HomeMy WebLinkAbout5201 ORDINANCE NO. 5201
AN ORDINANCE of the City Council of the City of
Bremerton, Washington, amending Section 3 86 200 of the
Bremerton Municipal Code entitled "Public Disclosure —
Confidentiality — Information Sharing relating to business and
occupation taxes, and further amending Chapter 3 48 of the
Bremerton Municipal Code entitled `Business and Occupation
Taxes "
WHEREAS, changes were recently made to the business & occupation tax model
ordinance which incorporates amendments to state law that were adopted since the model code
was last updated in 2008, and
WHEREAS, the City Council desires to amend its business and occupation tax
code and related administrative provisions to incorporate into the city's business & occupation
code the changes to the business & occupation tax model ordinance, and to make other related
amendments, NOW THEREFORE,
THE CITY COUNCIL OF THE CITY OF BREMERTON, WASHINGTON,
DOES HEREBY ORDAIN AS FOLLOWS
SECTION]. Section 3 86 200 of the Bremerton Municipal Code entitled
"Public Disclosure — Confidentiality — Information Sharing" is hereby amended to read as
follows
3.86.200 PUBLIC DISCLOSURE — CONFIDENTIALITY — INFORMATION
SHARING.
(1) For purposes of this section, unless c diff � ,°.,ma � ear • *.,bl b
Naii Vl V114 11V 64111116 I '
VZV�
°e�r the following definitions apply
(a) "Disclose" means to make known to any person in any manner whatever, a
return or tax information
(b) "Tax information" means
(i) A taxpayer's identity,
(n) The nature, source, or amount of the taxpayer's income, payments,
receipts, deductions, exemption, credits, assets, liability, net worth, tax liability deficiencies, over
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 Orree-ter- with respect to a p , ''e* t � oAte shal ' a the
464(1 K Vl , t.lv 161 4116{6 464!1 lIIIVllll
determination or the existence, or possible existence of liability, or the amount thereof of a
person under the City's tax codes defined in Section 3 86 015 BMC above for a tax penalty,
interest, fine, forfeiture, or other imposition or offense However data, material, or documents
that do not disclose information related to a specific or identifiable taxpayer do not constitute tax
information under this section Nothing in this chapter requires any person possessing data
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material, or documents made confidential and privileged by this section to delete infonnation
from such data, material or documents so as to permit its disclosure
(c) "City agency" means ever�City office, department, division, bureau,
board, commission, or other City agency
(d) "Taxpayer identity" means the taxpayer's name, address, telephone
number, registration number, or any combination thereof, or any other information disclosing the
identity of the taxpayer
(2) Returns and tax information are confidential and privileged, and except as
authorized by this section, neither the Director nor any other person may disclose any return or
tax information
(3) This section does not prohibit the Director from
(a) Disclosing such return or tax infonnation in a civil or criminal judicial
proceeding or an admaustrative proceeding
(i) In respect of any tax imposed under City's tax codes defined in
Section 3 86 015 BMC above if the taxpayer or its officer or other person liable under this title is
a party in the proceeding, or
(n) In which the taxpayer about whom such return or tax information
is sought and another state agency are adverse parties in the proceeding_
(b) Disclosing, subject to such requirements and conditions as the Director
prescribes by rules adopted pursuant to Section 3 86 160 BMC, such return or tax information
regarding a taxpayer to such taxpayer or to such person or persons as that taxpayer may
designate in a request for, or consent to, such disclosure, or to any other person, at the taxpayer's
request, to the extent necessary to comply with a request for infonnation or assistance made by
the taxpayer to such other person However, tax information not received from the taxpayer must
not be so disclosed if the Director determines that such disclosure would compromise any
investigation or litigation by any federal, state, or local government agency in connection with
the civil or cnmoral liability of the taxpayer or another person, or that such disclosure would
identify a confidential informant, or that such disclosure is contrar try agreement entered
into b,, t�partment that provides for the reciprocal exchange of information with other
government agencies which agreement requires confidentiality with respect to such information
unless such information is required to be disclosed to the taxpayer by the order of any cart,
(c) Publishing statistics so classified as to prevent the identification of
particular returns or reports or items thereof,
(d) Disclosing such return or tax infonnation, for official purposes only, to the
Mayor or City Attorney, or to any City agency, or to any member of the City Council or their
authorized designees dealing with matters of taxation, revenue, trade, commerce, the control of
industry or the professions,
(e) Permitting the he City's records to be audited and examined by the proper
state officer, his or her agents and employ
(fl Disclosing any such return or tax infonnation to a peace officer as defined
in RCW 9A 04 110 or prosecutor ag ttorney, for official purposes The disclosure may be made
only �sponse to a search warrant, subpoena, or other court order, unless the disclosure is for
the purpose of cnminal tax enforcement A peace officer or prosecuting attorney who receives the
return or tax information may disclose that return or tax infonnation only for use in the
investigation and a related court proceeding, or in the court proceeding for which the return or tax
information or ig nally was sought or where otherwise allowed to be disclosed under this Section,
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(g) Disclosing any such return or tax information to the proper officer of the
Internal Revenue Service of the United States, the Canadian government or provincial
governments of Canada, or to the proper officer of the tax department of any state or city or town
or county, for official purposes, but only if the statutes of the United States, Canada or its
provincial governments, or of such other state or city or town or county, as the case may be,
grants substantially sumlar privileges to the proper officers of the City,
(h) Disclosing any such return or tax information to the Umted States
Department of Justice, including the bureau of alcohol, tobacco, firearms and explosives, the
department of defense, the ummigration and customs enforcement and the customs and border
protection agencies of the Umted States department of homeland security, the Umted States coast
guard, the alcohol and tobacco tax and trade bureau of the Umted States department of treasures
and the United States department of transportation, or any authorized representative of these
federal agencies or their successors, for official purposes,
