HomeMy WebLinkAbout4342 ORDINANCE NO.4342
AN ORDINANCE of the City Council of the
City of Kent, Washington, amending chapters 3.18,
3.21, 3.26, 3.28 and 3.29, of the Kent City Code to
consolidate administrative provisions for all taxes,
align the City's B&O tax provisions with the model
ordinance, and add various clarifications.
RECITALS
A. Several parts of the City's tax code located in Title 3 of the
Kent City Code, include separate administrative provisions. This
administrative tax structure can make it difficult to administer the;
imposition and collection of taxes for staff, and difficult for taxpayers to'
properly remit taxes. The code amendments provided by this ordinance area
meant to consolidate the separate administrative provisions into a single
code section and to provide clarity for some tax provisions.
B. This ordinance also implements changes required by two bills;
i
passed by the state legislature in the 2019 session, HB 1403 regarding;
I
service apportionment rules and HB 1059 regarding annual tax filers. A!
work group of cities met over the past several months to update the model
B&O tax ordinance, and the updates were finalized in September 2019. All
B&O tax cities must adopt the changes with an effective date of
January 1, 2020.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
lAmend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
ORDINANCE
SECTION 1. - Amendment - KCC 3.18. Chapter 3.18 of the Kent
City Code entitled "Utility Tax on Telephone, Gas, Electric, Solid Waste,
Water, Sewer and Drainage Utilities," is hereby amended as follows:
CHAPTER 3.18
UTILITY TAX ON TELEPHONE, GAS, ELECTRIC, SOLID WASTE,
WATER, SEWER AND DRAINAGE UTILITIES
Sec. 3.18.001. Administrative provisions.
The administrative provisions contained in Chapter 3.29 KCC shall be fully
applicable to the provisions of this chapter except as expressly stated to
the contrary herein.
Sec. 3.18.010. Definitions. The following words, terms, and
phrases, when used in this chapter, shall have the meanings ascribed to
them in this section, except where the context clearly indicates a different
meaning:
Cable television business means:
1. A system providing service pursuant to a franchise issued by
the city under the Cable Communications Policy Act of 1984, Public Law
No. 98-549, 47 U.S.C. Section 521, as it may be amended or superseded;
or
2. Any system that competes directly with such franchised
system by employing antennas, microwaves, wires, wave guides, coaxial
cables, or other conductors, equipment, or facilities designed, construed,
or used for the purpose of:
a. Collecting and amplifying local and distant broadcast
television signals and distributing and transmitting them;
2Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re; Tax Codes
b. Transmitting original cable cast programming not
received through television broadcast signals; or
C. Transmitting television pictures, film, and videotape
programs not received through broadcast television signals, whether or
not encoded or processed to permit reception by only selected receivers;
provided, however, that "cable television business" shall not include
entities that are subject to charges as "commercial TV stations" under 47
U.S.C. Section 158, as it may be amended or superseded.
Cellular telephone service means any two-way voice and/or data
telephone or similar communications system based in whole or in
substantial part on wireless radio communications, including cellular
mobile service, and which is not subject to regulation by the Washington
State Utilities and Transportation Commission that conflicts with or
overrides this chapter. Cellular telephone service includes other wireless
radio communications services including, without limitation, specialized
mobile radio, paging services, personal communications, and data
services, and any other evolving wireless radio communications
technology that accomplishes a purpose substantially similar to cellular
telephone service. Cellular telephone service is included within the
definition of "telephone business" for the purposes of this chapter.
Competitive telephone service means the providing by any person, firm, or
corporation 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.
Gross income means the value proceeding or accruing from the
performance of the particular public service business involved, including
Mmend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
operations incidental thereto, but without any deduction on account of the
cost of the commodity furnished or 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. In addition, when determining total gross income from cellular
telephone service, "gross income" shall include all income from cellular
telephone service (including roaming charges incurred outside this state)
provided to customers whose "place of primary use" is in the city,
regardless of the location of the facilities used to provide the service. The
customer's place of primary use is, with respect to each telephone: (a) the
customer's address shown on the telephone service company's records; or
(b) the customer's place of residence if the telephone is for personal use,
and in both cases must be located within the licensed service area of the
home service provider. Roaming charges and cellular telephone charges to
customers whose place of primary use is outside the city of Kent will not
be taxable even though those cellular services are provided within the city
of Kent. There is a rebuttable presumption that the address shown on the
cellular telephone service company's records is the place of primary use
and is accurate. If the cellular telephone service company knows or should
have known that a customer's place of primary use address for a
telephone is within the city, then the gross income from cellular telephone
service provided to that customer with respect to that telephone is to be
included in the company's gross income.
Network telephone service means the providing by any person, firm, or
corporation of access to a local telephone network, local telephone
network switching service, toll service, or 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.
"Network telephone service" includes interstate service, including toll
4Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
service, originating from or received on telecommunications equipment or
apparatus in this state if the charge for the service is billed to a person in
this state. "Network telephone service" includes the provision of
transmission to and from the site of an internet provider via a local
telephone network, toll line or channel, cable, microwave, or similar
communication or transmission system. "Network telephone service" does
not include the providing of competitive telephone service, the providing
of cable television service, the providing of broadcast services by radio or
television stations, or the provision of internet service as defined in RCW
82.04.297, including the reception of dial-in connection, provided at the
site of the internet service provider.
Solid waste means all putrescible and nonputrescible solid and semisolid
wastes including, but not limited to, garbage, rubbish, ashes, industrial
wastes, swill, sewage sludge, infectious, hazardous, or toxic wastes,
demolition and construction wastes, abandoned vehicles or parts thereof,
and recyclable or reusable materials collected, in whole or in part, for
recycling or salvage.
