ORD NO. 2019-35 IMPLEMENTING STATE MANDATED CHANGES TO BUSINESS & OCCUPATION TAXORDINANCE NO. 2019-35
AN ORDINANCE of the City of Bainbridge Island, Washington, relating
to business and occupation taxes; amending Sections 5.05 and 5.06 of the
Bainbridge Island Municipal Code (BIMC).
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, in accordance with State law requirements, the City adopted the model
business and occupation tax administrative procedures ordinance on October 27, 2004
pursuant to Ordinance No. 2004-17; and
WHEREAS, in the most recent legislative session the Washington State legislature
passed house bills 1403 and 1059 which mandated certain changes to city business and
occupation tax; and
WHEREAS, provisions of RCW 35.102.040 require cities that levy business and
occupation taxes to form a working group, with input from business stakeholders, to
update the model ordinance; and
WHEREAS, during the spring and summer of 2019, the working group revised the
model ordinance to include the changes mandated by house bills 1403 and 1059; and
WHEREAS, all cities that levy local business and occupation taxes must adopt the
mandatory changes to the model ordinance.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BAINBRIDGE
ISLAND, WASHINGTON, DOES ORDAIN AS FOLLOWS:
Section 1. Chapter 5.05 of the Bainbridge Island Municipal Code is hereby amended as
shown on Exhibit A, attached hereto and incorporated herein by this reference.
Section 2. Section 5.06.040.A of the Bainbridge Island Municipal Code is hereby
amended to read as follows:
5.06.040 When due and payable — Reporting periods — Annual returns —
Threshold provisions or relief from filing requirements — Computing time
periods — Failure to file returns.
A. The tax imposed by this chapter shall be due and VHable annually. At the
Director's discretion, businesses may be assigned to a monthly or quarterly
reporting period depending on the tax amount owing or type of tax. Until
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December 31, 2020 tax payments are due on or before the last day of the second
month following the end of the assigned reporting period covered by the return.
Effective JgLiM 1 2021 tax ggyments are due on or before the time as provided
in RCW 82.3 2.045 (1), (2), and (3).
B Taxes shall be paid as provided in this chapter and accompanied by a return on
forms as prescribed by the Director. The return shall be signed by the taxpayer
personally or by a responsible officer or agent of the taxpayer. The individual
signing the return shall swear or affirm that the information in the return is
complete and true.
AC. For purposes of the tax imposed by Chapter 5.05 BIMC, any person whose
value of products, gross proceeds of sales, or gross income of the business,
subject to tax after all allowable deductions, is greater than or equal to $100,000
in the current calendar year shall file a return, submit the return to the director and
shall pay the correlating business and occupation tax on such products, gross
proceeds of sales and/or gross income of the business as set forth in this chapter
and Chapter 5.05 BIMC. A person whose value of products, gross proceeds of
sales, or gross income of the business, subject to tax after all allowable
deductions, is less than $100,000 in the current calendar year shall file a return,
declare that no tax is due on that person's return, and submit the return to the
director. The gross receipts and deduction amounts shall be entered on the tax
return regardless of whether any tax may be due.
D. Except as otherwise specifically provided by any other provision of this
chapter, in computing any period of days prescribed by this chapter the day of the
act or event from which the designated period of time runs shall not be included.
The last day of the period shall be included unless it is a Saturday, Sunday, or city
or federal legal holiday, in which case the last day of such period shall be the next
succeeding day which is neither a Saturday, Sunday, or city or federal legal
holiday.
E. If any taxpayer fails, neglects or refuses to make a return as and when required
in this chapter, the director is authorized to determine the amount of the tax or
fees payable by obtaining facts and information upon which to base the director's
estimate of the tax or fees due. Such assessment shall be deemed prima facie
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correct and shall be the amount of tax owed to the city by the taxpayer. The
director shall notify the taxpayer by mail of the amount of tax so determined,
together with any penalty, interest, and fees due; the total of such amounts shall
thereupon become immediately due and payable.
Section 3. This ordinance shall take effect and be in force on January 1, 2020, following
its passage and publication as required by law.
PASSED by the City Council this 26th day of November, 2019.
APPROVED by the Mayor this 26th day of November, 2019.
ATTEST/AUTHENTICATE:
1
Christine Brown, CM ity Clerk
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NUMBER:
7�� -
Kol Medina, Mayor
November 8, 2019
November 26, 2019
November 29, 2019
January 1, 2020
2019-35
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Exhibit A
Chapter 5.05
BUSINESS AND OCCUPATION TAX
Sections:
5.05.010 Purpose.
5.05.020 Exercise of revenue license power.
5.05.028 Administrative provisions.
5.05.030 Definitions.
5.05.040 Agency — Sales and services by agent, consignee, bailee, factor, or
auctioneer.
5.05.050 Imposition of the tax — Tax or fee levied.
5.05.070 Multiple activities credit when activities take place in one or more
cities with eligible gross receipt taxes.
5.05.075 Deductions to prevent multiple taxation of manufacturing activities
and, prior to January 1, 2008, transactions involving more than one
city with an eligible gross receipts tax.
5.05.076 Assignment of gross income derived from intangibles.
5.05.077 Allocation and apportionment of income when activities take place in
more than one jurisdiction.
5.05.078 Allocation and apportionment of printing and publishing income when
activities take place in more than one jurisdiction.
5.05.090 Exemptions.
5.05.100 Deductions.
5.05.120 Tax part of overhead.
5.05.130 Severability clause.
5.05.010 Purpose.
This section implements Washington Constitution Article XI, Section 12, and
RCW 35A.82.020 and 35A.11.020, which give municipalities the authority to license for
revenue. In the absence of a legal or constitutional prohibition, municipalities have the
power to define taxation categories as they see fit in order to respond to the unique
concerns and responsibilities of local government. It is intended that this chapter be as
uniform as possible among the various municipalities and consistent with the mandatory
requirements of Chapter 35.102 RCW for municipalities. Uniformity with provisions of
state tax laws should not be presumed, and references in this section to statutory or
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administrative rule changes do not mean state tax statutes or rules promulgated by the
Department of Revenue.
5.05.020 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 the city code.
5.05.028 Administrative provisions.
The administrative provisions contained in Chapter 5.06 BIMC shall be fully applicable
to the provisions of this chapter except as expressly stated to the contrary herein.
5.05.030 Definitions.
In construing the provisions of this chapter, the following definitions shall be applied.
Words in the singular number shall include the plural, and the plural shall include the
singular
A. Definitions, A — I.
Advance, Reimbursement.
1. "Advance" means money or credits received by a taxpayer from a customer or
client with which the taxpayer is to pay costs or fees on behalf of the customer or
client.
2. "Reimbursement" means money or credits received from a customer or client to
repay the taxpayer for money or credits expended by the taxpayer in payment of
costs or fees of the customer or client.