(i) Publishing or otherwise disclosing the text of a wntten deterimnation
designated by the Director as a precedent pursuant to RCW 82 32 410,
(t) Disclosing, in a manner that is not associated with other tax mfonnation,
the taxpayer name, entity type, business address, mailing address, revenue tax registration
numbers and the active /closed status of such registrations, state or local busmess license
registration identification and the active /closed status and effective dates of such licenses, reseller
permit numbers and the expiration date and status of such permits, North Amencan induga
classification system or standard mdustnal classification code of a taxpayer, and the dates of
opening and closing of business Except that this subsection may not be construed as ig ving
authority to the Crty or any recipient to give, sell, or provide access to any list of taxpayers for any
commercial purpose,
(k) Disclosing such return or tax information that is also mamtamed by another
Washington state or local governmental agency as a public record available for inspection and
copying under the provisions of chapter 42 56 RCW or is a document maintained by a court of
record and is not otherwise prohibited from disclosure,
(1) Disclosing such return or tax information to the Umted States department
of agnculture, or successor department or agency, for the limited purpose of mvestigatmg food
stamp fraud by retailers,
(m) Disclosing to a financial institution, escrow company, or title company, m
connection with specific real property that is the subject of a real estate transaction, current
amounts due the Clity for a filed tax warrant, judgement, or lien against the real property,
(n) Disclosing to a person against whom the department has asserted liability
as a successor under Section 3 86 130 BMC return or tax infonmation pertaimng to the specific
business of the taxpayer to which the person has succeeded,
(o) Disclosing real estate excise tax affidavit fonns filed under Chapter 3 84
BMC in the possession of the Crty, including real estate excise tax affidavit forms for transactions
exempt or otherwise not subject to tax,
(p) Disclosing such return or tax information to the court or hearing examiner
in respect to the Ci , 's a placation for a subpoena if there is probable cause to believe that the
records in possession of a third party will aid the Director in connection with its official duties
under this title or a civil or criminal investigation
(4) (a) The Director may disclose return or taxpayer information to a person
under investigation or dunng any court or administrative proceeding against a person under
investigation as provided in this subsection, BMC 3 86 200(4) The disclosure must be in
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connection with the department's official duties under this Chapter, or a civil or criminal
investigation The disclosure may occur only when the person under investigation and the person
in possession of data, materials, or documents are parties to the return or tax information to be
disclosed The department mqy disclose return or tax information such as invoices, contracts,
bills, statements, resale or exemption certificates, or checks However, the department ma, not
disclose general ledgers, sales or cash receipt journals, check registers, accounts
receivable /payable ledgers, e�journals, financial statements, expert's workpapers, income
tax returns, state tax returns, tax return workpapers, or other similar data, materials, or
documents
(b) Before disclosure of any tax return or tax information under this
subsection, BMC 3 86 200(4), the Director must, through written correspondence, inform the
person in possession of the data, materials, or documents to be disclosed The correspondence
must clearly identify the data, materials, or documents to be disclosed The Director ma, not
disclose any tax return or tax information under this subsection, BMC 3 86 200(4), until the time
penod allowed in (c) below of this subsection has expired or until the court has ruled on any
challenge ght under (c) of this subsection
(c) The person in possession of the data, materials, or documents to be
disclosed by the department has twenty days from the receipt of the written request required
under (b) of this subsection to petition the superior court of the county in which the petitioner
resides for injunctive relief The court must limit or deny the request of the Director if the court
detemmnes that
(1) The data, materials, or documents sought for disclosure are
cumulative or duplicative, or are obtainable from some other source that is more convenient, less
burdensome, or less expensive,
(n) The production of the data, materials, or documents sought would
be unduly burdensome or expensive, taking into account the needs of the department, the amount
in controversy, limitations on the petitioner's resources, and the importance of the
issues at stake, or
(iii) The data, matenals, or documents sought for disclosure contain
trade secret information that, if disclosed, could hann the petitioner
(d) The Director must reimburse reasonable expenses for the production of
data, materials, or documents incurred by the person in possession of the data, materials, or
documents to be disclosed
(e) Requesting information under (b) of this subsection that may indicate that
a taxpayer is under investigation does not constitute a disclosure of tax return or tax information
under this section
(5) Service of a subpoena issued by the court does not constitute a disclosure of return or
tax information under this section Notwithstanding anything else to the contrary in this section,
a person served with a subpoena issued by the may disclose the existence or content of the
subpoena to that person's legal counsel
(6) Any person ac uq inng knowledge of any return or tax information in the course of his
or her employment with the City and any person acquinng knowledge of any return or tax
information as provided under subsection (3) (d), (e), (f), (g), (h), (i), or (k) of this section, who
discloses any such return or tax information to another person not entitled to knowledge of such
return or tax information under the provisions of this section, is guifty of a misdemeanor If the
person guilty of such violation is an officer or employee of the City, such person must forfeit
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such office or employment and is incapable of holding any public office or employment in the
Cily for a period of two years thereafter
(a) The Mayer-, members ef the G" > >
state, >
effieef gr-ai4s substantially similar- pfivileges te the City, and ftwther- provided, that the agene
(4) AT.,tI i., this seette sh p o e m the u o f t in n ..,,,.,t.,.., b th D ifee t er - e
e ifAer-est, or- penalty
m4efmatten tmder- this seetten is guilty ef a misdemeanor-, and if the per-son vielating this pfivaey
SECTION 2. Chapter 3 48 of the 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
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 of this
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.
