HomeMy WebLinkAboutCOW 2022-11-28 Item 4F - Handouts Distributed at Meeting - Business and Occupation Ordinance and Attachment Strike-ThruNOTE: Text in underline and strike-thru format reflects
changes made per the discussion at the
11/22/22 Special Budget Work Session.
See pages 24, 33-34, and the attachment.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON; ESTABLISHING A NEW
CHAPTER 3.26 OF THE TUKWILA MUNICIPAL CODE (TMC)
ENTITLED, "BUSINESS AND OCCUPATION TAX";
ESTABLISHING TMC CHAPTER 3.27 ENTITLED "BUSINESS
AND OCCUPATION TAX ADMINISTRATIVE PROVISIONS";
PROVIDING FOR A REFERENDUM PROCESS; PROVIDING
FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE
DATE.
WHEREAS, in 2022, during the creation of the City's 2023-2024 Biennial Budget, the
City's long-range forecast identified a structural deficit on the General Fund financial
condition resulting from several factors, including the 1% limitation on regular property
tax, the sunset of streamlined sales tax mitigation revenue, and the City's increased cost
of services that outpace the increase in property and sales tax; and
WHEREAS, pursuant to RCW 35A.82.020, the City of Tukwila is authorized to impose
a business and occupation tax on business activities within the City; and
WHEREAS, RCW 35.102.040 requires the City utilize the mandatory provisions of
the model ordinances developed by Washington cities when imposing a business and
occupation tax and adopting administrative provisions related to the imposition and
collection of such a tax, but also allow for flexibility to customize the ordinances based on
local goals and policies; and
WHEREAS, the model ordinance provides mandatory and standard exemptions for
potential inclusion but also gives the City the ability to create certain exemptions from
business and occupation tax including an annual gross receipts exemption threshold for
small businesses to meet the City's own objectives, exemptions to set economic policy,
and exemptions to maintain local control; and
WHEREAS, the City Council has determined that imposition of a business and
occupation tax as provided herein and providing for uniform administration of the City's
tax codes will be in the best interest of the public health, safety, and welfare;
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. Chapter 3.26 of the Tukwila Municipal Code Established. A chapter of
the Tukwila Municipal Code entitled "Business and Occupation Tax," to be codified as
Tukwila Municipal Code (TMC) Chapter 3.26, is hereby established to read as follows:
CHAPTER 3.26
BUSINESS AND OCCUPATION TAX
Sections:
3.26.010 Purpose
3.26.020 Exercise of Revenue License Power
3.26.030 Administrative Provisions
3.26.040 Definitions
3.26.050 Imposition of the Tax — Tax or Fee Levied
3.26.070 Multiple Activities Credit When Activities Take Place in One or More
Cities with Eligible Gross Receipt Taxes
3.26.075 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
3.26.076 Assignment of Gross Income Derived from Intangibles
3.26.077 Allocation and Apportionment of Income when Activities Take Place
in More than One Jurisdiction
3.26.078 Allocation and Apportionment of Printing and Publishing Income
when Activities Take Place in More than One Jurisdiction
3.26.090 Exemptions
3.26.100 Deductions
3.26.120 Tax Part of Overhead
3.26.130 Severability Clause
Section 2. Regulations Established. A new TMC Section 3.26.010 is hereby
established to read as follows:
3.26.010 Purpose
The purpose of this Chapter is to implement Washington Constitution Article XI,
Section 12, RCW 35A.11.020, and RCW 35A.82,020, which give municipalities the
authority to license for revenue. In the absence of a legal or constitutional prohibition, the
City has the power to define taxation categories as they see fit in order to respond to the
unique concerns and responsibilities of local government.
Section 3. Regulations Established. A new TMC Section 3.26.020 is hereby
established to read as follows:
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3.26.020 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.
Section 4. Regulations Established. A new TMC Section 3.26.030 is hereby
established to read as follows:
3.26.030 Administrative Provisions
The administrative provisions contained herein and as codified in TMC Chapter 3.27
shall be fully applicable to the provisions of this Chapter, except as expressly stated to
the contrary herein.
Section 5. Regulations Established. A new TMC Section 3.26.040 is hereby
established to read as follows:
3.26.040 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. "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.
B. "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.
C. "Commercial or industrial use" means the following uses of products,
including by-products, by the extractor or manufacturer thereof:
1. Any use as a consumer; and
2. The manufacturing of articles, substances or commodities.
D. "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.
E. "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
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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 (Title 62A RCW) do not determine when or where delivery of tangible personal
property occurs for purposes of taxation.
F. "Digital automated service," "digital code," and "digital goods" have the same
meaning as in RCW 82.04.192 as now in effect or as may be subsequently amended or
recodified.
G. "Digital products" means digital goods, digital codes, digital automated services,
and the services described in RCW 82.04.050(2)(g) and (6)(b) as now in effect or as may
be subsequently amended or recodified.
H. "Eligible gross receipts tax" means a tax which:
1. Is imposed on the act or privilege of engaging in business activities within TMC
Section 3.26.050; and
2. Is measured by the gross volume of business, in terms of gross receipts and
is not an income tax or value added tax; and
3. Is not, pursuant to law or custom, separately stated from the sales price; and
4. Is not a sales or use tax, business license fee, franchise fee, royalty or
severance tax measured by volume or weight, or concession charge, or payment for the use
and enjoyment of property, property right or a privilege; and
5. Is a tax imposed by a local jurisdiction, whether within or without the State of
Washington, and not by a Country, State, Province, or any other non -local jurisdiction above
the County level.
I. "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.
1. 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 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 TMC Section 3.26.040.1. If an activity is not listed,
whether it constitutes engaging in business in the City shall be determined by considering
all the facts and circumstances and applicable law.
2. Without being all inclusive, any one of the following activities conducted within
the City by a person, or its employee, agent, representative, independent contractor, broker
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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, or having the right to use, or using,
tangible personal property, intangible personal property, or real property permanently or
temporarily located in the City.
b. Owning, renting, leasing, using, or maintaining, an office, place of
business, or other establishment in the City.
c. Soliciting sales.
d. Making repairs or providing maintenance or service to real or tangible
personal property, including warranty work and property maintenance.
e. Providing technical assistance or service, including quality control,
product inspections, warranty work, or similar services on or in connection with tangible
personal property sold by the person or on its behalf.
f. Installing, constructing, or supervising installation or construction of, real
or tangible personal property.
g.
agreements.