Agricultural Product, Farmer.
1. "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
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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.
2. "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.
Artistic or Cultural Organization. As used in this chapter:
1. The term "artistic or cultural organization" means an organization which is
organized and operated exclusively for the purpose of providing artistic or cultural
exhibitions, presentations, or performances or cultural or art education programs, as
defined in subsection 10 of this definition, for viewing or attendance by the general
public.
2. The organization must be a not-for-profit corporation under Chapter 24.03 RCW.
3. The organization must be managed by a governing board of not less than eight
individuals, none of whom is a paid employee of the organization or by a
corporation sole under Chapter 24.12 RCW.
4. No part of its income may be paid directly or indirectly to its members,
stockholders, officers, directors, or trustees except in the form of services rendered
by the corporation in accordance with its purposes and bylaws.
5. Salary or compensation paid to its officers and executives must be only for actual
services rendered, and at levels comparable to the salary or compensation of like
positions within the state.
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6. Assets of the corporation must be irrevocably dedicated to the activities for
which the exemption is granted and, on the liquidation, dissolution, or abandonment
by the corporation, may not inure directly or indirectly to the benefit of any member
or individual except a nonprofit organization, association, or corporation which also
would be entitled to the exemption.
7. The corporation must be duly licensed or certified when licensing or certification
is required by law or regulation.
8. The amounts received that qualify for exemption must be used for the activities
for which the exemption is granted.
9. Services must be available regardless of race, color, national origin, ancestry,
religion, age, sex, marital status, sexual orientation, Vietnam or disabled veteran
status, or the presence of any mental or physical disability.
10. The term "artistic or cultural exhibitions, presentations, or performances or
cultural or art education programs" is limited to:
a. An exhibition or presentation of works of art or objects of cultural or
historical significance, such as those commonly displayed in art or history
museums;
b. A musical or dramatic performance or series of performances; or
c. An educational seminar or program, or series of such programs, offered by
the organization to the general public on an artistic, cultural, or historical
subject.
"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.
"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.
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"Commercial or industrial use" means the following uses of products, including
byproducts, by the extractor or manufacturer thereof:
1. Any use as a consumer;
2. The manufacturing of products including articles, substances or commodities.
"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.
"Consumer" means the following:
1. Any person who purchases, acquires, owns, holds, or uses any tangible or
intangible personal property irrespective of the nature of the person's 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 a consumer other than for the purpose of:
a. Resale as tangible or intangible personal property in the regular course of
business;
b. Incorporating such property as an ingredient or component of real or
personal property when installing, repairing, cleaning, altering, imprinting,
improving, constructing, or decorating such real or personal property of or for
consumers;
c. Incorporating such property as an ingredient or component of a new product
or as a chemical used in processing a new product when the primary purpose
of such chemical is to create a chemical reaction directly through contact with
an ingredient of a new product; or
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d. Consuming the property 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;
2. Any person engaged in any business activity taxable under BIMC 5.05.050.A.7;
3. Any person who purchases, acquires, or uses any competitive telephone service
as herein defined, other than for resale in the regular course of business;
4. Any person who purchases, acquires, or uses any personal, business, or
professional service defined as a retail sale or retail service in subsection C of this
section, other than for resale in the regular course of business;
5. Any person who is an end user of software;
6. Any person engaged in the business of "public road construction" in respect to
tangible personal property when that person incorporates the tangible personal
property as an ingredient or component of a publicly owned street, place, road,
highway, easement, right-of-way, mass public transportation terminal or parking
facility, bridge, tunnel, or trestle by installing, placing or spreading the property in
or upon the right-of-way of a publicly owned street, place, road, highway,
easement, bridge, tunnel, or trestle or in or upon the site of a publicly owned mass
public transportation terminal or parking facility;
7. Any person who is an owner, lessee or has the right of possession to or an
easement in real property which is being constructed, repaired, decorated,
improved, or otherwise altered by a person engaged in business;
8. Any person who is an owner, lessee, or has the right of possession to personal
property which is being constructed, repaired, improved, cleaned, imprinted, or
otherwise altered by a person engaged in business;
9. Any person engaged in "government contracting." Any such person shall be a
consumer within the meaning of this subsection in respect to tangible personal
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property incorporated into, installed in, or attached to such building or other
structure by such person.
Nothing contained in this or any other subsection of this section shall be construed to
modify any other definition of "consumer."
"Delivery" means the transfer of possession of tangible personal property between the
seller and the buyer or the buyer's representative. Delivery to an employee of a buyer is
considered delivery to the buyer. Transfer of possession of tangible personal property
occurs when the buyer or the buyer's representative first takes physical control of the
property or exercises dominion and control over the property. Dominion and control
means the buyer has the ability to put the property to the buyer's own purposes. It means
the buyer or the buyer's representative has made the final decision to accept or reject the
property, and the seller has no further right to possession of the property and the buyer
has no right to return the property to the seller, other than under a warranty contract. A
buyer does not exercise dominion and control over tangible personal property merely by
arranging for shipment of the property from the seller to itself. A buyer's representative is
a person, other than an employee of the buyer, who is authorized in writing by the buyer
to receive tangible personal property and take dominion and control by making the final
decision to accept or reject the property. Neither a shipping company nor a seller can
serve as a buyer's representative. It is immaterial where the contract of sale is negotiated
or where the buyer obtains title to the property. Delivery terms and other provisions of
the Uniform Commercial Code (RCW Title 62A) do not determine when or where
delivery of tangible personal property occurs for purposes of taxation.
"Director" means the finance director of the city or any officer, agent or employee of the
city designated to act on the director's behalf.
"Digital automated service," "digital code," and "digital goods" have the same meaning
as in RCW 82.04.192.
"Digital products" means digital goods, digital codes, digital automated services, and the
services described in RCW 82.04.050(2)(g) and (6)(b).
Eligible Gross Receipts Tax. The term "eligible gross receipts tax" means a tax which:
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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 nonlocal
jurisdiction above the county level.
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.
2. This section sets forth examples of activities that constitute engaging in business
in the city, and establishes safe harbors for certain of those activities so that a
person who meets the criteria may engage in de its minimis business
activities in the city without having to register and obtain a business license or pay
city business and occupation taxes. The activities listed in this section are
illustrative only and are not intended to narrow the definition of "engaging in
business" in subsection 1 of this definition. If an activity is not listed, whether it
constitutes engaging in business in the city shall be determined by considering all
J
the facts and circumstances and applicable law.
3. Without being all-inclusive, any one of the following activities conducted within
the city by a person, or its employee, agent, representative, independent contractor,
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broker or another acting on its behalf constitutes engaging in business and requires
a person to register and obtain a business license.
a. Owning, renting, leasing, maintaining, 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.
