HomeMy WebLinkAbout5028
ORDINANCE NO. ..;Od{ i
AN ORDINANCE of the City Council of the City of
Bremerton, Washington, amending Chapter 3.48 of the Bremerton
Municipal Code entitled "Business and Occupation Tax" and
Chapter 3.86 entitled "Administrative Provisions for Taxes" to
update the provisions of Chapter 3.48 and Chapter 3.86 relating to
allocation and apportionment of income consistent with the
requirements ofRCW 35.102.130 adopted by EHB 2030 passed by
the state legislature during the 2003 legislative session, and to
make other related amendments.
WHEREAS, it is the intent of the City Council to encourage growth and attract
new businesses to the City of Bremerton; and
WHEREAS, the City Council believes that providing a greater exemption of
revenues from business and occupation taxes will serve to encourage desired expansion of
existing businesses and attract new businesses to the City of Bremerton; and
WHEREAS, the state legislature passed EHB 2030 on April 21, 2003,
establishing certain mandatory provisions to be included in business and occupation tax codes;
and
WHEREAS, the City of Bremerton adopted Ordinance No. 4843 amending its
business and occupation codes consistent with EHB 2030; and
WHEREAS, RCW 35.102.130, adopted by EHB 2030, requires cities to adopt
allocation and apportionment provisions effective January 1, 2008; and
WHEREAS, the City Council desires to amend its business and occupation tax
code and related administrative provisions in compliance with RCW 35.102.130 and to make
other related amendments; NOW THEREFORE,
THE CITY COUNCIL OF THE CITY OF BREMERTON, WASHINGTON,
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Chapter 3.48 ofthe Bremerton Municipal Code entitled "Business
and Occupation Taxes" is hereby amended to read as follows:
Chapter 3.48
BUSINESS AND OCCUPATION TAXES
3.48.020 EXERCISE OF REVENUE LICENSE POWER.
The provisions of this chapter shall be deemed an exercise of the power of the City to
license and/or tax for revenue. The provisions of this chapter are subject to periodic statutory or
1
B&O Tax and
Administrative Provisions
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.
3.48.025 BUSINESS LICENSE - REQUIRED.
It is unlawful for any person to engage in business in the City without having first
obtained a business license pursuant to Chapter 5.02 BMC.
3.48.028 ADMINISTRATIVE PROVISIONS.
The provisions contained in chapter 3.86 BMC shall be fully applicable to the provisions
ofthis chapter except as expressly stated to the contrary herein.
3.48.030 DEFINITIONS.
In construing the provisions of this chapter, the following definitions shall be applied.
Words in the singular number shall include the plural, and the plural shall include the singular.
"Advance," "reimbursement."
(1) "Advance" means money or credits received by a taxpayer from a customer or
client with which the taxpayer is to pay costs or fees on behalf of the customer or client.
(2) "Reimbursement" means money or credits received from a customer or client to
repay the taxpayer for money or credits expended by the taxpayer in payment of costs or fees of
the customer or client.
"Agricultural produc(," "farmer."(!) "Agricultural product" means any product of plant
cultivation or animal husbandry including, but not limited to: a product of horticulture, grain
cultivation, vermiculture, viticulture, or aquaculture as defined in RCW 15.83.480; plantation
Christmas trees; turf; or any animal including but not limited to an animal that is a private sector
cultured aquatic product as defined in RCW 15.83.480, or a bird, or insect, or the substances
obtained from such an animal. "Agricultural product" does not include animals intended to be
pets.
(2) "Farmer" means any person engaged in the business of gro\ying or producing,
upon the person's own lands or upon the lands in which the person has a present right of
possession, any agricultural product whatsoeycr for sale. "Farmer" does not include a person
using such products as ingredients in a manufacturing process, or a person growing or producing
such products for the person's own consumption. "Farmer" does not include a person selling any
animal or substance obtained the-refrom in connection with the person's business of operating a
stockyard or a slaughter or packing house. "Farmer" does not include any person in respect to the
business oftaking, cultivating, or raising timber.
"Artistic or cultural organization." As used in this chapter:
(1) The term "artistic or cultural organization" means an organization which is
organized and operated exclusively for the purpose of providing artistic or cultural exhibitions,
presentations, or performances or cultural or art education programs, as defined in subsection
(10) of this section, for viewing or attendance by the general public.
(2) The organization must be a not-for-profit corporation under Chapter 24.03 RCW.
(3) The organization must be managed by a governing board of not less than eight (8)
individuals none of whom is a paid employee of the organization or by a corporation sole under
Chapter 24.12 RCW.
2
B&O Tax and
Administrative Provisions
(4) No part of its income may be paid directly or indirectly to its members,
stockholders, officers, directors, or trustees except in the form of services rendered by the
corporation in accordance with its purposes and bylaws.
(5) Salary or compensation paid to its officers and executives must be only for actual
services rendered, and at levels comparable to the salary or compensation of like positions within
the State.
(6) Assets of the corporation must be irrevocably dedicated to the activities for which
the exemption is granted and, on the liquidation, dissolution, or abandonment by the corporation,
may not inure directly or indirectly to the benefit of any member or individual except a non-
profit organization, association, or corporation which also would be entitled to the exemption.
(7) The corporation must be duly licensed or certified when licensing or certification
is required by law or regulation.
(8) The amounts received that qualify for exemption must be used for the activities
for which the exemption is granted.
(9) Services must be available regardless of race, color, national origin, ancestry,
religion, age, sex, marital status, sexual orientation, Vietnam or disabled veteran status, or the
presence of any mental or physical disability.
(10) The term "artistic or cultural exhibitions, presentations, or performances or
cultural or art education programs" is limited to:
(a) An exhibition or presentation of works of art or objects of cultural or
historical significance, such as those commonly displayed in art or history museums;
(b) A musical or dramatic performance or series of performances; or
( c) An educational seminar or program, or series of such programs, offered by
the organization to the general public on an artistic, cultural, or historical subject.
"Business_," "Business" includes all activities engaged in with the object of gain, benefit, or
advantage to the taxpayer or to another person or class, directly or indirectly.
"Business and occupation tax,"Q! "gross receipts tax_," "Business and oceupation 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.
"Cash discoun(," "Cash discount" means a deduction from the invoiced amount allowed by the
seller if the bill is paid within a certain time period or before a specified date.
"City_," "City" means City of Bremerton, Washington.
"Commercial or industrial use_," "Commei"cial or industrial use" means the following uses of
products, including by-products, by the extractor or manufacturer thereof:
(1) Any use as a consumer;
(2) Any use in the manufacturing of products including articles, substances or
commodities-;-eF
(3) Consigning, shipping or transferring extracted or manufactured products to
another either without considemtion or in the performance of contracts.
"Competitive telephone service_," "Competiti','e telephone service" means the providing by any
person of telecommunications equipment or apparatus, or service related to that equipment or
apparatus such as repair or maintenance service, if the equipment or apparatus is of a type which
can be provided by persons that are not subject to regulation as telephone companies under RCW
Title 80 and for which a separate charge is made.
"Consumer_," "Consumer" means the following:
3
B&O Tax and
Administrative Provisions
(1) Any person who purchases, acquires, owns, holds, or uses any tangible or
intangible personal property irrespective of the nature ofthe person's business and including,
among others, without limiting the scope hereof, persons who install, repair, clean, alter,
improve, construct, or decorate real or personal property of or for a consumer other than for the
purpose of:
(a) Resale as tangible or intangible personal property in the regular course of
business;
(b) Incorporating such property as an ingredient or component of real or
personal property when installing, repairing, cleaning, altering, imprinting, improving,
constructing, or decorating such real or personal property of or for consumers;
( c) Incorporating such property as an ingredient or component of a new
product or as a chemical used in processing a new product when the primary purpose of such
chemical is to create a chemical reaction directly through contact with an ingredient of a new
product; or
(d) Consuming the property in producing ferrosilicon which is subsequently
used in producing magnesium for sale, if the primary purpose of such property is to create a
chemical reaction directly through contact with an ingredient of ferrosilicon;
(2) Any person engaged in any business activity taxable under BMC 3.48.050(1)(g);.
(3) Any person who purchases, acquires, or uses any competitive telephone service as
herein defined, other than for resale in the regular course of business;
(4) Any person who purchases, acquires, or uses any personal, business, or
professional service defined as a retail sale or retail service in BMC 3.48.030 other than for
resale in the regular course of business;
(5) Any person who is an end user of software;
(6) Any person engaged in the business of "public road construction" in respect to
tangible personal property when that person incorporates the tangible personal property as an
ingredient or component of a publicly owned street, place, road, highway, easement, right-of-
way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle by
installing, placing or spreading the property in or upon the right-of-way of a publicly owned
street, place, road, highway, easement, bridge, tunnel, or trestle or in or upon the site of a
publicly owned mass public transportation terminal or parking facility;
(7) Any person who is an owner, lessee or has the right of possession to or an
easement in real property which is being constructed, repaired, decorated, improved, or
otherwise altered by a person engaged in business;
(8) Any person who is an owner, lessee, or has the right of possession to personal
property which is being constructed, repaired, improved, cleaned, imprinted, or otherwise altered
by a person engaged in business;
(9) Any person engaged in "government contracting." Any such person shall be a
consumer within the meaning of this subsection in respect to tangible personal property
incorporated into, installed in, or attached to such building or other structure by such person.
Nothing contained in this or any other subsection ofthis section shall be construed to
modify any other definition of "consumer."
"Deficiency_," "Deficiency" means the amount of tax imposed by law less any tax reported by
the taxpayer on a tax return.
"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
4
B&O Tax and
Administrative Provisions
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 reiect the property, and the seller has no further right to
possession of the property and the buyer has no right to return the property to the seller, other
than under a warranty contract. A buyer does not exercise dominion and control over tangible
personal property merely by arranging for shipment ofthe property from the seller to itself. A
buyer's representative is a person, other than an employee ofthe 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 reiect 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.
"Director_o" "Director" means the Director of Financial Services ofthe City or any officer,
agent or employee of the City designated to act on the Director's behalf.
"Eligible gross receipts tax_o" The torm "eligible gross receipts tax" means a tax which:
(1) Is imposed on the act or privilege of engaging in business activities within BMC
3.48.050; 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.
"Engaging in business," "nexuso"
(1) The term "engaging in business" means commencing, conducting, or continuing
in business, and also the exercise of corporate or franchise powers, as well as liquidating a
business when the liquidators thereof hold themselves out to the public as conducting such
business.
(2) This section sets forth examples of activities that constitute engaging in business
in the City, and establishes safe harbors for certain of those activities so that a person who meets
the criteria may engage in de minimis business activities in the City without having to register
and obtain a business license or pay City business and occupation taxes. The activities listed in
this section are illustrative only and are not intended to narrow the definition of "engaging in
business" in subsection (1) of this definition. If an activity is not listed, whether it constitutes
engaging in business in the City shall be determined by considering all the facts and
circumstances and applicable law.