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(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 85 020 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 85 02015 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 definition, for viewing or attendance by the general public
(2) The organization must be a not - for - profit corporation under Chapter 24 03 RCW
(3) The organization must be managed by a governing board of not less than eight (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 nonprofit
organization, association, or corporation which also would be entitled to the exemption
(7) The corporation must be duly licensed or certified when licensing or certification
is required by law or regulation
(8) The amounts received that qualify for exemption must be used for the activities
for which the exemption is granted
(9) Services must be available regardless of race, color, national origin, ancestry,
religion, age, sex, marital status, sexual orientation, Vietnam or disabled veteran status, or the
presence of any mental or physical disability
(10) The term "artistic or cultural exhibitions, presentations, or performances or
cultural or art education programs" is limited to
(a) An exhibition or presentation of works of art or objects of cultural or
historical significance, such as those commonly displayed in art or history museums,
(b) A musical or dramatic performance or series of performances, or
(c) An educational seminar or program, or series of such programs, offered by
the organization to the general public on an artistic, cultural, or historical subject
"Business" includes all activities engaged in with the object of gain, benefit, or
advantage to the taxpayer or to another person or class, directly or indirectly
"Business and occupation tax" or "gross receipts tag" means a tax imposed on or
measured by the value of products, the gross income of the business, or the gross proceeds of
sales, as the case may be, and that is the legal liability of the business
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"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 of
telecommunications equipment or apparatus, or service related to that equipment or apparatus
such as repair or maintenance service, if the equipment or apparatus is of a type which can be
provided by persons that are not subject to regulation as telephone companies under RCW Title
80 and for which a separate charge is made
"Consumer" means the following
(1) Any person who purchases, acquires, owns, holds, or uses any tangible or
intangible personal property irrespective of the nature of the person's business and including,
among others, without limiting the scope hereof, persons who install, repair, clean, alter,
improve, construct, or decorate real or personal property of or for a consumer other than for the
purpose of
(a) Resale as tangible or intangible personal property in the regular course of
business,
(b) Incorporating such property as an ingredient or component of real or
personal property when installing, repairing, cleaning, altering, imprinting, improving,
constructing, or decorating such real or personal property of or for consumers,
(c) Incorporating such property as an ingredient or component of a new
product or as a chemical used in processing a new product when the primary purpose of such
chemical is to create a chemical reaction directly through contact with an ingredient of a new
product, or
(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 this section other than for resale in
the regular course of business,
(5) Any person who is an end user of software,
(6) Any person engaged in the business of "public road construction" in respect to
tangible personal property when that person incorporates the tangible personal property as an
ingredient or component of a publicly owned street, place, road, highway, easement, right -of-
way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle by
installing, placing or spreading the property in or upon the right -of -way of a publicly owned
street, place, road, highway, easement, bridge, tunnel, or trestle or in or upon the site of a
publicly owned mass public transportation terminal or parking facility,
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(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 definition 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 of this definition 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 of the property from the seller to
itself A buyer's representative is a person, other than an employee of the buyer, who is
authorized in writing by the buyer to receive tangible personal property and take dominion and
control by making the final decision to accept or reject the property Neither a shipping company
nor a seller can serve as a buyer's representative It is immaterial where the contract of sale is
negotiated or where the buyer obtains title to the property Delivery terms and other provisions of
the Uniform Commercial Code (RCW Title 62A) do not determine when or where delivery of
tangible personal property occurs for purposes of taxation
"Digital automated service," "digital code," and "digital goods" have the same
meaning as in RCW 82 04 192
"Digital products" means digital goods, digital codes, digital automated services, and
the services described in RCW 82 04 050(2)(2) and (6)(b)
"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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(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 mmimis 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, any one (1) 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
0) 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, and veterinarians
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(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 ajob in the City, acting on its behalf, or
for customers or potential customers
(n) Investigating, resolving, or otherwise assisting in resolving customer
complaints
(o) In -store stocking or manipulating products or goods, sold to and owned by
a customer, regardless of where sale and delivery of the goods took place
(p) Except as provided in subsection (5) of this definition, delivering goods in
vehicles owned, rented, leased, used, or maintained by the person or another acting on its behalf
goods or- sefvtees are delivered wAin or- withetA the City, or- whethef- the per-son's effiee or- pla
(4) Not Engaging in Business 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, that person is not engaging in business and
therefore is not required to register and obtain a City business license pursuant to Chapter 5 02
BMC or pay City business and occupation taxes pursuant to this chapter
(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
(h) Providing language interpretive services to the Bremerton Municipal
Court
(5) A business located outside the City merely delivering goods into the City by
common carrier or other means, including use of its own vehicles, is not required to register and
obtain a business license, provided, that it engages in no other business activities in the City
Such business activities do not include those in subsection (4) of this definition
(6) "Nexus " A person has created nexus with the City if, whether itself or by its
employees, agents, representatives, 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 includes 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
