Chapter 3.70
UTILITY TAX
Sections:
3.70.020 Utility tax levied — Rate.
3.70.030 Allocation of income — Cellular telephone service.
3.70.050 Taxpayer engaged in more than one business.
3.70.070 Record retention requirements.
3.70.080 Tax delinquency — Unlawful acts.
3.70.090 Quitting, selling, or transferring business.
3.70.130 Over or underpayment of tax.
3.70.140 Designation of use of funds generated by telephone utility tax.
3.70.010 Definitions.
Unless the context clearly indicates otherwise, the words, phrases and terms used in this chapter shall have the following meanings:
A. "Cellular telephone service" means a two-way voice and data telephone/telecommunications system based in whole or substantially in part on wireless radio communications which is not subject to regulation by the Washington State Utilities and Transportation Commission (WUTC). This includes cellular mobile service and prepaid wireless calling 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. Cellular telephone service is included within the definition of "telephone business" for the purposes of this chapter.
B. "Call by call basis" means any method of charging for telephone business where the price for the service is measured by individual calls.
C. "City manager" means the city manager and designees.
D. "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.
E. "Gross income" means the value proceeding or accruing from the sale of tangible property or service, and receipts (including all sums earned or charged, whether received or not) by reason of investment of capital in the business engaged in (including rentals, royalties, interest and other emoluments however designated) excluding receipts or proceeds from the sale or use of real property or any interest therein and the proceeds from the sale of notes, bonds, mortgages, or other evidences of indebtedness, or stocks and the like and without any deduction on account of the cost of the property sold, cost of materials used, labor costs, interest or discount paid, or any expenses whatsoever, and without any deduction on account of losses. Further deductions and exceptions from gross income upon which the fee or tax described in this chapter is computed are set forth in SVMC 3.70.060.
F. "Pager service" means service provided by means of an electronic device which has the ability to send or receive voice or digital messages transmitted through the local telephone network, via satellite or any other form of voice or data transmission. "Pager service" is included within the definition of "telephone business" for purposes of this chapter.
G. "Person" or "persons" means persons of either sex, firms, co-partnerships, corporations, limited liability companies, and other associations, whether acting by themselves or through servants, agents or employees.
H. "Service address" means the street address representative of where the customer's use of the telecommunications service primarily occurs, which must be the residential street address or the primary business street address of the customer. In the case of mobile telecommunications services, "place of primary use" must be within the licensed service area of the home service provider. For purposes of determining the service address of prepaid wireless calling services the business location of the seller of the prepaid wireless calling service shall be the presumptive service address, unless the taxpayer has actual knowledge to the contrary.
I. "Taxpayer" means any person liable for the license fee or tax imposed by this chapter.
J. "Tax year" or "taxable year" means (1) the year commencing January 1st and ending on December 31st of such year, or (2) the taxpayer's fiscal year when permission is obtained from the city manager to use that period as the tax year.
K. "Telephone business" means the providing access by a person or business to a local telephone network, local telephone network switching service, toll service, cellular telephone service, or coin telephone services, or providing 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. The term includes cooperative or farmer line telephone companies or associations operating an exchange. Telephone business also includes the provision of telephone service through technology commonly referred to as voice over internet protocol (VOIP). Telephone business does not include the providing of competitive telephone service, nor the providing of broadcast services by radio and telephone stations. (Ord. 08-014 § 2, 2008).
3.70.020 Utility tax levied — Rate.
There is levied on and shall be collected from every person a tax for the act or privilege of engaging in utility business activities, measured by multiplying the below respective rates against gross income as follows:
A. Telephone Business. Upon every person engaged in or carrying on any telephone business (including cellular telephone service and pager service) within the City a fee or tax equal to six percent of the total gross income from such business in the City. Tax liability imposed under this section shall not apply to that portion of 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, or charges for network telephone service that is purchased for the purpose of resale. (Ord. 08-014 § 2, 2008).
3.70.030 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 is current and accurate, unless the taxpayer has actual knowledge to the contrary.
C. Call-by-Call Based Service. When the cellular telephone service is provided by the telephone business to a subscriber on a call-by-call basis, the gross income shall be assigned consistent with the taxpayer's accounting system to (1) the location in which the call originates and terminates, or (2) the location in which the call either originates or terminates and in which the service address is located.
D. Dispute Resolution. If there is a dispute between or among the City and one or more other cities 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). Once the taxes on the disputed revenues have been paid to one of the contesting cities, the cellular telephone service company shall have no further liability with respect to additional taxes on the disputed revenues so long as it changes its billing records for future revenues to comport with the settlement facilitated by AWC.