Soliciting, negotiating, or approving franchise, license, or other similar
h. Collecting current or delinquent accounts.
i. Picking up and transporting tangible personal property, solid waste,
construction debris, or excavated materials.
j. Providing disinfecting and pest control services, employment and labor
pool services, home nursing care, janitorial services, appraising, landscape architectural
services, security system services, surveying, and real estate services including the listing
of homes and managing real property.
k. Rendering professional services such as those provided by accountants,
architects, attorneys, auctioneers, consultants, engineers, professional athletes, barbers,
baseball clubs and other sports organizations, chemists, consultants, psychologists, court
reporters, dentists, doctors, detectives, laboratory operators, teachers, veterinarians.
I. Meeting with customers or potential customers, even when no sales or
orders are solicited at the meetings.
m. Training or recruiting agents, representatives, independent contractors,
brokers or others, domiciled or operating on a job in the City, acting on its behalf, or for
customers or potential customers.
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.
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3. 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.
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 director 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.
4. 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
TMC Section 3.26.040.1.3.
5. 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.
J. "Extracting" is the activity engaged in by an extractor and is reportable under the
extracting classification.
K. "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,
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, 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.
L. "Extractor for Hire" means a person who performs under contract necessary
labor or mechanical services for an extractor.
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M. "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.
N. "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.
0. "Manufacturing" means the activity conducted by a manufacturer and is
reported under the manufacturing classification.
P. "Manufacturer," "to manufacture."
1. "Manufacturer" means every person who, either directly or by contracting with
others for the necessary labor or mechanical services, manufactures for sale or for
commercial or industrial use from the person's own materials or ingredients any products.
When the owner of equipment or facilities furnishes, or sells to the customer prior to
manufacture, materials or ingredients equal to less than 20% of the total value of all
materials or ingredients that become a part of the finished product, the owner of the
equipment or facilities will be deemed to be a processor for hire, and not a manufacturer.
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.
3. "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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Q. "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, non-profit, or otherwise
in the United States or any instrumentality thereof.
R. "Retailing" means the activity of engaging in making sales at retail and is reported
under the retailing classification.
S. "Retail Service" shall include the sale of or charge made for personal, business,
or professional services including amounts designated as interest, rents, fees, admission,
and other service emoluments however designated, received by persons engaging in the
following business activities:
1. Amusement and recreation services including but not limited to golf, pool,
billiards, skating, bowling, swimming, bungee jumping, ski lifts and tows, basketball, racquet
ball, handball, squash, tennis, batting cages, day trips for sightseeing purposes, and others,
when provided to consumers. "Amusement and recreation services" also include the
provision of related facilities such as basketball courts, tennis courts, handball courts,
swimming pools, and charges made for providing the opportunity to dance. The term
"amusement and recreation services" does not include instructional lessons to learn a
particular activity such as tennis lessons, swimming lessons, or archery lessons.
2. Abstract, title insurance, and escrow services;
3. Credit bureau services;
4. Automobile parking and storage garage services;
5. Landscape maintenance and horticultural services but excluding (i)
horticultural services provided to farmers and (ii) pruning, trimming, repairing, removing, and
clearing of trees and brush near electric transmission or distribution lines or equipment, if
performed by or at the direction of an electric utility;
6. Service charges associated with tickets to professional sporting events; and
7. The following personal services: Physical fitness services, tanning salon
services, tattoo parlor services, steam bath services, Turkish bath services, escort services,
and dating services.
8. The term shall also include the renting or leasing of tangible personal property
to consumers and the rental of equipment with an operator.
T. "Sale," "casual or isolated sale."
1. "Sale" means any transfer of the ownership of, title to, or possession of,
property for a valuable consideration and includes any activity classified as a "sale at retail,"
"retail sale," or "retail service." It includes renting or leasing, conditional sale contracts,
leases with option to purchase, and any contract under which possession of the property is
given to the purchaser but title is retained by the vendor as security for the payment of the
purchase price. It also includes the furnishing of food, drink, or meals for compensation
whether consumed upon the premises or not.
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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.
U. "Sale at retail," "retail sale"
1. "Sale at retail" or "retail sale" means every sale of tangible personal property
(including articles produced, fabricated, or imprinted) to all persons irrespective 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 TMC Section 3.26.040.U.1.a, b, c, d, or e
following such use.
f. Purchases for the purpose of satisfying the person's obligations under an
extended warranty as defined in TMC Section 3.26.040.U.7 if such tangible personal
property replaces or becomes an ingredient or component of property covered by the
extended warranty 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 TMC Section
3.26.050.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
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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 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.
consumers;
The installing, repairing, altering, or improving of digital goods for
h. The sale of or charge made for tangible personal property, labor and
services to persons taxable under TMC Section 3.26.040.U.3.a, b, c, d, e, f, and g when
such sales or charges are for property, labor and services which are used or consumed in
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whole or in part by such persons in the performance of any activity defined as a "sale at
retail" or "retail sale" even though such property, labor and services may be resold after such
use or consumption. Nothing contained in this section shall be construed to modify TMC
Section 3.26.040.U.1 and nothing contained in TMC Section 3.26.040.U.1 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. "Sale at retail" or "retail sale":
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 the purposes of this
section, 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. 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.
i. The service described in TMC Section 3.26.040.U.5.b includes the
right to access and use prewritten software to perform data processing.
ii. For the purposes of TMC Section 3.26.040.U.5.b(i), "data
processing" means the systematic performance of operations on data to extract the 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.
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
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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, 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.
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.
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 TMC Section 3.26.040.U.5.b.2 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.
12. "Sale at retail" or "retail sale" shall also include the installing, repairing, altering,
or improving of digital goods for consumers.
V. "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 TMC Section 3.26.040.U.5.b.i, which is not a retail sale,
and any charge made for labor and services rendered for persons who are not consumers,
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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.