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taxpayer benefits from the activity that constituted the original nexus - generating contact or
subsequent contacts
"Extracting" is the activity engaged in by an extractor and is reportable under the
extracting classification
"Extractor" means every person who from the person's own land or from the land of
another under a right or license granted by lease or contract, either directly or by contracting with
others for the necessary labor or mechanical services, for sale or for commercial or industrial
use, mines, quarries, takes or produces coal, oil, natural gas, ore, 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 ammal 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, discounts, 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, discounts, delivery costs, taxes, or
any other expense whatsoever paid or accrued and without any deduction on account of losses
"Gross proceeds of sales" means the value proceeding or accruing from the sale of
tangible personal property digital goods, digital codes, digital automated services or for other
services rendered, without any deduction on account of the cost of property sold, the cost of
materials used, labor costs, interest, discounts paid, delivery costs, taxes, or any other expense
whatsoever paid or accrued and without any deduction on account of losses
"In this City" or "within this City" includes all federal areas lying within the corporate City
limits of the City
"Janitorial services" shall mean those cleaning and caretaking services ordinarily
performed by commercial janitor service businesses including, but not limited to, wall and
window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and
upholstery The term does not include painting, papering, repairing, furnace or septic tank
cleaning, snow removal, sandblasting, or cleanup related to construction activities
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"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
(a) The production of special -made or custom -made articles,
(b) The production of dental appliances, devices, restorations, substitutes, or
other dental laboratory products by a dental laboratory or dental technician,
(c) Crushing and/or blending of rock, sand, stone, gravel, or ore, and
(d) The producing of articles for sale, or for commercial or industrial use from
raw materials or prepared materials by giving such materials, articles, and substances of trade or
commerce new forms, qualities, properties or combinations including, but not limited to, such
activities as making, fabricating, processing, refining, mixing, slaughtering, packing, aging,
curing, mild curing, preserving, canning, and the preparing and freezing of fresh fruits and
vegetables
"To manufacture" shall not include the production of digital goods or the production of
computer software if the computer software is delivered from the seller to the purchaser by
means other than tangible storage media, including the delivery by use of a tangible storage
media where the tangible storage media is not physically transferred to the purchaser
"Manufacturing" means the activity conducted by a manufacturer and is reported under
the manufacturing classification
"Newspaper," "magazine," "periodical."
(1) "Newspaper" means a publication offered for sale regularly at stated intervals at
least once a week and printed on newsprint in tabloid or broadsheet format folded loosely
together without stapling, glue, or any other binding of any kind
(2) "Magazine" or "periodical" means any printed publication, other than a
newspaper, issued and offered for sale regularly at stated intervals at least once every three (3)
months, including any supplement or special edition of the publication Any publication meeting
this definition qualifies regardless of its content
"Nonprofit corporation or nonprofit organization" means a corporation or
organization in which no part of the income can be distributed to its members, directors, or
officers and that holds a current tax exempt status as provided under Section 501(c)(3) of the
Internal Revenue Code, as hereafter amended, or is specifically exempted from the requirement
to apply for its tax exempt status under Section 501(c)(3) of the Internal Revenue Code, as
hereafter amended Where the term "nonprofit organization" is used, it is meant to include a
nonprofit corporation
"Office" or "place of business" means a fixed location or permanent facility where the
regular business of the person is conducted and which is either owned by the person or over
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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,
(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, point venture, club, company, point stock company,
business trust, municipal corporation, political subdivision of the State of Washington,
corporation, limited liability company, association, society, or any group of individuals acting as
a unit, whether mutual, cooperative, fraternal, nonprofit, or otherwise and the United States or
any instrumentality thereof
"Port District" means a port district as defined in Chapter 53 04 RCW
"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" means the performance of labor and mechanical services upon
materials or ingredients belonging to others so that as a result a new, different or useful product
is produced for sale, or commercial or industrial use A processor for hire is any person who
would be a manufacturer if that person were performing the labor and mechanical services upon
that person's own materials or ingredients If a person furnishes, or sells to the customer prior to
manufacture, materials or ingredients equal to 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."
(1) "Product" means tangible personal property, including articles, substances, or
commodities created, brought forth, extracted, or manufactured by human or mechanical effort
(2) "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
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"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" shall include the sale of or charge made for personal, business, or
professional services including amounts designated as interest, rents, fees, admission, and other
service emoluments however designated, received by persons engaging in the following business
activities
(1) Amusement and recreation services including but not limited to golf, pool,
billiards, skating, bowling, swimming, bungee dumping, 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 (a) horticultural
services provided to farmers and (b) pruning, trimming, repairing, removing, and clearing
of trees and brush near electric transmission or distribution lines or equipment, if
performed by or at the direction of an electric utility,
(6) Service charges associated with tickets to professional sporting events,
(7) The following personal services physical fitness services, tanning salon services,
tattoo parlor services, steam bath services, Turkish bath services, escort services, and dating
services, and
(8) The term shall also include the renting or leasing of tangible personal property to
consumers and the rental of equipment with an operator
"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
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(2) "Casual or isolated sale" means a sale made by a person who is not engaged in the
business of selling the type of property involved on a routine or continuous basis
"Sale at retail," "retail sale."
