ORD 2004-16 BUSINESS & OCCUPATION TAXESORDINANCE No. 2004-16
AN ORDINANCE of the City of Bainbridge Island, Washington, relating to
the City's Business and Occupation Tax; replacing Chapter 5.05 of the
Bainbridge Island Municipal Code.
WHEREAS, RCW 35.21.710 authorizes cities to levy and collect a tax not to
exceed two-tenths of one percent (.2%) on the gross income of persons doing business
within the city; and
WHEREAS, the City of Bainbridge Island has imposed a business and
occupation tax since at least 1982; and
WHEREAS, the Washington State Legislature has approved EHB 2030 which requires
that, effective January 1, 2005, all cities levying a general business and occupation tax
must revise their ordinances to be consistent with the "model ordinance" for municipal
gross receipts business and occupation tax created through the Washington
Association of Cities; now, therefore
THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, DOES ORDAIN
AS FOLLOWS:
Section 1. Chapter 5.05 of the Bainbridge Island Municipal Code is hereby
amended in its entirety to read as follows:
Chapter 5.05
BUSINESS AND OCCUPATION TAX
5.05.010 Exercise of revenue license power. The provisions of this chapter shall be
deemed an exercise of the power of the City to license for revenue. The provisions of
this chapter are subject to periodic statutory or administrative rule changes or judicial
interpretations of the ordinances or rules. The responsibility rests with the licensee or
taxpayer to reconfirm tax computation procedures and remain in compliance with this
chapter and the City code.
5.05.020 Administrative Provisions. Except as expressly stated to the contrary herein,
the administrative provisions contained in Chapter 5.06 BIMC shall be fully applicable to
the provisions of this chapter.
5.05.030 Definitions. In construing the provisions of this chapter, the following
definitions shall apply. This chapter incorporates by reference all definitions set forth in
Chapter 82.04 RCW, as hereafter amended, except where a conflicting definition is
stated in this chapter. Words in the singular number shall include the plural, and the
plural shall include the singular.
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A. "Agricultural product .... Agricultural product" means any product of plant
cultivation or animal husbandry including, but not limited to: A product of horticulture,
grain cultivation, vermiculture, viticulture, or aquaculture as defined in RCW 15.85.020;
plantation Christmas trees; turf; or any animal including but not limited to an animal that
is a private sector cultured aquatic product as defined in RCW 15.85.020, or a bird, or
insect, or the substances obtained from such an animal. "Agricultural product" does not
include animals intended to be pets.
B. "Business." "Business" includes all activities engaged in with the object
of gain, benefit, or advantage to the taxpayer or to another person or class, directly or
indirectly.
C. "Business and occupation tax." "Business and occupation tax" or
"gross receipts tax" means a tax imposed on or measured by the value of products, the
gross income of the business, or the gross proceeds of sales, as the case may be, and
that is the legal liability of the business.
D. "Commercial or industrial use." "Commercial or industrial use" means
the following uses of products, including by-products, by the extractor or manufacturer
thereof:
1. Any use as a consumer; and
2. The manufacturing of articles, substances or commodities.
E. "Eligible gross receipts tax." The term "eligible gross receipts tax"
means a tax which:
1. Is imposed on the act or privilege of engaging in business activities
within BIMC 5.05.050; and
2. Is measured by the gross volume of business, in terms of gross receipts
and is not an income tax or value added tax; and
3. Is not, pursuant to law or custom, separately stated from the sales
price; and
4. Is not a sales or use tax, business license fee, franchise fee, royalty or
severance tax measured by volume or weight, or concession charge, or payment for the
use and enjoyment of property, property right or a privilege; and
5. Is a tax imposed by a local jurisdiction, whether within or without the
State of Washington, and not by a country, state, province, or any other non-local
jurisdiction above the county level.