(3) Without being all inclusive, anyone of the following activities conducted within
the City by a person, or its employee, agent, representative, independent contractor, broker or
another acting on its behalf constitutes engaging in business and requires a person to register and
obtain a business license pursuant to Chapter 5.02 BMC.
5
B&O Tax and
Administrative Provisions
(a) Owning, renting, leasing, maintaining, or having the right to use, or using,
tangible personal property, intangible personal property, or real property permanently or
temporarily located in the City.
(b) Owning, renting, leasing, using, or maintaining, an office, place of
business, or other establishment in the City.
(c) Soliciting sales.
(d) Making repairs or providing maintenance or service to real or tangible
personal property, including warranty work and property maintenance.
( e) Providing technical assistance or service, including quality control,
product inspections, warranty work, or similar services on or in connection with tangible
personal property sold by the person or on its behalf.
(f) Installing, constructing, or supervising installation or construction of, real
or tangible personal property.
(g) Soliciting, negotiating, or approving franchise, license, or other similar
agreements.
(h) Collecting current or delinquent accounts.
(i) Picking up and transporting tangible personal property, solid waste,
construction debris, or excavated materials.
CD 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.
(1) Meeting with customers or potential customers, even when no sales or
orders are solicited at the meetings.
(m) Training or recruiting employees, 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.
(0) 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.
(q) Accepting or executing a contract with the City, irrespective of whether
goods or services are delivered within or without the City, or whether the person's office or place
of business is within or without the City.
(4) If a person, or its employee, agent, representative, independent contractor, broker
or another acting on the person's behalf, engages in no other activities in or with the City but the
following, it need not register and obtain a business license and pay tax:
(a) Meeting with suppliers of goods and services as a customer.
(b) Meeting with government representatives in their official capacity, other
than those performing contracting or purchasing functions.
6
B&O Tax and
Administrative Provisions
( c) Attending meetings, such as board meetings, retreats, seminars, and
conferences, or other meetings wherein the person does not provide training in connection with
tangible personal property sold by the person or on its behalf.
(d) Renting tangible or intangible property as a customer when the property is
not used in the City.
(e) Attending, but not participating in a "trade show" or "multiple vendor
events." Persons participating at a trade show shall review the City's trade show or multiple
vendor event ordinances.
Jt) Mere delivery of goods via common currier.
(g.t) Conducting advertising through the mail.
(hg) Soliciting sales by phone from a location outside the City.
(5) A seller located outside the City merely delivering goods into the Cityby means
of common carrier is not required to register and obtain a business license provided that it
engages in no other business activities in the City. Such activities do not include those in
subsection (4).
(6) "Nexus." A person has created nexus with the City if, whether itself or by its
employees, agents, representative, independent contractors, brokers or others acting on its behalf,
it:
(a) Is physically present in the City;
(b) Endeavors to maintain a share of the market within the City; or
( c) Avails itself of the economic benefits of the City.
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.
"Extractin~"" "Extracting" is the activity engaged in by an extractor and is reportable under the
extracting classification.
"Extractor_"" "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 coa:I, 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, or takes, cultivates,
or raises shellfish, or other sea or inland water foods or products. "Extractor" does not include
persons performing under contract the necessary labor or mechanical services for others; persons
cultivating or raising fish entirely within confined rearing areas on the person's own land or on
land in which the person has a present right of possession; or persons who fell, cut, or take
plantation Christmas trees from the person's own land or from land in which the person has a
present right of possession; or persons meeting the definition of farmer.
"Extractor for hire_"" "Extractor for hire" means a person who performs under contract
necessary labor or mechanical services for an extractor.
"Farmer" means any person engaged in the business of growing or producing, upon the
person's own lands or upon the lands in which the person has a present right of possession, any
agricultural product whatsoever for sale. "Farmer" does not include a person using such products
as ingredients in a manufacturing process, or a person growing or producing such products for
7
B&O Tax and
Administrative Provisions
the person's own consumption. "Farmer" does not include a person selling any animal or
substance obtained therefrom in connection with the person's business of operating a stockyard
or a slaughter or packing house. "Farmer" does not include any person in respect to the business
of taking, cultivating, or raising timber.
"Covernment eontraeting." "Government contracting" means 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 RC'N, 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. The term shall include the clearing of land
and the moving of earth of or for the United States, any instrumentality, thereof, or a county of
city housing authority.
"Gross income of the business_." "Gross income of the business" means the value proceeding
or accruing by reason of the business activity engaged in and includes gross proceeds of sales,
compensation for the rendition of services, gains realized from trading in stocks, bonds, or other
evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and
other emoluments however designated, all without any deduction on account of the cost of
tangible property sold, the cost of materials used, labor costs, interest, discount, delivery costs,
taxes, or any other expense whatsoever paid or accrued and without any deduction on account of
losses.
"Gross proceeds of sales_." "Gross proceeds of sales" means the value proceeding or accruing
from the sale of tangible personal property or for services rendered, without any deduction on
account of the cost of property sold, the cost of materials used, labor costs, interest, discount
paid, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any
deduction on account of losses.
"In this City," "within this City_." "In this City" or "within this City" includes all federal areas
lying within the corporate City limits of the City.
"Janitorial services_." The term "janitorial services" shall mean those cleaning and care taking
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 does not include painting, papering, repairing, furnace or septic
tank cleaning, snow removal, sandblasting, or cleanup related to construction activities.
"Manufacturer," "to manufacture."
(1) "Manufacturer" means every person who, either directly or by contracting with
others for the necessary labor or mechanical services, manufactures for sale or for commercial or
industrial use from the person's own materials or ingredients any products. When the owner of
equipment or facilities furnishes, or sells to the customer prior to manufacture, materials or
ingredients equal to less than twenty (20) percent of the total value of all materials or ingredients
that become a part of the finished product, the owner of the equipment or facilities will be
deemed to be a processor for hire and not a manufacturer. A business not located in this City that
is the owner of materials or ingredients processed for it in this City by a processor for hire shall
be deemed to be engaged in business as a manufacturer in this City.
(2) "To manufacture" means all activities of a commercial or industrial nature
wherein labor or skill is applied, by hand or machinery, to materials or ingredients so that as a
result thereof a new, different or useful product is produced for sale or commercial or industrial
use, and shall include:
8
B&O Tax and
Administrative Provisions
(a) The production of special made or custom made articles;
(b) The production of dental appliances, devices, restorations, substitutes, or
other dental laboratory products by a dental laboratory or dental technician;
(c) Crushing and/or blending of rock, sand, stone, gravel, or ore; and
(d) The producing of articles for sale, or for commercial or industrial use from
raw materials or prepared materials by giving such materials, articles, and substances of trade or
commerce new forms, qualities, properties or combinations including, but not limited to, such
activities as making, fabricating, processing, refining, mixing, slaughtering, packing, aging,
curing, mild curing, preserving, canning, and the preparing and freezing of fresh fruits and
vegetables.
"To manufacture" shall not include the production of 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.
"Manufacturin~," "Manufacturing" means the activity conducted by a manufacturer and is
reported under the manufacturing classification.
"Newspaper," "magazine," "periodical." "Newspaper" means a publication offered for sale
regularly at stated intervals at least once a week and printed on newsprint in tabloid or
broadsheet format folded loosely together without stapling, glue, or any other binding of any
kind. "Magazine" or "periodical" means any printed publication, other than a newspaper, issued
and offered for sale regularly at stated intervals at least once every three (3) months, including
any supplement or special edition of the publication. Any publication meeting this definition
qualifies regardless of its content.
"Non-profit corporation or non-profit organization_," "Non profit corporation or non profit
organization" means a corporation or organization in which no part of the income can be
distributed to its members, directors, or officers and that holds a current tax exempt status as
provided under Section 50 I (c )(3) of the Internal Revenue Code, as hereafter amended, or is
specifically exempted from the requirement to apply for its tax exempt status under Section
501(c)(3) of the Internal Revenue Code, as hereafter amended. Where the term non-profit
organization is used, it is meant to include a non-profit corporation.
"Office," "place of business_, " "Office" or "place of business" means a fixed location or
permanent facility where the regular business of the person is conducted and which is either
owned by the person or over which the person exercises legal dominion and control. The regular
business of the person is presumed conducted at a location:
(1) Whose address the person uses as its business mailing address;
(2) Containing a telephone line listed in a public telephone directory or other similar
publication under the business name; and
(3) Where the person holds itself out to the general public as conducting its regular
business through signage or other means; and
(4) Where the person is required to obtain any appropriate State and local business
license or registration unless they are exempted by law from such requirement.
A vehicle such as a pick-up, van, truck, boat or other motor vehicle is not an office or
place of business. A post office box is not an office or place of business.
If a person has an office or place of business, the person's home is not an office or place
of business unless it meets the criteria for office or place of business above. If a person has no
9
B&O Tax and
Administrative Provisions
office or place of business, the person's home or apartment within the City will be deemed the
place of business.
"Person_." "Person" means any individual, receiver, administrator, executor, assignee, trustee in
bankruptcy, trust, estate, firm, co-partnership, joint venture, club, company, joint stock company,
business trust, municipal corporation, political subdivision of the State of Washington,
corporation, limited liability company, association, society, or any group of individuals acting as
a unit, whether mutual, cooperative, fraternal, non-profit, or otherwise and the United States or
any instrumentality thereof.
"Precious metal bullion," "monetized bullion_." "Precious metal bullion" means any precious
metal which has been put through a process of smelting or refining, including, but not limited to,
gold, silver, platinum, rhodium, and palladium, and which is in such state or condition that its
value depends upon its contents and not upon its form. For purposes of this section, "monetized
bullion" means coins or other forms of money manufactured from gold, silver, or other metals
and heretofore, now, or hereafter used as a medium of exchange under the laws of this State, the
United States, or any foreign nation, but does not include coins or money sold to be
manufactured into jewelry or works of art.
"Processing for hire_." "Processing for hire" means the performance oflabor and mechanical
services upon materials or ingredients belonging to others so that as a result a new, different or
useful product is produced for sale, or commercial or industrial use. A processor for hire is any
person who would be a manufacturer if that person were performing the labor and mechanical
services upon that person's own materials or ingredients. If a person furnishes, or sells to the
customer prior to manufacture, materials or ingredients equal to twenty (20) percent or more of
the total value of all materials or ingredients that become a part of the finished product the
person will be deemed to be a manufacturer and not a processor for hire.
"Product," "By-product." "Product" means tangible personal property, including articles,
substances, or commodities created, brought forth, extracted, or manufactured by human or
mechanical effort. "By-product" means any additional product, other than the principal or
intended product, which results from extracting or manufacturing activities and which has a
market value, without regard to whether or not such additional product was an expected or
intended result of the extracting or manufacturing activities.
"Publie road eonstruetion." "Public road construction" means 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 a political subdivision of the State or by the United States and which is
used or to be used primarily for foot or ve-hicular traffic including mass transportation '{chicles of
any kind.