(1) "Sale at retail" or "retail sale" means every sale of tangible personal property
(including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of
their business and including, among others, without limiting the scope hereof, persons who
install, repair, clean, alter, improve, construct, or decorate real or personal property of or for
consumers, other than a sale to a person who presents a resale certificate under RCW 82 04 470
and who
(a) Purchases for the purpose of resale as tangible personal property in the
regular course of business without intervening use by such person, or
(b) Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates
real or personal property of or for consumers, if such tangible personal property becomes an
ingredient or component of such real or personal property without intervening use by such
person, or
(c) Purchases for the purpose of consuming the property purchased in
producing for sale a new article of tangible personal property or substance, of which such
property becomes an ingredient or component or is a chemical used in processing, when the
primary purpose of such chemical is to create a chemical reaction directly through contact with
an ingredient of a new article being produced for sale, or
(d) Purchases for the purpose of consuming the property purchased in
producing ferrosilicon which is subsequently used in producing magnesium for sale, if the
primary purpose of such property is to create a chemical reaction directly through contact with
an ingredient of ferrosilicon, or
(e) Purchases for the purpose of providing the property to consumers as part
of competitive telephone service, as defined in RCW 82 04 065 The term shall include every
sale of tangible personal property which is used or consumed or to be used or consumed in the
performance of any activity classified as a "sale at retail" or "retail sale" even though such
property is resold or utilized as provided in subsection (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 definition, if such tangible personal
property replaces or becomes an ingredient or component of property covered by the extended
warranty without intervening use by such person
(2) "Sale at retail" or "retail sale" also means every sale of tangible personal property
to persons engaged in any business activity which is taxable under 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 of laundry service to
nonprofit health care facilities, and excluding services rendered in respect to live animals, birds
and insects,
(b) The constructing, repairing, decorating, or improving of new or existing
buildings or other structures under, upon, or above real property of or for consumers, including
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the installing or attaching of any article of tangible personal property therein or thereto, whether
or not such personal property becomes a part of the realty by virtue of installation, and shall also
include the sale of services or charges made for the clearing of land and the moving of earth
excepting the mere leveling of land used in commercial farming or agriculture,
(c) The charge for labor and services rendered in respect to constructing,
repairing, or improving any structure upon, above, or under any real property owned by an owner
who conveys the property by title, possession, or any other means to the person performing such
construction, repair, or improvement for the purpose of performing such construction, repair, or
improvement and the property is then reconveyed by title, possession, or any other means to the
original owner,
(d) The sale of or charge made for labor and services rendered in respect to
the cleaning, fumigating, razing or moving of existing buildings or structures, but shall not
include the charge made forjanrtonal 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 furmshmg 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 (1) 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 (1) month or more to a person is a rental or lease of real property and not a mere
license to enjoy the same,
(g) The installing, repairing, altering or improving of digital goods for
consumers,
(gh) The sale of or charge made for tangible personal property, labor and
services to persons taxable under subsections (3)(a), (b), (c), (d), (e), end-(f) and (g) of this
definition when such sales or charges are for property, labor and services which are used or
consumed in whole or in part by such persons in the performance of any activity defined as a
"sale at retail" or "retail sale" even though such property, labor and services may be resold after
such use or consumption Nothing contained in this subsection shall be construed to modify
subsection (1) of this definition and nothing contained in subsection (1) of this definition shall be
construed to modify this subsection
(4) "Sale at retail" or "retail sale" shall also include the providing of competitive
telephone service to consumers
(5) "Sale at retail" or "retail sale" shall also include_
(a) the sale of e-anned- prewntten software other than a sale to a person who
presents a resale certificate under RCW 82 04 470, regardless of the method of delivery to the
end user, For
purposes of this subsection, the sale of the sale of prewritten computer software includes the sale
of or charge made for a key or an enabling or activation code, where the key or code is required
to activate prewritten computer software and put the software into use There is no separate sale
of the key or code from the prewritten computer software, regardless of how the sale may
characterized by the vendor or by the purchaser For pun2oses of this subsection the term "sale
at retail" or "retail sale" does not include the sale of or charge made for
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(i) Custom software, or
(n) The customization of prewritten software
(b) the charge made to consumers for the nght to access and use
prewritten computer software, where possession of the software is maintained by the seller
or a third pg1y, regardless of whether the charge for the service is on a per use per user,
per license, subscription, or some other basis This also includes the right to access and use
prewntten software to perform data processing
For purposes of this subsection, subsection (5)(b), "data processing"
means the systematic performance of operations on data to extract the required
information in an appropriate form or to convert the data to usable information Data
processing includes check processing, image processor f�processm survey
processing, payroll processing, cprocessing, and similar activities
(6) "Sale at retail" or "retail sale" shall also include the sale of or charge made for
labor and services rendered in respect to the building, repairing, or improving of any street,
place, road, highway, easement, right -of -way, mass public transportation terminal or parking
facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political
subdivision of the State, the State of Washington, or by the United States and which is used or to
be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind
(public road construction)
(7) "Sale at retail" or "retail sale" shall also include the sale of or charge made for
labor and services rendered in respect to the constructing, repairing, decorating, or improving of
new or existing buildings or other structures under, upon, or above real property of or for the
United States, any instrumentality thereof, or a county or city housing authority created pursuant
to Chapter 35 82 RCW, including the installing, or attaching of any article of tangible personal
property therein or thereto, whether or not such personal property becomes a part of the realty by
virtue of installation (government contracting)