E. City Manager Authority. The city manager is authorized to represent the City in negotiations with other cities for the proper allocation of cellular telephone service taxes imposed pursuant to this chapter. Any agreement with respect to the allocation of the cellular telephone service taxes shall receive the final approval of the city council. (Ord. 08-014 § 2, 2008).
3.70.040 Remittance.
A. Monthly Remittance. The tax imposed by this chapter shall be collected, reported and remitted to the City monthly on or before the last day of the subsequent month. If a taxpayer commences to engage in business at any time other than the first day of the month, then the taxpayer's first return and tax payment shall be based upon and cover the portion of the month during which the taxpayer engaged in business.
B. Returns. The remittance shall be in legal tender and shall be accompanied by a return on a form to be provided and prescribed by the City. The taxpayer shall be required to swear or affirm in writing on the return that the information therein given is full and true and that the taxpayer knows it to be so. If the total tax for which any person is liable under this chapter is not reasonably expected to exceed $100.00 in any month, the taxpayer may file a written request with the city manager to file and pay taxes due under this chapter annually. Such requests are subject to approval by the city manager. (Ord. 08-014 § 2, 2008).
3.70.050 Taxpayer engaged in more than one business.
Any person engaged in, or carrying on, more than one activity or business subject to the tax imposed by this chapter, shall pay the tax so imposed on each such business or activity. (Ord. 08-014 § 2, 2008).
3.70.060 Deductions.
In computing the tax imposed by this chapter, the following may be deducted from the measure of the tax:
A. 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 for which the taxpayer can provide documentation to the City.
B. All cash discounts allowed and actually granted to customers of the taxpayer during the tax year and for which the taxpayer can provide documentation to the City.
C. Amounts derived from transactions in interstate or foreign commerce, or from business done for the government of the United States, its officers or agents in their official capacity, and any amount paid by the taxpayer to the United States or the state of Washington as excise taxes.
D. The amount of credit losses actually sustained by taxpayers whose regular books are kept on an accrual basis.
E. Amounts derived from business which the City is prohibited from taxing under the Constitution or the laws of this state or the United States. (Ord. 08-014 § 2, 2008).
3.70.070 Record retention requirements.
It shall be the duty of every person liable for payment of the tax hereunder to obtain an occupation license, as prescribed by Chapter 5.05 SVMC, and to keep and preserve for a period of five years such books and records as will accurately reflect the amount of gross income from the business, and from which can be determined the amount of any tax for which the person may be liable under the provisions of this chapter. The term "books and records" as used in this section includes but is not limited to copies of the taxpayer's federal income tax returns, federal excise tax returns, state of Washington excise tax returns, and copies of income tax and excise tax audits made by the United States or the state of Washington and furnished to such person. The taxpayer's books and records shall be available for examination at all reasonable times by the city manager and his or her duly authorized designees.
In the case of any taxpayer who does not keep the necessary books and records within the City for examination, it shall be sufficient if such person produce the same within the City as instructed or required by the city manager.
Any taxpayer who fails, neglects, or refuses to produce such books and records in accordance with this chapter, or fails to file a return, in addition to being subject to other civil and criminal penalties provided by this chapter, is subject to a tax assessment in an amount determined by the city manager in accordance with the provisions of this chapter, which tax assessment shall be deemed prima facie correct and shall be the amount of fee or tax owing to the City by the taxpayer unless the person can prove otherwise by competent evidence. The taxpayer shall be notified by certified mail of the amount of tax assessment imposed pursuant to this section, together with any penalty and/or interest due, and the total of such amounts shall thereupon become immediately due and payable. (Ord. 08-014 § 2, 2008).
3.70.080 Tax delinquency — Unlawful acts.
A. Penalties and Interest. For each payment due, if such payment is not made by the due date thereof, there shall be added penalty and interest as follows:
1. If paid one to 10 days late, there shall be a penalty of five percent added to the amount of tax due.
2. If paid 11 to 20 days late, there shall be a penalty of seven percent added to the amount of tax due.
3. If paid 21 to 30 days late, there shall be a penalty of 10 percent added to the amount of tax due.
4. If paid 31 to 60 days late, there shall be a penalty of 15 percent added to the amount of tax due.
5. If paid in excess of 60 days late, there shall be a penalty of 20 percent added to the amount of tax due.
6. In addition to the above penalty, the City shall charge the taxpayer interest on all taxes due at the rate of one percent per month or portion thereof that said amounts are past due.
7. The tax imposed by this chapter, and all penalties and interest thereon, shall constitute a debt to the City, and may be collected by court proceedings in the same manner as any other debt, which remedy shall be in addition to all other available remedies. Any judgment entered in favor of the City may include an award to the City of all court and collection costs including attorneys' fees to the extent permitted by law. Amounts delinquent more than 60 days may be assigned to a third party for collection, in which case the amount of any collection charges shall be in addition to all other amounts owed. Amounts due shall not be considered paid until the City has received payment for the full amount due or has discharged the amount due and not paid.