"Reporting period_." "Reporting period" means:
(1) A one (1) month period beginning the first day of each calendar month (monthly);
or
(2) A three (3) month period beginning the first day of January, April, July or
October of each year (quarterly); or
(3) A twelve (12) month period beginning the first day of January of each year
(annual).
"Retail service_." "Retail service" shall include the sale of or charge made for personal,
business, or professional services including amounts designated as interest, rents, fees,
10
B&O Tax and
Administrative Provisions
admission, and other service emoluments however designated, received by persons engaging in
the following business activities:
(1) Amusement and recreation services including but not limited to golf, pool,
billiards, skating, bowling, swimming, bungee jumping, ski lifts and tows, basketball,
racquetball, handball, squash, tennis, batting cages, day trips for sightseeing purposes, and
others, when provided to consumers. Amusement and recreation services also 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;
(4Q) Service charges associated with tickets to professional sporting events; and
([}1) The following personal services: physical fitness services, tanning salon services,
tattoo parlor services, steam bath services, turkish bath services, escort services, and dating
servIces;
(6~) The term shall also include the renting or leasing of tangible personal property to
consumers and the rental of equipment with an operator.
"Retailin~." "Retailing" means the activity of engaging in making sales at retail and is reported
under the retailing classification.
"Return_." "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.
"Royalties_." "Royalties" means compensation for the use of intangible property, such as
copyrights, patents, licenses, franchises, trademarks, tradenames, and similar items.
"Sale," "casual or isolated sale."
(I) "Sale" means any transfer of the ownership of, title to, or possession of, property
for a valuable consideration and includes any activity classified as a "sale at retail," "retail sale,"
or "retail service~" It includes renting or leasing, conditional sale contracts, leases with option to
purchase, and any contract under which possession of the property is given to the purchaser but
title is retained by the vendor as security for the payment of the purchase price. It also includes
the furnishing of food, drink, or meals for compensation whether consumed upon the premises or
not.
(2) "Casual or isolated sale" means a sale made by a person who is not engaged in the
business of selling the type of property involved on a routine or continuous basis.
"Sale at retail," "retail sale. "
(I) "Sale at retail" or "retail sale" means every sale of tangible personal property
(including articles produced, fabricated, or imprinted) to all persons irrespective ofthe 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
11
B&O Tax and
Administrative Provisions
consumers, other than a sale to a person who presents a resale certificate under RCW 82.04.470
and who:
(a) Purchases for the purpose of resale as tangible personal property in the
regular course of business without intervening use by such person; or
(b) Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates
real or personal property of or for consumers, if such tangible personal property becomes an
ingredient or component of such real or personal property without intervening use by such
person; or
( c) Purchases for the purpose of consuming the property purchased in
producing for sale a new article of tangible personal property or substance, of which such
property becomes an ingredient or component or is a chemical used in processing, when the
primary purpose of such chemical is to create a chemical reaction directly through contact with
an ingredient of a new article being produced for sale; or
(d) Purchases for the purpose of consuming the property purchased in
producing ferrosilicon which is subsequently used in producing magnesium for sale, if the
primary purpose of such property is to create a chemical reaction directly through contact with
an ingredient of ferrosilicon; or
(e) Purchases for the purpose of providing the property to consumers as part
of competitive telephone service, as defined in RCW 82.04.065. The term shall include every
sale of tangible personal property which is used or consumed or to be used or consumed in the
performance of any activity classified as a "sale at retail" or "retail sale" even though such
property is resold or utilized as provided in subsections (l)(a), (b), (c), (d), or (e) of this
definition following such use-;-; or
(D Purchases for the purpose of satisfying the person's obligations under an
extended warranty as defined in subsection (8) of this section, if such tangible personal property
revlaces 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 oftangible personal property
to persons engaged in any business activity which is taxable under BMC 3.48.050(1)(g).
(3) "Sale at retail" or "retail sale" shall include the sale of or charge made for tangible
personal property consumed and/or for labor and services rendered in respect to the following:
(a) The installing, repairing, cleaning, altering, imprinting, or improving of
tangible personal property of or for consumers, including charges made for the mere use of
facilities in respect thereto, but excluding charges made for the use of coin-operated laundry
facilities when such facilities are situated in an apartment house, rooming house, or mobile home
park for the exclusive use ofthe tenants thereof, and also excluding sales oflaundry service to
non-profit 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
12
B&O Tax and
Administrative Provisions
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, which is taxed as a service in this chapter;
( 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;
(t) The sale of and charge made for the furnishing of lodging and all other
services, except network telephone service 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 fl-)-month or more constitutes
a rental or lease of real property and not a mere license to use or enjoy the same. For the
puq>oses 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 enioy the same;
(g) The sale of or charge made for tangible personal property, labor and
services to persons taxable under subsections (3)(a), (b), (c), (d), (e), and (t) of this definition
when such sales or charges are for property, labor and services which are used or consumed in
whole or in part by such persons in the performance of any activity defined as a "sale at retail" or
"retail sale" even though such property, labor and services may be resold after such use or
consumption. Nothing contained in this subsection shall be construed to modify subsection (l) of
this definition and nothing contained in subsection (l) ofthis definition shall be construed to
modify this subsection.
(4) "Sale at retail" or "retail sale" shall also include the providing of competitive
telephone service to consumers.
(5) "Sale at retail" or "retail sale" shall also include the sale of canned software other
than a sale to a person who presents a resale certificate under RCW 82.04.470, regardless ofthe
method of delivery to the end user, but shall not include custom software or the customization of
canned software.
(6) "Sale at retail" or "retail sale" shall also include the sale of or charge made for
labor and services rendered in respect to the building, repairing, or improving of any street,
place, road, highway, easement, right of way, mass public transportation terminal or parking
facility, bridge, tunneL or trestle which is owned by a municipal corporation or political
subdivision of the state, the State of Washington, or by the United States and which is used or to
be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind.
(Public road construction).to "public road construction."
(7) "Sale at retail" or "retail sale" shall also include the sale of or charge made for
labor and services rendered in respect to the constructing, repairing, decorating, or improving of
new or existing buildings or other structures under, upon, or above real property of or for the
United States, any instrumentality thereof, or a county or city housing authority created pursuant
to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal
13
B&O Tax and
Administrative Provisions
pro{'erty therein or thereto, whether or not such personal property becomes a {'art of the realty by
virtue of installation (government contracting)." go'.'ernment contracting. "
(8) "Sale at retail" or "retail sale" shall also include automobile parking and storage
garage services. 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 s{'ecified duration to perform
the replacement or repair of tangible {'ersonal pro{lerty at no additional charge or a reduced
charge for tangible personal property, labor, or both, or to provide indemnification for the
replacement or repair of tangible personal property, based on the occurrence of specified events.
The term "extended warranty" does not include an agreement, otherwise meeting the definition
of extended warranty in this subsection, if no separate charge is made for the agreement and the
value of the agreement is included in the sales price of the tangible personal property covered by
the agreement.
(9) "Sale at retail" or "retail sale" shall also include landscape maintenance and
horticultural services but excluding (a) horticultural services provided to farmers and (b)
pruning, trimming, repairing, removing, and clearing of trees and brush near electric
transmission or distribution lines or equipment, if performed by or at the direction of an electric
utility.
(!-92) "Sale at retail" or "retail sale" shall not include the sale of services or charges
made for the clearing ofland 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 by-products of weapons production and nuclear research and
development. (This is reported under the service or other classification.).
(-l-l-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 as defined in RC'N 82.01.2635(2).
(This is reported under the service and other classification.)
"Sale at wholesale," "wholesale sale_." "Sale at 'Nholesale" or "wholesale sale" means any sale
of tangible personal property which is not a retail sale, and any charge made for labor and
services rendered for persons who are not consumers, in respect to real or personal property, if
such charge is expressly defined as a retail sale when rendered to or for consumers. Sale at
wholesale also includes the sale of net'.vork telephone service business to another
telecommunications company as defined in RCW 80.04.010 for the purpose of resale, as
contemplated by RCW 35.21.715.
"Services_." "Services" means any business activity other than or in addition to those defined in
this section.
"Software," "canned software," "custom software," "customization of canned software, "
"master copies," "retained rights."
(1) "Canned software" means software that is created for sale to more than one (1)
person. For purposes of this chapter, canned software is deemed to be tangible personal property
regardless of the method of delivery-tangible media (e.g., disk or installed on hardware) or
intangible (e.g., electronically over telecommunications paths).
(2) "Custom software" means software created for a single person.
(3) "Customization of canned software" means any alteration, modification, or
development of applications using or incorporating canned software to specific individualized
requirements of a single person. Customization of canned software includes individualized
configuration of software to work with other software and computer hardware but does not
14
B&O Tax and
Administrative Provisions
include routine installation. Customization of canned software does not change the underlying
character or taxability of the original canned software.
(4) "Master copies" of software means copies of software from which a software
developer, author, inventor, publisher, licensor, sublicensor, or distributor makes copies for sale
or license. The software encoded on a master copy and the media upon which the software
resides are both ingredients of the master copy.
(5) "Retained rights" means any and all rights, including intellectual property rights
such as those rights arising from copyrights, patents, and trade secret laws, that are owned or are
held under contract or license by a software developer, author, inventor, publisher, licensor,
sublicensor, or distributor.
(6) "Software" means any information, program, or routine, or any set of one (1) or
more programs, routines, or collections of information used, or intended for use, to convey
information that causes one (1) or more computers or pieces of computer-related peripheral
equipment, or any combination thereof, to perform a task or set of tasks. "Software" includes the
associated documentation, materials, or ingredients regardless of the media upon which that
documentation is provided, that describes the code and its use, operation, and maintenance and
that typically is delivered with the code to the consumer. All software is classified as either
canned or custom.
"Successor_o" "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.
"Tax year," "taxable year_o" "Tax year" or "taxable year" means the calendar year.
"Taxpayer_o" "Taxpayc-r" means any person, as herein defined, required to have a business
license under this chapter or liable for the collection of any tax or fee under this chapter, or who
engages in any business or who performs any act for which a tax or fee is imposed by this
chapter.
"Tuition fee_o" "Tuition fee" includes library, laboratory, health service and other special fees,
and amounts charged for room and board by an educational institution when the property or
service for which such charges are made is furnished exclusively to the students or faculty of
such institution. "Educational institution," as used in this section, means only those institutions
created or generally accredited as such by the State and includes educational programs that such
educational institution cosponsors with a non-profit organization, as defined by the Internal
Revenue Code Section 501 (c )(3), as hereafter amended, if such educational institution grants
college credit for course work successfully completed through the educational program, or an
approved branch campus of a foreign degree-granting institution in compliance with Chapter
288.90 RCW, and in accordance with RCW 82.04.4332 or defined as a degree-granting
institution under RCW 28B.85.010(3) and accredited by an accrediting association recognized by
the United States Secretary of Education, and offering to students an educational program of a
general academic nature or those institutions which are not operated for profit and which are
privately endowed under a deed oftrust to offer instruction in trade, industry, and agriculture, but
not including specialty schools, business colleges, other trade schools, or similar institutions.