W. "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.
X. "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.
Y "Value of products"
1. The value of products, including by-products, extracted or manufactured, shall
be determined by the gross proceeds derived from the sale thereof whether such sale is at
wholesale or at retail, to which shall be added all subsidies and bonuses received from the
purchaser or from any other person with respect to the extraction, manufacture, or sale of
such products or by-products by the seller.
2. Where such products, including by-products, are extracted or manufactured
for commercial or industrial use; and where such products, including by-products, are
shipped, transported or transferred out of the City, or to another person, without prior sale
or are sold under circumstances such that the gross proceeds from the sale are not
indicative of the true value of the subject matter of the sale; the value shall correspond as
nearly as possible to the gross proceeds from sales in this state of similar products of like
quality and character, and in similar quantities by other taxpayers, plus the amount of
subsidies or bonuses ordinarily payable by the purchaser or by any third person with respect
to the extraction, manufacture, or sale of such products. In the absence of sales of similar
products as a guide to value, such value may be determined upon a cost basis. In such
cases, there shall be included every item of cost attributable to the particular article or article
extracted or manufactured, including direct and indirect overhead costs. The Director may
prescribe rules for the purpose of ascertaining such values.
3. Notwithstanding TMC Section 3.26.040.Y.2 above, the value of a product
manufactured or produced for purposes of serving as a prototype for the development of a
new or improved product shall correspond to (a) the retail selling price of such new or
improved product when first offered for sale; or (b) the value of materials incorporated into
the prototype in cases in which the new or improved product is not offered for sale.
Z "Wholesaling" means engaging in the activity of making sales at wholesale, and
is reported under the wholesaling classification.
Section 6. Regulations Established. A new TMC Section 3.26.050 is hereby
established to read as follows:
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3.26.050 Imposition of the Tax — Tax or Fee Levied
A. Except as provided in TMC Section 3.26.050.B, 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
by-products, as the case may be, as follows:
1. Upon every person engaging within the City in business as an extractor; as
to such persons the amount of the tax with respect to such business shall be equal to the
value of the products, including by-products, extracted within the City for sale or for
commercial or industrial use, multiplied by the rate of 0.085%. The measure of the tax is
the value of the products, including by-products, so extracted, regardless of the place of
sale or the fact that deliveries may be made to points outside the City.
2. Upon every person engaging within the City in business as a manufacturer,
as to such persons the amount of the tax with respect to such business shall be equal to
the value of the products, including by-products, manufactured within the City, multiplied
by the rate of 0.085%. The measure of the tax is the value of the products, including by-
products, so manufactured, regardless of the place of sale or the fact that deliveries may
be made to points outside the City.
3. Upon every person engaging within the City in the business of making sales
at wholesale, 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 0.085%.
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 0.05%.
5. 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 0.05%.
6. Upon every person engaging within the City in the business of (i) printing, (ii)
both printing and publishing newspapers, magazines, periodicals, books, music, and
other printed items, (iii) publishing newspapers, magazines and periodicals, (iv) extracting
for hire, and (v) 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
0.085%.
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 0.085%. 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
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software or of customizing canned software, producing royalties or commissions, and
persons engaged in the business of rendering any type of service which does not
constitute a sale at retail, a sale at wholesale, or a retail service.
B. The gross receipts tax imposed in this section shall not apply to any person
whose gross proceeds of sales, gross income of the business, and value of products,
including by-products, as the case may be, from all activities conducted within the City
during any calendar year is equal to or less than $750,000.
Section 7. Regulations Established. A new TMC Section 3.26.070 is hereby
established to read as follows:
3.26.070 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 TMC Section 3.26.050 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.
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 (a) with respect to the manufacturing of the products
sold in the City, and (b) 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
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.
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Section 8. Regulations Established. A new TMC Section 3.26.075 is hereby
established to read as follows:
3.26.075 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 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.
Section 9. Regulations Established. A new TMC Section 3.26.076 is hereby
established to read as follows:
3.26.076 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).
Section 10. Regulations Established. A new TMC Section 3.26.077 is hereby
established to read as follows:
3.26.077 Allocation and Apportionment of Income when Activities Take Place in
More than One Jurisdiction
Effective January 1, 2024, gross income, other than persons subject to the provisions
of chapter 82.14A RCW, shall be allocated and apportioned as follows:
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A. Gross income derived from all activities other than those taxed as service or
royalties under TMC Section 3.26.050.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;
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 TMC Section 3.26.077.0 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 TMC Section 3.26.077.C.1 through TMC Section
3.26.077.C.5, 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
TMC Section 3.26.077.D. The City may employ an alternative method for allocating the
income from the sale of digital products if the methods provided in TMC Section
3.26.077.C.1 through TMC Section 3.26.077.C.5 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 TMC Section 3.26.077.C.1 through TMC Section 3.26.077.C.5,
the following definitions apply:
1. "Digital automated services," "digital codes," and "digital goods" have the
same meaning as in RCW 82.04.192;
2. "Digital products" means digital goods, digital codes, digital automated
services, and the services described in RCW 82.04.050(2)(g) and (6)(c); and
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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 TMC Section 3.26.050.A.7 shall be apportioned to the City by multiplying
apportionable income 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% 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% 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
activity, at least some of the activity is performed in the City, and the gross income is
attributable under TMC Section 3.26.077.F.2 to a city or unincorporated area of a county
within the United States or to a foreign country in which the taxpayer is not taxable. For
purposes of TMC Section 3.26.077.F.3, "not taxable" means that the taxpayer 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 foreign 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 country imposes such a tax.
4. If the allocation and apportionment provisions of TMC Section 3.26.077.F do
not fairly represent the extent of the taxpayer's business activity in the City, the taxpayer
may petition for or the tax administrator may require, in respect to all or any part of the
taxpayer's business activity, if reasonable:
a. Separate accounting;
b. The exclusion of any 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
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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 TMC Section 3.26.077.F.4 must prove by a preponderance of the evidence:
a. That the allocation and apportionment provisions of this TMC Section
3.26.077.F do not fairly represent the extent of the taxpayer's business activity in the City;
and
b. That the alternative to such provisions is reasonable.
c. 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 an equitable allocation and apportionment of the taxpayer's income.
