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HomeMy WebLinkAbout3898 ORDINANCE NO. ~9~ ~ ~o~\ An Ordinance establishing a new Busines~Lice~se Fee and Occupatj~-Xpand~aling Orjii~nce~os. 841, .~ §§1 and 2/~.~, ~3~4 §1, 362~-~20, ~9'i7, ~002, ~v21, 3~9, ~5~,x~, ~8~5, ~nd 3586, and all ~rior ordinances. SECTION 1: EXERCISE OF REVENUE LICENSE PO~ER: The provisions of this Chapter shall be deemed an exercise of the power of the City of Bremerton to license and/or tax for revenue the privilege of engaging in business in the City of Bremerton. SECTION 2: DEFINITIONS-INTRODUCTORY: In construing the provisions of this Chapter, save when otherwise declared or clearly apparent from the context, the following definitions shall be applied. (a): TREASURER: "Treasurer" shall mean the City Treasurer of the City of Bremerton. (b): TAX YEAR or TAXABLE YEAR: The term "tax year" or "taxable year" shall mean either the calendar year or the taxpayer's fiscal year when permission is obtained from the Treasurer to use a fiscal year in lieu of the calendar year. (c): PERSON or COMPANY: The word "person" or "company" herein used interchangeably, means any individual, receiver, assignee, trustee in bankruptcy, trust, estate, firm co-partnership, joint venture, club, company, joint-stock company, business trust, corporation, association, society, or any group of individuals acting as a unit, whether mutual, co-operative, fraternal nonprofit or otherwise, and includes the United States or any instrumentality thereof, provided a valid tax may be levied upon or collected therefrom under the provisions of this Chapter. (d): NONPROFIT: In order to qualify for nonprofit deductions or exemptions, proof of such nonprofit status must be provided to the Treasurer. An exemption from taxation pursuant to the Internal Revenue Code of 1954, as amended, is the only acceptable indication of nonprofit status. 1 (e): SALE, CASUAL or ISOLATED SALE: "Sale" means any transfer of the ownership of or title to property for a valuable consideration and includes any activity classified as a "sale at retail" or "retail sale" under Subsection (f). It includes conditional sale contracts, leases with options to purchase, and any other 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 furnishing of food, drink or means for compensation, whether consumed upon the premises or not. "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. (f): SALES AT RETAIL, RETAIL SALE: "Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated or imprinted) other than a sale to one who (a) purchases for the purpose of resale as tangible personal property in the regular course of business, 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 or such real or personal property, or (c) purchases for the purpose of consuming the property purchased in producing for sale a new article of tangible personal property or substances, of which such property becomes an ingredient or component or as 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. The term also means every sale of tangible personal property to persons engaged in any business which is taxable under Section 8. The term "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, excluding, however, 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 to the extent necessary for such constructing or improving, unless the charge therefor is stated separately from other charges made in connection with the work performed under such rules as the Treasurer may prescribe; (c) for the furnishing of lodging and related services to transients in or 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. The term shall not include the sale of or charge made for labor and services rendered in respect to the mere cleaning, fumigating, razing or moving of existing buildings of structures, or the building, repairing, or improving of any publicly owned street, pla~e, road, highway, bridge or trestle, which is used or. to be used~linclude sales of feed, seed, fertilizer and spray materials to persons for the purpose of producing for sale any agricultural product whatsoever, including milk, eggs, wool, fur, meat, honey or other substances obtained from animals, birds or insects. (g): SALE AT WHOLESALE, WHOLESALE SALE: "Sale at wholesale" or "wholesale sale," means any sale of tangible personal property which is not a sale at retail and means any charge made for labor and services rendered for persons who are not consumers, in respect to real or personal property, if such charge is expressly defined as a retail sale by Subsection (f) or to consumers; provided, that the term "real or personal property" as used in this Section shall not include any natural products named in Subsection V. (h): GROSS PROCEEDS OF SALES: "Gross proceeds of sales" means the value proceeding or accruing from the sale of tangible personal property and/or for services rendered, without any deduction on account of the cost of property sold, the cost of materials used, labor costs, interest, discount paid, delivery costs, taxes or any expense whatsoever paid or accrued and without any deduction on account of losses. (i): GROSS INCOME OF THE BUSINESS: "Gross income of the business" means the value proceeding or accruing by reason of the transaction of the business engaged in and includes gross proceeds of sales, compensation for the rendition of services, gains realized from trading in stocks, bonds, or other evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends and other emoluments however designated, all without any deduction on account of the cost of tangible property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes or any other expense whatsoever paid or accrued and without any deduction on account of losses. (j): VALUE PROCEEDING OR ACCRUING: The term "value proceeding or accruing" means the consideration, whether money, credits, rights or other property expressed in terms of money, actually received or accrued. The term shall be applied, in each case, on a cash receipts or accrual basis according to which method of accounting is regularly employed in keeping the books of the taxpayer. The Treasurer may provide, by regulation, that the value proceeding or accruing from sales on the installment plan under conditional sales contracts may be reported as of dates when the payments become due. (k): MANUFACTURER: The word "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 his own materials or ingredients any articles, substances or commodities. When the 4 owner of the equipment or facilities furnishes or sells to the customer prior to manufacture, all or a portion of the materials that become a part or whole of the manufactured article, the Treasurer shall prescribe equitable rules for determining tax liability. (1): TO MANUFACTURE: The term "to manufacture" embraces all the activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials so that as a result thereof a new, different or useful article of tangible personal property or substances of trade or commerce is produced and shall include the production or fabrication of special made or custom made articles. (m): COMMERCIAL OR INDUSTRIAL USE: "Commercial or industrial use" means the following uses of products, including byproducts, by the extractor or manufacturer thereof: 1. Any use as a consumer; and 2. The manufacturing of articles, substances or commodities from extracted products, including byproducts. (n): BUSINESS: "Business" includes all activities engaged in with the object of gain, benefit or advantage to the taxpayer or to another person or class, directly or indirectly. (o): ENGAGING IN BUSINESS: The term "engaging in business" means commencing, conducting or continuing in business and also the exercise 0f corporate or franchise powers, as well as liquidating a business when the liquidators thereof hold themselves out to the public as conducting such business. (p): CASH DISCOUNT: The term "cash discount" means a deduction from the invoice price of goods or charge for services which is allowed if the bill is paid on or before a specified date. (q): TUITION FEE: The term "tuition fee" shall be construed to include library, laboratory, health service and other special fees, and amounts charged for room and board by an educational institution when the property or services for which such charges are made is furnished exclusively to the students or faculty of such institutions; provided, that the term "educational institution," as used herein, shall be construed to mean only those institutions created or generally accredited as such by the State and offering to students an educational program of a general academic nature, or those institutions which are not operated for profit and which are privately endowed under a deed of trust to offer instructions in trade, industry and agriculture, but not including specialty schools, business colleges, trade schools or similar institutions. (r): SUCCESSOR: "Successor" means any person who shall, through direct or mesne conveyance, purchase or succeed to the business, or portion thereof, or the whole or any part of the stock of goods, wares or merchandise or fixtures or any interest therein of a taxpayer quitting business, selling out, exchanging or otherwise disposing of his business. 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 surety or guarantor. (s): TAXPAYER: The word "taxpayer" includes any individual, group of individuals, corporation or association required to have a Business License Certificate hereunder, or liable for any license fee or tax, or for the collection of any license fee or tax hereunder, or who engages in any business, or who performs any act, for which a license fee or tax is imposed by this Chapter. (t): REPORTING PERIOD; QUARTERLY PERIOD: "Quarterly period" shall mean a three (3) month period beginning with the first day of the following months: January, April, July and October. (u): CITY: The word "city" shall mean the City of Bremerton. (v): EXTRACTOR: "Extractor" means every person who from his 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 or other natural products, or takes, cultivates, or raises fish, shellfish or other sea or inland water foods or products. It does not include persons performing under contract the necessary labor or mechanical services for others. SECTION 3: BUSINESS LICENSE REQUIRED; APPLICATION FEE: No person, whether subject to the payment of a tax or not, shall engage in any business or activity in the City of Bremerton without having first obtained and being the holder of a valid and subsisting license to do so, to be known as a "business license," issued under the provisions of this Chapter, as hereinafter provided. The application fee for the business license is to be set at Ten Dollars ($10.00) and is to be non-refundable whether or not the license application is later denied. Applications for the license shall be made to and issued by the Treasurer or his duly authorized agent. The license shall be valid as long as the person to whom the same is issued continues in business and pays the license fee or occupation tax due pursuant to the provisions of this Chapter. SECTION 4: TRANSFERABILITY: Said license shall be personal and nontransferable. In case business is transacted at two or more separate places by one taxpayer, a separate certificate for each place at which business is transacted with the public shall be required, but for such additional certificates, no additional application or quarterly fee shall be required. Each license shall be numbered, shall show the name, place and character of business of the taxpayer, such other information as the Treasurer shall deem necessary, and shall at all times be conspicuously posted in the place of business for which it is issued. Where a place of business of the licensee is changed, the licensee shall return to the Treasurer and complete a new application form. A new certificate shall then be issued free of charge, subject to departmental approval. No person to whom a license has been issued pursuant to this Ordinance shall suffer or allow any person for whom a separate license is required to operate under or display such license, nor shall such other person operate under or display s%ch license. SECTION 5: QUARTERLY LICENSE FEE OR OCCUPATION TAX: Any person engaging in any business activity within the City of Bremerton shall pay, on a quarterly basis, the greater of a Two Dollar ($2.00) license fee or the occupation tax, if any, imposed by this Chapter, unless such person makes an annual return pursuant to approval of the Treasurer. Any person making an annual return shall pay, on an annual basis, the greater of an Eight Dollar ($8.00) annual license fee or the occupation tax, if any, imposed by this Chapter. SECTION 6: QUARTERLY PAYMENTS OF LICENSE FEES: The license fee imposed by this Chapter, except the Ten Dollars ($10.00) required to accompany the application, shall be due and payable in quarterly installments and remittance therefor shall be made on or before the last day of the month next succeeding the end of the quarterly period, that is, on October thirty-first (31), January thirty-first (31), April thirtieth (30), and July thirty-first (31) of each year. SECTION 7: METHOD OF PAYMENT: The license fee payable hereunder shall be paid to the City by bank draft, certified check, cashier's check, personal check or money order or in cash. If payment is made by draft or check, the fee shall not be deemed paid unless the check or draft is honored in the usual course of business, nor shall the acceptance of any sum by the City be an acquittance or discharge of the fee unless the amount of payment is in the full and