Solid waste collection service means receiving solid waste for transfer,
storage, processing, treatment, or disposal including, but not limited to, all
residential and commercial collection services, public or private solid waste
disposal sites, transfer stations, and similar operations. Solid waste
collection service includes the activities of transferring, processing,
treating, storing, or disposing of the solid waste collected.
Telephone business means the business of providing network telephone
service and cellular telephone service as those terms are defined in this
section and includes cooperative or farmer line telephone companies or
associations operating an exchange. "Competitive telephone service" shall
not be considered "telephone business." Telephone business shall include
5Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
100 percent of the business and total gross income derived from calls
originating and/or billed to subscribers within the city.
Sec. 3.18.020. Certain utilities subject to tax.
A. In addition to the other business and license fees required by the
ordinances of the city, the city levies upon all persons, firms, or
corporations (including the city) engaged in certain business activities a
utilities tax to be collected as follows:
1. Upon every person, firm, or corporation engaging in or
carrying on any telephone business within the city, an annual tax equal to
six percent of the total gross income, including revenues from intrastate
toll, derived from the operation of such business within the city. This six
percent tax will be allocated as follows: 4.7 percent to the general fund,
0.3 percent to youth/teen programs, and one percent to street
improvement programs.
2. Upon every person, firm, or corporation engaging in or
carrying on a business of selling, wheeling, furnishing, distributing, or
producing gas, whether manufactured or natural, for commercial or
domestic use or purposes, a fee or tax equal to six percent of the total
gross income from such business in the city during the tax year for which
the license is required. This six percent tax will be allocated as follows: 4.7
percent to the general fund, 0.3 percent to youth/teen programs, and one
percent to street improvement programs.
3. Upon every person, firm, or corporation engaged in or
carrying on the business of selling, wheeling, furnishing, or distributing
electricity for light and power, a fee or tax equal to six percent of the total
gross income from such business in the city during the tax year for which a
license is required. This six percent tax will be allocated as follows: 4.7
percent to the general fund, 0.3 percent to youth/teen programs, and one
percent to street improvement programs.
6Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
4. Upon every person, firm, or corporation engaged in or
carrying on the business of providing cable television services, a tax equal
to six percent of the total gross income from that business in the city
during the tax year for which the license is required. All revenue received
from this tax must be applied only to funding the city's information
technology department operations and capital projects budgets in the
proportion determined by the city council in its biennial budget, including
all amendments.
5. Upon every person, firm, or corporation engaging in or
carrying on a business providing solid waste collection services, a tax equal
to 18.4 percent of the total gross income from such business in the city
during the tax year for which the license is required. This 18.4 percent tax
will be allocated as follows: 6.5 percent to the general fund, 0.3 percent to
youth/teen programs, one percent to street improvement programs, and
10.6 percent to maintain and repair residential streets, including related
impacts to curbs, gutters, sidewalks, and other road amenities, including
crosswalks along with necessary appurtenances, and improvements related
to residential traffic calming, but this 10.6 percent portion of the solid
waste utility tax shall not be used to expand, extend, or widen existing
residential streets or to build new residential streets. The amount used
from this fund for neighborhood traffic calming devices and crosswalks
shall not exceed $150,000 in any year.
6. Upon every person (including the city) engaging in or carrying
on the business of selling, furnishing, or distributing water services, a tax
equal to 13 percent of the total gross income from that business in the city
during the tax year; upon every person (including the city) engaging in or
carrying on the business of selling, furnishing, or distributing sewer
services, a tax equal to 9.5 percent of the total gross income from that
business in the city during the tax year; and upon every person (including
the city) engaging in or carrying on the business of selling, furnishing, or
distributing drainage services, a tax equal to 19.5 percent of the total
7Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
gross income from such business in the city during the tax year. Unless
otherwise directed by the city council in its budget process, the total of
these tax revenues will be allocated as follows: 43.85 percent to the
general fund for the use as allocated in the city's budget; 30.77 percent to
the capital resources fund, subject to the limitations provided in subsection
(A)(6)(a) of this section; 15.38 percent dedicated solely to the repayment
and elimination of debt in the city's "other capital projects" fund subject to
the limitations provided in subsection (A)(6)(b) of this section; 7.69
percent to street improvement programs; and 2.31 percent to youth/teen
programs.
a. Unless otherwise allocated by council, these funds must
be applied equally to (i) information technology capital programs directed
at funding long- and short-term hardware and software replacement, and
(ii) street capital programs, but further restricted to funding street
maintenance, repair, and signage only.
b. The 15.38 percent internal tax allocation will be
dedicated to the city's capital resources fund for the sole purpose of
retiring all debt in the city's other capital projects fund; provided, starting
January 1, 2023, or the first day of the year following the date the debt in
the other capital projects fund is fully retired, whichever occurs first, this
internal tax allocation will be dedicated to the general fund for use as
provided for in the city's budget.
B. In computing the tax provided in subsection (A) of this section, the
taxpayer may deduct from total gross income the following items:
1. The actual amount of credit losses and uncollectible
receivables sustained by the taxpayer.
2. Amounts derived from transactions in interstate and foreign
commerce which the city is prohibited from taxing under the laws and
Constitution of the United States.
8Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Sec. 3.18.025. Reserved.
Sec. 3.18.030. Utility tax, when due.