(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 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 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 )
(11) "Sale at retail" or "retail sale" shall also include the following sales to
consumers of digital goods, digital codes, and digital automated services
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(a) Sales in which the seller has granted the purchaser the right of
permanent use,
(b) Sales in which the seller has granted the purchaser a right of use that is
less than permanent,
(c) Sales in which the purchaser is not obligated to make continued payment
as a condition of the sale, and
(d) Sales in which the purchaser is obligated to make continued payment
as a condition of the sale
A retail sale of digital goods, digital codes, or digital automated services under this
subsection, subsection (11), includes any services provided by the seller exclusively in
connection with the digital goods, digital codes, or digital automated services, whether or not a
separate charge is made for such services
For purposes of this subsection, subsection 0 l), "permanent" means perpetual or for an
indefinite or unspecified length of time A right of permanent use is presumed to have been
granted unless the agreement between the seller and the purchaser specifies or the circumstances
surrounding the transaction suggest or indicate that the right to use terminates on the occurrence
of a condition subsequent
(12) "Sale at retail" or "retail sale" shall also include the installing, repairing,
altering, or improvindigital goods for consumers
"Sale at wholesale" or "wholesale sale" means any sale of tangible personal property,
digital goods, digital codes, digital automated services, prewritten computer software, or the
services described in subsection 5(b) 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 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 ansmg from copyrights, patents, and trade secret laws, that are owned or are
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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" or "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 nonprofit 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
under circumstances such that the gross proceeds from the sale are not indicative of the true
value of the subject matter of the sale, the value shall correspond as nearly as possible to the
gross proceeds from sales in this State of similar products of like quality and character, and in
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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 articles extracted or manufactured, including direct and
indirect overhead costs The Director may prescribe rules for the purpose of ascertaining such
values
(3) Notwithstanding subsection (2) of this definition, the value of a product
manufactured or produced for purposes of serving as a prototype for the development of a new or
improved product shall correspond to (a) the retail selling price of such new or improved product
when first offered for sale, or (b) the value of materials incorporated into the prototype in cases
in which the new or improved product is not offered for sale
"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
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
(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 of the principal's gross sales, the
amount of commissions and any other incidental income derived by the broker or agent from
such sales The principal's gross sales must not be reflected as the agent's income on any of the
agent's books and records Commissions must be computed according to a set percentage or
amount, which is agreed upon in the agency agreement
(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
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(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 of the tax only when the agent is not primarily or secondarily liable
to pay for the services procured
Any person who claims to be acting merely as agent in obtaining services for a principal will
have such claim recognized only when the contract or agreement between such persons clearly
establishes the relationship of principal and agent and when the following conditions are
complied with
(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, winch 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
the value of the 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 (0 00 16) The measure
of the tax is the value of the products, including by- products, so extracted, regardless of the place
of sale or the fact that deliveries may be made to points outside the City
(b) 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 (0 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 (0 00 16)
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(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 (0 00 125)
(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 of the business multiplied by the rate of one and nine-
tenths of one percent (0 00 19)
(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 (0 002)
(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 (0 002) 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) Tax Exemption
(a) 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) ( "Tax Exemption ") 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
(b) Beginning on January 1, 2013 and each year thereafter, the Tax
Exemption set forth in subsection shall be increased by an additional twenty thousand dollars
($20,000 ") for each year as follows
Year 2013 - the Tax Exemption shall be $80,000
Year 2014 - the Tax Exemption shall be $100,000
Year 2015 - the Tax Exemption shall be $120,000
Year 2016 - the Tax Exemption shall be $140,000
This formula for the Tax Exemption shall continue until no taxes are due to be received
by the City in any tax year at which time the business and occupation tax shall terminate, unless
the formula is modified as set forth in subsection (2)(c) below
(c) The tax reduction formula in subsection (2)(b) above may be,
(i) Accelerated at any time,
(H) Stayed for a period of time as determined by the City Council upon
findings by the City Council that fiscal and budget conditions of the City necessitate a stay of the
tax reduction, or
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(iii) The business and occupation tax is terminated by ordinance
adopted by the City Council
The actions by City Council to accelerate or stay implementation of the tax reduction is
subsections 2(b)(i) and 2(b)(u) above may be made by motion or other action of the City
Council
(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 if the employer is
actively recruiting a replacement employee
c "Family wage," beginning January 1, 2007, is seventeen
dollars and eleven cents ($17 11) an hour This is the annual average wage in Krtsap 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
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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 returnsJor 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.
f e
E 4 .,,t,e su et a tax .s ethe... se le ,7 e lleete.a by the n.4.. l, pe rson,-
there is hereby levied a tax on the pr-tvilege of aeeepting or- eyceeuttfig a eefitfaet with the City
Sueh twE shaP be levied and eelleeted whether- geeds or- semees are delivered withm er- without
the City and whether- or- not sueh per-son has mi effiee er- plaee of business within er- wAeU4 t
city
Exeept as pr-evided in BN46 3 4 8 077, as te stieh per-sons the ameunA ef tax shall be equal te the
gr-ess eentmet pfiee multiphed by the rate under- BMC 3 48 050 that would other-wise apply 44he
JRly
nle e o o w e r e t « «.4 to th ... 4 s ee4.e
3.48.070 MULTIPLE ACTIVITIES CREDIT WHEN ACTIVITIES TAKE
PLACE IN ONE (1) OR MORE CITIES WITH ELIGIBLE GROSS RECEIPT TAXES.