15
B&O Tax and
Administrative Provisions
"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 oflike quality and character, and in
similar quantities by other taxpayers, plus the amount of subsidies or bonuses ordinarily payable
by the purchaser or by any third person with respect to the extraction, manufacture, or sale of
such products. In the absence of sales of similar products as a guide to value, such value may be
determined upon a cost basis. In such cases, there shall be included every item of cost
attributable to the particular article or article extracted or manufactured, including direct and
indirect overhead costs. The Director may prescribe rules for the purpose of ascertaining such
values.
(3) Notwithstanding subsection (2) of this definition, the value of a product
manufactured or produced for purposes of serving as a prototype for the development of a new or
improved product shall correspond to (a) the retail selling price of such new or improved product
when first offered for sale; or (b) the value of materials incorporated into the prototype in cases
which the new or improved product is not offered for sale.
"Value proceeding or accruin~." "Value proceeding or accruing" means the consideration,
whether money, credits, rights, or other property expressed in terms of money, a person is
entitled to receive or which is actually received or accrued. The term shall be applied, in each
case, on a cash receipts or accrual basis according to which method of accounting is regularly
employed in keeping the books of the taxpayer. The value proceeding or accruing from sales on
the installment plan under conditional contracts of sale shall be reported as of the dates when the
payments become due.
"Wholesalin~." "Vlholesaling" means engaging in the activity of making sales at wholesale,
and is reported under the wholesaling classification.
3.48.040 AGENCY - SALES AND SERVICES BY AGENT, CONSIGNEE,
BAILEE, FACTOR OR AUCTIONEER.
(1) Sales in Own Name - Sales or Purchases as Agent. Every person, including
agents, consignees, bailees, factors or auctioneers having either actual or constructive possession
of tangible personal property or having possession of the documents of title thereto, with power
to sell such tangible personal property in the person's own name and actually so selling shall be
deemed the seller of such tangible personal property within the meaning of this chapter.
The burden shall be upon the taxpayer in every case to establish the fact that such
taxpayer is not engaged in the business of selling tangible personal property but is acting merely
as broker or agent in promoting sales or making purchases for a principal. Such claim will be
recognized only when the contract or agreement between such persons clearly establishes the
relationship of principal and agent and when the following conditions are complied with:
16
B&O Tax and
Administrative Provisions
(a) The books and records of the broker or agent show the transactions were
made in the name and for the account of the principal, and show the name of the actual owner of
the property for whom the sale was made, or the actual buyer for whom the purchase was made.
(b) The books and records show the amount ofthe principal's gross sales, the
amount of commissions and any other incidental income derived by the broker or agent from
such sales. The principal's gross sales must not be reflected as the agent's income on any ofthe
agent's books and records. Commissions must be computed according to a set percentage or
amount, which is agreed upon in the agency agreement.
(c) No ownership rights may be conferred to the agent unless the principal
refuses to pay, or refuses to abide by the agency agreement. Sales or purchases of any goods by a
person who has any ownership rights in such goods shall be taxed as retail or wholesale sales.
(d) Bulk goods sold or purchased on behalf of a principal must not be co-
mingled with goods belonging to another principal or lose their identity as belonging to the
particular principal. Sales or purchases of any goods which have been co-mingled or lost their
identity as belonging to the principal shall be taxed as retail or wholesale sales.
(2) If the above requirements are not met the consignor, bailor, principal or other
shall be deemed a seller of such property to the agent, consignee, bailee, factor or auctioneer.
(3) Services in Own Name - Procuring Services as Agent. For purposes of this
subsection, an agent is a person who acts under the direction and control of the principal in
procuring services on behalf of the principal that the person could not itself render or supply.
Amounts received by an agent for the account of its principal as advances or reimbursements are
exempted from the measure ofthe tax only when the agent is not primarily or secondarily liable
to pay for the services procured.
Any person who claims to be acting merely as agent in obtaining services for a principal will
have such claim recognized only when the contract or agreement between such persons clearly
establishes the relationship of principal and agent and when the following conditions are
complied with:
(a) The books and records of the agent show that the services were obtained
in the name and for the account of the principal, and show the actual principal for whom the
purchase was made.
(b) The books and records show the amount of the service that was obtained
for the principal, the amount of commissions and any other income derived by the agent for
acting as such. Amounts received from the principal as advances and reimbursements must not
be reflected as the agent's income on any of the agent's books and records. Commissions must be
computed according to a set percentage or amount, which is agreed upon in the agency
agreement.
3.48.050 IMPOSITION OF THE TAX - TAX OR FEE LEVIED.
(1) Imposition of the Tax - Tax or Fee Levied. Except as provided in subsection (2)
of this section, there is hereby levied upon and shall be collected from every person a tax for the
act or privilege of engaging in business activities within the City, whether the person's office or
place of business be within or without the City. The tax shall be in amounts to be determined by
application of rates against gross proceeds of sale, gross income of business, or value of
products, including by-products, as the case may be, as follows:
(a) Extractor. 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
17
B&O Tax and
Administrative Provisions
the value ofthe products, including by-products, extracted for sale or for commercial or
industrial use, multiplied by the rate of one and six-tenths of one percent (.0016). The measure of
the tax is the value ofthe 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) Manufacturer. Upon every person engaging within the City in business as
a manufacturer; as to such persons the amount of the tax with respect to such business shall be
equal to the value of the products, including by-products, manufactured, multiplied by the rate of
one and six-tenths of one percent (.0016). 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) Wholesale. 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 one and six-
tenths of one percent (.0016).
(d) Retail. Upon every person engaging within the City in the business of
making sales at retail; as to such persons, the amount of tax with respect to such business shall be
equal to the gross proceeds of such sales of the business without regard to the place of delivery
of articles, commodities or merchandise sold, multiplied by the rate of one and one quarter of
one percent (.00125).
(e) Printing and Publishing. 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 ofthe business multiplied by the rate of one and nine-
tenths of one percent (.0019).
(f) Retail Service. 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 two tenths of
one percent (.002).
(g) Service. 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 two tenths of one percent (.002). This subsection includes,
among others, and without limiting the scope hereof (whether or not title to material used in the
performance of such business passes to another by accession, merger or other than by outright
sale), persons engaged in the business of developing, or producing custom software or of
customizing canned software, producing royalties or commissions, and persons engaged in the
business of rendering any type of service which does not constitute a sale at retail or a sale at
wholesale or a retail service.
(2) Exemption. 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 twenty thousand dollars ($20,000).
Beginning on January 1, 2007, 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
18
B&O Tax and
Administrative Provisions
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 forty thousand dollars ($40,000). Persons with
gross income exceeding forty thousand dollars ($40,000) per year shall be taxed only on the
amount of gross income exceeding forty thousand dollars ($40,000) per year.
Beginning on January 1, 2008, 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 sixty thousand dollars ($60,000). Persons with
gross income exceeding sixty thousand dollars ($60,000) per year shall be taxed only on the
amount of grOSS income exceeding sixty thousand dollars ($60,000) per year.
(3) Job Credits. It is the intent of the City Council to encourage growth and attract
new business to the City. To that end, the City Council finds that an incentive measured by a
business's growth in jobs is a meaningful method of attracting and retaining such businesses.
Therefore, the incentive in this section is specifically targeted at new full-time positions. A basic
credit is made available to all businesses located in the City.
(a) Subject to the limits in this section, an eligible person is allowed a credit
against the tax due under this chapter. The credit is based on a qualified employment position
located within the City.
(i) The credit shall be five hundred dollars ($500.00) for each
qualified employment position within the City, which positions were created on or after January
1,2007, the "effective date." A credit is earned for the calendar year in which the employee is
hired to fill the position, plus the four (4) subsequent consecutive years, if the position, along
with the company's increased workforce of eligible persons, is maintained during the entire
period.
a. Credit may not be taken for hiring persons into positions
existing on the effective date. Credit is authorized for new employees hired for new positions
created on or after the effective date, which result in an increase in the total workforce of the
business located in the City. New positions filled by existing employees are eligible for the credit
under this section only if the position vacated by the existing employee is filled by a new hire.
b. If filled before July 1 st of any given year, a newly created
position is eligible for a full yearly credit. If filled after June 30th, the position is eligible for only
a half credit for the first calendar year.
c. Credit may not be accrued and carried forward or back. No
refunds may be granted for unused portion of credits under this section. If the position is filled
during the calendar year, after the filing of a quarterly tax period, an amended first or third
quarter tax return will be allowed, if appropriate, to qualify all the credit to which the employer
is entitled for that year.
(ii) For the purposes of this section:
a. "Eligible person" means a person or company who resides
in the City and is engaging in a business activity within the City.
b. "Qualified employment position" means a permanent, full-
time position with compensation of at least a "family wage" within twelve (12) months after the
date of hire (allowing for training time and a probation period). If an employee is either
voluntarily or involuntarily separated from employment, the employment position is considered
filled on a full-time basis during a period not to exceed three (3) months ifthe employer is
actively recruiting a replacement employee.
19
B&O Tax and
Administrative Provisions
c. "Family wage," beginning January 1, 2007, is seventeen
dollars and eleven cents ($17.11) an hour. This is the annual average wage in Kitsap County for
2004, developed by the Washington State Employment Security Department, Labor Market and
Economic Development Division ("ES202"). This amount will be adjusted annually beginning
on January 1, 2008, by an amount equal to the increase in the Consumer Price Index ("CPI") for
Urban Wage Earners, Tacoma-Seattle-Bremerton area, of the prior year. If the CPI increase is
more than five (5) percent, a five (5) percent increase will be used in computing the basis.
d. The purchase of an existing business does not create an
allowance of the credit for existing positions.
(iii) No application is necessary for the tax credit; however,
information must be submitted for each new employee position for which credit is requested, and
included with the first tax return in which the credit is claimed. The person must keep records
necessary for the City to verify eligibility under this section. This information includes:
a. Employment records, including Washington State and
federal tax returns, for the current year and previous five (5) years; and
b. Information relating to description of business activity
engaged in at the eligible location by the employee.
(b) If at any time the Director finds that an employer is not eligible or has lost
eligibility for a tax credit under this section, the total amount of taxes for which a credit has been
claimed for current and prior periods shall be immediately due.
(4) The tax levied pursuant to this chapter shall be in addition to any other tax or fee
that may be imposed or levied by the City of Bremerton.
3.48.060 DOING BUSINESS WITH THE CITY.
Except where such a tax is otherwise levied and collected by the City from such person,
there is hereby levied a tax on the privilege of accepting or executing a contract with the City.
Such tax shall be levied and collected whether goods or services are delivered within or without
the City and whether or not such person has an office or place of business within or without the
City.