actual amount due. SECTION 8: PERSONS ALSO SUBJECT TO TAX - AMOUNT: There is hereby levied upon and there shall be collected from every person as hereinafter provided for the act or privilege of engaging in business activities within the City, whether his office or place of business be within and/or without the City, an occupation tax, sometimes herein referred to as the "tax," in amounts to be determined by application of the rates given against the value of products, including by-products, gross proceeds of sales or gross income of the business, as the case may be, for the three (3) calendar months preceding the beginning of each quarterly period, as follows: (a) Upon every person engaging within this 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 products including by-products, extracted for sale or for commercial or industrial use, multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001)i 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. (b) Upon every person engaging within this City in business as a manufacturer, as to such persons, the amount of tax with respect to such business shall be equal to the value of the products, including by-products, manufactured, multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001). 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. (c) Upon every person, except persons taxable under Subparagraph (e) of this Section, engaging within the City in the business of making sales at wholesale, as to such persons the amount of the tax with respect to such business shall be equal to the gross proceeds of sales of such business multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001). (d) Upon every person engaging within this City in the business of making sales at retail, as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of such sales of the business without regard to the place of delivery of articles, commodities or merchandise sold, multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001). (e) Upon every person engaging in this City in the business of buying wheat, oats, corn and barley, but not including any manufactured or processed products thereof, and'selling the same at wholesale, the tax herein imposed shall be equal to the gross proceeds derived from such sales multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001). (f) Upon every person engaging within this City in the business of (i) printing and publishing periodicals or magazines; or (ii) building, repairing or improving any publicly owned street, place, road, highway, bridge or trestle which is used, or to be used, primarily for foot or vehicular traffic, the tax herein imposed on such business shall be equal to the gross income of the business multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001); or (iii) printing and publishing newspapers, the tax herein imposed on such business shall be equal to the gross income of the business multiplied by the rate of One and One-Quarter Tenths of One Precent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001). (g) Upon every person engaged within this City as a national bank, state bank, trust company, mutual savings bank, building and loan association, savings and loan association, security or other financial business or small loan company, the amount of tax shall be equal to the gross income of the business multiplied at the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001); subject to and in accordance with the definitions, deductions and exemptions set forth in RCW Chapter ; 82.04 insofar as the same may be applicable to national banks, state banks, trust companies, mutual savings banks, building and loan associations, savings and loan associations, loan companies and other banking, loan, security or financial institutions. (h) Upon every person engaging within this City in the business of radio and television broadcasting, exluding network, national and regional advertising, computed as a standard deduction based on the national average thereof as annually reported by the Federal Communications Commission, or in lieu thereof by itemization by the individual broadcasting station, and excluding that portion of revenue represented by the out-of-state audience computed as a ratio to the station's total audience as measured by the 100 micro-volt signal strength and delivery by wire, if any, as to such persons, the amount of tax on such business shall be equal to the gross income of the business multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001). (i) Upon every person engaging within this City in any business activity other than or in addition to, those enumerated in Subsections (a), (b), (c), (d), (e), (f), (g) and (h) above, the amount of tax on account of such activities shall be equal to the gross income of the business multiplied by the rate of One and One-Quarter Tenths of One Percent (.00125), until October 1, 1984, when the rate shall revert to One Tenth of One Percent (.001). This Subsection includes, among others and without limiting the scope thereof (whether or not title to material used in the performance of such business passes to another by accession, confusion or other than outright sale), persons engaged in the business of rendering any type of service.~ SECTION 9: MANUFACTURED OR NATURAL GAS: There is levied upon and shall be collected from every person, firm or corporation engaged in the sale of manufactured or natural gas within or partly within the corporate limits of the City, a business and occupation tax in addition to any franchise tax now imposed upon the business. Such tax shall be equal to Four 11 Percent (4%) of the total gross business rendered within the City. SECTION 10: TRANSACTIONS SUBJECT TO TAX: Except where such a tax is otherwise levied and collected by the City from such person, there is hereby levied upon and there shall be collected from every person, as set forth and provided in Section 8 of this Chapter, a tax on the act or privilege of engaging in business activities and transactions with the City involving the purchase of materials, supplies, equipment, improvements and other contractual services. Such tax shall be levied on the privilege of accepting and executing the contract, and shall be collected whether such business activities or transactions occur or take place within or without the City and whether or not such person has his office or place of business within or without the City. Any person engaging in such business activities and/or transactions with the City shall be taxed on the contractual transactions in the same manner and form and under the same rules and regulations and at the same rates of tax as if they were doing business within the City of Bremerton. SECTION 11: DETERMINATION OF VALUES: The value of products, including by-products, extracted or manufactured, shall be determined by the gloss proceeds derived from the sale thereof, whether such sale is at wholesale or 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, except: (a) Where such products, including by-products are extracted or manufactured for commercial or industrial use; and (b) Where such products, including by-products are shipped, transported 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. 