6. If the tax administrator requires any method to effectuate an equitable
allocation and apportionment of the taxpayer's income, the tax administrator cannot
impose any civil or criminal penalty with reference to the tax due that is attributable to the
taxpayer's reasonable reliance solely on the allocation and apportionment provisions of
TMC Section 3.26.077.F.
7. A taxpayer 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 change 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 county 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 goods
or services, whether or not denominated on a gross receipts tax or a tax imposed on the
privilege of doing business.
3. "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 taxpayer otherwise receives gross income of the
business.
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5. "Customer location" means the following:
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 physically present:
(1) The customer's residence; or
(2) If the customer's residence is not known, the customer's
billing/mailing address.
c. For a customer engaged in business:
(1) Where the services are ordered from;
(2) At the customer's billing/mailing address if the location from which
the services are ordered is not known; or
(3) At the customer's commercial domicile if none of the above are
known.
6. "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.
7. "Primarily assigned" means the business location of the taxpayer where
the individual performs his or her duties.
8. "Service -taxable income" or "service income" means gross income of
the business subject to tax under either the service or royalty classification.
9. "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.
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.
Section 11. Regulations Established. A new TMC Section 3.26.078 is hereby
established to read as follows:
3.26.078 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
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newspapers, periodicals, or magazines, have the same meanings as attributed to those
terms in RCW 82.04.280(1) by the Department of Revenue.
Section 12. Regulations Established. A new TMC Section 3.26.090 is hereby
established to read as follows:
3.26.090 Exemptions
A. 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 TMC Chapter 3.50.
B. Investments - dividends from subsidiary corporations. This chapter shall not
apply to amounts derived by persons, other than those engaging in banking, loan,
security, or other financial businesses, from investments or the use of money as such,
and also amounts derived as dividends by a parent from its subsidiary corporations.
C. 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.
D. 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.
2. A booth renter is an independent contractor for purposes of this chapter.
E. 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.
F. 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.
G. Amounts derived from manufacturing, selling or distributing motor vehicle
fuel. This chapter shall not apply to the manufacturing, selling, or distributing motor
vehicle fuel, as the term "motor vehicle fuel" is defined in RCW 82.38.020 and exempt
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under RCW 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.
H. 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.
I. Casual and isolated sales. This chapter shall not apply to the gross proceeds
derived from casual or isolated sales.
J. 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.
K. 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.
L. Nonprofit organizations. This chapter shall not apply to entities that are exempt
from federal income tax under Section 501(c)(3) of the Internal Revenue Code, except
retail sales.
M. Businesses operating as a public card room. This chapter shall not apply to
entities operating "public card rooms," as defined in WAC 230-15-001.
N. Amateur/Professional/Semi-professional sports teams. This chapter shall
not apply to amateur, professional or semi-professional sports teams or clubs operating
in the City primarily engaged in participating in live sporting events, such as baseball,
basketball, football, hockey, soccer, and jai alai games, before a paying audience. These
teams or clubs may or may not operate their own arena, stadium, or other facility for
presenting these events.
Section 13. Regulations Established. A new TMC Section 3.26.100 is hereby
established to read as follows:
3.26.100 Deductions
In computing the license fee or tax, there may be deducted from the measure of tax
the following items:
A. Receipts from tangible personal property delivered outside the State. In
computing tax, there may be deducted from the measure of tax under retailing or
wholesaling amounts derived from the sale of tangible personal property that is delivered
by the seller to the buyer or the buyer's representative at a location outside the State of
Washington.
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B. Cash discount taken by purchaser. In computing tax, there may be deducted
from the measure of tax the cash discount amounts actually taken by the purchaser. This
deduction is not allowed in arriving at the taxable amount under the extracting or
manufacturing classifications with respect to articles produced or manufactured, the
reported values of which, for the purposes of this tax, have been computed according to
the "value of product" provisions.
C. Credit losses of accrual basis taxpayers. In computing tax, there may be
deducted from the measure of tax the amount of credit losses actually sustained by
taxpayers whose regular books of account are kept upon an accrual basis.
D. Constitutional prohibitions. In computing tax, there may be deducted from the
measure of the tax amounts derived from business which the City is prohibited from taxing
under the Constitution of the State of Washington or the Constitution of the United States.
E. Receipts from the Sale of Tangible Personal Property and Retail Services
Delivered Outside the City but Within Washington. Effective January 1, 2024,
amounts included in the gross receipts reported on the tax return derived from the sale of
tangible personal 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.
F. 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.
G. 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 non -transient residential properties.
Section 14. Regulations Established. A new TMC Section 3.26.120 is hereby
established to read as follows:
3.26.120 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.
Section 15. Regulations Established. A new TMC Section 3.26.130 is hereby
established to read as follows:
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3.26.130 Severability Clause
If any provision of this chapter or its application to any person or circumstance is
held invalid, the remainder of the chapter or the application of the provision to other
persons or circumstances shall not be affected.
Section 16. Chapter 3.27 of the Tukwila Municipal Code Established. A chapter
of the Tukwila Municipal Code entitled "Business and Occupation Tax Administrative
Provisions," to be codified as Tukwila Municipal Code (TMC) Chapter 3.27, is hereby
established to read as follows:
CHAPTER 3.27
BUSINESS AND OCCUPATION TAX ADMINISTRATIVE PROVISIONS
Sections:
3.27.010 Purpose
3.27.015 Application of Chapter Stated
3.27.020 Definitions
3.27.021 Definitions — References to Chapter 82.32 RCW
3.27.025 Registration/License Requirements
3.27.040 When Due and Payable — Reporting Periods — Monthly, Quarterly,
and Annual Returns — Threshold Provisions or Relief from Filing
Requirements — Computing Time Periods — Failure to File Returns
3.27.050 Payment Methods — Mailing Returns or Remittances — Time
Extension — Deposits — Recording Payments — Payment Must
Accompany Return — NSF Checks
3.27.060 Records to be Preserved — Examination — Estoppel to Question
Assessment
3.27.070 Accounting Methods
3.27.080 Public Work Contracts — Payment of Fee and Tax Before Final
Payment for Work
3.27.090 Underpayment of Tax, Interest, or Penalty — Interest
3.27.095 Time in Which Assessment May Be Made
3.27.100 Over Payment of Tax, Penalty, or Interest — Credit or Refund —
Interest Rate — Statute of Limitations
3.27.110 Late Payment — Disregard of Written Instructions — Evasion —
Penalties
3.27.120 Cancellation of Penalties
3.27.130 Taxpayer Quitting Business — Liability of Successor
3.27.140 Administrative Appeal
3.27.150 Hardship Appeal Procedure
3.27.160 Stakeholder Involvement
3.27.170 Review and Reporting Provisions
3.27.260 Severability
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Section 17. Regulations Established. A new TMC Section 3.27.010 is hereby
established to read as follows:
3.27.010 Purpose
The purpose of this Chapter is to provide for the administrative procedures for the
Business and Occupation Tax as codified in TMC Chapter 3.26, setting administrative fees
and prescribing penalties for noncompliance with the provisions of this chapter.