Except as provided in BMC 3.48.077, As--~to such persons the amount of tax shall be
equal to the gross contract price multiplied by the rate under BMC 3.48.050 that would otherwise
apply if the sale or service were taxable pursuant to that section.
3.48.070 MUL TIPLE ACTIVITIES CREDIT WHEN ACTIVITIES TAKE
PLACE IN ONE flj OR MORE CITIES WITH ELIGIBLE GROSS RECEIPT TAXES.
This section provides a tax credit for taxpayers engaged in multiple taxable activities. The
section provides a credit against eligible selling or manufacturing taxes imposed by the City for
extracting or manufacturing taxes paid to the City or to any other local jurisdiction with respect
to the same products. The tax credit does not depend upon whether a person that sells in the City
extracts or manufactures in the City or in another jurisdiction to which it has paid an eligible
gross receipts tax. The tax credit does not depend on whether a person that manufactures in the
City extracts in the City or in another jurisdiction to which it has paid an eligible gross receipts
tax. The credit is available to any person that pays an eligible gross receipts tax on the applicable
activities, regardless of where it conducts business. The result ofthis section is that a city in
which selling takes place gives up the tax to the manufacturing jurisdiction and the
20
B&O Tax and
Administrative Provisions
manufacturing jurisdiction gives up the tax to the extracting jurisdiction, whether those
jurisdictions are inside or outside the State of Washington.
(1) Persons who engage in business activities that are within the purview of two (2)
or more subsections ofBMC 3.48.050 shall be taxable under each applicable subsection.
(2) 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.
(3) To take the credit authorized by this section, a taxpayer must be able to document
that the amount of tax sought to be credited was paid upon the same gross receipts used in
computing the tax against which the credit is applied and that the taxpayer paid the amount of tax
sought to be credited.
(4) 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.
(5) 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.
(6) 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.
3.48.075 DEDUCTIONS TO PREVENT MULTIPLE TAXATION OF
MANUFACTURING ACTIVITIES AND PRIOR TO JANUARY 1.2008.
TRANSACTIONS INVOLVING MORE THAN ONE fl1 CITY WITH AN ELIGIBLE
GROSS RECEIPTS TAX.
This section establishes deductions to be applied when a single taxable activity is taxable
by more than one jurisdiction that imposes an eligible gross receipts tax. To eliminate the
possibility of the same sale or service being taxed more than once by cities that maintain nexus
and an eligible gross receipts tax, the cities deductions set forth in this section shall apply as
follows.
(1) Manufacturing - 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
21
B&O Tax and
Administrative Provisions
manufactured outside the City and included in the measure of an eligible gross receipts tax lJaid
with respect to manufacturing such products.
~. A taxpaye-r that has paid an eligible gross receipts tax on the sale to the
jurisdiction v,'hef"e the product is delivered may deduct the gross receipts used to measure that tax
from the measure of the tax owed to. another jurisdiction on the sale. If a taxpayer has not paid
tax to the jurisdiction v/hcre the product is delivered, then no deduction is allo'.ved. The sale shall
be taxed by the city '.vhere the office or place of business that generated the sale is located.
Service. ,^,. taxpayer that has paid an eligible gross receipts tax on services to the
jurisdiction ,:,'here the service is performed may deduct the gross receipts used to measure that
tax from the measure of the tax o':led to another jurisdiction on that service. If a taxpayer has not
paid tax to the jurisdiction v/here the service is performed, then no deduction is allov/ed. The
service income shall be taxed by the city where the office or place of business that generated the
sale is located. For both sales and services, the order oftaxing rights is delivery city, first; and
business office location, second.
General Business },.cti','ities Other Than Services. The eligible gross receipts tax on
income derived from intangibles such as royalties, licenses, trademarks, patents and goodwill,
and reportable under the general business classification BMC 3.18.050(1 )(g), shall be assigned to
the headquarter's office or business location. /\ taxpayer that has paid an eligible gross receipts
tax on such activities to the jurisdiction where the taxpayer maintains a headquarters office may
deduct the gross receipts used to measure that tax from the measure of the tax o\ved to other
jurisdictions on the same activity.
Business Conducted 'Nith Other Cities. ,^,. taxpayer that has paid an eligible gross receipts
tax on the privilege of accepting or executing a contract with a city may deduct the contract price
used to measure the tax from the measure of the tax O'.ved to another city on the same activity.
(!-2) Goods and Services - Amounts Subiect 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 fB jurisdiction may be entitled to a deduction as follows:
(a) 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.
{Ql If a taxpayer has not paid tax to the iurisdiction where the product is
delivered or the service is provided, then no deduction is allowed. The sale shall be taxed by the
city where the office or place of business that generated the sale is located. For both sales and
services. the order of taxing rights is delivery city. first; and business office location. second.
(bf) Notwithstanding the above, a person that is subject to an eligible gross
receipts tax in more than one fB jurisdiction on the gross income derived from intangibles such
as royalties, trademarks, patents, or goodwill may deduct from the measure ofthe tax on those
amounts the gross income used in measuring the eligible gross receipts tax paid to the other
jurisdiction where the headquarters is located.
(€~D 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.
22
B&O Tax and
Administrative Provisions
(2) Person Manufacturing Products Within and 'Without. }.. 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 with respect to
manufacturing such products.
(e) For taxes due under this subsection (2) after January L 2008, see BMC
3.48.077.
3.48.076 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).
3.48.077 ALLOCATION AND APPORTIONMMENT OF INCOME WHEN
ACTIVITIES TAKE PLACE IN MORE THAN ONE JURISDICTION.
Effective January L 2008, gross income, other than persons subiect to the provisions of
chapter 82.14A RCW, shall be allocated and apportioned as follows:
(1) Location of Activity. Gross income derived from all activities other than those
taxed as service or royalties under BMC 3.48.0500 )(g) shall be allocated to the location where
the activity takes place.
(2) Place of Delivery. In the case of sales of tangible personal vroverty, the activity
takes place where delivery to the buyer occurs.
(3) Allocation. Gross income derived from activities taxed as services and other
activities taxed under BMC 3.48.050(1 )(g) (Service) shall be apportioned to the city by
multiplying apvortionable income by a fraction, the numerator of which is the payroll factor plus
the service-income factor and the denominator of which is two.
(a) Payroll Factor. The payroll factor is a fraction, the numerator of which is
the total amount paid in the city during the tax veriod by the taxpayer for compensation and the
denominator of which is the total comvensation paid everywhere during the tax period.
Compensation is paid in the city if:
(i) The individual is primarily assigned within the city;
(in The individual is not primarily assigned to any place of business
for the tax Veriod and the employee performs fifty percent or more of his or her service for the
tax period in the city; or
(iii) The individual is not primarily assigned to any place of business
for the tax period, the individual does not perform fifty percent or more of his or her service in
any city and the emvloyee resides in the city.
(b) Service Income Factor. 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:
(i) The customer location is in the city; or
(ii) The income-producing activity is performed in more than one
location and a greater proportion ofthe service-income-producing activity is verformed in the
23
B&O Tax and
Administrative Provisions
city than in any other location, based on costs of performance, and the taxpayer is not taxable at
the customer location; or
(iii) The service-income-producing activity is performed within the
city, and the taxpayer is not taxable in the customer location.
( c) Other Allocation Methods. If the allocation and apportionment provisions
of this subsection do not fairly represent the extent of the taxpayer's business activity in the city
or cities in which the taxpayer does business, the taxpayer may petition for or the tax
administrators may jointly require, in respect to all or any part of the taxpayer's business activity,
that one of the following methods be used jointly by the cities to allocate or apportion gross
income, if reasonable:
(i) Separate accounting;
(ii) The use of a single factor;
(iii) The inclusion of one or more additional factors that will fairly
represent the taxpayer's business activity in the city; or
(iv) The employment of any other method to effectuate an equitable
allocation and apportionment of the taxpayer's income.
(4) Definitions. The definitions in this subsection apply throughout this section.
(a) "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.
(b) "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.
( c) "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.
(d) "Customer location" means the city or unincorporated area of a county
where the majority of the contacts between the taxpayer and the customer take place.
(e) "Primarilv assi2ned" means the business location of the taxpayer where
the individual performs his or her duties.
(f) "Service-taxable income" or "service income" means gross income ofthe
business subject to tax under either the service or royalty classification.
(g) "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) "Taxable in the customer location" means either that a taxpayer is
subject to a gross receipts tax in the customer location for the privilege of doing business, or that
the government where the customer is located has the authority to subject the taxpayer to gross
receipts tax regardless of whether, in fact, the government does so.
(5) 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.
24
B&O Tax and
Administrative Provisions
3.48.078 ALLOCATION AND APPORTIONMENT OF PRINTING AND
PUBLISHING INCOME WHEN ACTIVITIES TAKE PLACE IN MORE THAN ONE
JURISDICTION.
Notwithstanding RCW 35.102.130, effective January L 2008, gross income from the
activities of printing, and of publishing newspapers, periodicals, or magazines, shall be allocated
to the principal place in this state from which the taxpayer's business is directed or managed. As
used in this section, the activities of printing, and of publishing newspapers, periodicals, or
magazines, have the same meanings as attributed to those terms in RCW 82.04.2800) by the
department of revenue.
3.48.090 EXEMPTIONS.
(1) Nonprofit Corporations or Nonprofit Organizations. This section shall not apply
to nonprofit organizations exempt from federal income tax under Section 501(c)(3) of the
Internal Revenue Code, as hereafter amended, except with respect to retail sales of such persons.
(2) Health Maintenance Organization, Health Care Service Contractor, Certified
Health Plan. Beginning on January 1, 2000, this chapter does not apply to any health
maintenance organization, health care service contractor, or certified health plan in respect to
premiums or prepayments that are taxable under RCW 48.14.0201.
(3) Public Utilities. This chapter shall not apply to any person in respect to a business
activity with respect to which tax liability is specifically imposed under the provisions of Chapter
3.50 BMC.
(4) 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.
(5) International Banking Facilities. This chapter shall not apply to the gross receipts
of an international banking facility. As used in this subsection, an "international banking facility"
means a facility represented by a set of asset and liability accounts segregated on the books and
records of a commercial bank, the principal office of which is located in this state, and which is
incorporated and doing business under the laws of the United States or of this state, a United
States branch or agency of a foreign bank, an Edge corporation organized under Section 25(a) of
the Federal Reserve Act, 12 United States Code 611-631, or an agreement corporation having an
agreement or undertaking with the Board of Governors of the Federal Reserve System under
Section 25 of the Federal Reserve Act, 12 United States Code 601-604(a), that includes only
international banking facility time deposits (as defined in subsection (a)(2) of Section 204.8 of
Regulation D (12 CFR Part 204), as promulgated by the Board of Governors of the Federal
Reserve System), and international banking facility extensions of credit (as defined in subsection
(a)(3) of Section 204.8 of Regulation D).
