Chapter 3.20
BUSINESS LICENSE AND OCCUPATION TAX

Sections:

3.20.010    Exercise of revenue license power.

3.20.020    Definitions.

3.20.030    Occupation license required – Violations.

3.20.040    License tax year.

3.20.050    Occupations subject to tax – Amounts.

3.20.060    Exceptions and deductions.

3.20.070    Application for occupation license.

3.20.080    Monthly payment of tax.

3.20.090    Commencement of business during tax year.

3.20.100    Reserved.

3.20.110    Sale or transfer of business.

3.20.120    Taxpayer to keep books and records – Returns confidential.

3.20.130    Clerk to investigate returns.

3.20.140    Over- or underpayment of tax.

3.20.150    Remedy for nonpayment of tax.

3.20.155    Allocation of income – Cellular telephone service.

3.20.156    Rate change.

3.20.160    Appeals to city council.

3.20.170    Mayor may subpoena any person.

3.20.180    Clerk to make rules.

3.20.190    Posting, unlawful use of license.

3.20.200    Unlawful acts – Failure to apply for license, false returns, etc.

3.20.210    Penalty for violations.

3.20.220    Severability.

3.20.010 Exercise of revenue license power.

The provisions of this chapter shall be deemed an exercise of the power of the city of Edmonds to license for revenue pursuant to the laws of the state of Washington. [Ord. 917 § 1, 1962].

3.20.020 Definitions.

In construing the provisions of this chapter, save when otherwise plainly declared or clearly apparent from context, the following definitions shall be applied:

A. “Cellular telephone service” is a two-way voice and data telephone/telecommunications system based in whole or substantially in part on wireless radio communications and which is not subject to regulation by the Washington Utilities and Transportation Commission (WUTC). This includes cellular mobile service. The definition of cellular mobile service includes other wireless radio communications services such as specialized mobile radio (SMR), personal communications services (PCS) and any other evolving wireless radio communications technology which accomplishes a purpose similar to cellular mobile service.

B. “Gross income” means the value proceeding or accruing by reason of the transaction of business engaged in and includes gross proceeds of sales, compensation for the rendition of services, gains realized from trading in stocks, bonds, or other evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and other emoluments, however designated, all without any deduction on account of the costs of tangible personal property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses.

C. “Person or persons” means persons of either sex, firms, copartnerships, corporations, public utility districts and other associations or natural persons, whether acting by themselves or by servants, agents or employees.

D. “Solid waste hauler” shall mean any person or persons providing solid waste disposal services authorized pursuant to Washington Utilities and Transportation Commission Tariff to dispose of solid waste, garbage, refuse or any similar material within and from the city of Edmonds, or providing such services to city of Edmonds’ residents.

E. “Taxpayer” means any person subject to the license fee or tax imposed by this chapter.

F. “Tax year or taxable year” means the year commencing January 1st and ending on the last day of December of the same year of, if approved by the city clerk as provided in this chapter, the taxpayer’s fiscal year.

G. “Telephone business” means the business of providing access to a local telephone network, local network telephone switching service, toll service, coin telephone services, or the providing of telephonic video, data, or similar communication or transmission for hire, via a local telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. It further includes cooperative or farmer line telephone companies or associations operating an exchange. “Telephone business” does not include the providing of competitive telephone service, the providing of cable television service, nor the providing of broadcast services by radio or television stations. [Ord. 3432 § 1, 2002; Ord. 3006 § 1, 1995; Ord. 2902 § 1, 1992; Ord. 2254 § 1, 1981; Ord. 2048 § 1, 1979; Ord. 917 § 1, 1962].

3.20.030 Occupation license required – Violations.

A. After the effective date of this chapter, no person shall engage in or carry on any business, occupation, pursuit or privilege for which a license fee or tax is imposed by this chapter without having first obtained, and being the holder of, a valid and subsisting license so to do, to be known as an “occupation license.”

B. Any person engaged in, or carrying on, more than one such business, occupation, pursuit or privilege shall pay the license tax so imposed upon each of the same.

C. Any taxpayer who engages in or carries on any business subject to tax hereunder without having his “occupation license” so to do shall be guilty of a violation of this chapter for each day during which the business is so engaged in or carried on and the taxpayer who fails or refuses to pay the license fee or tax on any part thereof on or before the due date shall be operating without having his license so to do. [Ord. 917 § 3, 1962].