Section 18. Regulations Established. A new TMC Section 3.27.015 is hereby
established to read as follows:
3.27.015 Application of Chapter Stated
The provisions of this Chapter shall apply with respect to the taxes imposed under
TMC Chapter 3.26 and under other titles, chapters, and sections in such manner and to
such extent as indicated in each such title, chapter or section.
Section 19. Regulations Established. A new TMC Section 3.27.020 is hereby
established to read as follows:
3.27.020 Definitions
For purposes of this Chapter, the definitions contained in TMC Chapter 3.26 shall
apply equally to the provisions of this chapter unless the term is defined otherwise in this
chapter. In addition, the following definitions shall apply:
A. "Reporting period" means:
1. A one-month period beginning the first day of each calendar month (monthly);
or
2. A three-month period beginning the first day of January, April, July or October
of each year (quarterly); or
3. A twelve-month period beginning the first day of January of each year
(annual).
B. "Return" means any document a person is required by the City to file to satisfy
or establish a tax or fee obligation that is administered or collected by the City and that
has a statutorily defined due date.
C "Successor" means any person to whom a taxpayer quitting, selling out,
exchanging, or disposing of a business sells or otherwise conveys, directly or indirectly, in
bulk and not in the ordinary course of the taxpayer's business, any part of the materials,
supplies, merchandise, inventory, fixtures, or equipment of the taxpayer. Any person
obligated to fulfill the terms of a contract shall be deemed a successor to any contractor
defaulting in the performance of any contract as to which such person is a surety or
guarantor.
D "Tax year" or "taxable year" means the calendar year.
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Section 20. Regulations Established. A new TMC Section 3.27.021 is hereby
established to read as follows:
3.27.021 Definitions — References to Chapter 82.32 RCW
Where provisions of Chapter 82.32 RCW are incorporated in TMC Section 3.27.090
of this Title, "Department" as used in the RCW shall refer to the "Director" as defined in
TMC Section 3.26.040.D and "warrant" as used in the RCW shall mean "citation or
criminal complaint."
Section 21. Regulations Established. A new TMC Section 3.27.025 is hereby
established to read as follows:
3.27.025 Registration/License Requirements
No person shall engage in any business or conduct any business activity without first
obtaining a valid current business registration as required by TMC 5.04.015.
Section 22. Regulations Established. A new TMC Section 3.27.040 is hereby
established to read as follows:
3.27.040 When Due and Payable — Reporting Periods — Monthly, Quarterly, and
Annual Returns — Threshold Provisions or Relief from Filing Requirements —
Computing Time Periods — Failure to File Returns.
A. Other than any annual license fee or registration fee assessed under this chapter,
the tax imposed by this chapter shall be due and payable in quarterly installments. At the
Director's discretion, businesses may be assigned to a monthly or annual reporting period
depending on the tax amount owing or type of tax. Effective January 1, 2024, tax
payments are due on or before the time as provided in RCW 82.32.045(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.
C. Tax returns must be filed and returned by the due date whether or not any tax is
owed.
D. For purposes of the tax imposed by TMC Chapter 3.26, any person whose value
of products, gross proceeds of sales, or gross income of the business, subject to tax after
all allowable deductions, is equal to or less than $750,000 in the current calendar year,
shall file a return, declare no tax due on their return, and submit the return to the Director.
The gross receipts and deduction amounts shall be entered on the tax return even though
no tax may be due.
E. A taxpayer that commences to engage in business activity shall file a return and
pay the tax or fee for the portion of the reporting period during which the taxpayer is
engaged in business activity.
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F. 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.
G. 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 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 23. Regulations Established. A new TMC Section 3.27.050 is hereby
established to read as follows:
3.27.050 Payment Methods — Mailing Returns or Remittances — Time Extension —
Deposits — Recording Payments — Payment Must Accompany Return — NSF
Checks.
A. Taxes shall be paid to the Director in United States currency by bank draft,
certified check, cashier's check, personal check, money order, cash, or by wire transfer
or electronic payment if such wire transfer or electronic payment is authorized by the
Director. If payment so received is not paid by the bank on which it is drawn, the
taxpayer, by whom such payment is tendered, shall remain liable for payment of the tax
and for all legal penalties, the same as if such payment had not been tendered.
Acceptance of any sum by the Director shall not discharge the tax or fee due unless the
amount paid is the full amount due.
B. A return or remittance that is transmitted to the City by United States mail shall
be deemed filed or received on the date shown by the cancellation mark stamped by the
Post Office upon the envelope containing it. The Director may allow electronic filing of
returns or remittances from any taxpayer. A return or remittance which is transmitted to
the City electronically shall be deemed filed or received according to procedures set
forth by the Director.
C. If a written request is received prior to the due date, the Director, for good
cause, may grant, in writing, additional time within which to make and file returns.
D. The Director shall keep full and accurate records of all funds received or
refunded. The Director shall apply payments first against all penalties and interest
owing, and then upon the tax, without regard to any direction of the taxpayer.
E. For any return not accompanied by a remittance of the tax shown to be due
thereon, the taxpayer shall be deemed to have failed or refused to file a return and shall
be subject to the penalties and interest provided in this chapter.