12 In the above cases, the value shall correspond as nearly as possible to the gross proceeds from sales in the City 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. The Treasurer shall prescribe uniform and equitable rules for the purpose of ascertaining such values. SECTION 12: BUSINESS WITHIN AND WITHOUT CITY-APPORTIONMENT: Any person rendering services and maintaining places of business both within and without this City shall, for the purpose of computing tax liability under this Section, apportion to this City that portion of his gross income which' is derived from services rendered within this City. Where such apportionment cannot be accurately made by separate accounting methods, the taxpayer shall apportion to this City that proportion of his total income which the cost of doing business with the City bears to the total cost of doing business both within and without the City. SECTION 13: ANCILLARY ALLOCATION AUTHORITY OF TREASURER: To prevent or reduce overlapping municipal taxation, the Treasurer, at his or her discretion, is authorized to: (a) agree with one or more Washington cities for a joint audit of a taxpayer and for the reciprocal application of common principles or policies consistent with this Code for allocation or apportionment of the gross proceeds of sales, gross receipts, or gross income with respect to any taxpayer or any line of commerce; and (b) as part of an intercity agreement or in concert with other Washington cities, include or implement reciprocal policies and procedures, consistent with this Chapter to insure that this City and the other cities, receive the tax payments each city is due when a taxpayer who owes tax to this City has, in good faith, overpaid municipal taxes measured by the taxpayer's gross proceeds of sales, gross receipts, or gross income to either city, when such overpayments are due to the City of Bremerton or the other cities. SECTION 14: SALES BY CONSIGNEE, BAILEE, FACTOR OR AUCTIONEER: Every consignee, bailee, factor or auctioneer having either actual or constructive possession of tangible p~rsonal property, or having possession of the dDcuments of title thereto, with power to sell such tangible personal property in his or its own name and actually so selling, shall be deemed the seller of such tangible personal property within the meaning of this Chapter and, further, the consignor, bailor, principal or owner shall be deemed a seller of such property to the consignee, bailee, factor or auctioneer. The burden shall be upon the taxpayer in every case to establish the fact that such taxpayer is not engaged in the business of selling tangible personal property but is acting merely as broker or agent in promoting sales for a principal; such claim will be allowed only when the taxpayer's account records are kept in such manner as the Treasurer shall, by general regulation, provide. (Ord. 1917 7,1951) SECTION 15: EXEMPTIONS: Except as hereinafter provided, the provisions of this Chapter shall not apply to: (a) Any person in respect to insurance businesses upon which a tax based on gross premiums is paid to the State of Washington, provided, however, that the provisions of this Subparagraph shall not exempt any person engaging in the business of representing any insurance company, whether acting as broker or solicitor for such companies, and provided further that the provisions of this Subparagraph 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. (b) Any fruits, vegetables, berries, butter, eggs, fish, milk, poultry, meats or any farm produce or edibles raised, caught, produced or manufactured and sold by any farmer or gardener. {c) Any person in respect to the business of conducting boxing contests and sparring and/or wrestling matches and 14 exhibitions for the conduct of which a license must be secured from the State Athletic Commission. (d) Any person in respect to the business of conducting race meets for the conduct of which a license must be secured from the State Horse Racing Commission. (e) Any person in respect to his employment in the capacity of an employee or servant as distinguished from that of an independent contractor. (f) Fraternal benefit societies, as defined in Revised Code of Washington, Section 48.36.0100, fraternal mutual property insurers, as defined in Revised Code of Washington, Section 48.36.410, and beneficiary corporations or societies organized under and existing by virtue of Revised Code of Washington, Sections 24.16.010 to 24.16.140 inclusive, if such corporations or societies provide in their bylaws for the payment of death benefits as authorized in Revised Code of Washington, Section 24.16.100. {g) The gross income received by the United States or any instrumentality thereof and by the State of Washington or any municipal subdivision thereof; provided, however, that the exemption contained in this Subsection shall only apply to gross income which the City is prohibited from taxing pursuant to the terms of any federal or state law. (h) Amounts derived from the lease, rental or sale of real estate; provided, however, that nothing herein shall be construed to allow a deduction of amounts derived from engaging in any business wherein a mere license to use or enjoy real property is granted or to allow a deduction of amounts received as commissions from the sale or rental of real estate. (i) Casual or isolated sales: The term "casual or isolated sales" is defined by RCW 82.04.040- as a sale made by a person who is not engaged in the business of selling the type of property involved. Any sales which are routine and continuous must be considered to be an integral part of the business operation and are not casual or isolated sales. (j) Nothing in this Chapter shall be construed as imposing a license fee on any interstate or foreign commerce. SECTION 16: DEDUCTIONS: In computing the occupation tax, there may be deducted from the measure of tax the following items: (a) 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. (b) Amounts derived from bona fide initiation fees, dues, contributions, donations, tuition fees and endowment funds. The provisions of this Paragraph shall not be construed to exempt any person, association or society from tax liability upon selling tangible personal property or upon providing facilities or services for which a special charge is made to members or others; provided that dues which are for or graduated upon the amount of service rendered