(6) Insurance Business. This chapter shall not apply to amounts received by any
person or agent who is an insurer upon which a tax based on gross premiums is paid to the state
pursuant to RCW 48.14.020; provided, that the provisions of this subsection shall not exempt
any person engaging in the business of insurance as a broker as defined in RCW 48.17.020 or as
a solicitor as defined in RCW 48.17.030; and provided further, that the provisions of this
subsection shall not exempt any bonding company from tax with respect to gross income derived
25
B&O Tax and
Administrative Provisions
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.
(7) Farmers - Agriculture. This chapter shall not apply to any farmer in respect to
amounts received from selling fruits, vegetables, berries, butter, eggs, fish, milk, poultry, meats
or any other agricultural product that is raised, caught, produced, or manufactured by such
persons.
(8) Athletic Exhibitions. This chapter shall not apply to any person in respect to the
business of conducting boxing contests and sparring or wrestling matches and exhibitions for the
conduct of which a license must be secured from the State Boxing Commission.
(9) Racing. This chapter shall not apply to any person in respect to the business of
conducting race meets for the conduct of which a license must be secured from the Washington
State Horse Racing Commission.
(10) Ride Sharing. This chapter does not apply to any funds received in the course of
commuter ride sharing or ride sharing for persons with special transportation needs in
accordance with RCW 46.74.010.
(11) Em?loyees. This chapter shall not apply to:
(a) 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.
(b) A booth renter, as defined by RCW 18.16.020, is an independent
contractor for purposes of this chapter.
(12) 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 thirty (30) days or
longer.
(13) 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.
(14) Amounts Derived from Manufacturing, Selling or Distributing Motor Vehicle
Fuel. This chapter shall not apply to the manufacturing, selling, or distributing motor vehicle
fuel, as the term "motor vehicle fuel" is defined in RCW 82.36.010 and exempt under RCW
82.36.440; provided, that any fuel not subjected to the State fuel excise tax, or any other
applicable deduction or exemption, will be taxable under this chapter.
(15) 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.
(16) Casual and Isolated Sales. This chapter shall not apply to the gross proceeds
derived from casual or isolated sales.
(17) 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 (a) the amount paid by
the buyer does not exceed the amount paid by the seller to the vendor in the acquisition of the
26
B&O Tax and
Administrative Provisions
article; and (b) the sale is made as an accommodation to the buyer to enable the buyer to fill a
bona fide existing order of a customer or is made within fourteen (14) days to reimburse in kind
a previous accommodation sale by the buyer to the seller.
(18) 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.
(19) Three (3) Year Exemption forAnnexed Businesses. This chapter shall not apply
to any person with respect to a business activity conducted in an area that has become part of the
City by annexation; provided, however, that the business premises of such person be located in
the said area on the date of annexation; and provided further, that the exemption provided herein
shall cease at the expiration of twelve (12) full calendar quarters following the date of such
annexation.
3.48.100 DEDUCTIONS.
In computing the license fee or tax, there may be deducted from the measure of tax the
following items:
(1) Compensation from Public Entities for Health or Social Welfare Services-
Exception. In computing tax, there may be deducted from the measure of tax amounts received
from the United States or any instrumentality thereof or from the State of Washington or any
municipal corporation or political subdivision thereof as compensation for, or to support, health
or social welfare services rendered by a health or social welfare organization (as defined in RCW
82.04.431) or by a municipal corporation or political subdivision, except deductions are not
allowed under this subsection for amounts that are received under an employee benefit plan. For
purposes of this subsection, "employee benefit plan" includes the military benefits program
authorized in 10 USC Section 1071 et seq., as amended, or amounts payable pursuant thereto.
(2) Interest on Investments or Loans Secured by Mortgages or Deeds of Trust In
computing tax, there may be deducted from the measure of tax by those engaged in banking,
loan, security or other financial businesses, amounts derived from interest received on
investments or loans primarily secured by first mortgages or trust deeds on non-transient
residential properties.
(3) Interest on Obligations of the State, its Political Subdivisions, and Municipal
Corporations. In computing tax, there may be deducted from the measure of tax by those
engaged in banking, loan, security or other financial businesses, amounts derived from interest
paid on all obligations of the State of Washington, its political subdivisions, and municipal
corporations organized pursuant to the laws thereof.
(4) Interest on Loans to Farmers and Ranchers, Producers or Harvesters of Aquatic
Products, or Their Cooperatives. In computing tax, there may be deducted from the measure of
tax amounts derived as interest on loans to bona fide farmers and ranchers, producers or
harvesters of aquatic products, or their cooperatives by a lending institution which is owned
exclusively by its borrowers or members and which is engaged solely in the business of making
loans and providing finance-related services to bona fide farmers and ranchers, producers or
harvesters of aquatic products, their cooperatives, rural residents for housing, or persons engaged
in furnishing farm-related or aquatic-related services to these individuals or entities.
(5) 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 recei'led by the purchaser or
27
B&O Tax and
Administrative Provisions
its agent delivered by the seller to the buyer or the buyer's representative at a location outside the
State of Washington.
(6) 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.
(7) 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.
(8) Repair, Maintenance, Replacement, Etc., of Residential Structures and Commonly
Held Property - Eligible Organizations.
(a) In computing tax, there may be deducted from the measure of tax amounts
used solely for repair, maintenance, replacement, management, or improvement of the residential
structures and commonly held property, but excluding property where fees or charges are made
for use by the public who are not guests accompanied by a member, which are derived by:
(i) A cooperative housing association, corporation, or partnership
from a person who resides in a structure owned by the cooperative housing association,
corporation, or partnership;
(ii) An association of owners of property as defined in RCW
64.32.010, as now or hereafter amended, from a person who is an apartment owner as defined in
RCW 64.32.010; or
(iii) An association of owners of residential property from a person
who is a member of the association. "Association of owners of residential property" means any
organization of all the owners of residential property in a defined area who all hold the same
property in common within the area.
(b) For the purposes ofthis subsection "commonly held property" includes
areas required for common access such as reception areas, halls, stairways, parking, etc., and
may include recreation rooms, swimming pools and small parks or recreation areas; but is not
intended to include more grounds than are normally required in a residential area, or to include
such extensive areas as required for golf courses, campgrounds, hiking and riding areas, boating
areas, etc.
(c) To qualify for the deductions under this subsection:
(i) The salary or compensation paid to officers, managers, or
employees must be only for actual services rendered and at levels comparable to the salary or
compensation of like positions within the county wherein the property is located;
(ii) Dues, fees, or assessments in excess of amounts needed for the
purposes for which the deduction is allowed must be rebated to the members of the association;
(iii) Assets of the association or organization must be distributable to
all members and must not inure to the benefit of any single member or group of members.
(9) Sales at Wholesale or Retail of Precious Metal Bullion and Monetized Bullion. In
computing tax, there may be deducted from the measure ofthe tax amounts derived from the sale
at wholesale or retail of precious metal bullion and monetized bullion. However, no deduction is
allowed on amounts received as commissions upon transactions for the accounts of customers
over and above the amount paid to other dealers associated in such transactions, and no
28
B&O Tax and
Administrative Provisions
deduction or offset is allowed against such commissions on account of salaries or commissions
paid to salesmen or other employees.
(10) Amounts RelJresenting Rental of Real Estate for Boarding Homes. In computing
tax, there may be deducted from the measure of tax amounts representing the value of the rental
of real estate for "boarding homes." To qualify for the deduction, the boarding home must meet
the definition of "boarding home, and licensed by the State of Washington under Chapter 18.20
RCW. The deduction shall be in the amount of twenty-five (25 percent ofthe gross monthly
billing when the boarder has resided within the boarding home for longer than thirty (30) days.
(11) Radio and Television Broadcasting - Advertising Agency Fees - National,
Regional, and Network Advertising - Interstate Allocations. In computing tax, there may be
deducted from the measure of tax by radio and television broadcasters amounts representing the
following:
(a) Advertising agencies' fees when such fees or allowances are shown as a
discount or price reduction in the billing or that the billing is on a net basis, i.e., less the discount;
(b) Actual gross receipts from national network, and regional advertising or a
"standard deduction" as provided by RCW 82.04.280; and
(c) Local advertising revenue that represent advertising which is intended to
reach potential customers ofthe advertiser who are located outside the State of Washington. The
Director may issue a rule that provides detailed guidance as to how these deductions are to be
calculated.
(12) 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 ofthe State of Washington or the Constitution ofthe United States.
(13) ReceilJts From the Sale of Tangible Personal ProlJerty and Retail Service
Delivered Outside the City but Within Washington. Effective January L 2008, amounts included
in the gross receipts reported on the tax return derived from the sale of tangible personal property
and retail service 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.
(14) Professional Employer Services. In computing the tax, a professional emlJloyer
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"
comlJensation, lJavroll taxes, withholding, or other assessments paid to or on behalf of a covered
employee by the professional employer organization under a professional employer agreement.
3.48.120 T AX 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.
3.48.125 RULES AND REGULATIONS.
The Director may establish administrative rules and regulations as deemed appropriate,
consistent with this chapter for the purpose of enforcing and carrying out its provisions.
29
B&O Tax and
Administrative Provisions
3.48.130 SEVERABILITY CLAUSE.
If any provision of this chapter or its application to any person or circumstance is held
invalid, the remainder of the chapter or the application of the provision to other persons or
circumstances shall not be affected.
SECTION 2. Chapter 3.86 of the Bremerton Municipal Code entitled
"Administrative Provisions" is hereby amended to read as follows:
Chapter 3.86
ADMINISTRATIVE PROVISIONS FOR TAXES
3.86.015 APPLICATION OF CHAPTER STATED.
The provisions of this chapter shall apply with respect to the licenses and taxes imposed
under chapter Chapter 5.02 BMC "General Business Licenses", chapter 3.48 BMC "Business
and Occupation Taxes", chapter Chapter 3.50 BMC "Utility Taxes" and under other titles,
chapters, and sections in such manner and to such extent as indicated in each such title, chapter
or section.
3.86.020 DEFINITIONS.
For purposes ofthis chapter:
The definitions contained in chapter 3.48 BMC shall apply equally to the provisions of this
chapter unless the term is defined otherwise in this chapter. In addition, the following definitions
will apply.
"Reporting period_." "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).
"Return_." "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.
"Successor_." "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.
"Tax year,"or "taxable year_." "Tax year" or "taKable year" means the calendar year.
3.86.025 DEFINITIONS - REFERENCES TO CHAPTER 82.32 RCW.
Where provisions ofChavter 82.32 RCW are incorporated in BMC 3.86.090,
"Department" as used in the RCW shall refer to the "Director" as defined in BMC 3.48.030 and
"warrant" as used in the RCW shall mean "citation or criminal complaint."
30
B&O Tax and
Administrative Provisions
3.86.030 BUSINESS LICENSES.
Business licenses shall be issued pursuant to Chapter 5.02 BMC.
3.86.040 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.