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F. Any payment made that is returned for lack of sufficient funds or for any other
reason will not be considered received until payment by certified check, money order, or
cash of the original amount due, plus a "non -sufficient funds" (NSF) charge of $25.00
for checks of $50.00 or less and $40.00 for checks over $50.00 is received by the
Director. Any license issued upon payment with a NSF check will be considered void,
and shall be returned to the Director. No license shall be reissued until payment
(including the NSF charge) is received.
G. The Director is authorized, but not required, to mail tax return forms to
taxpayers, but failure of the taxpayer to receive any such forms shall not excuse the
taxpayer from filing returns and making payment of the taxes or fees, when and as due
under this chapter.
Section 24. Regulations Established. A new TMC Section 3.27.060 is hereby
established to read as follows:
3.27.060 Records to be Preserved — Examination — Estoppel to Question
Assessment.
Every person liable for any fee or tax imposed by this chapter shall keep and
preserve, for a period of 5 years after filing a tax return, such records as may be necessary
to determine the amount of any fee or tax for which the person may be liable; which
records shall include copies of all federal income tax and state tax returns and reports
made by the person. All books, records, papers, invoices, vendor lists, inventories, stocks
of merchandise, and other data including federal income tax and state tax returns and
reports shall be open for examination at any time by the Director or its duly authorized
agent. Every person's business premises shall be open for inspection or examination by
the Director or a duly authorized agent.
A. If a person does not keep the necessary books and records within the City, it
shall be sufficient if such person (a) produces within the City such books and records as
may be required by the Director, or (b) bears the cost of examination by the Director's
agent at the place where such books and records are kept; provided that the person
electing to bear such cost shall pay in advance to the Director the estimated amount
thereof including round-trip fare, lodging, meals and incidental expenses, subject to
adjustment upon completion of the examination.
B. Any person who fails, or refuses a Department request, to provide or make
available records, or to allow inspection or examination of the business premises, shall
be forever barred from questioning in any court action, the correctness of any assessment
of taxes made by the City for any period for which such records have not been provided,
made available or kept and preserved, or in respect of which inspection or examination
of the business premises has been denied. The Director is authorized to determine the
amount of the tax or fees payable by obtaining facts and information upon which to base
the estimate of the tax or fees due. Such fee or tax assessment shall be deemed prima
facie correct and shall be the amount of tax owing the City by the taxpayer. The Director
shall notify the taxpayer by mail 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.
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Section 25. Regulations Established. A new TMC Section 3.27.070 is hereby
established to read as follows:
3.27.070 Accounting Methods
A. A taxpayer may file tax returns in each reporting period with amounts based upon
cash receipts only if the taxpayer's books of account are kept on a cash receipts basis. A
taxpayer that does not regularly keep books of account on a cash receipts basis must file
returns with amounts based on the accrual method.
B. The taxes imposed and the returns required hereunder shall be upon a calendar
year basis.
Section 26. Regulations Established. A new TMC Section 3.27.080 is hereby
established to read as follows:
3.27.080 Public Work Contracts — Payment of Fee and Tax Before Final Payment
for Work
The Director may, before issuing any final payment to any person performing any
public work contract for the City, require such person to pay in full all license fees or taxes
due under this title from such person on account of such contract or otherwise, and may
require such taxpayer to file with the Director a verified list of all subcontractors supplying
labor and/or materials to the person in connection with said public work.
Section 27. Regulations Established. A new TMC Section 3.27.090 is hereby
established to read as follows:
3.27.090 Underpayment of Tax, Interest, or Penalty - Interest
A. If, upon examination of any returns, or from other information obtained by the
Director, it appears that a tax or penalty less than that properly due has been paid, the
Director shall assess the additional amount found to be due and shall add thereto interest
on the tax only. The Director shall notify the person by mail of the additional amount,
which shall become due and shall be paid within 30 days from the date of the notice, or
within such time as the Director may provide in writing.
B. For tax periods after December 31, 2004 the Director shall compute interest in
accordance with RCW 82.32.050 as it now exists or as it may be amended.
C. If TMC Section 3.27.090.6 is held to be invalid, then the provisions of RCW
82.32.050 existing at the effective date of this ordinance shall apply.
Section 28. Regulations Established. A new TMC Section 3.27.095 is hereby
established to read as follows:
3.27.095 Time in Which Assessment May Be Made
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The Director shall not assess, or correct an assessment for additional taxes,
penalties, or interest due more than four years after the close of the calendar year in
which they were incurred, except that the Director may issue an assessment:
A. Against a person who is not currently registered or licensed or has not filed a tax
return as required by this chapter for taxes due within the period commencing 10 years
prior to the close of the calendar year in which the person was contacted in writing by the
Director;
B. Against a person that has committed fraud or who misrepresented a material
fact; or
C. Against a person that has executed a written waiver of such limitations.
Section 29. Regulations Established. A new TMC Section 3.27.100 is hereby
established to read as follows:
3.27.100 Over Payment of Tax, Penalty, or Interest — Credit or Refund — Interest
Rate — Statute of Limitations
A. If, upon receipt of an application for a refund, or during an audit or examination
of the taxpayer's records and tax returns, the Director determines that the amount of tax,
penalty, or interest paid is in excess of that properly due, the excess amount shall be
credited to the taxpayer's account or shall be refunded to the taxpayer. Except as
provided in TMC Section 3.27.100.B, no refund or credit shall be made for taxes,
penalties, or interest paid more than 4 years prior to the beginning of the calendar year in
which the refund application is made or examination of records is completed.
B. The execution of a written waiver shall extend the time for applying for, or making
a refund or credit of any taxes paid during, or attributable to, the years covered by the
waiver if, prior to the expiration of the waiver period, an application for refund of such
taxes is made by the taxpayer or the Director discovers that a refund or credit is due.
C. Refunds shall be made by means of vouchers approved by the Director and by
the issuance of a City check or warrants drawn upon and payable from such funds as the
City may provide.
