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ORDINANCE NO. 5D~tf
AN ORDINANCE of the City Council of the City of
Bremerton, Washington, amending certain sections of Chapter 3.48
of the Bremerton Municipal Code relating to Business and
Occupation Taxes and business activity on industrially designated
port district owned property.
WHEREAS, the Port of Bremerton is a port district that operates within the City;
and
WHEREAS, that the City has a cooperative relationship with the Port of
Bremerton that, among other things, includes new port development in the City; and
WHEREAS, the City approves of the Port's ongoing activities in its industrial
development district and desires to foster intergovernmental relations; and
WHEREAS, the City Council believes that continued cooperation with the Port of
Bremerton will result in additional opportunities to provide additional new industrial
development and therefore new job opportunities for citizens of the City; and
WHEREAS, a tax exemption from business and occupation taxes for business
activity on Port of Bremerton owned industrial property would be consistent with the City's
goals of fostering industrial growth as part of its economic development of the City; and
WHEREAS, that such an exemption would contribute to the overall economic
vitality of the City and to the improvement of the quality oflife of its citizens; and
WHEREAS, the City Council desires to update certain provisions of Chapter 3.48
of the Bremerton Municipal Code in order to provide an exemption from the City's business and
occupation taxes for business activity on certain port district owned property; NOW
THEREFORE,
THE CITY COUNCIL OF THE CITY OF BREMERTON, WASHINGTON,
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Section 3.48.030 of the Bremerton Municipal Code entitled
"Definitions" relating to B&O Taxes is hereby amended to read as follows:
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.
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Business and Occupation Taxes
"Advance," "reimbursement."
(1) "Advance" means money or credits received by a taxpayer from a customer or
client with which the taxpayer is to pay costs or fees on behalf of the customer or client.
(2) "Reimbursement" means money or credits received from a customer or client to
repay the taxpayer for money or credits expended by the taxpayer in payment of costs or fees of
the customer or client.
"Agricultural product" 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.
"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.
(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.
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Business and Occupation Taxes
"Business" includes all activities engaged in with the object of gain, benefit, or advantage to the
taxpayer or to another person or class, directly or indirectly.
"Business and occupation tax,"_or "gross receipts tax" means a tax imposed on or measured
by the value of products, the gross income of the business, or the gross proceeds of sales, as the
case may be, and that is the legal liability of the business.
"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" means City of Bremerton, Washington.
"Commercial or industrial use" means the following uses of products, including by-products,
by the extractor or manufacturer thereof:
(1) Any use as a consumer;
(2) Any use in the manufacturing of products including articles, substances or
commodities.
"Competitive telephone service" means the providing by any person oftelecommunications
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 fI means the following:
(1) Any person who purchases, acquires, owns, holds, or uses any tangible or
intangible personal property irrespective of the nature of the person's business and including,
among others, without limiting the scope hereof, persons who install, repair, clean, alter,
improve, construct, or decorate real or personal property of or for a consumer other than for the
purpose of:
(a) Resale as tangible or intangible personal property in the regular course of
business;
(b) Incorporating such property as an ingredient or component of real or
personal property when installing, repairing, cleaning, altering, imprinting, improving,
constructing, or decorating such real or personal property of or for consumers;
(c) Incorporating such property as an ingredient or component of a new
product or as a chemical used in processing a new product when the primary purpose of such
chemical is to create a chemical reaction directly through contact with an ingredient of a new
product; or
(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-
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Business and Occupation Taxes
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" 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
delivery to the buyer. Transfer of possession of tangible personal property occurs when the
buyer or the buyer's representative first takes physical control of the property or exercises
dominion and control over the property. Dominion and control means the buyer has the ability to
put the property to the buyer's own purposes. It means the buyer or the buyer's representative
has made the final decision to accept or reject the property, and the seller has no further right to
possession of the property and the buyer has no right to return the property to the seller, other
than under a warranty contract. A buyer does not exercise dominion and control over tangible
personal property merely by arranging for shipment ofthe property from the seller to itself. A
buyer's representative is a person, other than an employee of the buyer, who is authorized in
writing by the buyer to receive tangible personal property and take dominion and control by
making the final decision to accept or reject the property. Neither a shipping company nor a
seller can serve as a buyer's representative. It is immaterial where the contract of sale is
negotiated or where the buyer obtains title to the property. Delivery terms and other provisions
of the Uniform Commercial Code (Title 62A RCW) do not determine when or where delivery of
tangible personal property occurs for purposes of taxation.