(1) Other than any annual license fee or registration fee assessed under chapter 5.02
BMC, the tax imposed by those chapters set forth in BMC 3.86.015 shall be due and payable in
quarterly installments unless otherwise specifically provided for therein. At the Director's
discretion, businesses may be assigned to a monthly or annual reporting period depending on the
tax amount owing or type oftax. Tax payments are due on or before the last day ofthe next
month following the end of the assigned reporting period covered by the return.
(2) 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.
(3) Tax returns must be filed and returned by the due date whether or not any tax is
owed.
(4) For purposes of the tax im{losed bv Chapter 3.48 BMC, any person whose value
of products, gross proceeds of sales, or gross income of the business, subiect to tax after all
allowable deductions, is equal to or less than Sixty Thousand Dollars ($60,000) 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, deduction amounts and exemptions shall be entered on the tax
return even though no tax may be due.
(4~) 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.
(~.Q) 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.
(61) 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.
31
B&O Tax and
Administrative Provisions
3.86.050 PAYMENT METHODS - MAILING RETURNS OR
REMITTANCES - TIME EXTENSION - DEPOSITS - RECORDING PAYMENTS-
PAYMENT MUST ACCOMPANY RETURN - NSF CHECKS.
(1) 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.
(2) A return or remittance that which 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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 forty dollars ($40.00) 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 forty dollars ($40.00) NSF fee) is received.
(7) 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.
3.86.060 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 five (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.
(1) 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
32
B&O Tax and
Administrative Provisions
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 ofthe examination.
(2) 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.
3.86.070 ACCOUNTING METHODS.
(1) 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.
(2) The taxes imposed and the returns required, hereunder, shall be upon a calendar
year basis.
3.86.080 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.
3.86.090 UNDERPAYMENT OF TAX, INTEREST, OR PENALTY-
INTEREST LIMITATIONS.
(1) 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 thirty (30) days from the date ofthe notice, or within such time as the
Director may provide in writing.
(2) Interest calculation on underpayments.
(a) Interest on underpayments of taxes for periods prior to January 1, 2003,
shall be computed from the date of underpayment until paid at a rate of one percent for each
month, or portion thereof, compounded monthly.
(b) Interest imposed on or after January 1, 2003, shall be computed from the
last day of the month following the end of the reporting period and will continue to accrue until
payment is made. In case of an audit the interest shall be computed from the first day of the
33
B&O Tax and
Administrative Provisions
month following each calendar year or portion thereof included in the audit period. The rate of
interest to be charged to the taxpayer shall be an average ofthe federal short-term rate as defined
in 26 U.S.C. Sec. 1 274(d) plus two percentage points. The rate shall be computed by taking an
arithmetical average to the nearest percentage point of the federal short-term rate, compounded
annually, for the months of January, April, July, and October of the year immediately preceding
the calendar year as published by the United States Secretary of the Treasury. The rate shall be
adjusted on the first day of January of each year for use in computing interest for that calendar
year.
(c) F or 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. If
incorporation herein of future amendments to RCW 82.32.050 is deemed invalid, then the
provisions ofRCW 82.32.050 existing at the effective date of this subsection shall apply.
~3.86.095 TIME IN WHICH ASSESSMENT MAY BE MADE. 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:
(al) 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 ten (10) years
prior to the close of the calendar year in which the person was contacted in writing by the
Director;
(B2) Against a person that has committed fraud or who misrepresented a material fact;
or
(eJ) Against a person that has executed a written waiver of such limitations.
3.86.100 OVER PAYMENT OF TAX, PENALTY, OR INTEREST - CREDIT
OR REFUND - INTEREST RATE - STATUTE OF LIMITATIONS.
(1) 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 subsection (2) of
this section, no refund or credit shall be made for taxes, penalties, or interest paid more than four
(4) years prior to the beginning of the calendar year in which the refund application is made or
examination of records is completed.
(2) 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 ofthe 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.
(3) 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.
(4) 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 subsection (3) of this section, upon the filing with the Director a certified
copy of the order or judgment of the court.
(5) Interest calculation on refunds or overpayments.
34
B&O Tax and
Administrative Provisions
(a) Interest on overpayments of taxes for periods ending prior to January 1,
2003, shall be computed at three (3) percent per annum.
(b) Interest on overpayments of taxes for periods beginning on or after
January 1, 2003, shall be an average of the federal short-term rate as defined in 26 U.S.C. Sec.
127 4( d) less two percentage points. The rate shall be computed by taking an arithmetical
average to the nearest percentage point of the federal short-term rate, compounded annually, for
the months of January, April, July, and October of the year immediately preceding the calendar
year as published by the United States Secretary ofthe Treasury. The rate shall be adjusted on
the first day of January of each year for use in computing interest for that calendar year.
( c) F or tax periods after December 31, 2004 the Director shall compute
interest on refunds or credits of amounts paid or other recovery allowed a taxpayer in accordance
with RCW 82.32.060 as it now exists or as it may be amended. If incorporation herein of future
amendments to RCW 82.32.060 is deemed invalid, then the provisions ofRCW 82.32.060
existing at the effective date of this subsection shall apply.
3.86.110 LATE PAYMENT - DISREGARD OF WRITTEN INSTRUCTIONS
- EVASION - PENALTIES.
(1) If the Director does not receive a return or payment of any tax due on a return by
the due date, the Director shall add a penalty in accordance with RCW 82.32.0900), as it now
exists or as it may be amended equal to the greuter of ten percent (10%) of the amount of the tax,
or ten dollars ($10.00); and ifthe tax is not received on or before the last day of the month
following the due date, the Director shall add a total penalty equal to the greater of fifteen
percent (15%) ofthe amount of the tax, or fifteen dollars ($15.00); and if the tax is not received
on or before the last day of the second month following the due date, the Director shall add a
total penalty equal to the greater of t\venty percent (20%) of the amount of the tax, or tv/enty
dollars ($20.00).
(2) If payment of any tax assessed by 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 amendedis not received by
the due date specified in the notice, or any extension thereof, the Director shall add a penalty
equal to the greater often percent (10%) ofthe amount of the additional tax found due, or ten
dollars ($10.00).
(3) 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.
(4) 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 business license as required by Chapter 5.02 BMC, 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 this subsection (4) 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.
(J~) 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 amendedef
twenty five percent (25%) ofthe amount ofthe additional tax due.
35
B&O Tax and
Administrative Provisions
(a) ..^.. taxpayer fails to follo':/ specific written tax reporting instructions when
the Director has informed the taxpayer in writing of the taxpayer's tax obligations and the
taxpayer fails to act in accordance with those instructions. The Director shall not assess the
penalty under this subsection upon any taxpayer that has made a good faith effort to comply v/ith
the specific written instructions provided by the Director to that taxpayer.
(b) Specific ',vritten instructions may be given as a part of a tax assessment,
audit, determination, or closing agreement, provided that such specific \vritten instructions shall
apply only to the taxpayer addressed or referenced on such documents.
( c) }..ny specific v/ritten instructions by the Director shall be identified as such
and shall inform the taxpayer that failure to follow the instructions may subject the taxpayer to
the penalties imposed by this subsection.
(1) 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 of fifty percent (50%) ofthe additional tax found
to be due.
(5) The aggregate of penalties imposed under subsections (1) and (2) ofthis section shall
not exceed thirty percent (30%) of the tax due, and shall not be less than hventy dollars ($20.00).
This subsection does not prohibit or restrict the application of other penalties authorized by law.
(6) The penalties authorized by subsection (3) and (1) shall be assessed in accordance
with the pro','isions of this chapter go','crning assessment of tax. 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.
(6) 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(6),
as it now exists or as it may be amended.
(7) The penalties imposed under subsections (1) through (5) above of this section can
each be imposed on the same tax found to be due. This subsection does not prohibit or restrict
the a{l{llication of other penalties authorized by law.
(8) The Director shall not impose both the evasion penalty and the penalty for
disregarding s{lecific written instructions on the same tax found to be due.
(9) For the purposes of this section, "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.
(10) If incorporation herein of future amendments to RCW 82.32.090 is deemed
invalid, then the provisions ofRCW 82.32.090 existing at the effective date of this subsection
shall apply.
3.86.120 CANCELLATION OF PENALTIES.
(1) The Director may cancel any penalties imposed under BMC 3.86.110(1) and (2) 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 other penalties or to cancel penalties
for any other reason except as provided in subsection (3).
(2) A request for cancellation of penalties must be received by the Director within
thirty (30) days after the date the Department mails the notice that the penalties are due. The
36
B&O Tax and
Administrative Provisions
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.
(3) The Director may cancel the penalties in BMC 3.86.110(1) and (2) one time if a
person:
(a) Is not currently licensed, and filing returns,
(b) Was unaware of its responsibility to file and pay tax, and
(c) Obtained business licenses and filed past due tax returns within thirty (30)
days after being notified by the Department.
(4) The Director shall not cancel any interest charged upon amounts due.
3.86.130 TAXPAYER QUITTING BUSINESS - LIABILITY OF
SUCCESSOR.
(1) 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 ten (10) days thereafter, make a return and pay the tax
due.
(2) 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 six (6) months have passed since the successor notified the Director of the acquisition
and the Director has not issued and notified the successor of an assessment.
(3) 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.
(4) Notwithstanding the above, if a successor gives written notice to the Director of
the acquisition, and the Department does not within six (6) months ofthe 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.
3.86.140 ADMINISTRATIVE APPEAL.
Any person, except one who has failed to comply with BMC 3.86.060 relating to the
maintenance of records, aggrieved by the amount of the fee or tax determined by the Director to
be required under the provisions of this chapter may pay the amount due and appeal from such
determination by filing a written notice of appeal with the Administrative Hearing Examiner
within thirty (30) calendar days from the date written notice of such amount was mailed to the
taxpayer. A filing fee as set forth in Chapter 3.01 BMC shall be submitted with the appeal, which
filing fee is required to process the appeal. The Administrative Hearing Examiner shall, as soon
as practical, fix a time and place for the hearing of such appeal, and shall cause a notice of the
time and place thereof to be delivered or mailed to the parties. The hearing shall be conducted in
accord with the provisions of Chapter 2.13 BMC. The decision of the Administrative Hearing
Examiner shall indicate the correct amount of the fee or tax owing.
37
B&O Tax and
Administrative Provisions
3.86.160 DIRECTOR TO MAKE RULES.
The Director shall have the power, from time to time, to adopt, publish and enforce rules
and regulations not inconsistent with this chapter or with law for the purpose of carrying out the
provisions of this chapter and it shall be unlawful to violate or fail to comply with any such rule
or regulation.
3.86.170 ANCILLARY ALLOCATION AUTHORITY OF DIRECTOR.
The Director is authorized to enter into agreements with other Washington cities which
impose an "eligible gross receipts tax":
(1) To conduct an audit or joint audit of a taxpayer by using an auditor employed by
the City of Bremerton, another city, or a contract auditor; pro'.'ided, that such contract auditor's
pay is not in any 'Nay based upon the amount of tax assessed;
(2) To allocate or apportion the gross proceeds of sales, gross receipts, or gross
income of the business, or taxes due from any person that is required to pay an eligible gross
receipts tax to more than one Washington city in a manner that fairly reflects gross receipts
earned from activities conducted within the respective cities.