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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, and veterinarians.
1. 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.
n. Investigating, resolving, or otherwise assisting in resolving customer
complaints.
o. In-store stocking or manipulating products or goods, sold to and owned by a
customer, regardless of where sale and delivery of the goods took place.
p. Delivering goods in vehicles owned, rented, leased, used, or maintained by
the person or another acting on its behalf.
4. If a 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, it need not register and obtain a business license and pay tax:
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.
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4. If a 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, it need not register and obtain a business license and pay tax:
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.
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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.
This provision does not apply to any board of directors member or attendee
engaging in business such as a member of a board of directors who attends a
board meeting.
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.
g. Soliciting sales by phone from a location outside the city.
5. A seller located outside the city merely delivering goods into the city by means
of common carrier is not required to register and obtain a business license;
provided, that it engages in no other business activities in the city. Such activities
do not include those in subsection 4 of this definition.
The city expressly intends that engaging in business 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.
"Extracting" is the activity engaged in by an extractor and is reportable under the
extracting classification.
"Extractor" means every person who from the person's own land or from the land of
another under a right or license granted by lease or contract, either directly or by
contracting with others for the necessary labor or mechanical services, for sale or for
commercial or industrial use, mines, quarries, takes or produces coal, oil, natural gas, ore,
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stone, sand, gravel, clay, mineral or other natural resource product; or fells, cuts or takes
timber, Christmas trees, other than plantation Christmas trees, or other natural products;
or takes fish, or takes, cultivates, or raises shellfish, or other sea or inland water foods or
products. "Extractor" does not include persons performing under contract the necessary
labor or mechanical services for others; or persons meeting the definition of farmer.
"Extractor for hire" means a person who performs under contract necessary labor or
mechanical services for an extractor.
"Gross income of the business" means the value proceeding or accruing by reason of the
transaction of the business 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.
"Gross proceeds of sales" means the value proceeding or accruing from the sale of
tangible personal property, digital goods, digital codes, digital automated services or for
other 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.
In This City, Within This City. "In this city" or "within this city" includes all federal
areas lying within the corporate city limits of the city.
B. Definitions, J — R.
"Manufacturing" means the activity conducted by a manufacturer and is reported under
the manufacturing classification.
Manufacturer, To Manufacture.
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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 20 percent
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 this city that is the owner
of materials or ingredients processed for it in this city by a processor for hire shall
be deemed to be engaged in business as a manufacturer in this 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.
"To manufacture" shall not include the production of digital goods or the
production of computer software if the computer software is delivered from the
seller to the purchaser by means other than tangible storage media, including the
delivery by use of a tangible storage media where the tangible storage media is not
physically transferred to the purchaser.
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Newspaper, Magazine, Periodical.
1. "Newspaper" means a publication offered for sale regularly at stated intervals at
least once a week and printed on newsprint in tabloid or broadsheet format folded
loosely together without stapling, glue, or any other binding of any kind.
2. "Magazine" or "periodical" means any printed publication, other than a
newspaper, issued and offered for sale regularly at stated intervals at least once
every three months, including any supplement or special edition of the publication.
Any publication meeting this definition qualifies regardless of its content.
"Nonprofit corporation" or "nonprofit organization" means a corporation or organization
in which no part of the income can be distributed to its members, directors, or officers
and that holds a current tax-exempt status as provided under Section 501(c)(3) of the
Internal Revenue Code, as hereafter amended, or is specifically exempted from the
requirement to apply for its tax-exempt status under Section 501(c)(3) of the Internal
Revenue Code, as hereafter amended. Where the term "nonprofit organization" is used, it
is meant to include a nonprofit corporation.
"Office" or "place of business" means a fixed location or permanent facility where the
regular business of the person is conducted and which is either owned by the person or
over which the person exercises legal dominion and control. The regular business of the
person is presumed conducted at a location:
1. Whose address the person uses as its business mailing address; and
2. Where the place of primary use is shown on a telephone billing or a location
containing a telephone line listed in a public telephone directory or other similar
publication under the business name; and
3. Where the person holds itself out to the general public as conducting its regular
business through signage or other means; and
4. Where the person is required to obtain any appropriate state and local business
license or registration unless they are exempted by law from such requirement.
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A vehicle such as a pickup, van, truck, boat or other motor vehicle is not an office or
place of business. A post office box is not an office or place of business.
If a person has an office or place of business, the person's home is not an office or place
of business unless it meets the criteria for office or place of business above. If a person
has no office or place of business, the person's home or apartment within the city will be
deemed the place of business.
"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, cooperative, fraternal, nonprofit, or
otherwise, and the United States or any instrumentality thereof.
Precious Metal Bullion or Monetized Bullion. "Precious metal bullion" means any
precious metal which has been put through a process of smelting or refining, including,
but not limited to, gold, silver, platinum, rhodium, and palladium, and which is in such
state or condition that its value depends upon its contents and not upon its form. For
purposes of this section, "monetized bullion" means coins or other forms of money
manufactured from gold, silver, or other metals and heretofore, now, or hereafter used as
a medium of exchange under the laws of this state, the United States, or any foreign
nation, but does not include coins or money sold to be manufactured into jewelry or
works of art.
"Processing for hire" means the performance of labor and mechanical services upon
materials or ingredients belonging to others so that as a result a new, different or useful
product is produced for sale, or commercial or industrial use. A processor for hire is any
person who would be a manufacturer if that person were performing the labor and
mechanical services upon that person's own materials or ingredients. If a person
furnishes, or sells to the customer prior to manufacture, materials or ingredients equal to
20 percent or more of the total value of all materials or ingredients that become a part of
the finished product, the person will be deemed to be a manufacturer and not a processor
for hire.
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Product, Byproduct.
1. "Product" means tangible personal property, including articles, substances, or
commodities created, brought forth, extracted, or manufactured by human or
mechanical effort.
2. "Byproduct" means any additional product, other than the principal or intended
product, which results from extracting or manufacturing activities and which has a
market value, without regard to whether or not such additional product was an
expected or intended result of the extracting or manufacturing activities.
"Retailing" means the activity of engaging in making sales at retail and is reported under
the retailing classification.
"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, racquetball, handball, squash, tennis, batting cages, day trips for
sightseeing purposes, and others, when provided to consumers. "Amusement and
recreation services" also includes 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;
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5. Landscape maintenance and horticultural services but excluding (a) horticultural
services provided to farmers and (b) 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;
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; and
8. The term shall also include the renting or leasing of tangible personal property to
consumers and the rental of equipment with an operator.
"Royalties" means compensation for the use of intangible property, such as copyrights,
patents, licenses, franchises, trademarks, trade names, and similar items.
C. Definitions, S — V.
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,"
or "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.
Sale at Retail, Retail Sale.