"Director" means the Director of Financial Services of the City or any officer, agent or
employee of the City designated to act on the Director's behalf.
"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
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Business and Occupation Taxes
(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," "nexus."
(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.
(a) Owning, renting, leasing, maintaining, or having the right to use, or using,
tangible personal property, intangible personal property, or real property permanently or
temporarily located in the City.
(b) Owning, renting, leasing, using, or maintaining, an office, place of
business, or other establishment in the City.
(c) Soliciting sales.
(d) Making repairs or providing maintenance or service to real or tangible
personal property, including warranty work and property maintenance.
(e) Providing technical assistance or service, including quality control,
product inspections, warranty work, or similar services on or in connection with tangible
personal property sold by the person or on its behalf.
(f) Installing, constructing, or supervising installation or construction of, real
or tangible personal property.
(g) Soliciting, negotiating, or approving franchise, license, or other similar
agreements.
(h) Collecting current or delinquent accounts.
(i) Picking up and transporting tangible personal property, solid waste,
construction debris, or excavated materials.
(j) Providing disinfecting and pest control services, employment and labor
pool services, home nursing care, janitorial services, appraising, landscape architectural services,
security system services, surveying, and real estate services including the listing of homes and
managing real property.
(k) Rendering professional services such as those provided by accountants,
architects, attorneys, auctioneers, consultants, engineers, professional athletes, barbers, baseball
clubs and other sports organizations, chemists, consultants, psychologists, court reporters,
dentists, doctors, detectives, laboratory operators, teachers, veterinarians.
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Business and Occupation Taxes
(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.
(c) Attending meetings, such as board meetings, retreats, seminars, and
conferences, or other meetings wherein the person does not provide training in connection with
tangible personal property sold by the person or on its behalf.
(d) Renting tangible or intangible property as a customer when the property is
not used in the City.
(e) Attending, but not participating in a "trade show" or "multiple vendor
events." Persons participating at a trade show shall review the City's trade show or multiple
vendor event ordinances.
(f) Conducting advertising through the mail.
(g) Soliciting sales by phone from a location outside the City.
(5) A seller located outside the City merely delivering goods into the City by means
of common carrier is not required to register and obtain a business license provided that it
engages in no other business activities in the City. Such activities do not include those in
subsection (4).
(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.
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Business and Occupation Taxes
"Extracting" is the activity engaged in by an extractor and is reportable under the extracting
classification.
"Extractor" means every person who from the person's own land or from the land of another
under a right or license granted by lease or contract, either directly or by contracting with others
for the necessary labor or mechanical services, for sale or for commercial or industrial use,
mines, quarries, takes or produces coal, oil, natural gas, ore, 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" 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
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.
"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" 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" includes all federal areas lying within the corporate City
limits of the City.
"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 tenn 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
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Business and Occupation Taxes
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:
(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.
"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 ofthe publication. Any publication meeting this definition
qualifies regardless of its content.
"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 501(c)(3) ofthe 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" 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
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Business and Occupation Taxes
(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
office or place of business, the person's home or apartment within the City will be deemed the
place of business.
"Person" means any individual, receiver, administrator, executor, assignee, trustee in
bankruptcy, trust, estate, firm, co-partnership, joint venture, club, company, joint stock company,
business trust, municipal corporation, political subdivision of the State of Washington,
corporation, limited liability company, association, society, or any group of individuals acting as
a unit, whether mutual, cooperative, fraternal, non-profit, or otherwise and the United States or
any instrumentality thereof.