F. "Engaging in business"
1. The term "engaging in business" means commencing, conducting,
or continuing in business, and also the exercise of corporate or franchise powers, as
well as liquidating a business when the liquidators thereof hold themselves out to the
public as conducting such business. Without being all inclusive, any one of the
following activities conducted within the City by a person, or its employee, agent,
representative, independent contractor, broker or another acting on its behalf,
constitutes "engaging in business" and requires a person to register and obtain a
business license:
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a. Owning, renting, leasing, maintaining, or having the right to
use, or using, tangible personal property, intangible personal property, or real property
permanently or temporarily located in the City;
b. Owning, renting, leasing, using, or maintaining, an office,
place of business, or other establishment in the City;
c. Soliciting sales;
d. Making repairs or providing maintenance or service to real or
tangible personal property, including warranty work and property maintenance;
e. Providing technical assistance or service, including quality
control, product inspections, warranty work, or similar services on or in connection with
tangible personal property sold by the person or on its behalf;
f. Installing, constructing, or supervising installation or
construction of, real or tangible personal Property;
g. Soliciting, negotiating, or approving franchise, license, or
other similar agreements;
h. Collecting current or delinquent accounts;
i. Picking up and transporting tangible personal property, solid
waste, construction debris, or excavated materials;
j. Providing disinfecting and pest control services, employment
and labor pool services, home nursing care, janitorial services, appraising, landscape
architectural services, security system services, surveying, and real estate services
including the listing of homes and managing real property;
k. Rendering professional services such as those provided by
accountants, architects, attorneys, auctioneers, consultants, engineers, professional
athletes, barbers, baseball clubs and other sports organizations, chemists, consultants,
psychologists, court reporters, dentists, doctors, detectives, laboratory operators,
teachers, veterinarians;
I. Meeting with customers or potential customers, even when
no sales or orders are solicited at the meetings;
m. Training or recruiting agents, representatives, independent
contractors, brokers or others, domiciled or operating on a job in the City, acting on its
behalf, or for customers or potential customers;
Investigating, resolving, or otherwise assisting in resolving
customer complaints;
O.
and owned by a customer,
place;
p.
In-store stocking or manipulating products or goods, sold to
regardless of where sale and delivery of the goods took
Delivering goods in vehicles owned, rented, leased, used, or
maintained by the person or another acting on its behalf; and
q. Accepting or executing a contract with the City, irrespective
of whether goods or services are delivered within or without the City, or whether the
person's office or place of business is within or without the City.
The activities listed in this subsection are illustrative only and are not intended to narrow
the definition of "engaging in business". If an activity is not listed in this subsection,
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whether it constitutes "engaging in business" in the City shall be determined by
considering all the facts and circumstances and applicable law.
2. A person, or its employee, agent, representative, independent
contractor, broker or another acting on the person's behalf, shall not be deemed to be
"engaging in business" within the City, and shall not be required to register and obtain a
business license and pay business and occupation tax, if that person, or its employee,
agent, representative, independent contractor, broker or another acting on the person's
behalf engages in no other activities in or with the City but the following:
a. Meeting with suppliers of goods and services as a customer;
b. Meeting with government representatives in their official
capacity, other than those performing contracting or purchasing functions;
c. Attending meetings, such as board meetings, retreats,
seminars, and conferences, or other meetings wherein the person does not provide
training in connection with tangible personal property sold by the person or on its behalf;
d. Renting tangible or intangible property as a customer when
the property is not used in the City;
e. Attending, but not participating in a "trade show" or "multiple
vendor events". Persons participating at a trade show shall review the City's trade show
or multiple vendor event ordinances;
f. Conducting advertising through the mail; and
g. Soliciting sales by phone from a location °utside the City.
3. A seller located outside the City merely delivering goods into the
City by means of common carrier shall not be considered to be "engaging in business"
in the City and shall not be required to register and obtain a business license; provided,
that it engages in no other business activities in the City.
The City expressly intends that "engaging in business" shall include any activity
sufficient to establish nexus for purposes of applying the tax under the law and the
constitutions of the United States and the State of Washington. Nexus is presumed to
continue as long as the taxpayer benefits from the activity that constituted the original
nexus generating contact or subsequent contacts.
G. "Extracting." "Extracting" is the activity engaged in by an extractor and is
reportable under the extracting classification.
H. "Farmer." "Farmer" means any person engaged in the business of
growing or producing, upon the person's own lands or upon the lands in which the
person has a present right of possession, any agricultural product whatsoever for sale.
"Farmer" does not include a person using such products as ingredients in a
manufacturing process, or a person growing or producing such products for the person's
own consumption. "Farmer" does not include a person selling any animal or substance
obtained therefrom in connection with the person's business of operating a stockyard or
a slaughter or packing house. "Farmer" does not include any person in respect to the
business of taking, cultivating, or raising timber.
I. "Gross income of the business." "Gross income of the business"
means the value proceeding or accruing by reason of the transaction of the business
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engaged in and includes gross proceeds of sales, compensation for the rendition of
services, gains realized from trading in stocks, bonds, or other evidences of
indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and
other emoluments however designated, all without any deduction on account of the cost
of tangible property sold, the cost of materials used, labor costs, interest, discount,
delivery costs, taxes, or any other expense whatsoever paid or accrued and without any
deduction on account of losses.