D. Any final judgment for which a recovery is granted by any court of competent
jurisdiction for tax, penalties, interest, or costs paid by any person shall be paid in the
same manner, as provided in TMC Section 3.27.100.C, upon the filing with the Director a
certified copy of the order or judgment of the court.
Section 30. Regulations Established. A new TMC Section 3.27.110 is hereby
established to read as follows:
3.27.110 Late Payment — Disregard of Written Instructions — Evasion - Penalties
A. If payment of any tax due on a return to be filed by a taxpayer is not received by
the Director by the due date, the Director shall add a penalty in accordance with RCW
82.32.090(1), as it now exists or as it may be amended.
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B. If the Director determines that any tax has been substantially underpaid as
defined in RCW 82.32.090(2), there shall be added a penalty in accordance with RCW
82.32.090(2), as it now exists or as it may be amended.
C. If a citation or criminal complaint is issued by the Director for the collection of
taxes, fees, assessments, interest or penalties, there shall be added thereto a penalty in
accordance with RCW 82.32.090(3), as it now exists or as it may be amended.
D. If the Director finds that a person has engaged in any business or performed any
act upon which a tax is imposed under this title and that person has not obtained from the
Director a license as required by City of Tukwila, the Director shall impose a penalty in
accordance with RCW 82.32.090(4), as it now exists or as it may be amended. No penalty
shall be imposed under TMC Section 3.27.110.D if the person who has engaged in
business without a license obtains a license prior to being notified by the Director of the
need to be licensed.
E. If the Director determines that all or any part of a deficiency resulted from the
taxpayer's failure to follow specific written tax reporting instructions, there shall be
assessed a penalty in accordance with RCW 82.32.090(5), as it now exists or as it may
be amended.
F. If the Director finds that all or any part of the deficiency resulted from an intent to
evade the tax payable, the Director shall assess a penalty in accordance with RCW
82.32.090(5), as it now exists or as it may be amended.
G. The penalties imposed under TMC Section 3.27.110.A through E can each be
imposed on the same tax found to be due. This subsection does not prohibit or restrict
the application of other penalties authorized by law.
H. The Director shall not impose both the evasion penalty and the penalty for
disregarding specific written instructions on the same tax found to be due.
I. For the purposes of this section, "return" means any document a person is
required by the City of Tukwila to file to satisfy or establish a tax or fee obligation that is
administered or collected by the City, and that has a statutorily defined due date.
J. If incorporation of future changes to RCW 82.32.090 into the Tukwila Municipal
Code is deemed invalid, then the provisions of RCW 82.32.090 existing at the time this
ordinance is effective shall apply.
Section 31. Regulations Established. A new TMC Section 3.27.120 is hereby
established to read as follows:
3.27.120 Cancellation of Penalties
A. The Director may cancel any penalties imposed under TMC Section 3.27.110.A
if the taxpayer shows that its failure to timely file or pay the tax was due to reasonable
cause and not willful neglect. Willful neglect is presumed unless the taxpayer shows that
it exercised ordinary business care and prudence in making arrangements to file the
return and pay the tax but was, nevertheless, due to circumstances beyond the taxpayer's
control, unable to file or pay by the due date. The Director has no authority to cancel any
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other penalties or to cancel penalties for any other reason except as provided in TMC
Section 3.27.120.C.
B. A request for cancellation of penalties must be received by the Director within 30
days after the date the Department mails the notice that the penalties are due. The
request must be in writing and contain competent proof of all pertinent facts supporting a
reasonable cause determination. In all cases the burden of proving the facts rests upon
the taxpayer.
C. The Director may cancel the penalties in TMC Section 3.27.110.A one time if a
person:
1. Is not currently licensed and filing returns,
2. Was unaware of its responsibility to file and pay tax, and
3. Obtained business licenses and filed past due tax returns within 30 days
after being notified by the Department.
D. The Director shall not cancel any interest charged upon amounts due.
Section 32. Regulations Established. A new TMC Section 3.27.130 is hereby
established to read as follows:
3.27.130 Taxpayer Quitting Business — Liability of Successor
A. Whenever any taxpayer quits business, sells out, exchanges, or otherwise
disposes of his business or his stock of goods, any tax payable hereunder shall become
immediately due and payable. Such taxpayer shall, within 10 days thereafter, make a
return and pay the tax due.
B. Any person who becomes a successor shall become liable for the full amount of
any tax owing. The successor shall withhold from the purchase price a sum sufficient to
pay any tax due to the City from the taxpayer until such time as: a) the taxpayer shall
produce a receipt from the City showing payment in full of any tax due or a certificate that
no tax is due, or b) more than 6 months has passed since the successor notified the
Director of the acquisition and the Director has not issued and notified the successor of
an assessment.
C. Payment of the tax by the successor shall, to the extent thereof, be deemed a
payment upon the purchase price. If such payment is greater in amount than the purchase
price, the amount of the difference shall become a debt due such successor from the
taxpayer.
D. Notwithstanding the above, if a successor gives written notice to the Director of
the acquisition, and the Department does not within 6 months of the date it received the
notice issue an assessment against the taxpayer and mail a copy of that assessment to
the successor, the successor shall not be liable for the tax.
Section 33. Regulations Established. A new TMC Section 3.27.140 is hereby
established to read as follows:
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3.27.140 Administrative Appeal
A. Any person aggrieved by the calculation of the tax determined to be due to the
City pursuant to this chapter may appeal to the Finance Director or his/her designee
from such determination by filing a written notice of appeal with the City Clerk within 20
calendar days from the date on which such person was given notice of the tax. The
notice of appeal must state the grounds for appeal, including a detailed explanation of
why the amount of the tax was incorrect. The Finance Director or designee shall review
the basis for the appeal and may request clarification from the appellant. After the
review is complete, the Finance Director or designee shall issue an administrative
decision that may sustain or modify the amount of tax owed. Notice of the
administrative decision shall be sent to the appellant by certified mail within 10 days of
issuance.
B. The appellant, if aggrieved by the decision of the Finance Director or designee,
may then appeal to the City Hearing Examiner within 20 calendar days of the date the
administrative decision is mailed to the appellant. The notice of appeal must state the
grounds for appeal, including a detailed explanation of why the administrative decision
is incorrect. The notice of appeal must be accompanied by an Appeal Fee in
accordance with the fee schedule adopted by resolution of the City Council.