by the recipient thereof are not permitted as a deduction hereunder. (c) The amount of cash discount actually taken by the purchaser. This deduction is not allowed in arriving at the taxable amount under the extractive 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 provisions of Section 11. (d) The amount of credit losses actually sustained by taxpayers whose regular books of account are kept upon an accrual basis. (e) Amounts derived from business which the City is prohibited from taxing under the Constitution or laws of the State or the Constitution or laws of the United States. (f) Amounts derived as compensation for services rendered to patients by a hospital or other institution which is organized as a nonprofit corporation devoted to the care of human beings with respect to the prevention or treatment of disease, sickness or suffering, but only if no part of the net earnings received by 16 such an institution inures directly or indirectly to any person other than the institution entitled to deduction hereunder. In no event shall any such deduction be allowed unless the hospital building is entitled to exemption from taxation under the property tax laws of the State of Washington, and unless the Superintendent or other proper officer of the institution, under oath, makes annual reports to the State of Washington Department of Health of its receipts and disbursements during the preceding year, specifying in detail the sources from which receipts have been derived and the object to which disbursements have been applied, and furnishes in such report full and complete vital statistics for the use and information of the State of Washington Department of Health. (g) Amounts derived from the business of producing, selling or distributing motor vehicle fuel, as that term is defined in Revised Code of Washington, Section 82.36.010. (h) 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. (i) By those engaged in banking, loan, security or other financial businesses, amounts derived from interest paid on all obligations of the State of Washington, its political subdivisions and municipal corporations organized pursuant to the laws thereof. (j) Amounts derived as interest on loans by a lending institution which is owned exclusively by its borrowers or members and which is engaged solely in the business of making loans for agricultural production. (k) Amounts derived from program service fees, government grants and/or contract receipts, and private foundation grants by any organization organized and operated for charitable, educational or other purposes, which is exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code of 1954, as Amended; provided, however, that amounts derived from 17 selling, altering or repairing tangible personal property shall not be considered a deductible item. (1) Amounts expended for medical, nursing, ambulance, hospital and other appropriate out-patient care as charges and service fees by non-profit health care organizations for the benefit of subscribers to its services where none of said medical services are furnished by the organization itself and where none of such fees and charges inure to the benefit of the organization or any of its employees. SECTION 17: QUARTERLY PAYMENTS OF OCCUPATION TAX: The occupation tax imposed by this Chapter, except the Ten Dollars ($10.00) required to accompany the application, shall be due and payable in quarterly installments, and remittance therefor shall be made on or before the last day of the month next succeeding the end of the quarterly period in which the tax accrued, that is, on October thirty-first (31), January thirty-first (31), April thirtieth (30), and July thirty-first (31) of each year. The remittance shall be made as hereinafter provided and shall be accompanied by a return on a form to be provided and prescribed by the Treasurer. To the return, the taxpayer will be required to swear and affirm that the information therein given is full and true and that the taxpayer knows the same to be so. SECTION 18: ANNUAL RETURN: Whenever the total tax for which any person is liable uhder this Chapter qualifies him for an annual return, in the judgment of the Treasurer and upon request of the taxpayer, an annual return may be made. SECTION 19: FIRST RETURN: Whenever a taxpayer commences to engage in business during any quarterly period, his first return and the occupation tax shall be based upon and cover the portion of the quarterly period during which he is engaged in business. SECTION 20: METHOD OF PAYMENT: The occupation tax payable hereunder shall, at the time the return is required to be filed hereunder, be paid to the City by bank draft, certified check, cashier's check, Personal check or money order or in cash. If payment is made by draft or check, the tax shall not be deemed paid unless the check or draft is honored in the usual course of 18 business, nor shall the acceptance of any sum by the City be an acquittance or discharge of the tax unless the amount of payment is in the full and actual amount due. The return shall be presented to the Treasurer who shall endorse thereon the date and amount of payment received by him and file same. The Treasurer is authorized, but not required, to mail to taxpayers forms for applications for business licenses and forms for tax returns, but failure of the taxpayer to receive any such forms shall not excuse the taxpayer from making application for and securing the business license required, or making returns and payments of the license fee or tax when and as due hereunder. SECTION 21: RECORDS: It shall be the duty of every person who is required to obtain a business license or who is liable for any fee or tax imposed by this Chapter, to keep and preserve for a period of five (5) years, such books and records as will accurately reflect the amount of his gross income, gross proceeds of sales or values of products, as the case may be, and from which can be determined the amount of any fee or tax for which he may be liable under the provisions of this Chapter; provided, however, that any taxpayer utilizing punchboards and/or pull tabs taxable under Section 3.72 of the Municipal Code of the City of Bremerton and this Chapter may, at his option, retain unsold punchboards and/or pull tab chances for the six consecutive months last passed, conditioned upon his entry into an agreement with the City of Bremerton, as approved by the City Attorney, providing that the taxpayer agrees that, upon an audit, the Treasurer or his duly authorized agent shall utilize the records available for such six month period for the purpose of developing an error factor, which error factor shall be applied to the punchboard and/or pull tab income over the total period subject to audit. The term "books and records," as used in this Section, includes the taxpayer's