J. "Gross proceeds of sales." "Gross proceeds of sales" means the value
proceeding or accruing from the sale of tangible personal property or for services
rendered, without any deduction on account of the cost of property sold, the cost of
materials used, labor costs, interest, discount paid, delivery costs, taxes, or any other
expense whatsoever paid or accrued and without any deduction on account of losses.
K. "Manufacturing." "Manufacturing" means the activity conducted by a
manufacturer and is reported under the manufacturing classification.
L. "Manufacturer, .... to manufacture."
1. "Manufacturer" means every person who, either directly or by
contracting with others for the necessary labor or mechanical services, manufactures for
sale or for commercial or industrial use from the person's own materials or ingredients
any products. When the owner of equipment or facilities furnishes, or sells to the
customer prior to manufacture, materials or ingredients equal to less than twenty
percent (20%) of the total value of all materials or ingredients that become a part of the
finished product, the owner of the equipment or facilities will be deemed to be a
processor for hire, and not a manufacturer. A business not located in the City that is the
owner of materials or ingredients processed for it in the City by a processor for hire shall
be deemed to be engaged in business as a manufacturer in the City.
2. "To manufacture" means all activities of a commercial or industrial
nature wherein labor or skill is applied, by hand or machinery, to materials or ingredients
so that as a result thereof a new, different or useful product is produced for sale or
commercial or industrial use, and shall include:
a. The production of special made or custom made articles;
b. The production of dental appliances, devices, restorations,
substitutes, or other dental laboratory products by a dental laboratory or dental
technician;
c. Crushing and/or blending of rock, sand, stone, gravel, or ore; and
d. The producing of articles for sale, or for commercial or industrial
use from raw materials or prepared materials by giving such materials, articles, and
substances of trade or commerce new forms, qualities, properties or combinations
including, but not limited to, such activities as making, fabricating, processing, refining,
mixing, slaughtering, packing, aging, curing, mild curing, preserving, canning, and the
preparing and freezing of fresh fruits and vegetables.
M. "Person." "Person" means any individual, receiver, administrator,
executor, assignee, trustee in bankruptcy, trust, estate, firm, co-partnership, joint
venture, club, company, joint stock company, business trust, municipal corporation,
political subdivision of the State of Washington, corporation, limited liability company,
association, society, or any group of individuals acting as a unit, whether mutual,
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cooperative, fraternal, non-profit, or otherwise and the United States or any
instrumentality thereof.
N. "Retailing." "Retailing" means the activity of engaging in making sales at
retail and is reported under the retailing classification.
O. "Retail Service." "Retail service" shall include the sale of or charge made
for personal, business, or professional services including amounts designated as
interest, rents, fees, admission, and other service emoluments however designated,
received by persons engaging in the following business activities:
1. Amusement and recreation services including but not limited to golf,
pool, billiards, skating, bowling, swimming, bungee jumping, ski lifts and tows,
basketball, racquet ball, handball, squash, tennis, batting cages, day trips for
sightseeing purposes, and others, when provided to consumers. "Amusement and
recreation services" also include the provision of related facilities such as basketball
courts, tennis courts, handball courts, swimming pools, and charges made for providing
the opportunity to dance. The term "amusement and recreation services" does not
include instructional lessons to learn a particular activity such as tennis lessons,
swimming lessons, or archery lessons.
2. Abstract, title insurance, and escrow services;
3. Credit bureau services;
4. Automobile parking and storage garage services;
5. Landscape maintenance and horticultural services but excluding (i)
horticultural services provided to farmers and (ii) pruning, trimming, repairing, removing,
and clearing of trees and brush near electric transmission or distribution lines or
equipment, if performed by or at the direction of an electric utility;
6. Service charges associated with tickets to professional sporting events;
and
7. The following personal services: physical fitness services, tanning salon
services, tattoo parlor services, steam bath services, turkish bath services, escort
services, and dating services.
"Retail service" shall also include the renting or leasing of tangible personal property to
consumers and the rental of equipment with an operator
P. "Sale," "casual or isolated sale."
1. "Sale" means any transfer of the ownership of, title to, or possession of,
property for a valuable consideration and includes any activity classified as a "sale at
retail," "retail sale," or "retail service." It includes renting or leasing, conditional sale
contracts, leases with option to purchase, and any contract under which possession of
the property is given to the purchaser but title is retained by the vendor as security for
the payment of the purchase price. It also includes the furnishing of food, drink, or
meals for compensation whether consumed upon the premises or not.