"Port District" means a port district as defined in Chapter 53.04 RCW.
"Precious metal bullion," "monetized 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 ofthis section, "monetized bullion" means coins or
other forms of money manufactured from gold, silver, or other metals and heretofore, now, or
hereafter used as a medium of exchange under the laws of this State, the United States, or any
foreign nation, but does not include coins or money sold to be manufactured into jewelry or
works of art.
"Processing for hire" means the performance 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 ofthe extracting or manufacturing activities.
"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).
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Business and Occupation Taxes
"Retail service" shall include the sale of or charge made for personal, business, or professional
services including amounts designated as interest, rents, fees, admission, and other service
emoluments however designated, received by persons engaging in the following business
activities:
(1) Amusement and recreation services including but not limited to golf, pool,
billiards, skating, bowling, swimming, bun gee 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;
(6) Service charges associated with tickets to professional sporting events; and
(7) The following personal services: physical fitness services, tanning salon services,
tattoo parlor services, steam bath services, turkish bath services, escort services, and dating
serVIces;
(8) The term shall also include the renting or leasing of tangible personal property to
consumers and the rental of equipment with an operator.
"Retailing" means the activity of engaging in making sales at retail and is reported under the
retailing classification.
"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" means compensation for the use of intangible property, such as copyrights, patents,
licenses, franchises, trademarks, tradenames, and similar items.
"Sale," "casual or isolated sale."
(1) "Sale" means any transfer of the ownership of, title to, or possession of, property
for a valuable consideration and includes any activity classified as a "sale at retail," "retail sale,"
or "retail service." It includes renting or leasing, conditional sale contracts, leases with option to
purchase, and any contract under which possession of the property is given to the purchaser but
title is retained by the vendor as security for the payment of the purchase price. It also includes
the furnishing of food, drink, or meals for compensation whether consumed upon the premises or
not.
(2) "Casual or isolated sale" means a sale mad~ 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."
(1) "Sale at retail" or "retail sale" means every sale of tangible personal property
(including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of
their business and including, among others, without limiting the scope hereof, persons who
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Business and Occupation Taxes
install, repair, clean, alter, improve, construct, or decorate real or personal property of or for
consumers, other than a sale to a person who presents a resale certificate under RCW 82.04.470
and who:
(a) Purchases for the purpose of resale as tangible personal property in the
regular course of business without intervening use by such person; or
(b) Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates
real or personal property of or for consumers, if such tangible personal property becomes an
ingredient or component of such real or personal property without intervening use by such
person; or
(c) Purchases for the purpose of consuming the property purchased in
producing for sale a new article of tangible personal property or substance, of which such
property becomes an ingredient or component or is a chemical used in processing, when the
primary purpose of such chemical is to create a chemical reaction directly through contact with
an ingredient of a new article being produced for sale; or
(d) Purchases for the purpose of consuming the property purchased in
producing ferrosilicon which is subsequently used in producing magnesium for sale, if the
primary purpose of such property is to create a chemical reaction directly through contact with
an ingredient of ferrosilicon; or
( e) Purchases for the purpose of providing the property to consumers as part
of competitive telephone service, as defined in RCW 82.04.065. The term shall include every
sale of tangible personal property which is used or consumed or to be used or consumed in the
performance of any activity classified as a "sale at retail" or "retail sale" even though such
property is resold or utilized as provided in subsections (1)( a), (b), (c), (d), or ( e) of this
definition following such use; or
(f) 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
replaces or becomes an ingredient or component of property covered by the extended warranty
without intervening use by such person.
