showing the balance due, which
shall be paid to the Finance Director within 10 days of the date of the notice.
3.__. 150 Failure to file return. If any taxpayer fails, neglects or refuses to make
a return as and when required, the Finance Director 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.
3. .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.
3.__.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 the 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.
DOCS\94700\103\0145783.01 11/26/97 7
3.__.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.
3.m.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:
A. 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 25 percent.
B. In addition to the penalties imposed, interest on the amount due shall
accrue at the rate of eight percent per annum from the date of the delinquency.
The Finance Director is authorized to waive all or any portion of the
penalties and interest if the Director determines that late payment was the result of
excusable neglect or extreme hardship.
3.__.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.
3.__.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 60 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.
3.__.220 Rules and regulations. The Finance Director shall have the power and
authority, and it shall be the Director'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.
3. .230 Appeals.
A. Any taxpayer aggrieved by the amount of the fee or tax determined by
the Finance Director to be due under the provisions of this chapter may appeal such
determination to the City Hearing Examiner.
B. The appeal shall be in writing and shall contain the following:
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1. The name and address of the taxpayer;
2. A statement identifying the determination of the Finance
Director 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 Director 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 as provided by City Council resolution.
C. The appeal must be filed with the City Clerk within 10 days from
the date the taxpayer was mailed notice of the Finance Director's decision.
D. The Hearing Examiner shall conduct an appeal hearing, at which 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. The Hearing
Examiner shall establish rules for such hearings consistent with the provisions of
this section, including rules relating to the issuance and reconsideration of
decisions.
E. Appeal proceedings before the Hearing Examiner shall be tape
recorded and all exhibits admitted by the Examiner shall be made part of the
record.
F. Following the hearing, the Hearing Examiner shall render a decision
on the appeal, entering written findings and conclusions in support thereof and
giving substantial weight to the decision of the Finance Director. A copy of the
findings, conclusions, and decision shall be mailed to the appellant taxpayer and
the Finance Director. The decision shall state the correct amount of tax owing as
determined by the Hearing Examiner.
G. The decision of the Hearing Examiner shall be final and conclusive
unless the same is appealed to the City Council. Any such appeal must be filed
with the City Clerk within 10 business days of the decision appealed from or any
final decision on reconsideration thereof. Any such appeal shall be based solely on
the record of the appeal hearing conducted by the Ilearing Examiner.
H. Any and all actions seeking judicial review of a City Council
decision under this section must be filed in the King County Superior Court within
10 calendar days following the date of the decision. Any action not brought within
this time limit is barred.
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3. ..240 Penalty. Any person violating any of the provisions of this chapter
shall, upon conviction thereof, be punished as provided in Chapter 1.24 of this
code.
Section 2. This ordinance shall take effect and be in force five days from and after its
passage, approval and publication as required by law.
PASSED by the City Council this 18ttday ofDecomber , 199j8.7
APPROVED by the Mayor this19thday olDecomber ,1998.
ATTEST/AUTHENTICATE:
Susan P. Kasper, City Clerk
APPROVED AS TO FORM:
Rod P. Kaseguma, City Attorney
FILED WITH THE CITY CLERK: October 31, 1997
PASSED BY THE CITY COUNCIL: December 18, 1997
PUBLISHED: December 24, 1997
EFFECTIVE DATE: l)ecomher 29, 1997
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