2. "Casual or isolated sale" means a sale made by a person who is not
engaged in the business of selling the type of property involved on a routine or
continuous basis.
Q. "Sale at retail," "retail sale."
1. "Sale at retail" or "retail sale" means every sale of tangible personal
property (including articles produced, fabricated, or imprinted) to all persons irrespective
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of the nature of their business and including, among others, without limiting the scope
hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or
personal property of or for consumers, other than a sale to a person who presents a
resale certificate under RCW 82.04.470 and who:
a. Purchases for the purpose of resale as tangible personal
property in the regular course of business without intervening use by such person; or
b. Installs, repairs, cleans, alters, imprints, improves, constructs, or
decorates real or personal property of or for consumers, if such tangible personal
property becomes an ingredient or component of such real or personal property without
intervening use by such person; or
c. Purchases for the purpose of consuming the property purchased
in producing for sale a new article of tangible personal property or substance, of which
such property becomes an ingredient or component or is a chemical used in processing,
when the primary purpose of such chemical is to create a chemical reaction directly
through contact with an ingredient of a new article being produced for sale; or
d. Purchases for the purpose of consuming the property purchased
in producing ferrosilicon which is subsequently used in producing magnesium for sale, if
the primary purpose of such property is to create a chemical reaction directly through
contact with an ingredient of ferrosilicon; or
e. Purchases for the purpose of providing the property to
consumers as part of competitive telephone service, as defined in RCW 82.04.065.
The term shall include every sale of tangible personal property which is used or
consumed or to be used or consumed in the performance of any activity classified as a
"sale at retail" or "retail sale" even though such property is resold or utilized as provided
in subsections a, b, c, d, or e of this Section 1 following such use.
2. "Sale at retail" or "retail sale" also means every sale of tangible personal
property to persons engaged in any business activity which is taxable under BIMC
5.05.050.A.7].
3."Sale at retail" or "retail sale" shall also include the sale of or charge
made for tangible personal property consumed and/or for labor and services rendered in
respect to the following:
a. The installing, repairing, cleaning, altering, imprinting, or
improving of tangible personal property of or for consumers, including charges made for
the mere use of facilities in respect thereto, but excluding charges made for the use of
coin-operated laundry facilities when such facilities are situated in an apartment house,
rooming house, or mobile home park for the exclusive use of the tenants thereof, and
also excluding sales of laundry service to nonprofit health care facilities, and excluding
services rendered in respect to live animals, birds and insects;
b. The constructing, repairing, decorating, or improving of new or
existing buildings or other structures under, upon, or above real property of or for
consumers, including the installing or attaching of any article of tangible personal
property therein or thereto, whether or not such personal property becomes a part of the
realty by virtue of installation, and shall also include the sale of services or charges
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made for the clearing of land and the moving of earth excepting the mere leveling of
land used in commercial farming or agriculture;
c. The charge for labor and services rendered in respect to
constructing, repairing, or improving any structure upon, above, or under any real
property owned by an owner who conveys the property by title, possession, or any Other
means to the person performing such construction, repair, or improvement for the
purpose of performing such construction, repair, or improvement and the property is
then reconveyed by title, possession, or any other means tothe original owner;
d. The sale of or charge made for labor and services rendered in
respect to the cleaning, fumigating, razing or moving of existing buildings or structures,
but shall not include the charge made for janitorial services; and for purposes of this
section the term "janitorial services" shall mean those cleaning and caretaking services
ordinarily performed by commercial janitor service businesses including, but not limited
to, wall and window washing, floor cleaning and waxing, and the cleaning in place of
rugs, drapes and upholstery. The term "janitorial services" does not include painting,
papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting;
e. The sale of or charge made for labor and services rendered in
respect to automobile towing and similar automotive transportation services, but not in
respect to those required to report and pay taxes under Chapter 82.16 RCW;
f. The sale of and charge made for the furnishing of lodging and all
other services, except network telephone service and cable service, by a hotel, rooming
house, tourist court, motel, trailer camp, and the granting of any similar license to use
real property, as distinguished from the renting or leasing of real property, and it shall be
presumed that the occupancy of real property for a continuous period of one month or
more constitutes a rental or lease of real property and not a mere license to use or
enjoy the same. For the purposes of this subsection, it shall be presumed that the sale
of and charge made for the furnishing of lodging for a continuous period of one month or
more to a person is a rental or lease of real property and not a mere license to enjoy the
same;
g. The sale of or charge made for tangible personal property, labor
and services to persons taxable under subsections a, b, c, d, e, and f of this Subsection
3 when such sales or charges are for property, labor and services which are used or
consumed in whole or in part by such persons in the performance of any activity defined
as a "sale at retail" or "retail sale" even though such property, labor and services may
be resold after such use or consumption. Nothing contained in this Subsection 3 shall
be construed to modify Subsection land nothing contained in Subsection 1shall be
construed to modify this Section 3.