The utility tax imposed by KCC 3.18.020 shall be due and payable in
monthly installments and remittance thereof shall be made on or before
the last day of the following month in which the tax accrued. On or before
said due date, the taxpayer shall file with the finance department a return
upon a form to be prescribed and provided by the finance department,
which return shall contain a statement by the taxpayer, stating that the
amount of tax for which it is liable for the preceding monthly period, that
the information therein given and the amount of tax liability therein
reported are full and true, and that the taxpayer knows the same to be
true. This statement shall be signed by the taxpayer or its authorized
agent. Taxpayers expected to owe less than one thousand dollars ($1,000)
per month may submit taxes on a quarterly basis; taxes shall be due on
the last day of the month following the end of the quarter in which the tax
accrued. Quarterly period for the purpose of this chapter shall mean each
three (3) month period of the calendar year, commencing on January 1st.
its business within the eity, and sueh FeeeFds shall be Fetaffined
feF at least six (6) yeaFs and shall be epen at a'' Feasenable tinges to au
See. 3.18.050. Tax Payment failure Penalty and
9Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Of that tax will be ingpesed. Delinquent taxes, ine'Liding any penalties, aFe
taxes and penalties aFe paid On fLill. Any unpaid tax, penalty, OF inteFest
See. 3.18.060. Gverpayrmemt of tax.
the tax impesed by this ehapter, OF in exeess Of sueh tax, shall, LipeR
See. 3.18.070. Appeal to he
Any taxpayeF aggFieved by the angaunt Of tax, inteFest, OF penalties
due undeF this ehapteF pFieF to filing an appeal.
10Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
reF in eenneetienwith, such. FetUffi,
See. 3.18.090. Noncompliance Giviii penalty.
Any rfiFFn, eF EeFpeFatien subjeet te this chapter,
r at itS EliSEFetien,
RGWruse a ealleetien ageney to celleettaxes, inteFest,
OF assessed PUFSuant to this and penalties e
OF the eity n9ay seek cellectien lay
eeUFt
s r
Fengedme
SECTION 2. - Amendment - KCC 3.21. Chapter 3.21 of the Kent
City Code entitled 'Gambling Tax," is hereby amended as follows:
CHAPTER 3.21
GAMBLING TAX
Sec. 3.21.010. Gambling activities and tax.
A. Tax imposed. In accordance with RCW 9.46.110, the following taxes
are levied upon all persons, associations, and organizations who have been
duly licensed by the Washington State Gambling Commission to conduct or
operate gambling activities:
11Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
1. For bingo games and raffles, a tax rate of five percent of the
gross receipts received therefrom less the amount awarded as cash or
merchandise prizes;
2. For amusement games, a tax rate of two percent of the gross
receipts from any such amusement games less the amount awarded as
prizes, which is an amount less than the actual amount of costs of
enforcement by the city of the provisions of Chapter 9.46 RCW;
3. For punch boards and pull-tabs for bona fide charitable or
nonprofit organizations and for commercial stimulant operators, a tax rate
of 10 percent based on the gross receipts from the operation of the games
less the amount awarded as cash or merchandise prizes;
4. Commencing July 1, 2013, for social card games not
prohibited by subsection (D) of this section, a tax rate of seven percent of
the gross revenue from those games. Beginning January 1, 2017, this tax
rate will return to 11 percent of the gross revenue from those games.
B. Definitions. For the purposes of this chapter, the words and terms
used herein shall have the same meaning given to each pursuant to
Chapter 9.46 RCW, as same exist or may from time to time be amended;
and as set forth under the rules of the Washington State Gambling
Commission, WAC Title 230, as the same exists or may hereafter be
amended, unless otherwise specifically provided herein.
C. Exemption from tax. No tax shall be imposed under the authority of
this chapter on bingo or amusement games when such activities or any
combination thereof are conducted by any bona fide charitable or nonprofit
organization as defined in Chapter 9.46 RCW, which organization has no
paid operating or management personnel and has gross receipts from
bingo or amusement games, or any combination thereof, not exceeding
$5,000 per year less the amount awarded as cash or merchandise prizes.
For raffles conducted by bona fide charitable or nonprofit organizations, no
12Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
tax shall be imposed under this chapter on the first $10,000 per year of
gross receipts, less the amount awarded as cash or merchandise for prizes.
D. House-banked card rooms. Pursuant to RCW 9.46.295 and to the
city's police power and legislative authority, the operation or conduct of
house-banked card rooms by any person, association, or organization as a
commercial stimulant, as defined in Chapter 9.46 RCW, is allowed within
the city of Kent pursuant to KCC Title 15. It is further provided that bona
fide charitable or nonprofit organizations, as defined in Chapter 9.46 RCW,
may operate or conduct social card games if said social card games have
been duly licensed by the Washington State Gambling Commission and if
they are otherwise operated or conducted in compliance with the
provisions of this chapter. A violation of this section shall not be subject to
KCC 1.01.140.
Sec. 3.21.020. Administration and collection.
The administrative provisions contained in Chapter 3.29 KCC shall be fully
applicable to the provisions of this chapter except as expressly stated to
the contrary herein. The administration and collection of the tax imposed
by this chapter shall be by the finance director, pursuant to the rules and
regulations of the State Gambling Commission. The finance directo—ity�
eeuncil shall adopt and publish such rules and regulations as may be
reasonably necessary to enable the collection of the tax imposed herein.
Sec. 3.21.030. Filing declaration of intent.
For the purpose of identifying who shall be subject to the tax imposed by
this chapter, any person, association, or organization intending to conduct
or operate any gambling activity authorized by RCW 9.46.010 et seq. shall,
prior to commencement of any such activity, file with the finance director a
sworn declaration of intent to conduct or operate such activity, together
with a copy of the license issued in accordance with RCW 9.46.010 et seq.
13Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Thereafter, for any period covered by such state license or any renewal
thereof, any person, association, or organization shall, on or before the
fifteenth day of the month following the end of the quarterly period in
which the tax accrued, file with the finance director a sworn statement on
a form to be provided and prescribed by the city council for the purpose of
ascertaining the tax due for the preceding quarterly period.
Sec. 3.21.040. Tax due.
A. Quarterly tax reporting and payment. Except as provided in
subsection (B) of this section for taxes due in excess of $50,000 annually,
the tax imposed by this chapter shall be due and payable in quarterly
installments and Femettanee theFefeF, tegetheF with the FetuFn feFms, Shall
fir.
B. Monthly tax reporting and payment. The tax imposed by this chapter
shall be due and payable in monthly installments when the gambling taxes
due in the previous calendar year were in excess of $50,000. In that
event, the tax remittance, together with the return forms, shall be made
on or before the final day of the month immediately after the month in
which the tax accrued.
1. Whenever any person, association, or organization taxed
under this chapter quits business, sells out, or otherwise disposes of its
business, or terminates the business, any tax due shall become due and
payable immediately, and such taxpayer shall, within 10 days after the last
date the establishment is open for business, file a return and pay the tax
due.
2. Whenever it appears to the finance director that the collection
of taxes from any person, association, or organization may be in jeopardy,
14Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
the finance director, after not less than 10 days' notice to the taxpayer, is
authorized to require that the taxpayer remit taxes due and returns at
such shorter intervals than otherwise provided, as the finance director
deems appropriate under the circumstances.
shall be due and payable in Fnenthly instalingents when the gambling tax
whmeh the tax QeeFued
undeF this ehapteF EjUitS business, sells eut, er ether-wise dispeses E)f its
business, eF teFfflinates the business, any tax due shall became due and
payable and sueh taxpayeF shall, within 19 days afteF the 'a- -
date the establishment is epen fOF business, file a retuFn and pay the taX
dt e:
See. 3.21.041. Aellmmniistratmen and ce'llectmen of tax.
�r
15Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
r r
taxes due. The fonaigee diFeEtE)F shall have feFn9s available te the publie in
n9aml to
G. in additmen te the Feturn feFFfl,
Fengottanee ef thetax nt d-u-
befeFe the time FeqUiFed by bank
See. 3.21.042. Method of payment.
dFaftr eeFtified r eashieFS r
peFsenal eFedit
eF cash. if payngent is n9ade by
r r r
dFaft the tax shall not be deenged paid until thte
reFedit caFd, eF cheek,
d Faft, EFedit G-a Fd, eF cheek is-i ry T=eFed--fn-ihe usual CeUFse ef business, Tv-F
shall the aeeeptanee ef any sung by the finance diFeetE)F be an aeEluittane-e
eF disehaFge ef the tax unless the angeunt paid as the full angeant due. The
See. 3.21.043. Fauure to make tmmely payment of tax or f
r
due date theFe shall be added a penalty as fellews�
if sueh payngent is not n9ade by the
16Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
h° h the tax aeeFued—shrrull be deemed to—be beth a-EFflginal and e; *t
subseetien (A) ef this i
iwhiehevef= aFneunt is greateF,
i
until all past due aFneunts aFe paid On fu+l-.
Sec. 3.21.050. Records required.
A. Each person, association, or organization engaging in an activity
taxable under this chapter shall maintain records respecting that activity
which truly, completely, and accurately disclose all information necessary
to determine the taxpayer's tax liability hereunder during each base tax
period. Such records shall be kept and maintained for a period of not less
than three years. In addition, all information and items required by the
Washington State Gambling Commission under Chapter 230-08 WAC, and
the United States Internal Revenue Service, respecting taxation, shall be
kept and maintained for the periods required by those agencies.
17Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
B. All books, records, and other items required to be kept and
maintained under this section shall be subject to and immediately made
available for inspection and audit at any time, with or without notice, at
the place where such records are kept upon the demand of the finance
director or his designee for the purpose of enforcing the provisions of this
chapter.
C. Where the taxpayer does not keep all of the books, records, or items
required to be kept or maintained under this section within the jurisdiction
of the city so that the auditor may examine them conveniently, the
taxpayer shall either:
1. Produce and make available for inspection in this jurisdiction
all of the required books, records, or other items within 10 days following a
request by the auditor that he do so;
2. Bear the actual cost of inspection by the auditor or his
designee at the location of which books, records or items are located;
provided, that a taxpayer choosing to bear these costs shall pay in
advance to the finance director the estimated costs thereof, including, but
not limited to, round trip fare by the most rapid means, lodging, meals,
and incidental expenses. The actual amounts due or to be refunded for
expenses shall be determined following the examination of the records.