This section provides a tax credit for taxpayers engaged in multiple taxable activities
This 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 of this section is that a
city in which selling takes place gives up the tax to the manufacturing jurisdiction and the
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 of BMC 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,
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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 (1) 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 (1) . 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
manufactured outside the City and included in the measure of an eligible gross receipts tax paid
with respect to manufacturing such products
(2) Goods and Services — Amounts Subject to an Eligible Gross Receipts Tax in
Another City That Also Maintains Nexus Over the Same Activity For taxes due prior to January
1, 2008, a taxpayer that is subject to an eligible gross receipts tax on the same activity in more
than one (1) 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 in which the goods are delivered or the services are
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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
(b) If a taxpayer has not paid tax to the jurisdiction 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
(c) Notwithstanding the above, a person that is subject to an eligible gross
receipts tax in more than one (1) jurisdiction on the gross income derived from intangibles such
as royalties, trademarks, patents, or goodwill may deduct from the measure of the 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
(e) For taxes due under this subsection (2) after January 1, 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 APPORTIONMENT OF INCOME WHEN
ACTIVITIES TAKE PLACE IN MORE THAN ONE (1) JURISDICTION.
Gross income, other than persons subject 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 48 050(l)(g) shall be allocated to the location where
the activity takes place
(2) Place of Delivery In the case of sales of tangible personal property, the activity
takes place where delivery to the buyer occurs
(3) In the case of sales of digital products, the activity takes place where delivery to
the buyer occurs The delivery of digital products will be deemed to occur at
(a) The seller's place of business if the purchaser receives the digital
product at the seller's place of business,
(b) If not received at the seller's place of business, the location where the
purchaser or the purchaser's donee, designated as such by the purchaser, receives the digital
product, including the location indicated by instructions for delivery to the purchaser or donee,
known to the seller,
(c) If the location where the purchaser or the purchaser's donee receives the
digital product is not known, the purchaser's address maintained in the ordinary course of the
seller's business when use of this address does not constitute bad faith,
(d) If no address for the purchaser is maintained in the ordinary course of
the seller's business, the purchaser's address obtained during the consummation of the sale,
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including the address of a purchaser's payment instrument, if no other address is available,
when use of this address does not constitute bad faith, and
(e) If no address for the purchaser is obtained during the consummation of
the sale, the address where the digital good or digital code is first made available for
transmission by the seller or the address from which the digital automated service or service
described in RCW 82 04 050 (2)(g) or 6)(b ) was provided, disregarding for these purposes any
location that merely_ provided the digital transfer of the product sold
(4) If none of the methods in subsection (3) above for determining where the
delivererdigital products occurs are available after a good faith effort by the taxpayer to
apply the methods provided therein, then the City and the taxpayer v mutually agree to
employ any other method to effectuate an equitable allocation of income from the sale of digital
products The taxpayer will be responsible for petitioning the City to use an alternative method
If taxpayer and the City are unable to mutually agree on an alternative method to effectuate an
equitable allocation of income from the sale of digital products, then the City may employ an
alternative method for allocating the income from the sale of digital products
(5) For purposes of subsections (3)(a ) through' (e), "Receive" has the same meaning as
in RCW 82 32 730
(36) 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 apportionable income by a fraction, the numerator of which is the payroll factor plus
the service - income factor and the denominator of which is two (2)
(a) Payroll Factor The payroll factor is a fraction, the numerator of which is
the total amount paid in the City during the tax period by the taxpayer for compensation and the
denominator of which is the total compensation paid everywhere during the tax period
Compensation is paid in the City if
(i) The individual is primarily assigned within the City,
(n) The individual is not primarily assigned to any place of business
for the tax period and the employee performs fifty (50) 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 (50) percent or more of his or her service
in any city and the employee resides in the City
(b) Service Income Factor The service income factor is a fraction, the
numeratoriof 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
(n) The income - producing activity is performed in more than one (1)
location and a greater proportion of the service - income - producing activity is performed in the
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,
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that one (1) 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 (1) 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) "Primarily assigned" 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 of the
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
3.48.078 ALLOCATION AND APPORTIONMENT OF PRINTING AND
PUBLISHING INCOME WHEN ACTIVITIES TAKE PLACE IN MORE THAN ONE (1)
JURISDICTION.