4. "Sale at retail" or "retail sale" shall also include the providing of
competitive telephone service to consumers. 5. "Sale at retail" or "retail sale"
shall also include the sale of canned software other than a sale to a person who
presents a resale certificate under RCW 82.04.470, regardless of the method of delivery
to the end user, but shall not include custom software or the customization of canned
software.
6. "Sale at retail" or "retail sale" shall also include the sale of or charge
made for labor and services rendered in respect to the building, repairing, or improving
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of any street, place, road, highway, easement, right of way, mass public transportation
terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal
corporation or political subdivision of the state, the State of Washington, or by the
United States and which is used or to be used primarily for foot or vehicular traffic
including mass transportation vehicles of any kind ("public road construction").
7. "Sale at retail" or "retail sale" shall also include the sale of or charge
made for labor and services rendered in respect to the constructing, repairing,
decorating, or improving of new or existing buildings or other structures under, upon, or
above real property of or for the United States, any instrumentality thereof, or a county
or city housing authority created pursuant to chapter 35.82 RCW, including the
installing, or attaching of any article of tangible personal property therein or thereto,
whether or not such personal property becomes a part of the realty by virtue of
installation ("government contracting").
8. "Sale at retail" or "retail sale" shall not include the sale of services or
charges made for the clearing of land and the moving of earth of or for the United
States, any instrumentality thereof, or a county or city housing authority. Nor shall the
term include the sale of services or charges made for cleaning up for the United States,
or its instrumentalities, radioactive waste and other byproducts of weapons production
and nuclear research and development. (This should be reported under the service and
other classification.)
9. "Sale at retail" or "retail sale" shall not include the sale of or charge
made for labor and services rendered for environmental remedial action as defined in
RCW 82.04.2635(2). (This should be reported under the service and other
classification.)
R. "Sale at wholesale," "wholesale sale." "Sale at wholesale" or
"wholesale sale" means any sale of tangible personal property which is not a retail sale,
and any charge made for labor and services rendered for persons who are not
consumers, in respect to real or personal property, if such charge is expressly defined
as a retail sale when rendered to or for consumers. Sale at wholesale also includes the
sale of network telephone service to a telecommunications company as defined in RCW
80.04.010 for the purpose of resale, as contemplated by RCW 35.21.715
S. "Services." At such time as Chapter 82.04 RCW "defines services", that
definition shall apply. Until such time as Chapter 82.04 RCW shall define "services",
"services" means all business activities not defined elsewhere in this section.
T. "Taxpayer." "Taxpayer" means any "person", as herein defined, required
to have a business license under Chapter 5.04 BIMC or liable for the collection of any
tax or fee under this chapter, or who engages in any business or who performs any act
for which a tax or fee is imposed by this chapter.
U. "Value proceeding or accruing." "Value proceeding or accruing" means
the consideration, whether money, credits, rights, or other property expressed in terms
of money, a person is entitled to receive or which is actually received or accrued. The
term shall be applied, in each case, on a cash receipts or accrual basis according to
which method of accounting is regularly employed in keeping the books of the taxpayer.
The value proceeding or accruing from sales on the installment plan under conditional
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contracts of sale shall be reported as of the dates when the payments become due.
V. "Value of products,"
1. The "value of products", including by-products, extracted or
manufactured, shall be determined by the gross proceeds derived from the sale thereof
whether such sale is at wholesale or at retail, to which shall be added all subsidies and
bonuses received from the purchaser or from any other person with respect to the
extraction, manufacture, or sale of such products or by-products by the seller.
2. Where such products, including by-products, are extracted or manufactured for
commercial or industrial use; and where such products, including by-products, are
shipped, transported or transferred out of the City, or to another person, without prior
sale or are sold under circumstances such that the gross proceeds from the sale are not
indicative of the true value of the subject matter of the sale; the value shall correspond
as nearly as possible to the gross proceeds from sales in this state of similar products of
like quality and character, and in similar quantities by other taxpayers, plus the amount
of subsidies or bonuses ordinarily payable by the purchaser or by any third person with
respect to the extraction, manufacture, or sale of such products. In the absence of
sales of similar products as a guide to value, such value may be determined upon a
cost basis. In such cases, there shall be included every item of cost attributable to the
particular article or article extracted or manufactured, including direct and indirect
overhead costs. The Director may prescribe rules for the purpose of ascertaining such
values.