D. A taxpayer who fails, neglects, or refuses to produce such books and
records either within or without this jurisdiction, in addition to being
subject to other civil and criminal penalties provided by this chapter, shall
be subject to a jeopardy fee or tax assessment by the auditor which
penalty fee or jeopardy assessment shall be deemed prima facie correct
and shall be the amount of the fee or tax owing by the taxpayer unless he
can prove otherwise. The taxpayer shall be notified by the finance director
by posting in the mails of the United States, addressed to the taxpayer to
the last address on file with the finance department, a statement of the
18Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
amount of tax so determined by jeopardy assessment, together with any
penalty and/or interest, and the total of such amounts shall thereupon
become immediately due and payable.
i. A tax eF etheF fee has been paid On exeess ef that PFepeFly due, thes
total excess paid eveF all angeunts due te the eity within such peFied of
allowed feF any exeess paid n9eFe than thFee yeaFS befeFe the date of such
2. A tax eF etheF fee has been paid whieh is less than that pFepeFly
due, eF ne tax eF etheF fee has been paid, the finanee dffit:eeteF shall n9ail a
angeunt eF penalty assessments and fees, and it shall be a See. 3.21.051. Overpayment or underpayment of tax.
fails te Fnake payngent in full within 19 ealendaF days ef sueh n9ailing.
detemqwne the ameunt of tax payable, tegetheF with any penalty and/ef
19Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 1
Re: Tax Codes
beeenge the tax and penalty and-/eF inteFest and shall beeenge immediately
due and payable.
Cep 3.21.053.
053 Tax additional
to edgers
The taxes levied heFein shall be additional te any Imeense fee eF tax
See. 3.21.054. Hnance dnreeter to make rules.
The fonanee diFeEteF shall have the / and it shall be his OF heF /
tinge, te adopt,
Sec. 3.21.055. Taxes, penalties, service charges, and fees
constitute debt to municipality.
Any tax due and unpaid under this chapter and all penalties, service
charges, or fees shall constitute a debt to the city. The city may, pursuant
to Chapter 19.16 RCW, use a collection agency to collect outstanding
debts, or it may seek collection by court proceedings, which remedies shall
be in addition to all other existing remedies. Further, as provided for in
RCW 9.46.110(4), as now enacted or hereafter amended, taxes and
associated penalties and charges imposed under this chapter shall become
a lien upon personal and real property used in the gambling activity in the
same manner as provided for under RCW 84.60.010 for property taxes.
The lien shall attach on the date the tax becomes due and shall relate back
and have priority against real and personal property to the same extent as
ad valorem taxes.
20Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Sec. 3.21.060. Penalties.
Any person who shall fail or refuse to pay the tax as required in this
chapter, or who shall willfullywilfully disobey any rule or regulation
promulgated by the city council under this chapter, shall be guilty of a
misdemeanor and upon conviction shall be punished by imprisonment for
not more than 90 days or by a fine of not more than $250 or by both such
fine and imprisonment. Any such fine shall be in addition to the tax
required. Officers, directors, and managers of any organization conducting
gambling activities shall be jointly and severally liable for the payment of
the tax and for the payment of any fine imposed under this chapter.
SECTION 3. - Amendment - KCC 3.26. Chapter 3.26 of the Kent
City Code entitled 'Admissions Tax," is hereby amended as follows:
CHAPTER 3.26
ADMISSIONS TAX
Sec. 3.26.010. Exercise of revenue license l2owerAdmiggie
tax imposed.
The provisions of this chapter shall be deemed an exercise of the power of
the city to license 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.
Sec. 3.26.015. General administrative provisions apply.
The administrative provisions contained in Chapter 3.29 KCC shall be fully
applicable to the provisions of this chapter except as expressly stated to
the contrary herein.
21Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Sec. 3.26.020. Definitions.
The following definitions shall apply throughout this chapter:
A. Admission charge, in addition to its usual and ordinary meaning,
means a monetary charge for an event open to the public including, but
not limited to, the following:
1. A charge made for season tickets or subscriptions;
2. A cover charge or a charge made for use of seats and tables,
reserved or otherwise, and similar accommodations;
3. A charge made for food and refreshments in any place where
any free entertainment, recreation, or amusement is provided;
4. If a general admission fee is charged for entry onto the
premises where a rental occurs and if the rental of equipment or facilities
is necessary to the enjoyment of a privilege for which a general admission
is charged, the combined charges shall be considered as the admission
charge; provided, however, that a general admission fee must be charged
for entry onto the premises where a rental occurs before the rental can be
taxed under this chapter;
5. If a general admission fee is charged for entry onto the
premises where an activity occurs (such as, and without limitation, a
bowling alley or ice skating rink) and if the activity charge is necessary to
the enjoyment of a privilege for which a general admission is charged, the
combined charges shall be considered as the admission charge; provided,
however, that a general admission fee must be charged for entry onto the
premises where an activity occurs before the activity charge can be taxed
under this chapter;
6. Automobile parking charges if the amount of the charge is
determined according to the number of passengers in the automobile;
7. If the ticket price is accompanied by a service charge, mailing
fee, or other ancillary payment, per ticket and/or per order, whether or not
they are printed on the ticket, the admission tax shall be based upon the
total sum of the admission price plus any such surcharge(s).
22Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
8. Any other charge for entrance and observation.
B. Collecting entity means any person, business, association,
organization, or other entity entrusted with the collection and remittance
of admission taxes under this section.
C. Governmental entity means any federal, state, or local government,
or branch thereof, and also includes any public facility or any public
facility, service, or utility district that is exempt from federal income
taxation pursuant to Section 501(c)(1) or (3) of the Internal Revenue
Code, as it may be amended from time to time.
D. Nonprofit tax-exempt organization means an organization,
corporation, or association organized and operated for the advancement,
appreciation, public exhibition, or performance, preservation, study, and/or
teaching of the performing arts, visual arts, history, science, or a public
charity providing human services, or a public education entity, which is
currently exempt from federal income taxation pursuant to Section
501(c)(1) or (3) of the Internal Revenue Code, as it may be amended from
time to time.
E. Secondary or elementary school means any public or private
primary school, middle school, junior high school, high school, or any
accredited college, junior college, university, or the recognized student
body association thereof.