(2) "Sale at retail" or "retail sale" also means every sale 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 of the 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 abo\;'e 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 apart 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 ofland used in commercial farming or agriculture;
11
Business and Occupation Taxes
( c) The charge for labor and services rendered in respect to constructing,
repairing, or improving any structure upon, above, or under any real property owned by an owner
who conveys the property by title, possession, or any other means to the person performing such
construction, repair, or improvement for the purpose of performing such construction, repair, or
improvement and the property is then reconveyed by title, possession, or any other means to the
original owner;
(d) The sale of or charge made for labor and services rendered in respect to
the cleaning, fumigating, razing or moving of existing buildings or structures, but shall not
include the charge made for janitorial services, 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;
(f) The sale of and charge made for the furnishing of lodging and all other
services, except telephone business and cable service, by a hotel, rooming house, tourist court,
motel, trailer camp, and the granting of any similar license to use real property, as distinguished
from the renting or leasing of real property, and it shall be presumed that the occupancy of real
property for a continuous period of one month or more constitutes a rental or lease of real
property and not a mere license to use or enjoy the same. For the purposes of this subsection, it
shall be presumed that the sale of and charge made for the furnishing of lodging for a continuous
period of one month or more to a person is a rental or lease of real property and not a mere
license to enjoy the same;
(g) The sale of or charge made for tangible personal property, labor and
services to persons taxable under subsections (3)(a), (b), (c), (d), (e), and (f) 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 (1) of
this definition and nothing contained in subsection (1) 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 ~raffic including mass transportation vehicles of any kind.
(Public road construction).
(7) "Sale at retail" or "retail sale" shall also include the sale of or charge made for
labor and services rendered in respect to the constructing, repairing, decorating, or improving of
new or existing buildings or other structures under, upon, or above real property of or for the
United States, any instrumentality thereof, or a county or city housing authority created pursuant
12
Business and Occupation Taxes
to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal
property therein or thereto, whether or not such personal property becomes a part of the realty by
virtue of installation (government contracting).
(8) "Sale at retail" or "retail sale" shall also include the sale of or charge made for an
extended warranty to a consumer. For purposes of this subsection, "extended warranty" means an
agreement for a specified duration to perform the replacement or repair of tangible personal
property at no additional charge or a reduced charge for tangible personal property, labor, or
both, or to provide indemnification for the replacement or repair oftangible personal property,
based on the occurrence of specified events. The term "extended warranty" does not include an
agreement, otherwise meeting the definition of extende.d 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 not include the sale of services or charges
made for the clearing of land and the moving of earth of or for the United States, any
instrumentality thereof, or a county or city housing authority. Nor shall the term include the sale
of services or charges made for cleaning up for the United States, or its instrumentalities,
radioactive waste and other by-products of weapons production and nuclear research and
development. (This is reported under the service or other classification.).
(10) "Sale at retail" or "retail sale" shall not include the sale of or charge made for
labor and services rendered for environmental remedial action. (This is reported under the
service and other classification.)
"Sale at wholesale," "wholesale sale" means any sale oftangible 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 telephone
business to another telecommunications company as defined in RCW 80.04.010 for the purpose
of resale, as contemplated by RCW 35.21.715.
"Services" 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
include routine installation. Customization of canned software does not change the underlying
character or taxability of the C!riginal canned software.
(4) "Master copies" of software means copies of software from which a software
developer, author, inventor, publisher, licensor, sub licensor, 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.
13
Business and Occupation Taxes
(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" 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" means the calendar year.
"Taxpayer" means any person, as herein defined, required to have a business license under this
chapter or liable for the collection of any tax or fee under this chapter, or who engages in any
business or who performs any act for which a tax or fee is imposed by this chapter.
"Tuition fee" includes library, laboratory, health service and other special fees, and amounts
charged for room and board by an educational institution when the property or service for which
such charges are made is furnished exclusively to the students or 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
28B.90 RCW, and in accordance with RCW 82.04.4332 or defined as a degree-granting
institution under RCW 28B.85.010(3) and accredited by an accrediting association recognized by
the United States Secretary of Education, and offering to students an educational program of a
general academic nature or those institutions which are not operated for profit and which are
privately endowed under a deed of trust to offer instruction in trade, industry, and agriculture, but
not including specialty schools, business colleges, other trade schools, or similar institutions.