3.20.040 License tax year.

A. All “occupation licenses” for the calendar year following the effective date of this chapter shall be for the tax year during which this chapter takes effect, and shall expire at the end of such tax year. Thereafter, all “occupation licenses” shall be for the tax year for which issued and shall expire at the end of such tax year.

B. Such occupation license and a fee or tax therefor imposed, shall be for the year commencing January 1st (with the sole exception of the year in which this chapter becomes effective) and ending on the last day of December of the year; provided, however, that if the taxpayer, in transacting his business, keeps the books reflecting the same for a fiscal year not based on the calendar year, he may, with the assent of the city clerk, obtain his license for the period of his current fiscal year which shall be deemed his tax year, and pay the fee or tax computed upon his gross income made during his fiscal year (next preceding his tax year) covering his accounting period as shown by the method of keeping the books of the business.

C. The occupation license levied on the city’s cable television franchisee(s) shall include for the initial period of franchise if less than one calendar year, a partial tax year dating from the date of franchise approval or extension through December 31st of that calendar year. The franchisee shall pay a tax for the initial period equal to the prorated portion of the annual tax determined in accordance with the provisions of this chapter. Any partial concluding year shall be similarly prorated. [Ord. 2837 § 2, 1991; Ord. 2210 § 1, 1981; Ord. 917 § 4, 1962].

3.20.050 Occupations subject to tax – Amounts.

Sellers of electricity, gas, water, sewer, cable television and telephone services shall be subject to the taxes imposed by this chapter. There are levied upon, and shall be collected from, every person, firm, corporation or other entity on account of the business activities, license and occupation taxes in the amounts to be determined by the application of the rates against gross income as follows:

A. Public Utility Districts. Upon every person, firm, corporation or other entity engaged in or carrying on the business of selling or furnishing electrical energy and power a fee or tax equal in the following percentages is levied upon the total gross income from such business within the city of Edmonds during the tax year for which the license is required:

1. A fee or tax equal to six percent.

2. Until December 31, 2013, an additional three-quarters of one percent for a total of six percent shall be levied; provided, however that the additional three-quarters of one percent shall automatically expire and be repealed on December 31, 2013.

3. Provided, however, that there shall be no tax or fee upon revenues derived from the sale of electricity for the purposes of resale.

B. Natural or Manufactured Gas and Service. Upon every person, firm, corporation or other entity engaged in or carrying on the business of transmitting, distributing, selling and furnishing natural and/or manufactured gas, a tax equal to six percent of the total gross income from the sale of gas within the corporate limits of the city during and for the term for which the occupation license is required.

C. Brokered Natural Gas – Use Tax in Lieu of Occupations Tax. There is imposed under the authority of RCW 35.21.870 a use tax on the consumers of brokered natural gas. Such tax shall be in lieu of the tax imposed by subsection (B) of this section when consumers receive natural gas directly from a producer of manufactured natural gas outside of the state of Washington. Such tax shall be the same as that imposed on a natural manufactured gas utility by subsection (B) of this section, equal to six percent of the customer’s monthly purchases or other use charge by the broker of out-of-state natural gas.

D. Telephone Business. A tax equal to six percent of the gross subscribers’ exchange monthly service charges billed to business and residence customers located within the corporate limits of the city, together with six percent of gross income derived from intrastate toll service provided to business and residential customers located within the corporate limits of the city.

E. Cable Television. Pursuant to Chapter 4.68 ECC, community antenna television systems, commonly known as cable television franchisees, are hereby levied a franchise fee of five percent, as authorized by 47 U.S.C. Section 542(a) and RCW 35.21.860, on all gross revenues derived from any source of revenue by cable television franchisees from their cable television operations in the city of Edmonds. In addition thereto, a business license tax, as authorized in part by 47 U.S.C. Section 542(g)(2)(A), is hereby levied equal to six percent on all gross revenues derived from any source of revenue by cable television franchisees from their cable television operations in the city of Edmonds.

F. City Sewer Utility. The city of Edmonds, as a seller of sewer services, shall be subject to the tax imposed by this chapter. The sewer utility shall pay a license fee or tax equal to 10 percent of the gross income from the city’s sewer utility.