3. Notwithstanding Subsection 2 above, the value of a product
manufactured or produced for purposes of serving as a prototype for the development
of a new or improved product shall correspond to (a) the retail selling price of such new
or improved product when first offered for sale; or (b) the value of materials incorporated
into the prototype in cases in which the new or improved product is not offered for sale.
W. "Wholesaling." "Wholesaling" means engaging in the activity of making
sales at wholesale, and is reported under the wholesaling classification.
5.05.050 Imposition of the tax - tax or fee levied.
A. In addition to the business license fee required by Chapter 5.04 BIMC, and
except as provided in Subsection B of this section or elsewhere in this chapter, there is
hereby levied upon and shall be collected from every person a tax for the act or
privilege of engaging in business activities within the City, whether the person's office or
place of business be within or without the City. The tax shall be in amounts to be
determined by the application of rates against gross proceeds of sale, gross income of
business, or value of products, including by-products, as the case may be, as follows:
1. Upon every person engaging within the City in business as an
extractor, as to such persons the amount of the tax with respect to such business shall
be equal to the value of the products, including by-products, extracted for sale or for
commercial or industrial use, multiplied by the rate of one tenth of one percent (.1%).
The measure of the tax is the value of the products, including by-products, so extracted,
regardless of the place of sale or the fact that deliveries may be made to points outside
the City.
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2. Upon every person engaging within the City in business as a
manufacturer, as to such persons the amount of the tax with respect to such business
shall be equal to the value of the products, including by-products, manufactured,
multiplied by the rate of one tenth of one percent (.1%). The measure of the tax is the
value of the products, including by-products, so manufactured, regardless of the place
of sale or the fact that deliveries may be made to points outside the City.
3. Upon every person engaging within the City in the business of
making sales at wholesale, except persons taxable under subsection __ of this
section; as to such person, the amount of tax with respect to such business shall be
equal to the gross proceeds of such sales of the business without regard to the place of
delivery of articles, commodities or merchandise sold, multiplied by the rate of one tenth
of one percent (.1%).
4. Upon every person engaging within the City in the business of
making sales at retail, as to such persons, the amount of tax with respect to such
business shall be equal to the gross proceeds of such sales of the business, without
regard to the place of delivery of articles, commodities or merchandise sole, multiplied
by the rate of one tenth of one percent (.1%).
5. Upon every person engaging within the City in the business of (a)
printing; (b) both printing and publishing newspapers, magazines, periodicals, books,
muic and other printed items; (c) publishing newpapers, magazines and periodicals; (d)
extracting for hire; and (e) processing for hire, as to such person, the amount of tax on
such business shall be equal to the rate of one tenth of one percent (.1%).
6. Upon every person engaging within the City in the business of
making sales of retail services, as to such persons, the amount of tax with respect to
such business shall be equal to the gross proceeds of sales multiplied by the rate of one
tenth of one percent (.1%).
7. Upon every other person engaging within the City in any business
activity other than or in addition to those enumerated in this Section, as to such
persons, the amount of tax on account of such activities shall be equal to the gross
income of the business multiplied by the rate of one tenth of one percent (.1%). This
subsection includes but is not limited to (regardless of whether title to material used in
the performance of such business passes to another by accession, merger or other than
by outright sale), persons engaged in the business of developing or producing custom
software or of customizing canned software, producing royalties or commissions, and
persons engaged in the business of rendering any type of service which does not
constitute a sale at retail, a sale at wholesale, or a retail service.
B. The gross receipts tax imposed in this section shall not apply to any person
whose gross proceeds of sales, gross income of the business, and value of products,
including by-products, as the case may be, from all activities conducted within the City
during any calendar year is equal to or less than Two Hundred Fifty Thousand Dollars
($250,000.00). Persons with gross income exceeding Two Hundred Fifty Thousand
Dollars ($250,000) per year shall by taxed only on the amount of gross income
exceeding Two Hundred Fifty Thousand Dollars ($250,000) per year.
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5.05.060 Doing business with the City. Except where such a tax is otherwise
levied and collected by the City from such person, there is hereby levied a tax on the
privilege of accepting or executing a contract with the City. Such tax shall be levied and
collected whether goods or services are delivered within or without the City and whether
or not such person has an office or place of business within or without the City. As to
such persons, the amount of tax shall be equal to the gross contract price multiplied by
the rate under BIMC 5.05.050 that would otherwise apply if the sale or service were
taxable pursuant to that Section.