Notwithstanding RCW 35 102 130, effective January 1, 2008, gross income from the
activities of printing, and of publishing newspapers, periodicals, or magazines, shall be allocated
to the principal place in this State from which the taxpayer's business is directed or managed As
used in this section, the activities of printing, and of publishing newspapers, periodicals, or
magazines, have the same meanings as attributed to those terms in RCW 82 04 280(1) by the
Department of Revenue
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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 2 4 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 2 4 8 of Regulation D)
(6) Insurance Business This chapter shall not apply to amounts received by any
person or agent who is an insurer or their appointed insurance producer upon which a tax based
on gross premiums is paid to the State pursuant to RCW 48 14 020, and provided further that the
provisions of this subsection shall not exempt any per-son engaging in the business of insufanee
as a br-eker- as defined in RCW 4 8 17 020 or- as a sehetter- as defined in RCW 4 8 17 030, and
provided fuAher-, that the pr-ovistens of this subseetion shall not bonding company
from tax with respect to gross income derived from the completion of any contract as to which it
is a surety, or as to any liability as successor to the liability of the defaulting contractor
(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
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(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) Employees 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
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) Port District Business Activity For the purpose of the tax imposed by BMC
3 48 050(1)(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 K trap 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
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Port Property but within the City, also in the same manner as if the Port Property were located in
unincorporated Krtsap County
(20) 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
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 43 1) or by a municipal corporation or political subdivision, except deductions are not
allowed under this subsection for amounts that are received under an employee benefit plan For
purposes of this subsection, "employee benefit plan" includes the military benefits program
authorized in 10 U S C 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, to the extent permitted by Chapter 82 14A RCW, there may be deducted from the
measure of tax by those engaged in banking, loan, security or other financial businesses, amounts
derived from interest received on investments or loans primarily secured by first mortgages or
trust deeds on non-transient residential properties
(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 furmshmg 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 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
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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,
(u) 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 of this subsection "commonly held property" includes
areas required for common access such as reception areas, halls, stairways, parking, etc , and
may include recreation rooms, swimming pools and small parks or recreation areas, but is not
intended to include more grounds than are normally required in a residential area, or to include
such extensive areas as required for golf courses, campgrounds, hiking and riding areas, boating
areas, etc
(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 of the tax amounts derived from the sale
at wholesale or retail of precious metal bullion and monetized bullion However, no deduction is
allowed on amounts received as commissions upon transactions for the accounts of customers
over and above the amount paid to other dealers associated in such transactions, and no
deduction or offset is allowed against such commissions on account of salaries or commissions
paid to salesmen or other employees
(10) Amounts Representing Rental of Real Estate for Boarding Homes In computing
tax, there may be deducted from the measure of tax amounts representing the value of the rental
of real estate for "boarding homes " To qualify for the deduction, the boarding home must meet
the definition of "boarding home," and be licensed by the State of Washington under Chapter
18 20 RCW The deduction shall be in the amount of twenty -five (25) percent of the gross
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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
it deduction" as provided by RCW 82 04 280, and
(c) Local advertising revenue that represents advertising wluch is intended to
reach potential customers of the advertiser who are located outside the State of Washington The
Director may issue a rule that provides detailed guidance as to how these deductions are to be
calculated
(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 of the State of Washington or the Constitution of the United States
(13) Receipts from the Sale of Tangible Personal Property and Retail Service
Delivered Outside the City but Within Washington Effective January 1, 2008, amounts included
in the gross receipts reported on the tax return derived from the sale of tangible personal 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 employer
organization may deduct from the calculation of gross income the gross income of the business
derived from performing professional employer services that is equal to the portion of the fee
charged to a client that represents the actual cost of wages and salaries, benefits, workers'
compensation, payroll taxes, withholding, or other assessments paid to or on behalf of a covered
employee by the professional employer organization under a professional employer agreement
3.48.120 TAX PART OF OVERHEAD.
It is not the intention of this chapter that the taxes or fees herein levied upon persons
engaging in business be construed as taxes or fees upon the purchasers or customer, but that such
taxes or fees shall be levied upon, and collectible from, the person engaging in the business
activities herein designated and that such taxes or fees shall constitute a part of the cost of doing
business of such persons
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
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
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SECTION 3. Severabdq If any one 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 day of 1 )9 &497 �jY , 2012
C-4
M McDONALD, Council President
Approved this day of .� GC D till` , 2012
PATTY , ayor
APPR TO FORM
S ON CORIN, City C er RO ER A LUBOVICH C
PUBLISHED the day of J Clthi ber , 2012
EFFECTIVE the d a of kr)i 2012
ORDINANCE NO d r
R \Legal \Legal \Ordmances\Finance\2012 B & O Tax Ordmances\B & O Tax Code Model Ordinance Updates 2012 - final doc
34
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AFFIDAVIT OF PUBLICATION
Account #42742 AD #287855
STATE OF WASHINGTON
COUNTY OF KITSAP
I, Stacey J C Hovland, 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 an advertisement as it was
published in regular issues (and not in supplement form) of said newspaper on the following date, to wit
And on December 10, 2012 such newspaper was regularly distributed to its subscribers during all of said
period The full amount of the fee charged for the foregoing publication is the sum of $4156 This amount
has not been paid in full
4z"% 1 "XF
(Signature of Pi4ricipal Clerk)
Subscribed and sworn to before me this day of December 10, 2012
Notary Public in and for the State of Washington, Kitsap County CASSANDRA I s
Notary P State of Wa My Commissi
February 0
ORDINANCE NO 5201
AN ORDINANCE of the City Council of the City of Bremerton, Washington, amending Section 3 86 200
of the Bremerton Municipal Code entitle "Public Disclosure -- Confidentiality -- Information Sharing"
relating to business and occupation taxes, and further amending Chapter 3 48 of the Bremerton Municipal
Code entitled "Business and Occupation Taxes "
PASSED by the City Council on the 5th day of December, 2012
The full text of this ordinance is available from the City Clerk's Office, 345 Sixth Street, Suite 600,
Bremerton, WA 98337
AD#20130221