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1. "Sale at retail" or "retail sale" means every sale of tangible personal property
(including articles produced, fabricated, or imprinted) to all persons irrespective 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 subsection La, Lb, Lc, Ld, or Le of this definition following such
use.
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£ Purchases for the purpose of satisfying the person's obligations under an
extended warranty as defined in subsection 7 of this section, if such tangible
personal property replaces or becomes an ingredient or component of property
covered by the extended warran without intervening use by such person.
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 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 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
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property is then reconveyed by title, possession, or any other means to the
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 telephone business 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 installing, repairing, altering, or improving of digital goods for
consumers;
h. The sale of or charge made for tangible personal property, labor and
services to persons taxable under subsections 3.a, 3.b, 3.c, 3.d, 3.e, 3.f, and 3.g
of this definition 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
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though such property, labor and services may be resold after such use or
consumption. Nothing contained in this subsection shall be construed to
modify subsection 1 of this definition and nothing contained in subsection 1 of
this definition shall be construed to modify this subsection.
4. "Sale at retail" or "retail sale" shall also include the providing of competitive
telephone service to consumers.
5. a. "Sale at retail" or "retail sale" shall also include the sale of prewritten 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. For purposes
of this subsection 5.a the sale of prewritten computer software includes the sale of
or charge made for a key or an enabling or activation code, where the key or code is
required to activate prewritten computer software and put the software into use.
There is no separate sale of the key or code from the prewritten computer software,
regardless of how the sale may be characterized by the vendor or by the purchaser.
The term "sale at retail" or "retail sale" does not include the sale of or charge made
for:
i. Custom software; or
ii. The customization of prewritten software.
b. i. The term also includes the charge made to consumers for the right to
access and use prewritten computer software, where possession of the software
is maintained by the seller or a third party, regardless of whether the charge for
the service is on a per use, per user, per license, subscription, or some other
basis.
ii. (A) The service described in subsection 5.b.i of this definition includes
the right to access and use prewritten software to perform data
processing.
(B) For purposes of this subsection 5.b.ii "data processing" means
the systematic performance of operations on data to extract the
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required information in, an appropriate form or to convert the data to
usable information. Data processing includes check processing,
image processing, form processing, survey processing, payroll
processing, claim processing, and similar activities.
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 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 an
extended warranty to a consumer. For purposes of this subsection, "extended
warranty" means an agreement for a specified duration to perform the replacement
or repair of tangible personal property at no additional charge or a reduced charge
for tangible personal property, labor, or both, or to provide indemnification for the
replacement or repair of tangible personal property, based on the occurrence of
specified events. The term "extended warranty" does not include an agreement,
otherwise meeting the definition of extended warranty in this subsection, if no
separate charge is made for the agreement and the value of the agreement is
included in the sales price of the tangible personal property covered by the
agreement.
8. "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).
9. "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,
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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 or other classification.)
10. "Sale at retail" or "retail sale" shall not include the sale of or charge made for
labor and services rendered for environmental remedial action. (This is reported
under the service and other classification.)
11. "Sale at retail" or "retail sale" shall also include the following sales to
consumers of digital goods, digital codes, and digital automated services:
a. Sales in which the seller has granted the purchaser the right of permanent
use;
b. Sales in which the seller has granted the purchaser a right of use that is less
than permanent;
c. Sales in which the purchaser is not obligated to make continued payment as
a condition of the sale; and
d. Sales in which the purchaser is obligated to make continued payment as a
condition of the sale.
A retail sale of digital goods, digital codes, or digital automated services under this
subsection includes any services provided by the seller exclusively in connection
with the digital goods, digital codes, or digital automated services, whether or not a
separate charge is made for such services.
For purposes of this subsection, "permanent" means perpetual or for an indefinite or
unspecified length of time. A right of permanent use is presumed to have been
granted unless the agreement between the seller and the purchaser specifies or the
circumstances surrounding the transaction suggest or indicate that the right to use
terminates on the occurrence of a condition subsequent.
Page 26 of 50
12. "Sale at retail" or "retail sale" shall also include the installing, repairing,
altering, or improving of digital goods for consumers.
"Sale at wholesale" or "wholesale sale" means any sale of tangible personal property,
digital goods, digital codes, digital automated services, prewritten computer software, or
services described in subsection 5.b.i of the definition of "sale at retail" 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 and retail services, if such charge is
expressly defined as a retail sale or retail service when rendered to or for consumers. Sale
at wholesale also includes the sale of telephone business to another telecommunications
company as defined in RCW 80.04.010 for the purpose of resale, as contemplated by
RCW 35.21.715.
Services. No definition.
Software, Prewritten Software, Custom Software, Customization of Canned Software,
Master Copies, Retained Rights.
1. "Prewritten software" or "canned software" means computer software, including
prewritten upgrades, that is not designed and developed by the author or other
creator to the specifications of a specific purchaser. The combining of two or more
prewritten computer software programs or prewritten portions thereof does not
cause the combination to be other than prewritten computer software. Prewritten
computer software includes software designed and developed by the author or other
creator to the specifications of a specific purchaser when it is sold to a person other
than such purchaser. Where a person modifies or enhances computer software of
which such person is not the author or creator, the person shall be deemed to be the
author or creator only of the person's modifications or enhancements. Prewritten
computer software or a prewritten portion thereof that is modified or enhanced to
any degree, where such modification or enhancement is designed and developed to
the specifications of a specific purchaser, remains prewritten computer software;
however, where there is a reasonable, separately stated charge or an invoice or other
statement of the price given to the purchaser for the modification or enhancement,
the modification or enhancement shall not constitute prewritten computer software.
2. "Custom software" means software created for a single person.
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3. "Customization of canned software" means any alteration, modification, or
development of applications using or incorporating canned software to specific
individualized requirements of a single person. Customization of canned software
includes individualized configuration of software to work with other software and
computer hardware but does not include routine installation. Customization of
canned software does not change the underlying character or taxability of the
original canned software.
4. "Master copies" of software means copies of software from which a software
developer, author, inventor, publisher, licensor, sublicensor, or distributor makes
copies for sale or license. The software encoded on a master copy and the media
upon which the software resides are both ingredients of the master copy.
5. "Retained rights" means any and all rights, including intellectual property rights
such as those rights arising from copyrights, patents, and trade secret laws, that are
owned or are held under contract or license by a software developer, author,
inventor, publisher, licensor, sublicensor, or distributor.
6. "Software" means any information, program, or routine, or any set of one or
more programs, routines, or collections of information used, or intended for use, to
convey information that causes one or more computers or pieces of computer-
related peripheral equipment, or any combination thereof, to perform a task or set of
tasks. "Software" includes the associated documentation, materials, or ingredients
regardless of the media upon which that documentation is provided, that describes
the code and its use, operation, and maintenance and that typically is delivered with
the code to the consumer. All software is classified as either canned or custom.