5.05.070 Multiple activities credit when activities take place in one or more cities
with eligible gross receipt taxes.
A. Persons who engage in business activities that are within the purview of
two (2) or more subsections of BIMC 5.05.050 shall be taxable under each applicable
subsection.
B. Notwithstanding anything to the contrary herein, if the imposition of the
City's tax would place an undue burden upon interstate commerce or violate
constitutional requirements, a taxpayer shall be allowed a credit to the extent necessary
to preserve the validity of the City's tax; provided, thatthe City tax shall still apply to as
much of the taxpayer's activities as may be constitutionally subject to the City's taxing
authority.
C. As a condition to taking the credit authorized by this section, a taxpayer
must be able to document that the amount of tax sought to be credited was paid upon
the same gross receipts used in computing the tax against which the credit is applied.
D. Persons engaged in the retailing or wholesaling business with respect to
selling products in the City shall be allowed a credit against those taxes for any eligible
gross receipts taxes paid (1) with respect to the manufacturing of the products sold in
the City, and (2) with respect to the extracting of the products, or the ingredients used in
the products, sold in the City. The amount of the credit shall not exceed the tax liability
arising under this chapter with respect to the sale of those products.
E. Persons engaged in a manufacturing business with respect to
manufacturing products in the City shall be allowed a credit against those taxes for any
eligible gross receipts tax paid with respect to extracting the ingredients of the products
manufactured in the City. The amount of the credit shall not exceed the tax liability
arising under this chapter with respect to the manufacturing of those products.
F. Persons engaged in retailing or wholesaling business with respect to
selling products in the City shall be allowed a credit against those taxes for any eligible
gross receipts taxes paid with respect to the printing, or the printing and publishing, of
the products sold within the City. The amount of the credit shall not exceed the tax
liability arising under this chapter with respect to the sale of those products.
5.05.075 Deductions to prevent multiple taxation of transactions involving more
than one city with an eligible gross receipts tax.
A. A taxpayer that is subject to an eligible gross receipts tax on the same activity
in more than one jurisdiction may be entitled to a deduction as follows:
Page 12 10/6/2004
1. A taxpayer that has paid an eligible gross.receipts tax, with respect to a
sale of goods or services, to a jurisdiction in which the goods are delivered or the
services are provided may deduct an amount equal to the gross receipts used to
measure that tax from the measure of the tax owed to the City.
2. Notwithstanding subsection 1 above, a person that is subject to an
eligible gross receipts tax in more than one jurisdiction on the gross income derived
from intangibles such as royalties, trademarks, patents, or goodwill shall assign those
gross receipts to the jurisdiction where the person is domiciled or where its
headquarters is located.
3. A taxpayer that has paid an eligible gross receipts tax on the privilege of
accepting or executing a contract with another city may deduct an amount equal to the
contract price used to measure the tax due to the other city from the measure of the tax
owed to the City.
B. A person manufacturing products within the City and using products
manufactured by the same person outside the City may deduct from the measure of the
manufacturing tax the value of products manufactured outside the City and included in
the measure of an eligible gross receipts tax paid to the other jurisdiction with respect to
manufacturing such products.
5.05,090
A.
business
Chapters
Exemptions.
Public utilities. This chapter shall not apply to any person conducting a
activity upon which tax liability is specifically imposed under the provisions of
3.88, 5.08, or 5.10 BIMC.
B. Investments - dividends from subsidiary corporations. This chapter shall not
apply to amounts derived by persons, other than those engaging in banking, loan,
security, or other financial businesses, from investments or the use of money as such,
and also amounts derived as dividends by a parent from its subsidiary corporations.
C. Employees.
1. This chapter shall not apply to any person with respect to the
person's employment in the capacity as an employee or servant as distinguished from
that of an independent contractor. For the purposes of this subsection, the definition of
employee shall include those persons that are defined in the Internal Revenue Code, as
hereafter amended.
2. For purposes of this chapter, a booth renter, as defined by RCW
18.16.020, is an independent contractor.
D. Amounts derived from sale of real estate. This chapter shall not apply to
gross proceeds derived from the sale of real estate; provided, that this exemptionshall
not be construed to exempt amounts received as commissions from the sale of real
estate, nor as fees, handling charges, discounts, interest or similar financial charges
resulting from, or relating to, real estate transactions. This chapter shall also not apply
to amounts received for the rental of real estate if the rental income is derived from a
contract to rent for a continuous period of thirty (30) days or longer.