copies of his Federal income tax returns, Federal excise tax returns, State of Washington excise tax returns, City of Bremerton excise tax returns and copies of the income tax and excise tax audits made by the United States or State of Washington and furnished to such person. The taxpayer's 19 books and records shall be open for examination at all reasonable times by the Treasurer or his duly authorized agent. In the case of any taxpayer who does not keep the necessary books and records within the City for examination, it shall be sufficient if such person produces the same within the City as instructed or required by the Treasurer, or if such person bears the cost of examination by the Treasurer'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 Treasurer the estimated amount thereof, including round-trip fare, lodging, meals and incidental expenses, subject to adjustment upon completion of the examination. Any taxpayer who fails, neglects or refuses to produce such books and records either within or without the City, in addition to being subject to other civil and criminal penalties provided by this Chapter, is subject to a jeopardy fee or tax assessment by the Treasurer under the provisions of this Chapter, which jeopardy assessment shall be deemed prima facie correct and shall be the amount of fee or tax owing the City by the taxpayer unless he can prove otherwise by competent evidence. The taxpayer shall be notified by mail by the Treasurer of the amount of tax so determined by jeopardy assessment, together with any penalty and/or interest and the total of such amounts shall thereupon become immediately due and payable. SECTION 22: PUBLIC WORK CONTRACTS: PAYMENT OF FEE AND TAX BEFORE FINAL PAYMENT. The Treasurer shall, before issuing any warrant making 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 Chapter from such person on account of such contract or otherwise, and shall require such taxpayer to file with the Treasurer a verified list of all subcontractors supplying labor and/or materials to the taxpayer in connection with said public work. SECTION 23: EXTENSION TIME FOR PAYMENT-INTEREST-PENALTY: The Treasurer for good cause shown, may extend the time for making and filing any return as required under this Ordinance and 20 may grant such reasonable additional time within which to file such returns as he may deem proper; provided that any extensions in excess bf thirty (30) days shall be conditioned upon payment of interest of one percent (1%) for each thirty (30) days or portion thereof on the amount of the tax from the date upon which said tax became due. If payment of any tax due under this Ordinance is not received by the Treasurer by the last day of the month in which the tax was due, there shall be added to such tax a penalty as follows: 1-30 days, 10% of tax due, minimum penalty of $3.00 31-60 days, 15% of tax due, minimum penalty of $4.00 61 days or more, 20% of tax due, minimum penalty of $5.00 The Treasurer shall notify the taxpayer by mail of the amount of any penalties so added or assessed and the same shall become due and shall be paid within ten (10) days from the date of such notice. In addition to this penalty, the City Treasurer may charge the taxpayer interest of one percent (1%) of all taxes and fees due for each thirty day period or portion thereof, that said amounts are past due. Failure to make payment in full of all tax amounts and penalties within sixty (60) days following the day the tax amount initially became due, shall be both a civil and criminal violation of this Section. SECTION 24: SALE OR TRANSFER OF BUSINESS: Upon the sale or transfer during any quarterly period of a business on account of which a tax is hereby required, the purchaser or transferee shall, if the tax has not been paid in full for said quarterly period, be responsible for the payment of the tax for that portion of the quarterly period during which he carries on such business. SECTION 25: APPLICATIONS AND RETURNS CONFIDENTIAL: The returns made to the Treasurer pursuant to this Chapter shall not be made public, nor shall they be subject to the inspection of any person except the City Attorney, Treasurer, Business License Inspector, Auditor or the authorized agents thereof, or to the 21 Police Chief or the authorized agents thereof during the course of an official investigation, or to the proper office of the Internal Revenue Service of the United States, or to the proper tax department of any state, city, town or county for official purposes, but only if the statutes of such other state, city, town or county, as the case may be, grants substantially similar privileges to the proper officers of this City. The foregoing, however, shall not prevent persons authorized to inspect applications and returns from giving facts or information in evidence in any court action involving license fees or taxes imposed under this Ordinance, or involving any department of the state, if such facts and information are relevant to the issues in such cases. Applications made to the Treasurer pursuant to this Chapter shall not be made public, except information regarding the owner's name, business address and telephone; nor shall they be subject to the inspection of any person, except the proper City agents in the course of their duties, or to the proper office of the Internal Revenue Service of the United States, or to the proper tax department of any state, city, town or county for official purposes, but only if the statutes of such other state, city, town or county, as the case may be, grants substantially similar privileges to the proper officers of this City. It shall be unlawful for any person to make public or to inform any other person as to the contents of any information contained in or to permit inspection of any application or return except as in this Section authorized, or whenever required by RCW 42.17, the Public Disclosure Act. SECTION 26: UNDERPAYMENT OF TAX: If, upon examination of any returns or from other information obtained by the Treasurer, it appears that a tax or penalty has been paid less than the properly due amount, the Treasurer shall assess against the taxpayer such additional amount found to be due and shall add thereto interest at the rate of One Percent (1%) for each thirty (30) days or portion thereof, compounded monthly, from the respective due dates of such additional amount until the date of such assessment. The Treasurer shall notify the taxpayer by mail 22 of the additional amount and the same shall become due and shall be paid within ten (10) days from the date of notice, or within such further time as the Treasurer may provide. If payment is not received by the Treasurer by the due date specified in the notice, the Treasurer shall add a penalty of Ten Percent (10%) of the amount of the additional tax found due. If