"Taxpayer" means any "person," as herein defined, required to have a business license
under this chapter 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.
"Tuition fee" includes library, laboratory, health service and other special fees, and
amounts charged for room and board by an educational institution when the property or
service for which such charges are made is furnished exclusively to the students or
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faculty of such institution. "Educational institution," as used in this section, means only
those institutions created or generally accredited as such by the state and includes
educational programs that such educational institution cosponsors with a nonprofit
organization, as defined by the Internal Revenue Code Section 501(c)(3), as hereafter
amended, if such educational institution grants college credit for coursework successfully
completed through the educational program, or an approved branch campus of a foreign
degree -granting institution in compliance with Chapter 28B.90 RCW, and in accordance
with RCW 82.04.4332 or defined as a degree -granting institution under
RCW 28B.85.010(3) and accredited by an accrediting association recognized by the
United States Secretary of Education, and offering to students an educational program of
a general academic nature or those institutions which are not operated for profit and
which are privately endowed under a deed of trust to offer instruction in trade, industry,
and agriculture, but not including specialty schools, business colleges, other trade
schools, or similar institutions.
"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.
Value of Products.
1. The value of products, including byproducts, 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 byproducts by the seller.
2. Where such products, including byproducts, are extracted or manufactured for
commercial or industrial use; and where such products, including byproducts, 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
Page 29 of 50
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 of this definition, 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.
"Wholesaling" means engaging in the activity of making sales at wholesale, and is
reported under the wholesaling classification.
5.05.040 Agency — Sales and services by agent, consignee, bailee, factor= or
auctioneer.
A. Sales in Own Name — Sales or Purchases as Agent. Every person, including agents,
consignees, bailees, factors or auctioneers having either actual or constructive possession
of tangible personal property or having possession of the documents of title thereto, with
power to sell such tangible personal property in the person's own name and actually so
selling shall be deemed the seller of such tangible personal property within the meaning
of this chapter.
The burden shall be upon the taxpayer in every case to establish the fact that such
taxpayer is not engaged in the business of selling tangible personal property but is acting
merely as broker or agent in promoting sales or making purchases for a principal. Such
claim will be recognized only when the contract or agreement between such persons
clearly establishes the relationship of principal and agent and when the following
conditions are complied with:
1. The books and records of the broker or agent show the transactions were made in
the name and for the account of the principal, and show the name of the actual
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owner of the property for whom the sale was made, or the actual buyer for whom
the purchase was made.
2. The books and records show the amount of the principal's gross sales; the
amount of commissions and any other incidental income derived by the broker or
agent from such sales. The principal's gross sales must not be reflected as the
agent's income on any of the agent's books and records. Commissions must be
computed according to a set percentage or amount, which is agreed upon in the
agency agreement.
3. No ownership rights may be conferred to the agent unless the principal refuses to
pay, or refuses to abide by the agency agreement. Sales or purchases of any goods
by a person who has any ownership rights in such goods shall be taxed as retail or
wholesale sales.
4. Bulk goods sold or purchased on behalf of a principal must not be commingled
with goods belonging to another principal or lose their identity as belonging to the
particular principal. Sales or purchases of any goods which have been commingled
or lost their identity as belonging to the principal shall be taxed as retail or
wholesale sales.
B. If the above requirements are not met the consignor, bailor, principal or other shall be
deemed a seller of such property to the agent, consignee, bailee, factor or auctioneer.
C. Services in Own Name — Procuring Services as Agent. For purposes of this subsection,
an agent is a person who acts under the direction and control of the principal in procuring
services on behalf of the principal that the person could not itself render or supply.
Amounts received by an agent for the account of its principal as advances or
reimbursements are exempted from the measure of the tax only when the agent is not
primarily or secondarily liable to pay for the services procured.
Any person who claims to be acting merely as agent in obtaining services for a principal
will have such claim recognized only when the contract or agreement between such
persons clearly establishes the relationship of principal and agent and when the following
conditions are complied with:
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1. The books and records of the agent show that the services were obtained in the
name and for the account of the principal, and show the actual principal for whom
the purchase was made.
2. The books and records show the amount of the service that was obtained for the
principal, the amount of commissions and any other income derived by the agent
for acting as such. Amounts received from the principal as advances and
reimbursements must not be reflected as the agent's income on any of the agent's
books and records. Commissions must be computed according to a set percentage
or amount, which is agreed upon in the agency agreement.
5.05.050 Imposition of the tax — Tax or fee levied.
A. Except as provided in subsection A.2 of this section, 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 application of rates
against gross proceeds of sale, gross income of business, or value of products, including
byproducts, 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 byproducts, extracted within the city for sale or
for commercial or industrial use, multiplied by the rate of one-tenth of one percent.
The measure of the tax is the value of the products, including byproducts, so
extracted, regardless of the place of sale or the fact that deliveries may be made to
points outside the city.
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 byproducts, manufactured within the city,
multiplied by the rate of one-tenth of one percent. The measure of the tax is the
value of the products, including byproducts, 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 A.2 of this section, as to such
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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 sold, multiplied by the rate of one-tenth of
one percent.
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 sold, multiplied by the rate of
one-tenth of one percent.
5. Upon every person engaging within the city in the business of (a) printing, (b)
both printing and publishing newspapers, magazines, periodicals, books, music, and
other printed items, (c) publishing newspapers, magazines and periodicals, (d)
extracting for hire, and (e) processing for hire, as to such persons, the amount of tax
on such business shall be equal to the gross income of the business multiplied by
the rate of one-tenth of one percent.
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.
7. Upon every other person engaging within the city in any business activity other
than or in addition to those enumerated in the above subsections, 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. This subsection
includes, among others, and without limiting the scope hereof (whether or not 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.
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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
byproducts, as the case may be, from all activities conducted within the city during any
calendar year is equal to or less than $150,000 per year, and where gross receipts do
equal or exceed $150,000 per year, the tax shall only apply to the amount of gross income
exceeding $150,000 per year.
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 or more
subsections of BIMC 5.05.050 shall be taxable under each applicable subsection.
B. Notwithstanding anything to the contrary herein, if 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, and still apply the city tax to as much of the taxpayer's activities as may be
subject to the city's taxing authority.
C. To take 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 and that the taxpayer paid the
amount of tax sought to be credited.
D. Credit for Persons That Sell in the City Products That They Extract or Manufacture.
Persons taxable under the retailing or wholesaling classification with respect to selling
products in this 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. Credit for Persons That Manufacture Products in the City Using Ingredients They
Extract. Persons taxable under the manufacturing classification with respect to
manufacturing products in this 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
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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. Credit for Persons That Sell within the City Products That They Print, or Publish and
Print. Persons taxable under the retailing or wholesaling classification with respect to
selling products in this 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 manufacturing activities and,
prior to January 1, 2008, transactions involving more than one city with an eligible
gross receipts tax.