F. By way of illustration only, this tax applies to any nonexempt
admission charge, as defined in this section, collected for admission to any
theater, cinema, dance hall, cabaret, adult entertainment cabaret, circus,
side show, outdoor amusement park, dinner theatre, music concerts, radio
shows, and television shows.
23Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
G. Chapter shall mean Chapter 3.26 KCC, as it may be amended or
replaced from time to time.
Sec. 3.26.025. Tax imposed.
�esecIn accordance with RCW 35.21.280, there is levied and
shall be collected a tax from every person, without regard to age, who
pays an admission charge to any place within the city limits. The tax shall
be measured by applying the rate set forth in this chapter to the admission
charge. The tax shall be held in trust by the business, association,
organization, or other entity charging and collecting admission taxes until
the taxes are remitted to the finance director under KCC 3.26.030. No tax
shall be levied on any person who is admitted free of charge and the tax
on reduced admission charges shall be calculated on the reduced charge
and not on the regular admission charge.
chapteF:
tneiudinq, but net limited te, the fellewing!
iZrDTCs, FeJCTYCQ e"reLITCTWTJCj aTTCrSTITfITpTCfGeeTmITfImTQV'O"CTeTTS
y place
/ / eF amusement OS /
nte the
ehaFge/ / /
24Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
nte the
taxed undeF this ehaptef-,-
Eharge
ef admFssm"• taxes r e s tRd2F thT9 S2ct4en r.
r r
facility,publie
,
,
,
appFeeiatienr r eF peFfeFnganee, pFeservatierg, study,
r histeicy, seeigee,
r eF a publie edueatmen entity,
Cede, whieh
as it may be amended fFem
Ae
pFingaFy r middle scheel, juigieF high seheel, high seheel,
eF any
25Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
this chapteF en the fellewing!
a sepaFate business eigteFPF*se shall net be exen9pt fFeM this tax. By way
event and the nenpFefit tax exen9pt eFganizatien Feeeives the use and
eeneeqs,Fadie r3he'ws,ZITTLr television s3Thews3.
Sec. 3.26.03-20. Tax rate.
The amount of the tax charged on admission charges shall be equal to the
admission charge multiplied by the rate of five (5) percent.
Sec. 3.26.035. Exemptions.
No tax shall be imposed under the authority of this chapter on the
following:
26Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
A. Admission charges for any activity of any elementary or secondary
school, any governmental entity, or any nonprofit tax-exempt
organization. However, governmental activities operated in the manner of
a separate business enterprise shall not be exempt from this tax. By way
of example and not limitation, a business enterprise subject to the
admissions tax levy could include an event center or golf course, if
operated as a business activity in a separate fund.
B. Events sponsored by nonprofit tax-exempt organizations if the
nonprofit tax-exempt organization publicly sponsors and promotes the
event and the nonprofit tax-exempt organization receives the use and
benefit of the admission charges collected.
Sec. 3.26.036. Deductions.
In computing the tax imposed by this chapter, the following amounts may
be deducted from the measure of the tax: Amounts derived from business
which the city is prohibited from taxing under the Constitution of this state
or the Constitution or laws of the United States.
See.�T.26.030. wdmommstrat"em and ea"ee`mem..
tFuei i
and eengplete.
i but not i
to mail te the
sueh a feFFn shall net excuse the eelleeting entity ft:em making the FetuFf,,
and tangely paying all taxes due. The finanee diFeetE)F shall have feFngs-
27Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Sec. 3.26.040. Tax due.
A. The tax imposed by this chapter shall be due and payable in
quarterly installments_ and FeFnittanee theFefeF, tegetheF with the FetuFn
feFn9../ r shall be ade befere the final day of the nth ...,1�-.�..I..
LCI
shall be due en eF befeFe gaiquaFy
and Getebef
/ ApFil / guly /
1. Whenever any collecting entity quits business, sells out, or
otherwise disposes of its business, or terminates the business, any tax due
shall become due and payable immediately, and the collecting entity shall,
within ten (10) days thereafter, submit a return form and pay the tax due.
2. Whenever it appears to the finance director that the collection
of taxes from any collecting entity may be in jeopardy, the finance
director, after not less than ten (10) days' prior written notice to the
collecting entity, is authorized to require that the collecting entity remit
taxes due and deliver returns at shorter intervals than otherwise provided,
as the finance director deems it appropriate under the circumstances.
See. 3.26.050. Method of payrnent.
Taxes payable heFeundeF shall be Fengitted te the finance diFeeteF en OF
befeFe the time FeqUired by bank / /
/ eredit eaFd, eF cash. if payment is n9ade by dFaft,
/ the tax shall net be deenged paid until the dFaft,
eaF�, eF eh.eek is heneFed in theusual I—GIIArSC— UJITfCS.S, nfVF SI"7'QITCITG
dischaFge ef the tax, unless the angeunt paid is the full aFneunt di
28Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
See. 3.26.060. Fao'ure to make tomely payment of tax or fee
Pena'tmes.
A. Delinquent acceunts. Emeept ta the extent modified by this ,
the eity will tFeat a'' unpaid aF uncelleeted adngissiens taxes as delinquent
B. Late charge assessed. if any eelleeting entity fails eF negleets te pay
/ whieheveF is the gi:eateF /
fFeR9 the date payment was due, and at the end of eaeh sueeeeding
Fnenthly / until all past due angeunts aFe paid in full.
G. GeHect4efi agency. Any
/ /
ehapteF and unpaid ei: uneelleeted shall censtitute a debt te the city. The
eity / 16 /
debts,eutstanding /
D. Gr4mimal penalties. Any celleeting entity that vielates eF fails
amended fFeFn tinge te tinge.