G. Solid Waste Haulers. Any solid waste hauler shall be subject to the tax imposed by this chapter. The solid waste hauler shall pay a tax equal to six percent of the total gross income from the charges derived from solid waste disposal services within the corporate limits of the city during and for the term for which the occupation license is required.

H. City Water Utility. The city of Edmonds, as the seller of water services, shall be subject to the tax imposed by this chapter. The water utility shall pay a license tax or fee equal to 18.7 percent on the gross income from the city’s water utility.

I. City Storm Water Utility. The city of Edmonds, as the seller of storm water services, shall be subject to the tax imposed by this chapter. The storm water utility shall pay a license tax or fee equal to 10 percent on the gross income from the city’s storm water utility. [Ord. 3745 § 1, 2009; Ord. 3709 § 1, 2008; Ord. 3688 § 1, 2008; Ord. 3618 § 1, 2006; Ord. 3531 § 1, 2005; Ord. 3432 § 2, 2002; Ord. 3281 § 1, 1999; Ord. 2899 § 1, 1992; Ord. 2837 § 3, 1991; Ord. 2775-A § 1, 1990; Ord. 2413, 1983; Ord. 2339 § 1, 1982].

3.20.060 Exceptions and deductions.

A. Interstate or Foreign Commerce. There shall be excepted and deducted from the total gross income upon which the license fee or tax is computed, so much thereof as is derived from the transactions in interstate or foreign commerce, or from business done for the government of the United States, its officers or agents, and any amount paid by the taxpayer to the United States, the state of Washington or the city of Edmonds as excise taxes levied or imposed upon the sale or distribution of property or service.

B. Bad Debts. There shall be excepted and deducted from the total gross income upon which the license fee or tax is computed, all bad debts for services incurred, rendered or charged for during the tax year, or for a preceding tax year if the charge-off is made in the current tax year.

Debts shall be deemed bad and uncollectible when the same have been written off the books of the taxpayer. In the event debts are subsequently collected, said income shall be reported in the return for tax year in which said debts are collected and at the rate prevailing in the tax year when collected.

C. Cash Discounts. There shall be excepted and deducted from the total gross income upon which the license fee or tax is computed, all cash discounts allowed and actually granted to customers of the taxpayer during the tax year.

D. Burden on Interstate Commerce. Nothing in this chapter shall be construed as requiring a license, or the payment of a license fee or tax, or the doing of any act, which would constitute an unlawful burden or interference in violation of the Constitution or laws of the United States or which would not be consistent with the Constitution or laws of the state of Washington.

E. Deduction Allowed. Any person subject to the payment of a license fee or tax under the provisions of any ordinance of the city other than this chapter, on account of engaging in any activity for which he is liable to tax hereunder, may deduct the amount of such fee or tax from the amount of fee or tax imposed by this chapter on account of such activity, but such persons shall, nevertheless, in the manner herein provided for, apply for and procure an “occupation license.”

F. There shall be excluded and deducted from the total gross income upon which the license fee or tax for telephone businesses and telecommunications companies is computed, the following:

1. That portion of the gross income derived from charges to another telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate services.

2. Charges by a taxpayer engaging in a telephone business or to a telecommunications company, as defined in RCW 80.04.010, for telephone service that the purchaser buys for the purpose of resale.

3. Adjustments made to a billing or to a customer account or to a telecommunications company accrual account in order to reverse a billing or charge that had been made as a result of third-party fraud or other crime and was not properly a debt of a customer.

4. Charges to cellular telephone service subscribers passed on to compensate for the cost to the company of the tax imposed by this chapter.

5. There shall be allowed as a deduction as to cellular telephone companies which keep their regular books of account on an accrual basis, for credit losses actually sustained by the taxpayer as a result of the cellular telephone business. [Ord. 3006 § 2, 1995; Ord. 917 § 6, 1962].

3.20.070 Application for occupation license.

A. On or before the first day of each tax year, every taxpayer shall apply for an “occupation license” on forms provided by the city clerk. The application shall require such information as may be necessary to enable the city clerk to arrive at the lawful amount of tax imposed by this chapter.

B. The application form shall be signed and acknowledged before a notary public by an authorized representative of the taxpayer. [Ord. 2048 § 2, 1979; Ord. 917 § 7, 1962].