"Value 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
14
Business and Occupation Taxes
under circumstances such that the gross proceeds from the sale are not indicative ofthe true
value of the subject matter of the sale; the value shall correspond as nearly as possible to the
gross proceeds from sales in this State of similar products of like quality and character, and in
similar quantities by other taxpayers, plus the amount of subsidies or bonuses ordinarily payable
by the purchaser or by any third person with respect to the extraction, manufacture, or sale of
such products. In the absence of sales of similar products as a guide to value, such value may be
determined upon a cost basis. In such cases, there shall be included every item of cost
attributable to the particular article or article extracted or manufactured, including direct and
indirect overhead costs. The Director may prescribe rules for the purpose of ascertaining such
values.
(3) Notwithstanding subsection (2) 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 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.
"Wholesaling" means engaging in the activity of making sales at wholesale, and is reported
under the wholesaling classification.
SECTION 2. Section 3.48.090 ofthe Bremerton Municipal Code entitled
"Exemptions" relating to B&O Taxes is hereby amended to read as follows:
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 48.14.020l.
(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
15
Business and Occupation Taxes
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
from the completion of any contract as to which it is a surety, or as to any liability as successor
to the liability ofthe 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) Emplovees. 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 ofthis 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-Partv Provider Services Trust Accounts. This chapter
shall not apply to amounts received from trust accounts to mortgage brokers for the payment of
16
Business and Occupation Taxes
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
regularl y 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
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.
(9) Port District Business Activity. For the purpose of the tax imposed by BMC
3.48.0500) (a) through (g), persons engaged in business on Port District owned property located
within and zoned by the City with an industrial classification ("Port Property") shall be treated in
the same manner as if the Port Property were located in unincorporated Kitsap County and
therefore exempt from the tax; however, the apportionment and allocation, place of delivery and
the appropriate tax provisions of this chapter shall apply for business activity occurring off the
Port Property but within the City, also in the same manner as if the Port Property were located in
unincorporated Kitsa? County.
(l-92.Q) Three (3) Year Exemption for Annexed 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.
SECTION 3. Severabilitv. 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. 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 I~
day of ~~.AJ
17
,2008
Business and Occupation Taxes
d-
Approved this 0lW-...l) day of
CARY BOZEMAN, Mayor
ATTEST:
APPROVED AS TO FORM:
~ -~: ~--=
. R ~~R A.!, ICH, City Attorney
PUBLISHED the,.,lSn{; day of ~; :1:
EFFECTIVE the .if::::c)J day of . .
ORDINANCE NO. fa ,y,/
,2008
,2008
R:\Legal\Legal\Ordinances\Finance\2008 BMC 3.48 Update (B&O Taxes).doc
18
Business and Occupation Taxes
"
AFFIDAVIT OF PUBLICATION
Account # 42742 / Ad # 226039
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 ofthe 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:
March 25, 2008 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 $31.86 amount
has not been paid in full.
CA{^O~t ~~
(Signature of Principal Clerk)
Subscribed and swornto before me this day of March 28, 200~ "-
/~
Notary Public in and for the State of Washington, Kjtsap County.
ORDINANCE NO. 5044
AN ORDINANCE ofthe City Council of the City of Bremerton, Washington, amending certain sections of
Chapter 3.48 of the Bremerton Municipal Code relating to Business and Occupation Taxes and business
activity on industrially designated port district owned property.
PASSED by the City Council the 19th day of March 2008.
The full text of this ordinance is available from the City Clerk's Office, 345 Sixth Street, Suite 600,
Bremerton, W A 98337.
March 25, 2008.........................AD #20063937