See. 3.26.070. Reeords required.
activity
whieh
whieh
/ /
entity's
peFied. Sueh FeeeFds shall be kept and maintained faF a peFied ef net less
29Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
,s FequiFedd to be kept and
available, feF inspeetien and audit at anytinge, r
at
diFeeteFrdesignee,
.�F�ti
r r
eF itengs f=equiFed te be kept eF maintained undeF this seetien within the
the eelleet.ng entity shall eithei=:
all ef the FequiFed r r
r
auditeFr
s designee at the leeatien whef=e the rFeeeFds,
r
rii9eluding, but net limited ta,-
FeUnd
rledging, ngeals,
and ineidenta4
iee these
r r
beeks and
reitheF within eF eutside this juFisdietien,
30Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
See. 3.26.080. Overpayment or underpayment of tax.
the
due,
entity's
entity's
due/ paid,
entity,statement te the eelleeting the balanee /
tax ameunt eF penalty assessments and fees. it shall be a ineluding the
/ both eivil and /
fails, of the celleeting
entity fails te n9ake payment in full within ten (10) calendaF days ef that,
See. 3.26.090. Fam'ure to make return.
if any eelleeting entity /
31Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
shall beeenge immediately due and payable.
The taxes levied heFein shall be additienal to any I;eense fee eF tax
See. 3.26.11:0. Finance directer to make rue!i.
The fonanee d4FeeteF shall have the
and it shall be his eF heF
/ /
time,fFOFfl tinge to te adept, publish,
-ut these previsions, and at is unlawful to vielate eF fad to eengply
SECTION 4. - Amendment - KCC 3.28. Chapter 3.28 of the Kent
City Code entitled "Business and Occupation Tax - Gross Receipts," is
hereby amended as follows:
CHAPTER 3.28
BUSINESS AND OCCUPATION TAX - GROSS RECEIPTS
Sec. 3.28.010. Purpose.
This chapter implements Washington Constitution Article XI, Section 12
and RCW 35A.82.020 and 35A.11.020, which give municipalities the
authority to license for revenue. In the absence of a legal or constitutional
prohibition, municipalities have the power to define taxation categories as
they see fit in order to respond to the unique concerns and responsibilities
of local government. The city of Kent has developed over the last half
century into a major manufacturing/warehousing hub. However, due to
recent changes in sales tax and property tax laws, the city no longer
32Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
receives sufficient revenue from warehousing activities to support the
transportation infrastructure needed to serve warehouse activities. As a
result, the city no longer generates sufficient revenue to maintain the level
of general city services that supports this business base, and to maintain
and operate its considerable past investment in local streets and arterial
infrastructure. This chapter, then, is intended to generate additional
revenue to maintain, repair, and operate the city's existing transportation
network in order to fairly allocate the cost to provide those services and to
maintain that infrastructure to those business entities that contribute most
to the use and degradation of city streets.
Sec. 3.28.020. Exercise of revenue license power.
The provisions of this chapter shall be deemed an exercise of the power of
the city to license 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.
Sec. 3.28.028. Administrative provisions.
The administrative provisions contained in Chapter 3.29 KCC shall be fully
applicable to the provisions of this chapter except as expressly stated to
the contrary herein.
Sec. 3.28.030. 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.
A. Advance, reimbursement.
33Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
1. Advance means money or credits received by a taxpayer from
a customer or client with which the taxpayer is to pay costs or fees on
behalf of the customer or client.
2. Reimbursement means money or credits received from a
customer or client to repay the taxpayer for money or credits expended by
the taxpayer in payment of costs or fees of the customer or client.
B. Agricultural product, farmer.
1. 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 15.85.020; 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 15.85.020, or a bird, or insect, or the
substances obtained from such an animal. "Agricultural product" does not
include animals intended to be pets.
2. Farmer means any person engaged in the business of growing
or producing, upon the person's own lands or upon the lands in which the
person has a present right of possession, any agricultural product
whatsoever for sale. "Farmer" does not include a person using such
products as ingredients in a manufacturing process, or a person growing or
producing such products for the person's own consumption. "Farmer" does
not include a person selling any animal or substance obtained therefrom in
connection with the person's business of operating a stockyard or a
slaughter or packing house. 'Farmer" does not include any person in
respect to the business of taking, cultivating, or raising timber.
C. 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
34Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
cultural or art education programs, as defined in subsection (C)(10) of this
section, for viewing or attendance by the general public.
2. The organization must be a not-for-profit corporation under
Chapter 24.03 RCW.
3. The organization must be managed by a governing board of
not less than eight (8) individuals, none of whom is a paid employee of the
organization or by a corporation sole under Chapter 24.12 RCW.
4. No part of its income may be paid directly or indirectly to its
members, stockholders, officers, directors, or trustees except in the form
of services rendered by the corporation in accordance with its purposes
and bylaws.
5. Salary or compensation paid to its officers and executives
must be only for actual services rendered, and at levels comparable to the
salary or compensation of like positions within the state.
6. Assets of the corporation must be irrevocably dedicated to the
activities for which the exemption is granted and, on the liquidation,
dissolution, or abandonment by the corporation, may not inure directly or
indirectly to the benefit of any member or individual except a 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:
35Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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.
D. 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.
E. Business and occupation tax or gross receipts tax means a tax
imposed on or measured by the value of products, the gross income of the
business, or the gross proceeds of sales, as the case may be, and that is
the legal liability of the business.