the Treasurer finds that all or any part of the deficiency resulted from an intent to evade the tax payable hereunder, a further penalty of Fifty Percent (50%) of the additional tax found to be due shall be added. No assessment or correction of an assessment for additional taxes due may be made by the Treasurer more than five (5) years after the close of the tax year, except (i) against a taxpayer who has not been licensed as required by this Chapter; (ii) upon a showing of fraud or misrepresentation of a material fact by the taxpayer, or (iii) where a taxpayer has executed a written waiver of such limitation. SECTION 27: OVERPAYMENT OF TAX: If, upon application by a taxpayer for a refund or for an audit of his records, or upon an examination of the returns or records of any taxpayer, it is determined by the Treasurer that within two (2) years immediately preceding the receipt by the Treasurer of the application by the taxpayer for a refund or for an audit, or in the absence of such application, within the two (2) years immediately preceding the commencement by the Treasurer of such examination, a tax has been paid in excess of that properly due, the excess amount paid within such period of two (2) years shall be credited to the taxpayer's account or shall be refunded to the taxpayer, at his option. No refund or credit shall be allowed with respect to any payment made to the Treasurer more than two (2) years before the date of such application or examination. Where a refund or credit may not be made because of the lapse of said two (2) year period, the amount of the refund or credit which would otherwise be allowable for the portion of the statutory assessment period preceding the two (2) year period may be offset against the amount of any tax deficiency which may be determined by the 23 Treasurer for such preceding period. Interest upon any such refund or credit shall be allowed by the Treasurer at the rate of Three Percent (3%) per annum. SECTION 28: FAILURE TO MAKE RETURN: If any taxpayer fails, neglects, or refuses to make and file his return as and when required under this Chapter, the Treasurer is authorized to determine the amount of tax payable, together with any penalty and/or interest assessed under the provisions of this Chapter and, by mail, to notify such taxpayer of the amount so determined, which amount shall thereupon become the tax and penalty and/or interest and shall become immediately due and payable. SECTION 29: APPEALS: Any taxpayer aggrieved by the amount of the fee or tax found by the Treasurer to be required under the provisions of this Chapter, may appeal to the City Council from such finding by filing a written notice of appeal with the City Clerk within ten (10) days from the time such taxpayer was given notice of such amount. The Clerk, pursuant to direction from the City Council shall, as soon as practicable, fix a time and place for the hearing of such appeal, which time shall be not more than sixty (60) days after the filing of the notice of appeal, and shall cause a notice of the time and place thereof to be delivered or mailed to the appellant. At such hearing before the City Council, the taxpayer shall be entitled to be heard and to introduce evidence in his or her own behalf. The City Council shall render a decision, together with a finding of fact and conclusions of law based upon the evidence presented at the time of the hearing and all material on file in the case. The correct amount of the tax shall be decided by resolution and the City Clerk shall immediately notify the appellant thereof. The mayor may, by subpoena, require the attendance at the hearing of any person, and may also require him to produce any pertinent books and records. Any person served with such subpoena shall appear at the time and place therein stated and produce the books and records required, if any, and shall testify truthfully under oath _ administered by the mayor in charge of the hearing on appeal as to any matter required of him pertinent to the appeal, and it shall be unlawful for him to f~il or refuse to do so. SECTION 30: TREASURER TO MAKE RULES: The Treasurer shall have the power, and it shall be his duty, from time to time to adopt, publish and enforce rules and regulations not inconsistent with this Chapter for the purpose of carrying out the provisions hereof, and it shall be unlawful to violate or fail to comply with any such rule or regulation. SECTION 31: MAILING OF NOTICES: Any notice required by this Chapter shall be mailed to any taxpayer by ordinary mail, addressed to the address of the taxpayer as shown by the records of the Treasurer, or if no such address is shown, to such address as the Treasurer is able to ascertain by reasonable effort. Failure of the taxpayer to receive such mailed notice shall not release the taxpayer from any tax or penalties thereon, nor shall such failure operate to extend any time limit set by the provisions of this Chapter. SECTION 32: FALSE OR FRAUDULENT RETURNS: It shall be unlawful for any person liable for tax or licensing hereunder to fail or refuse to secure a license to make the returns as and when required, or to pay the fee or tax when due, or for any person to make any false or fraudulent application or return or any false statement or representation in or in connection with, any such application or return, or to aid or abet another in any attempt to evade payment of the fee or tax, or any part thereof, or for any person to fail to appear and/or testify in response to Subpoena issued pursuant hereto, or to testify, falsely, upon any investigation of the correctness of a return, or upon the hearing of any appeal, or in any manner to hinder or delay the City or any of its officers in carrying out the provisions of this Chapter. SECTION 33: LICENSE FEE ADDITIONAL TO OTHERS: The license fee and tax herein levied shall be in addition to any license fee or tax imposed or levied under any law or any other ordinance of the City of Bremerton except as herein otherwise expressly provided. 