3.20.080 Monthly payment of tax.

The taxpayer shall pay the tax in monthly installments during the life of the occupation license within 25 days after the end of each calendar month. [Ord. 2048 § 3, 1979; Ord. 917 § 8, 1962].

3.20.090 Commencement of business during tax year.

Taxpayers commencing any business, occupation pursuit or privilege during any tax year shall acquire an occupation license as provided in this chapter. The tax shall be proportioned to the remainder of the tax year. [Ord. 2048 § 4, 1979; Ord. 917 § 9, 1962].

3.20.100 Reserved.

3.20.110 Sale or transfer of business.

Upon the sale or transfer during any tax year of a business on account of which a fee or tax is hereby required, the purchaser or transferee shall, if the fee or tax has not been paid in full for said year, be responsible for its payment for that portion of said year during which he carried on such business. [Ord. 917 § 11, 1962].

3.20.120 Taxpayer to keep books and records – Returns confidential.

It shall be the duty of each taxpayer taxed upon his gross income to keep and enter in a proper book or set of books or records an account which shall accurately reflect the amount of his gross income, which account shall always be open to the inspection of the city clerk, and/or his or her duly authorized agent, and from which said officer or his agent may verify the return made by the taxpayer.

The applications, statements or returns made to the city clerk pursuant to this chapter, shall not be made public, nor shall they be subject to the inspection of any person except the mayor, the city attorney, the city clerk or his authorized agent, and members of the city council. [Ord. 917 § 12, 1962].

3.20.130 Clerk to investigate returns.

If any taxpayer fails to apply for license or make his return, or if the city clerk is dissatisfied as to the correctness of the statement made in the application or return of any taxpayer, said officer, or his authorized agent, may enter the premises of such taxpayer at any reasonable time for the purpose of inspecting his books or records of account to ascertain the amount of the fee or tax or to determine the correctness of any such statements, as the case may be, and may examine any person under oath administered by said officer, or his agent, touching the matters inquired into, or said officer, or his authorized agent, may fix a time and place for the investigation of the correctness of the return and may issue a subpoena to the taxpayer, or any other person, to attend upon such investigation and there testify under oath administered by said officer, or his agent, in regard to the matters inquired into and may, by subpoena, require him, or any person, to bring with him such books, records and papers as may be necessary. [Ord. 917 § 13, 1962].

3.20.140 Over- or underpayment of tax.

If the city clerk, upon investigation or upon checking returns, finds that the fee or tax paid on any of them is more than the amount required of the taxpayer, he shall refund the amount overpaid by a warrant upon the general fund. If the city clerk finds that the fee or tax paid is less than required, he shall send a statement to the taxpayer showing the balance due, who shall within three days pay the amount shown thereon. [Ord. 917 § 14, 1962].

3.20.150 Remedy for nonpayment of tax.

If any taxpayer fails to apply for license, or make his return, or to pay the fee or tax therefor, or any part thereof within three days after the same shall have become due, the city clerk shall ascertain the amount of the fee or tax or installment thereof due and shall notify such taxpayer thereof, who shall be liable therefor, in any suit or action by the city for the collection thereof. The city clerk shall also notify the city attorney in writing of the name of such delinquent taxpayer, and the amount due from him and said officer shall, with the assistance of the city clerk, collect the same by any appropriate means or by suit or action in the name of the city. [Ord. 917 § 15, 1962].

3.20.155 Allocation of income – Cellular telephone service.

A. Service Address. Payments by a customer for the telephone service from telephones without a fixed location shall be allocated among taxing jurisdictions to the location of the customer’s principal service address during the period for which the tax applies.

B. Presumption. There is a presumption that the service address a customer supplies to the taxpayer (cellular telephone company) is current and accurate, unless the taxpayer has actual knowledge to the contrary.

C. Roaming Phones. When the service is provided while a subscriber is roaming outside the subscriber’s normal cellular network area, the gross income shall be assigned consistent with the taxpayer’s accounting system to the location of the originating cell site of the call, or to the location of the main cellular switching office that switched the call.