B. Unlawful Acts. It is unlawful for any person liable for the tax imposed by this chapter to fail to pay the tax when due or for any person, firm, or corporation to make any false or fraudulent return or any false statement in connection with the return.
C. Criminal Penalties. Any person who intentionally violates any provision of this chapter shall be guilty of a misdemeanor and, upon conviction thereof, punished pursuant to state law or City ordinance. (Ord. 08-014 § 2, 2008).
3.70.090 Quitting, selling, or transferring business.
Whenever any taxpayer quits business, or sells out, exchanges, or otherwise disposes of such business, any tax payable under this chapter shall become immediately due and payable, and such taxpayer shall, within 10 days thereafter, make a return and pay the tax due; and any person who becomes a successor shall become liable for the full amount of any unpaid tax, interest, and penalties and shall withhold from the purchase price an amount sufficient to pay any tax due from the taxpayer until such time as the taxpayer shall produce a receipt from the City showing payment in full of any tax due or a certificate that no tax is due. If such tax, interest or penalty has not been paid by the taxpayer within 10 days from the date of such sale, exchange, or disposal, the successor shall become liable for the payment of the full amount of tax, interest and penalties. The successor's liability shall be limited to the purchase price or fair market value of the business purchased if no cash transaction took place. No successor shall be liable for any tax due from the taxpayer from whom the successor has acquired a business or stock of goods if the successor gives written notice to the city manager of such acquisition and no assessment is issued by the city manager within six months of receipt of such notice against the former operator of the business. The taxpayer's account will remain on an active status and be subject to all taxes, penalties, and interest until such time as the city manager is notified in writing that the taxpayer has discontinued business activity within the City. Nothing in this chapter is intended nor shall it be construed to prohibit the successor from engaging in business in the City pending resolution of the successor's tax liability. (Ord. 08-014 § 2, 2008).
3.70.100 Tax not exclusive.
The tax levied herein shall be additional to any license fee or tax imposed or levied under any other law or under any other ordinance of the City. (Ord. 08-014 § 2, 2008).
3.70.110 Rate changes.
No change in the rate of tax upon persons engaging in the business of furnishing utility services shall apply to business activities occurring before the effective date of the change. Furthermore, except for a change in the tax rate authorized by RCW 35.21.870, no change in the rate of the tax on persons engaging in the business of providing utility services may take effect sooner than 60 days following the enactment of the ordinance establishing the change. (Ord. 08-014 § 2, 2008).
3.70.120 Appeal procedure.
Any taxpayer aggrieved by the amount of the fee or tax found by the city manager to be required under the provisions of this chapter may, upon full payment of the amount assessed, appeal from such finding by filing a written notice of appeal with the city clerk within 14 days from the date such taxpayer was given notice in writing of such amount. The clerk shall, as soon as practicable, fix a time and place for the hearing of such appeal before the hearing examiner, which time shall be not more than 60 days after the filing of the notice of appeal, and shall cause a notice of the time and place thereof to be delivered or mailed to the appellant. At such hearing before the hearing examiner, the taxpayer shall be entitled to be heard and to introduce evidence in his or her own behalf. The hearing examiner shall render a decision, together with findings of fact and conclusions of law, based upon the evidence presented at the time of the hearing and all material on file in the case. The hearing examiner's decision shall indicate the correct amount of the fee or tax owing. The hearing examiner's decision shall be final. The appellant or the City may appeal the decision of the hearing examiner to the Superior Court of Washington in and for Spokane County within 30 days after the date of the hearing examiner's decision. The hearing examiner may, by subpoena, require the attendance of any person, and may also require him/her to produce any pertinent books and records. Any person served with such subpoena shall appear at the time and place therein stated and produce the books and records required, if any, and shall testify truthfully under oath administered by the hearing examiner as to any matter required of him/her pertinent to the appeal, and it shall be unlawful for him/her to fail or refuse so to do. (Ord. 08-014 § 2, 2008).
3.70.130 Over or underpayment of tax.
In the event that any person makes an overpayment, and within two years of the date of such overpayment makes application for a refund or credit, the person's claims shall be allowed and a refund made by the City upon determination by the city manager that no other sums are owed by the person to the City. If a person determines that the tax has been underpaid and without notice by any party pays the amount due to the City, such amount shall not be subject to penalty. (Ord. 08-014 § 2, 2008).
3.70.140 Designation of use of funds generated by telephone utility tax.
All net revenues generated through taxation of telephone business pursuant to this chapter shall be designated for use exclusively in the City road fund. (Ord. 08-014 § 2, 2008).