25 SECTION 34: TAX CONSTITUTES DEBT: Any license fee or tax due and unpaid under this Chapter, and all penalties thereon, shall constitute a debt to the City of Bremerton and may be collected by court proceedings in the same manner as any other debt in like amount, which remedy shall be in addition to all other existing remedies. SECTION 35: TAX NOT TO BE PASSED ON: It is not the intention of this Chapter that the taxes herein levied upon persons engaging in business be construed as taxes upon the purchasers or customers, but that such taxes shall be levied upon, and collectible from, the person engaging in business activities herein designated, and that such taxes shall constitute a part of the operating overhead of such persons. SECTION 36: REVOCATION OF BUSINESS LICENSE: The Treasurer may revoke or suspend the business license issued to any person engaged in business activities within the City of Bremerton who is in default in any payment of any license fee or occupation tax hereunder, or who shall fail to comply with any of the provisions of this Chapter, or where any employee of the licensee is engaged in any conduct which violates any state or local laws or ordinances at the licensee's place of business, and of which the licensee has actual or constructive notice, or upon the recommendation of the county health department that such business is being managed, conducted or maintained without regard to proper sanitation and hygiene. Such revocation or suspension shall take effect ten (10) days from the date of receipt of notice by certified mail from the Treasurer, unless a hearing before City Council is requested within that time. SECTION 37: SEVERABILITY: If any provision or section of this Chapter shall be held void or unconstitutional, all other parts, provisions and sections of this Chapter not expressly held to be void or unconstitutional shall continue in full force and effect. SECTION 38: VIOLATION-PENALTIES: Any person violating or failing to comply with any of the provisions of this Chapter or any lawful rule or regulation adopted by the Treasurer pursuant thereto, upon conviction thereof, shall be punished by a fine in any sum not to exceed Five Hundred Dollars ($500.00). Any taxpayer who engages in, or carries on, any business subject to a tax hereunder without having first obtained his business license, shall be guilty of a violation of this Chapter for each day during which the business is so engaged in or carried on, and any taxpayer who fails or refuses to pay the license fee or tax, or any part thereof, on or before the due date, shall be deemed to be operating without having his license to do so. APPROVED by the City Council on the first reading this ~- day of ~~ , 1984. PASSED by the City Council of the City of Bremerton, Washington, signed by the Mayor and attested by the City Clerk in authentication of such passage this ~ day of ~~ , 1984. MORRIE DAWKINS, Mayor ATTEST: KATHLEEN McCLUSKEY, Clerk 27 SUMMARY OF BREMERTON ORDINANCE NO. 3898~ Ordinance establishing a new Business License Fee ~a~_~\ An and Occupation Tax and repealing Ordinance Nos. 841, §§1 and 2, 2525 §4, 2384 §1, 3625 §20, 1917, 2002, 2121, 2136, 2385, 2901, 3001, 3172, 3173, 3482, 3483, 3484, 3509, 3592, 3681, 3885 and 3885, and all prior ordinances. Section 2: Adds definitions of the following terms to be used in applying the Ordinance: Treasurer, Nonprofit, Casual or Isolated Sale, Sales at Retail, Sales at Wholesale, Engaging in Business, Taxpayer, Reporting Period and City. Section 3: States that the Ten Dollar business license application fee will be nonrefundable. Section 4: Requires Planning Department approval on business location Changes. Section 5: New provision to pay minimum tax or license renewal fee even if no other liability for tax exists. Section 6: Changes quarterly tax payment due dates to the thirtieth of the month next succeeding the end of the quarter. Section 8: Expanded to include a' breakdown of rate classifications for business and occupation tax Purposes. Section 9: Carries over new rate increase on Manufactured or Natural Gas from two percent to four percent. Section 11: States that subsidies and bonuses must be included in the determination of gross income for tax purposes. Section 13: Added to provide for municipal agreements for allocation and apportionment of tax where mutual taxpayers are involved. Also allows for joint audits of taxpayers between municipalities. Section 15: Adds an exemption for insurance businesses paying a tax on their gross premiums, any farmer or gardener selling his or her own produce, and casual sales. Section 16(g): Allows a deduction for amounts derived from the business of producing, selling or distributing motor vehicle fuel, as defined by R.C.W. 82.36.010. Section 16(h): Allows a deduction by those engaged in banking, loan, security or other financial businesses on amounts derived from interest received on investments or loans secured primarily by first mortgages or trust deeds on non-transient residential properties. Section 16(i): Allows a deduction by those engaged in banking, loan, security or other financial businesses on amounts derived from interest paid on all obligations of the State of Washington, its political subdivisions and municipal corporations. Section 16(~): Allows a deduction on amounts derived as interest on loans by a lending institution which is owned exclusively by its borrowers or members and which is engaged solely in the business of making loans for agricultural production. Section 16(k): Allows a deduction on amounts received from service fees, government grants and/or contract receipts and private foundation grants by nonprofit organizations, provided that amounts derived from selling, altering, or repairing tangible personal property are not 'considered a deductible item. Section 16(1): Allows a deduction from amounts expended for medical, nursing, ambulance, hospital and other appropriate out-patient care as charges and service fees by nonprofit health care organizations. Section 21: Expanded to include an error factor for gambling audits, travel expenses for out-of-town audits, and a jeopardy assessment for any taxpayer who fails to provide records and pay tax due. Section 23: Adds interest of one percent per month on delinquent accounts. Section 25: Revised to allow dissemination of owner's name, business address an~ telephon~ number and to provide for review of applications by appropriate City departments. Section 26: Provides penalties for taxpayers attempting to evade taxes and extends the statute of limitations on taxpayers who have never been licensed or have never paid any tax. Section 27: Revised to provide three percent interest on refunds to taxpayers for overpayalent of tax. Section 29: Revised to extend taxpayer appeals from five to ten days from date of notification, and to extend hearing dates from ten to sixty days from date of filing. Section 33: License fee and tax herein levied shall be in addition to any license fee or tax imposed or levied under any law or any other ordinance of the City of Bremerton. Section 36: Expanded to provide for possible license revocations for Health Department violations, other code violations, or where any employee of the licensee is engaged in any conduct which violates any state or local laws or ordinances. APPROVED by the City Council on the first reading this 25 day of APRIL , 1984. PASSED by the City Councl of the City of Bremerton, Washington, signed by the Mayor and attested by the City Clerk in authentication of such passage this 2 day of MAY , 1984. MORRIE DAWKINS, Mayor ATTEST: IC~THLEEN L. McCLUSKEY, City Clerk