(3) To apply the City's tax prospectively where a taxpayer has no office or place of
business within the City and has paid tax on all gross income to another Washington city where
the taxpayer is located; provided, that the other city maintains an eligible gross receipts tax, and
the income was not derived from contracts with the City.
3.86.180 MAILING OF NOTICES.
Any notice required by this chapter to be mailed to any taxpayer or licensee shall be sent
by ordinary mail, addressed to the address of the taxpayer or licensee as shown by the records of
the Director. Failure ofthe taxpayer or licensee to receive any such mailed notice shall not
release the taxpayer or licensee from any tax, fee, interest, or any penalties thereon, nor shall
such failure operate to extend any time limit set by the provisions of this chapter. It is the
responsibility of the taxpayer to inform the Director in writing about a change in the taxpayer's
address.
3.86.190 TAX DECLARED ADDITIONAL.
The license fee and tax herein levied shall be additional 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.
3.86.200 PUBLIC DISCLOSURE - CONFIDENTIALITY - INFORMATION
SHARING.
(1) For purposes ofthis section, unless a different meaning is clearly established by
context, the following definitions apply:
(a) "Disclose" means to make known to any person in any manner.
(b) "Tax information" means:
(i) A taxpayer's identity;
(ii) The nature, source, or amount of the taxpayer's income, payments,
receipts, deductions, exemption, credits, assets, liability, net worth, tax liability deficiencies, over
38
B&O Tax and
Administrative Provisions
assessments, or tax payments, whether taken from the taxpayer's books and records or any other
source;
(iii) Whether the taxpayer's return was, is being, or will be examined or
subject to other investigation or processing; or
(iv) Other data received by, recorded by, prepared by, or provided to
the Director with respect to a taxpayer; provided, that tax information shall not include data,
material, or documents that do not disclose information related to a specific or identifiable
taxpayer.
(2) Tax returns and information are "public records" as that term is defined in RCW
42.17.020. The Director shall not disclose tax information if disclosure would violate Chapter
42.17 RCW or any other law prohibiting disclosure.
(3) Tax information may be disclosed to the following:
(a) The Mayor, members of the City Council, City Attorney, City Clerk, or
their authorized designees, for official purposes;
(b) Any agency or officer of the United States of America, the State of
Washington, or a tax department of any state, county, city or town; provided, that the agency or
officer grants substantially similar privileges to the City; and further provided, that the agency or
officer shall not further disclose the tax information except as authorized in this section.
(4) Nothing in this section shall prevent the use of tax information by the Director or
any other agency in any civil or criminal action involving any license, tax, interest, or penalty.
(5) A person disclosing tax information to a person not entitled to receive that
information under this section is guilty of a misdemeanor, and if the person violating this privacy
requirement is an officer or employee of the City, such person may be required to forfeit their
office or employment.
3.86.210 TAX CONSTITUTES DEBT.
Any license fee or tax due and unpaid under this chapter, and all interest and penalties
thereon, shall constitute a debt to the City of Bremerton and may be collected in the same
manner as any other debt in like amount, which remedy shall be in addition to all other existing
remedies.
3.86.220 UNLAWFUL ACTIONS - VIOLATION - PENALTIES.
(1) It shall be unlawful for any person liable for amounts due under this chapter or
under other chapters as referenced in BMC 3.86.015:
(a) To violate or fail to comply with any ofthe provisions of this or the
referenced chapters or any lawful rule or regulation adopted by the Director;
(b) To intentionally defraud the City or intentionally evade the payment of
any tax or part thereof;
(c) For any person to make any false or fraudulent tax return or false
statement in any tax return, with intent to defraud the City or evade the payment of any tax or
part thereof;
(d) To aid or abet any person in any attempt to intentionally defraud the City
or intentionally evade payment of a license fee or tax or any part thereof;
(e) To fail to appear or testify in response to a subpoena issued pursuant to
law;
39
B&O Tax and
Administrative Provisions
(t) To testify falsely in any investigation, audit, or proceeding conducted
pursuant to this chapter;
(g) To fail to keep and preserve books and records or for any person to fail or
refuse to permit the examination of any book, paper, record or other data by the City in
accordance with this chapter; and/or
(h) To violate any of the provisions ofthis chapter.
(2) Violations - Penalties.
(a) Civil Penalties. Any violation of BMC 3.86.220(1) constitutes a civil
violation under Chapter 1.04 BMC for which a monetary penalty and costs may be assessed and
enforcement of this chapter may be required as provided for in this chapter and Chapter 1.04
BMC, including, but not limited to, enforcement of assessment of {lenalties pursuant to BMC
3.86.110.
(b) Criminal Penalties. In addition to the foregoing penalties, any person who
violates or fails to comply with BMC 3.86.220(1) shall, upon conviction, be punished as
described in the general criminal penalty provisions ofBMC 1.12.020(2). Such person will be
guilty of this violation for each day, or portion thereof, during which the business is so engaged
or carried on.
( c) In lieu of and as an alternative to a hearing before the Administrative
Hearing Examiner pursuant to BMC 3.86.220(2)(a) above, the City may file an action in a court
of competent jurisdiction to seek enforcement of this chapter and assessment and collection of
penalties, costs and enforcement as provided for in this chapter. Additionally, the City may file
an action in a court of competent jurisdiction to seek enforcement of an order of the
Administrative Hearing Examiner issued pursuant to BMC 3.86.220(2)(a) above.
(d) Penalties or punishments provided in this section are not exclusive, and
may be used in addition to or in conjunction with other enforcement and penalty provisions
authorized by the Bremerton City Code or State law.
3.86.230 SUSPENSION OR REVOCATION OF BUSINESS LICENSE.
The Director, or designee, shall have the {lower and authority to suspend or revoke any
business license pursuant to Chapter 5.02 BMC.
3.86.240 CLOSING AGREEMENT PROVISIONS.
The Director may enter into an agreement in writing with any person relating to the
liability of such person in respect of any tax imposed by any of the chapters within this title and
administered by this chapter for any taxable period(s). Upon approval of such agreement,
evidenced by execution thereof by the Director and the person so agreeing, the agreement shall
be final and conclusive as to the tax liability or tax immunity covered thereby, and, except upon
a showing of fraud or malfeasance, or misrepresentation of a material fact:
(1) The case shall not be reopened as to the matters agreed upon, or the agreement
modified, by the Director or the taxpayer, and
(2) In any suit, action or proceeding, such agreement, or any determination,
assessment, collection, payment, abatement, refund, or credit made in accordance therewith shall
not be annulled, modified, set aside, or disregarded.
40
B&O Tax and
Administrative Provisions
3.86.250 CHARGE-OFF OF UNCOLLECTIBLE TAXES.
The Director may charge off any tax, penalty, or interest that is owed by a taxpayer if the
Director reasonably ascertains that the cost of collecting such amounts would be greater than the
total amount that is owed or likely to be collected from the taxpayer. Charge-offs in excess of
one thousand dollars ($1,000) require City Council approval.
3.86.260 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 3. Severability. If anyone or more sections, subsections, or
sentences of this ordinance are held to be unconstitutional or invalid, such decision shall not
affect the validity of the remaining portion of this ordinance and the same shall remain in full
force and effect.
SECTION 4. Effective Date of Ordinance. This ordinance shall take effect and
be in force ten (10) days from and after its passage, approval and publication as provided by law.
PASSED by the City Council the
/~
,2007
"
Approved this lli~) day of
ATTEST:
av~~J
CAROL E GEN, Ci Clerk
PUBLlSHEDthe Iffl.- daYOf~.._.,.__._._._..
EFFECTIVE the OZ ~ day of
ORDINANCE NO. S7Jc:l..J' . .
,2007
,2007
R:\Legal\Legal\Ordinances\Finance\2007 8&0 Tax Update. doc
41
B&O Tax and
Administrative Provisions
AFFIDAVIT OF PUBLICATION
Account # 42742 / Ad # 217004
STATE OF WASHINGTON
COUNTY OF KITSAP
I, Christy Moffitt, being first duly sworn on oath, deposes and says: That she is now, and at all times
embraced in the publication herein mentioned was the principal clerk of the printers and publishers of
KITSAP SUN; that said newspaper has been approved as a legal newspaper by order of the Superior Court
of the County of Kitsap, in which County it is published and is now and has been for more than six months
prior to the date of the publication hereinafter referred to, published in the English language continually as
a daily newspaper in Bremerton, Kitsap County, Washington, a weekly newspaper in Kitsap County,
Washington and is now and during all of said time, was printed in an office maintained in the aforesaid
place of publication of said newspaper; that the following is a true text of a legal advertisement as it was
published in regular issues (and not in supplement form) of said newspaper on the following date, to wit:
November 19,2007 and that such newspaper was regularly distributed to its subscribers during all of said
period. That the full amount of the fee charged for the foregoing publication is the sum of $36.97 which
amount has not been paid in full.
~Afl~ hL~Alt
(Signature of Principal Clerk)
. &eF\~;;~~~$~;;.Jh
~/ 'V'.J " \..., ,1 '. 'U~'
"~_of ~~ !'f ~ ,r= ~ .. "V,^ " r
7d~c~ .'",g,,:, k ~
'_ ,t:!~./ ~~t~~':'. 't~ A '~'.ri~~c;~~Q () y/,
v! ~ \'I (T.. r') ~ r"~ f1.ic) (D\ ~ ....p ~~l
, ".~ Cl) :''''.,.~ .,>, "1'-\
. :,';\:.: j)t i ,. \(:1 :,
II 0 I~ e .~ ',.~ _ e 2
ORDINANCE NO. 5028 '\~\'-i'. ",,:'C', '.,;, -".0'
(-Q{2>~ :.' ~:> ":<0~~1 ' .
. " .. "'t.T' 0;,- \,~,{ 0. S'(\\'. -,J
AN ORDINANCE of the CIty CouncIl of the CIty of Bremerton, Washmgton, amendmg Chapter 3.48 of \l~,". ,(I" ...Ff
the Bremerton Municipal Code entitled "Business and Occupation Tax" and Chapter 3.86 entitled .,).s.,-,s;:s:)S~,...y
"Administrative Provisions for Taxes" to update the provisions of Chapter 3.48 and Chapter 3.86 relating to
allocation and apportionment of income consistent with the requirements of RCW 35.102.130 adopted by
EHB 2030 passed by the state legislature during the 2003 legislative session, and to make other related
amendments.
Subscribed and sworn to before me this day of November 23, 2007
,~
Notary Public in and for the State of Washington, Kitsap County.
PASSED by the City Council the 14th day of November, 2007.
November 19, 2007..................AD #20055701