C. Upon timely filing of a notice of appeal, the Finance Director shall schedule a
hearing on the appeal before the City's Hearing Examiner. The hearing shall be
conducted no later than 30 days from the date of the notice of appeal, unless an
extension is agreed to by the appellant or otherwise ordered by the Hearing Examiner
for good cause shown. Notice of the hearing and the appeal shall be given to the
appellant by certified mail at least five days prior to the date of the hearing.
D. The hearing shall be governed by the City of Tukwila Hearing Examiner's
procedural rules. The hearing shall be de novo. The decision of the City's Hearing
Examiner or other hearing body shall be based upon a preponderance of the evidence.
The burden of proof shall be on the appellant. The Hearing Examiner or other hearing
body may affirm, reverse or modify the Finance Director's decision.
E. Within 20 business days, excluding holidays recognized by the City of Tukwila,
from the date of the hearing on an appeal under this section, the Hearing Examiner
shall issue a written decision which shall set forth the reasons therefor.
Section 34. Regulations Established. A new TMC Section 3.27.150 is hereby
established to read as follows:
3.27.150 Hardship Appeal Procedure
The Director shall develop a financial hardship appeal procedure by January 1,
2024.
Section 35. Regulations Established. A new TMC Section 3.27.160 is hereby
established to read as follows:
3.27.160 Stakeholder Involvement
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The City shall develop a stakeholder committee that includes members of the
business community to advise the Director and City on the long-term financial
sustainability of the City. This effort shall include a review of the appropriate levels of
taxation of businesses within the City and will culminate before the 2025-2026 Biennial
Budget process to inform the Council of any recommended changes to revenue sources
for the coming biennium.
Section 36. Regulations Established. A new TMC Section 3.27.170 is hereby
established to read as follows:
3.27.170 Review and Reporting Provisions
A. The City shall undertake a regular review of the Business and Occupation Tax
as codified in TMC Chapter 3.26. During the 2023-2024 biennium, this review will occur
through the stakeholder process identified in TMC Section 3.27.160. Beginning in the
2025-2026 biennium, the review shall occur in odd -numbered years to inform the
budget process that commences the following year.
B. The Director and Police Chief shall provide quarterly reports to the Council on
public safety funding associated with the Business and Occupation Tax.
Section -3437. Regulations Established. A new TMC Section 3.27.260 is hereby
established to read as follows:
3.27.260 Severability
If any provision of this chapter or its application to any person or circumstance is held
invalid, the remainder of the chapter or the application of the provision to other persons
or circumstances shall not be affected.
Section 536. Referendum. This ordinance is subject to referendum as set forth in
RCW 35.21.706. A referendum petition to repeal this ordinance may be filed with the City
Clerk within 7 days of adoption of this ordinance. Within 10 days of such filing, the City Clerk
shall confer with the petitioner concerning form and style of the petition, issue the petition
and identifications number, and secure an accurate, concise, and positive ballot title from
the City Attorney. The petitioner shall then have 30 days in which to secure the signatures
of not less than 15% of the City's registered voters as of the last municipal general election
upon petition forms which contain the ballot title and the full text of the measures to be
referred. The City Clerk shall verify the sufficiency of the signatures and, if sufficient valid
signatures are properly submitted, shall certify the referendum measure to the next election
ballot within the City or at a special election ballot as provided pursuant to RCW
35.17.260(2).
Section 3639. Corrections by City Clerk or Code Reviser Authorized. Upon
approval of the City Attorney, the City Clerk and the code reviser are authorized to make
necessary corrections to this ordinance, including the correction of clerical errors;
references to other local, state or federal laws, codes, rules, or regulations; or ordinance
numbering and section/subsection numbering.
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1
1
1
Section 3740. Severability. If any section, subsection, paragraph, sentence, clause
or phrase of this ordinance or its application to any person or situation should be held to
be invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
Section 3841. Effective Date. This ordinance or a summary thereof shall be
published in the official newspaper of the City, and shall take effect and be in full force on
January 1, 2024, after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Special Meeting thereof this day of , 2022.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Office of the City Attorney
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
Attachment: Comparison of Deviations from Core Model B&O Provisions and City of
Tukwila Provisions
CC: Legislative Development\B&O Tax Levy strike-thru 11-23-22
TC:AY Review and analysis by Andy Youn Page 35 of 35
Comparison of Deviations from Core Model Ordinance Provisions
and
City of Tukwila Provisions
B&O TAX
PROVISION:
Summary of Change from Model B&O Tax Ordinance:
.050 Imposition of
the tax — tax or fee
levied.
(2) The gross receipts tax imposed in this section shall not apply to any
person whose gross proceeds of sales, gross income of the business,
and value of products, including by-products, as the case may be, from
all activities conducted within the City during any calendar year is equal
to or less than $750,000.
.090 Exemptions.
• Nonprofit organizations exempt from federal income tax under
Section 501(c)(3) of the Internal Revenue code.
• Businesses operating as a public card room.
• Amateur/Professional/Semi-Professional sports teams operating in
the City.
.150 Hardship
The Director shall develop a financial hardship appeal procedure by
Appeal Procedure
January 1, 2024.
.160 Stakeholder
The City shall develop a stakeholder committee that includes
Involvement
members of the business community to advise the Director and City
on the long-term financial sustainability of the City. This effort shall
include a review of the appropriate levels of taxation of businesses
within the City and will culminate before the 2025-2026 Biennial
Budget process to inform the Council of any recommended changes to
revenue sources for the coming biennium.
.170 Review and
A. The City shall undertake a regular review of the Business and
Reporting
Provisions
Occupation Tax as codified in TMC Chapter 3.26. During the 2023 -
2024 biennium, this review will occur through the stakeholder process
identified in TMC Section 3.27.160. Beginning in the 2025-2026
biennium, the review shall occur in odd -numbered years to inform the
budget process that commences the following year.
B. The Director and Police Chief shall provide quarterly reports to
the Council on public safety funding associated with the Business and
Occupation Tax.