A. Amounts Subject to an Eligible Gross Receipts Tax in Another City That Also
Maintains Nexus over the Same Activity. For taxes due prior to January 1, 2008, 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:
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 the 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 (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. Person Manufacturing Products within and Without. A person manufacturing products
within the city using products manufactured by the same person outside the city may
deduct from the measure of the manufacturing tax the value of products manufactured
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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.
5.05.076 Assignment of gross income derived from intangibles.
Gross income derived from the sale of intangibles such as royalties, trademarks, patents,
or goodwill shall be assigned to the jurisdiction where the person is domiciled (its
headquarters is located).
5.05.077 Allocation and apportionment of income when activities take place in more
than one jurisdiction.
Effective January 1, 2008, gross income, other than persons subject to the provisions of
Chapter 82.14A RCW, shall be allocated and apportioned as follows:
A. Gross income derived from all activities other than those taxed as service or royalties
under BIMC 5.05.050.A.7 shall be allocated to the location where the activity takes
place.
B. In the case of sales of tangible personal property, the activity takes place where
delivery to the buyer occurs.
C. In the case of sales of digital products, the activity takes place where delivery to the
buyer occurs. The delivery of digital products will be deemed to occur at:
1. The seller's place of business if the purchaser receives the digital product at the
seller's place of business;
2. If not received at the seller's place of business, the location where the purchaser
or the purchaser's donee, designated as such by the purchaser, receives the digital
product, including the location indicated by instructions for delivery to the
purchaser or donee, known to the seller;
3. If the location where the purchaser or the purchaser's donee receives the digital
product is not known, the purchaser's address maintained in the ordinary course of
the seller's business when use of this address does not constitute bad faith;
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4. If no address for the purchaser is maintained in the ordinary course of the seller's
business, the purchaser's address obtained during the consummation of the sale,
including the address of a purchaser's payment instrument, if no other address is
available, when use of this address does not constitute bad faith; and
5. If no address for the purchaser is obtained during the consummation of the sale,
the address where the digital good or digital code is first made available for
transmission by the seller or the address from which the digital automated service
or service described in RCW 82.04.050(2)(g) or (6)(b) was provided, disregarding
for these purposes any location that merely provided the digital transfer of the
product sold.
D. If none of the methods in subsection C of this section for determining where the
delivery of digital products occurs are available after a good faith effort by the taxpayer
to apply the methods provided in subsections C.1 through C.5 of this section, then the
city and the taxpayer may mutually agree to employ any other method to effectuate an
equitable allocation of income from the sale of digital products. The taxpayer will be
responsible for petitioning the city to use an alternative method under this subsection D.
The city may employ an alternative method for allocating the income from the sale of
digital products if the methods provided in subsections C.1 through C.5 of this section are
not available and the taxpayer and the city are unable to mutually agree on an alternative
method to effectuate an equitable allocation of income from the sale of digital products.
E. For purposes of subsections C.1 through C.5 of this section, "rveeive hast the
nieaning as in RCW 82.32.739:the following definitions gppI
1. "Digital automated services," "digital codes," and "digitalgoods" have the same
meaning as in RCW 82.04.192;
"Digital products" means digital goods, digital codes. digital automated service
and the services described in RCW 82.04.050 2 and (6)(c); and
3 "Receive" has the same meaning as in RCW 82.32.730.
F. Gross income derived from activities taxed as services and other activities taxed under
BIMC 5.05.050.A.7 shall be apportioned to the city by multiplying apportionable income
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by a fraction, the numerator of which is the payroll factor plus the service -income factor
and the denominator of which is two.
1. The payroll factor is a fraction, the numerator of which is the total amount paid
in the city during the tax period by the taxpayer for compensation and the
denominator of which is the total compensation paid everywhere during the tax
period. Compensation is paid in the city if:
a. The individual is primarily assigned within the city;
b. The individual is not primarily assigned to any place of business for the tax
period and the employee performs 50 percent or more of his or her service for
the tax period in the city; or
c. The individual is not primarily assigned to any place of business for the tax
period, the individual does not perform 50 percent or more of his or her service
in any city and the employee resides in the city.
2. The service income factor is a fraction, the numerator of which is the total
service income of the taxpayer in the city during the tax period, and the
denominator of which is the total service income of the taxpayer everywhere during
the tax period. Service income is in the city if: the customer location is in the city.
3. Gross income of the business from engaging in an apportionable activity must be
excluded from the denominator of the service income factor if, in respect to such
activily, at least some of the activijy is performed in the ci1y, and the gross income
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is attributable under subsection 2 of this subsection F to a city or unincorporated
area of a county within the United States or to a foreign country in which the
axpayer is not taxable For purposes of this subsection 17.3. not taxable" means
that the taxp4yer is not subject to a business activities tax by that city or county
within the United States or by that foreign country,. except that a taxpayer is taxable
in a city or county within the United States or in a foremen country in which it would
be deemed to have a substantial nexus with the city or county within the United
States or with the foreign country under the standards in RCW 35.102.050
regardless of whether that city or county within the United States or that foreign
counqy imposes such a tax.
-34. If the allocation and apportionment provisions of this subsection do not fairly
represent the extent of the taxpayer's business activity in the city er ���
the tn,eMer- doari-busin, the taxpayer may petition for or the tax administrators
may jeintly-require, in respect to all or any part of the taxpayer's business activity,
j if reasonable:
a. Separate accounting;
b. The use of a single f p*nr-The exclusion of M one or more of the factors;
c. The inclusion of one or more additional factors that will fairly represent the
taxpayer's business activity in the city; or
d. The employment of any other method to effectuate an equitable allocation
and apportionment of the taxpayer's income.
5 The party_ petitioning for or the tax administrator requiring, the use of any
method to effectuate an equitable allocation and apportionment of the taxpayer's
income pursuant to subsection 4 of this subsection F must prove by a preponderance
of the evidence:
a That the allocation and apportionment provisions of this subsection F do not
fairly represent the extent of the tax a er's business activi1y in the cily,• and
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b That the alternative to such provisions is reasonable. The same burden of
proof shall apply whether the taxpayer is petitioning for, or the tax
administrator is requiring, the use of an alternative, reasonable method to
effectuate anequitable allocation and a ortionment of the taxpayer's income.
6 If the tax administrator requires any method to effectuate an equitable allocation
and apportionment of the tax a er's income the tax administrator cannot impose
gpy civil or criminal penally with reference to the tax due that is attributable to the
taxpayer's reasonable reliance solely on the allocation and apportionment
provisions of this subsection F.