D. Dispute Resolution. If there is a dispute among one or more other cities, and/or the taxpayer, as to the service address of a customer who is receiving cellular telephone services and the dispute is not resolved by negotiation among the parties, then the dispute shall be resolved by the city and the other city or cities by submitting the issue for settlement to the Association of Washington Cities (AWC). The taxpayer shall have no further liability with respect to additional taxes on the disputed revenues, but will change his or her billing records for future revenues to comport with the settlement facilitated by AWC. [Ord. 3006 § 3, 1995].

3.20.156 Rate change.

No change in the rate of tax upon persons engaging in providing cellular telephone service shall apply to business activities occurring before the effective date of the change and, except for a change in the tax rate authorized by RCW 35.21.870, no change in the rate of the tax may take effect sooner than 60 days following the enactment of the ordinance establishing the change. The city shall send to each cellular telephone service company at the address on its license, a copy of any ordinance changing the rate of tax upon cellular telephone service promptly upon its enactment. [Ord. 3006 § 4, 1995].

3.20.160 Appeals to city council.

Any taxpayer aggrieved by the amount of the fee or tax found by the city clerk to be required under the provisions of this chapter, may appeal to the city council from such finding by filing a written notice of appeal with the city clerk within five days from the time such taxpayer was given notice of such amount. The clerk shall, as soon as practicable, fix a time and place for the hearing of such appeal, which time shall not be more than 10 days after the filing of the notice of appeal, and he shall cause a notice of the time and place thereof to be delivered or mailed to the appellant. At such hearing the taxpayer shall be entitled to be heard and to introduce evidence in his own behalf. The city council shall thereupon ascertain the correct amount of the fee or tax by resolution and the city clerk shall immediately notify the appellant thereof, which amount, together with costs of the appeal, if appellant is unsuccessful therein, must be paid within three days after such notice is given. [Ord. 917 § 16, 1962].

3.20.170 Mayor may subpoena any person.

The mayor of the city of Edmonds may, by subpoena, require the attendance of any person and may also require him to produce any pertinent books and records. Any person served with such subpoena shall appear at the time and place therein stated and produce the books and required records, if any, and shall testify truthfully under oath administered by the mayor as to any matter required of him pertinent to the appeal, and it shall be unlawful for him to fail or refuse so to do. [Ord. 917 § 17, 1962].

3.20.180 Clerk to make rules.

The city clerk shall have the power, subject to the approval of the city council, and it shall be his duty from time to time, to adopt, publish and enforce rules and regulations not inconsistent with this chapter or with law for the purpose of carrying out the provisions thereof, and it shall be unlawful to violate or fail or comply with any such rule or regulation. [Ord. 917 § 18, 1962].

3.20.190 Posting, unlawful use of license.

A. All licenses issued pursuant to the provisions of this chapter shall be kept posted by the licensee in a conspicuous place in his principal place of business in the city.

B. No person to whom a license has been issued, pursuant to this chapter, shall suffer or allow any other person chargeable with a separate license to operate under or display his license, nor shall such other person operate under or display such license. [Ord. 917 § 19, 1962].

3.20.200 Unlawful acts – Failure to apply for license, false returns, etc.

It shall be unlawful for any person liable to tax hereunder to fail or refuse to make application or return for a license or to pay the fee or tax or installment thereof when due, or for any person to make any false or fraudulent application or return or any false statement or representation in or in connection with, any such application or return, or to aid or abet another in any attempt to evade payment of the fee or tax or any part thereof, or for any person to fail to appear and/or testify in response to subpoena issued pursuant hereto, and/or to testify falsely upon the hearing of any appeal or upon any investigation of the correctness of a return, or in any manner to hinder or delay the city or any of its officers in carrying out the provisions of this chapter. [Ord. 917 § 20, 1962].

3.20.210 Penalty for violations.

Any person violating or failing to comply with any of the provisions of this chapter or any lawful rule or regulation adopted by the city clerk pursuant thereto, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, shall be punished by a fine in any sum not to exceed $250.00 or by imprisonment in the city jail for a term not to exceed 90 days, or by both such fine and imprisonment. Each and every day that the violation of this chapter shall be continued is a separate offense and punishable as herein provided. [Ord. 917 § 22, 1962].

3.20.220 Severability.

If any provision or section of this chapter shall be held void or unconstitutional, all other parts, provisions and sections of this chapter, not expressly so held to be void or unconstitutional shall continue in full force and effect.

[Ord. 917 § 21, 1962].