E. Mortgage brokers' third-party provider services trust accounts. This chapter
shall not apply to amounts received from trust accounts to mortgage brokers for the
Page 13 10/6/2004
payment of third-party costs if the accounts are operated in a manner consistent with
RCW 19.146.050 and any rules adopted by the director of financial institutions.
F. Amounts derived from manufacturing, selling or distributing motor vehicle
fuel. This chapter shall not apply to the manufacturing, selling, or distributing motor
vehicle fuel, as the term "motor vehicle fuel" is defined in RCW 82.36.010 and as
exempt under RCW 82.36.440; provided, that any fuel not subjected to the state fuel
excise tax, or any other applicable deduction or exemption, will be taxable under this
chapter.
G. Amounts derived from liquor, and the sale or distribution of liquor. This
chapter shall not apply to liquor as defined in RCW 66.04.010 and exempt in RCW
66.08.120.
H. Casual and isolated sales. This chapter shall not apply to the gross
proceeds derived from casual or isolated sales.
I. Accommodation sales. This chapter shall not apply to sales for resale by
persons regularly engaged in the business of making retail sales of the type of property
so sold to other persons similarly engaged in the business of selling such property
where (1) the amount paid by the buyer does not exceed the amount paid by the seller
to the vendor in the acquisition of the article and (2) the sale is made as an
accommodation to the buyer to enable the buyer to fill a bona fide existing order of a
customer or is made within fourteen days to reimburse in kind a previous
accommodation sale by the buyer to the seller.
J. Taxes collected as trust funds. This chapter shall not apply to amounts
collected by the taxpayer from third parties to satisfy third party obligations to pay taxes
such as the retail sales tax, use tax, and admission tax.
__K. Non-profit activities. This chapter shall not apply to the nonprofit activities
of religious, charitable, educational, benevolent, fraternal, or social organizations which
have been determined by the Internal Revenue Service of the United States to be
exempt from the payment of income tax.
L. Governmental activities. This chapter shall not apply to the exercise of
governmental functions performed by any instrumentality of the United States, the state
of Washington, or any political subdivision thereof.
5.05.100 Deductions. In computing the license fee or tax, there may be deducted from
the measure of tax the following items:
A. Receipts from tangible personal property delivered outside the State. In
computing tax, there may be deducted from the measure of tax under retailing or
wholesaling amounts derived from the sale of tangible personal property that is received
by the purchaser or its agent outside the State of Washington.
B. Cash discount taken by purchaser. In computing tax, there may be deducted
from the measure of tax the cash discount amounts actually taken by the purchaser.
This deduction is not allowed in arriving at the taxable amount under the extracting or
manufacturing classifications with respect to articles produced or manufactured, the
reported values of which, for the purposes of this tax, have been computed according to
the "value of product" provisions.
Page 14 10/6/2004
C. Credit losses of accrual basis taxpayers. In computing tax, there may be
deducted from the measure of tax the amount of credit losses actually sustained by
taxpayers whose regular books of account are kept uPon an accrual basis.
D. Constitutional prohibitions. In computing tax, there may be deducted from the
measure of the tax amounts derived from business whichthe City is prohibited from
taxing under the Constitution of the State of Washington or the Constitution of the
United States.
E. Other deductions. All other items allowed by the State of Washington as
deductions from the business and occupation tax imposed by the state; provided, that
the items being deducted have been included in the remaining income after having
subtracted the exemptions in section 5.05.090.
5.05.120 Tax part of overhead. It is not the intention of this chapter that the taxes or
fees herein levied upon persons engaging in business be construed as taxes or fees
upon the purchasers or customer, but that such taxes or fees shall be levied upon, and
collectible from, the person engaging in the business activities herein designated and
that such taxes or fees shall constitute a part of the cost of doing business of such
persons.
5.05.130 Severability Clause. If any provision of this chapter or its application to any
person or circumstance is held invalid, the remainder of the chapter or the application of
the provision to other persons or circumstances shall not be affected.
Section 2. This ordinance shall take effect and be in force on and after January
1, 2005, which date is more than five days from and after its passage, approval, and
publication.
PASSED by the City Council this 27 th day of :Oc~:obez-, 2004.
APPROVED by the Mayor the 2Rth day of oct. obez:, 2004.
ATTEST/AUTHENTICATE:
DARLENE KORDONOWY,(~r
Page 15 10/6/2004
APPROVED AS TO FORM:
ROD P. KASEGUMA, City Attomey
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NO.
June 25, 2004
October 27, 2004
November 3, 2004
November 7, 2004
2004-16