7. A tax a er that has received written permission from the tax administrator to use
a reasonable method to effectuate an equitable allocation and apportionment of the
taxpayer's income shall not have that permission revoked with respect to
transactions and activities that have already occurred unless there has been a
material chanize in, or a material misrepresentation of, the facts_provided by the
taxpayer upon which the tax administrator reasonably relied in approving. a
reasonable alternative method.
G. The definitions in this subsection apply throughout this section.
1. "Apportionable income" means the gross income of the business taxable under
the service classifications of a city's gross receipts tax, including income received
from activities outside the city if the income would be taxable under the service
classification if received from activities within the city, less any exemptions or
deductions available.
2. "Business activities tax" means a tax measured by the amount of, or economic
results of, business activity conducted in a city or c2gm within the United States or
within a foreign country The term includes taxes measured in whole or in part on
net income or gross income or receipts. "Business activities tax" does not include a
sales tax, use tax or a similar transaction tax imposed on the sale or acquisition of
mods or services whether or not denominated a gross receipts tax or a tax imposed
on the privilege of doiniz business.
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23. "Compensation" means wages, salaries, commissions, and any other form of
remuneration paid to individuals for personal services that are or would be included
in the individual's gross income under the federal Internal Revenue Code.
4 "Customer" means a person or entity to whom the taxpayer makes a sale or
renders services or from whom the tax a er otherwise receives gross income of the
business.
5 "Customer location" means the followin :
(a) For a customer not engaged in business, if the service requires the customer
to be physically_ present, where the service is performed.
b For a customer not engaged in business if the service does not require the
customer to be h sicall resent:
A The customer's residence` or
(B) If the customer's residence is not known, the customer's
billin mailin address.
c For a customer engaged in business:
A Where the services are ordered from,• ,
(B) At the customer's billin mailing address if the location from which
the services are ordered is not known-, or
C At the customer's commercial domicile if none of the above are
known.
36. "Individual" means any individual who, under the usual common law rules
applicable in determining the employer-employee relationship, has the status of an
employee of that taxpayer.
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67. "Primarily assigned" means the business location of the taxpayer where the
individual performs his or her duties.
68. "Service -taxable income" or "service income" means gross income of the
business subject to tax under either the service or royalty classification.
79. "Tax period" means the calendar year during which tax liability is accrued. If
taxes are reported by a taxpayer on a basis more frequent than once per year,
taxpayers shall calculate the factors for the previous calendar year for reporting in
the current calendar year and correct the reporting for the previous year when the
factors are calculated for that year, but not later than the end of the first quarter of
the following year.
sO7
H. Assignment or apportionment of revenue under this section shall be made in
accordance with and in full compliance with the provisions of the interstate commerce
clause of the United States Constitution where applicable.
5.05.078 Allocation and apportionment of printing and publishing income when
activities take place in more than one jurisdiction.
Notwithstanding RCW 35.102.130, effective January 1, 2008, gross income from the
activities of printing, and of publishing newspapers, periodicals, or magazines, shall be
allocated to the principal place in this state from which the taxpayer's business is directed
or managed. As used in this section, the activities of printing, and of publishing
newspapers, periodicals, or magazines, have the same meanings as attributed to those
terms in RCW 82.04.280(1) by the Department of Revenue.
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5.05.090 Exemptions.
The provisions of this chapter shall not apply to the following:
A. Nonprofit Corporations or Nonprofit Organizations. This chapter shall not apply to
nonprofit organizations exempt from federal income tax under Section 501(c)(3) of the
Internal Revenue Code, as hereafter amended, except with respect to retail sales of such
persons.
B. Health Maintenance Organization, Health Care Service Contractor, Certified Health
Plan. This chapter does not apply to any health maintenance organization, health care
service contractor, or certified health plan in respect to premiums or prepayments that are
taxable under RCW 48.14.0201.
C. Public Utilities. This chapter shall not apply to any person in respect to a business
activity with respect to which tax liability is specifically imposed under the provisions of
Chapter 3.8 8, 5.08 or 5.10 BIMC.
D. 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.
E. International Banking Facilities. This chapter shall not apply to the gross receipts of an
international banking facility. As used in this subsection, an "international banking
facility" means a facility represented by a set of asset and liability accounts segregated on
the books and records of a commercial bank, the principal office of which is located in
this state, and which is incorporated and doing business under the laws of the United
States or of this state, a United States branch or agency of a foreign bank, an Edge
corporation organized under Section 25(a) of the Federal Reserve Act, 12 USC 611
through 631, or an Agreement corporation having an agreement or undertaking with the
Board of Governors of the Federal Reserve System under Section 25 of the Federal
Reserve Act, 12 USC 601 through 604(a), that includes only international banking
facility time deposits (as defined in Section 204.8(a)(2) of Regulation D (12 CFR
Part 204), as promulgated by the Board of Governors of the Federal Reserve System),
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and international banking facility extensions of credit (as defined in Section 204.8(a)(3)
of Regulation D).
F. Insurance Business. This chapter shall not apply to amounts received by any person
who is an insurer or their appointed insurance producer upon which a tax based on gross
premiums is paid to the state pursuant to RCW 48.14.020, and provided, further, that the
provisions of this subsection shall not exempt any bonding company from tax with
respect to gross income derived from°the completion of any contract as to which it is a
surety, or as to any liability as successor to the liability of the defaulting contractor.
G. Farmers — Agriculture. This chapter shall not apply to any farmer in respect to
amounts received from selling fruits, vegetables, berries, butter, eggs, fish, milk, poultry,
meats or any other agricultural product that is raised, caught, produced, or manufactured
by such persons.
H. Athletic Exhibitions. This chapter shall not apply to any person in respect to the
business of conducting boxing contests and sparring or wrestling matches and exhibitions
for the conduct of which a license must be secured from the State Boxing Commission.
I. Racing. This chapter shall not apply to any person in respect to the business of
conducting race meets for the conduct of which a license must be secured from the
Washington State Horse Racing Commission.
J. Ride Sharing. This chapter does not apply to any funds received in the course of
commuter ride sharing or ride sharing for persons with special transportation needs in
accordance with RCW 46.74.010.
K. Employees.
1. This chapter shall not apply to any person in 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.
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2. A booth renter, as defined by RCW 18.16.020, is an independent contractor for
purposes of this chapter.
L. Amounts Derived from Sale of Real Estate. This chapter shall not apply to gross
proceeds derived from the sale of real estate. This, however, shall not be construed to
allow an exemption of 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 30 days or longer.
M. Mortgage Brokers' Third -Party Provider Services Trust Accounts. This chapter shall
not apply to amounts received from trust accounts to mortgage brokers for the 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.
N. Amounts Derived from Manufacturing, Selling or Distributing Motor Vehicle Fuel.
This chapter shall not apply to the manufacturing, selling, or distributing of motor vehicle
fuel, as the term "motor vehicle fuel" is defined in RCW 82-36.01 and exempt
under RCW 82 82.38.280; 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.
O. 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.
P. Casual and Isolated Sales. This chapter shall not apply to the gross proceeds derived
from casual or isolated sales.
Q. 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 14 days
to reimburse in kind a previous accommodation sale by the buyer to the seller.
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R. 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.
5.05.100 Deductions.
In computing the license fee or tax, there may be deducted from the measure of tax the
following items:
A. Compensation from Public Entities for Health or Social Welfare Services — Exception.
In computing tax, there may be deducted from the measure of tax amounts received from
the United States or any instrumentality thereof or from the state of Washington or any
municipal corporation or political subdivision thereof as compensation for, or to support,
health or social welfare services rendered by a health or social welfare organization (as
defined in RCW 82.04.43 1) or by a municipal corporation or political subdivision, except
deductions are not allowed under this subsection for amounts that are received under an
employee benefit plan. For purposes of this subsection, "employee benefit plan" includes
the military benefits program authorized in 10 USC 1071 et seq., as amended, or amounts
payable pursuant thereto.
B. Interest on Investments or Loans Secured by Mortgages or Deeds of Trust. In
computing tax, to the extent permitted by Chapter 82.14A RCW, there may be deducted
from the measure of tax by those engaged in banking, loan, security or other financial
businesses, amounts derived from interest received on investments or loans primarily
secured by first mortgages or trust deeds on nontransient residential properties.
C. Interest on Obligations of the State, Its Political Subdivisions, and Municipal
Corporations. In computing tax, there may be deducted from the measure of tax by those
engaged in banking, loan, security or other financial businesses, amounts derived from
interest paid on all obligations of the state of Washington, its political subdivisions, and
municipal corporations organized pursuant to the laws thereof.
D. Interest on Loans to Farmers and Ranchers, Producers or Harvesters of Aquatic
Products, or Their Cooperatives. In computing tax, there may be deducted from the
measure of tax amounts derived as interest on loans to bona fide farmers and ranchers,
producers or harvesters of aquatic products, or their cooperatives by a lending institution
Page 46 of 50
which is owned exclusively by its borrowers or members and which is engaged solely in
the business of making loans and providing finance -related services to bona fide farmers
and ranchers, producers or harvesters of aquatic products, their cooperatives, rural
residents for housing, or persons engaged in furnishing farm -related or aquatic -related
services to these individuals or entities.
E. 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 delivered by the seller
to the buyer or the buyer's representative at a location outside the state of Washington.
F. 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.
G. 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.
H. Repair, Maintenance, Replacement, etc., of Residential Structures and Commonly
Held Property — Eligible Organizations.
1. In computing tax, there may be deducted from the measure of tax amounts used
solely for repair, maintenance, replacement, management, or improvement of the
residential structures and commonly held property, but excluding property where
fees or charges are made for use by the public who are not guests accompanied by a
member, which are derived by:
a. A cooperative housing association, corporation, or partnership from a person
who resides in a structure owned by the cooperative housing association,
corporation, or partnership;
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b. An association of owners of property as defined ,in RCW 64.32.010, as now
or hereafter amended, from a person who is an apartment owner as defined in
RCW 64.32.010; or
c. An association of owners of residential property from a person who is a
member of the association. "Association of owners of residential property"
means any organization of all the owners of residential property in a defined
area who all hold the same property in common within the area.
2. For the purposes of this subsection "commonly held property" includes areas
required for common access such as reception areas, halls, stairways, parking, etc.,
and may include recreation rooms, swimming pools and small parks or recreation
areas; but is not intended to include more grounds than are normally required in a
residential area, or to include such extensive areas as required for golf courses,
campgrounds, hiking and riding areas, boating areas, etc.
3. To qualify for the deductions under this subsection:
a. The salary or compensation paid to officers, managers, or employees must
be only for actual services rendered and at levels comparable to the salary or
compensation of like positions within the county wherein the property is
located;
b. Dues, fees, or assessments in excess of amounts needed for the purposes for
which the deduction is allowed must be rebated to the members of the
association;
c. Assets of the association or organization must be distributable to all
members and must not inure to the benefit of any single member or group of
members.
I. Sales at Wholesale or Retail of Precious Metal Bullion and Monetized Bullion. In
computing tax, there may be deducted from the measure of the tax amounts derived from
the sale at wholesale or retail of precious metal bullion and monetized bullion. However,
no deduction is allowed on amounts received as commissions upon transactions for the
accounts of customers over and above the amount paid to other dealers associated in such
Page 48 of 50
transactions, and no deduction or offset is allowed against such commissions on account
of salaries or commissions paid to salesmen or other employees.
J. Amounts Representing Rental of Real Estate for Boarding Homes. In computing tax,
there may be deducted from the measure of tax amounts representing the value of the
rental of real estate for "boarding homes." To qualify for the deduction, the boarding
home must meet the definition of "boarding home," and be licensed by the state of
Washington under Chapter 18.20 RCW. The deduction shall be in the amount of 25
percent of the gross monthly billing when the boarder has resided within the boarding
home for longer than 30 days.
K. Radio and Television Broadcasting — Advertising Agency Fees — National, Regional,
and Network Advertising — Interstate Allocations. In computing tax, there may be
deducted from the measure of tax by radio and television broadcasters amounts
representing the following:
1. Advertising agencies' fees when such fees or allowances are shown as a discount
or price reduction in the billing or that the billing is on a net basis, i.e., less the
discount;
2. Actual gross receipts from national network, and regional advertising or a
"standard deduction" as provided by RCW 82.04.280; and
3. Local advertising revenue that represents advertising which is intended to reach
potential customers of the advertiser who are located outside the state of
Washington. The director may issue a rule that provides detailed guidance as to
how these deductions are to be calculated.
L. Constitutional Prohibitions. In computing tax, there may be deducted from the
measure of the tax amounts derived from business which the city is prohibited from
taxing under the Constitution of the state of Washington or the Constitution of the United
States.
M. Receipts from the Sale of Tangible Personal Property and Retail Services Delivered
outside the City but within Washington. Effective January 1, 2008, amounts included in
the gross receipts reported on the tax return derived from the sale of tangible personal
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property delivered to the buyer or the buyer's representative outside the city but within
the state of Washington may be deducted from the measure of tax under the retailing,
retail services, or wholesaling classification.
N. Professional Employer Services. In computing the tax, a professional employer
organization may deduct from the calculation of gross income the gross income of the
business derived from performing professional employer services that is equal to the
portion of the fee charged to a client that represents the actual cost of wages and salaries,
benefits, workers' compensation, payroll taxes, withholding, or other assessments paid to
or on behalf of a covered employee by the professional employer organization under a
professional employer agreement.
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.
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