F. Commercial or industrial use means the following uses of products,
including byproducts, by the extractor or manufacturer thereof:
1. Any use as a consumer; and
2. The manufacturing of articles, substances, or commodities.
G. 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.
H. Consumer means the following:
36Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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
KCC 3.28.050(A)(7);
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;
37Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
6. Any person engaged in the business of "public road
construction" in respect to tangible personal property when that person
incorporates the tangible personal property as an ingredient or component
of a publicly owned street, place, road, highway, easement, right-of-way,
mass public transportation terminal or parking facility, bridge, tunnel, or
trestle by installing, placing, or spreading the property in or upon the
right-of-way of a publicly owned street, place, road, highway, easement,
bridge, tunnel, or trestle or in or upon the site of a publicly owned mass
public transportation terminal or parking facility;
7. Any person who is an owner, lessee, or has the right of
possession to or an easement in real property which is being constructed,
repaired, decorated, improved, or otherwise altered by a person engaged
in business;
8. Any person who is an owner, lessee, or has the right of
possession to personal property which is being constructed, repaired,
improved, cleaned, imprinted, or otherwise altered by a person engaged
in business;
9. Any person engaged in "government contracting." Any such
person shall be a consumer within the meaning of this subsection in
respect to tangible personal property incorporated into, installed in, or
attached to such building or other structure by such person.
Nothing contained in this or any other subsection of this section shall be
construed to modify any other definition of"consumer."
I. 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
38Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 1
Re: Tax Codes
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.
J. Director means the finance director of the city or any officer, agent
or employee of the city designated to act on the director's behalf.
K. Digital automated service, digital code, and digital goods have the
same meaning as in RCW 82.04.192.
L. Digital products means digital goods, digital codes, digital
automated services, and the services described in RCW 82.04.050(2)(g)
and (6)(b).
M. Eligible gross receipts tax. The term "eligible gross receipts tax"
means a tax which:
1. Is imposed on the act or privilege of engaging in business
activities within KCC 3.28.050; and
39Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
2. Is measured by the gross volume of business, in terms of
gross receipts, and is not an income tax or value added tax; and
3. Is not, pursuant to law or custom, separately stated from the
sales price; and
4. Is not a sales or use tax, business license fee, franchise fee,
royalty, or severance tax measured by volume or weight, or concession
charge, or payment for the use and enjoyment of property, property right,
or a privilege; and
5. Is a tax imposed by a local jurisdiction, whether within or
without the state of Washington, and not by a country, state, province, or
any other nonlocal jurisdiction above the county level.
N. Engaging in business.
1. The term "engaging in business" means commencing,
conducting, or continuing in business, and also the exercise of corporate or
franchise powers, as well as liquidating a business when the liquidators
thereof hold themselves out to the public as conducting such business.
2. This section sets forth examples of activities that constitute
engaging in business in the city, and establishes safe harbors for certain of
those activities so that a person who meets the criteria may engage in de
minimis business activities in the city without having to register and obtain
a business license or pay city business and occupation taxes. The activities
listed in this section are illustrative only and are not intended to narrow
the definition of "engaging in business" in subsection (N)(1) of this section.
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
40Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
behalf, constitutes engaging in business and requires a person to register
and obtain a business license:
a. Owning, renting, leasing, maintaining, or having the
right to use, or using, tangible personal property, intangible personal
property, or real property permanently or temporarily located in the city.
b. Owning, renting, leasing, using, or maintaining an
office, place of business, or other establishment in the city.
C. Soliciting sales.
d. Making repairs or providing maintenance or service to
real or tangible personal property, including warranty work and property
maintenance.
e. Providing technical assistance or service, including
quality control, product inspections, warranty work, or similar services, on
or in connection with tangible personal property sold by the person or on
its behalf.
f. Installing, constructing, or supervising installation or
construction of real or tangible personal property.
g. Soliciting, negotiating, or approving franchise, license,
or other similar agreements.
h. Collecting current or delinquent accounts.
i. Picking up and transporting tangible personal property,
solid waste, construction debris, or excavated materials.
j. Providing disinfecting and pest control services,
employment and labor pool services, home nursing care, janitorial
services, appraising, landscape architectural services, security system
services, surveying, and real estate services including the listing of homes
and managing real property.
k. Rendering professional services such as those provided
by accountants, architects, attorneys, auctioneers, consultants, engineers,
professional athletes, barbers, baseball clubs and other sports
organizations, chemists, consultants, psychologists, court reporters,
41Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
dentists, doctors, detectives, laboratory operators, teachers, and
veterinarians.
I. Meeting with customers or potential customers, even
when no sales or orders are solicited at the meetings.
M. Training or recruiting agents, representatives,
independent contractors, brokers, or others, domiciled or operating on a
job in the city, acting on its behalf, or for customers or potential
customers.
n. Investigating, resolving, or otherwise assisting in
resolving customer complaints.
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. Delivering goods in vehicles owned, rented, leased,
used, or maintained by the person or another acting on its behalf.
4. If a person, or its employee, agent, representative,
independent contractor, broker, or another acting on the person's behalf,
engages in no other activities in or with the city but the following, it need
not register and obtain a business license and pay tax:
a. Meeting with suppliers of goods and services as a
customer.
b. Meeting with government representatives in their
official capacity, other than those performing contracting or purchasing
functions.
C. Attending meetings, such as board meetings, retreats,
seminars, and conferences, or other meetings, wherein the person does
not provide training in connection with tangible personal property sold by
42Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
the person or on its behalf. This provision does not apply to any board of
director member or attendee engaging in business, such as a member of a
board of directors who attends a board meeting.
d. Renting tangible or intangible property as a customer
when the property is not used in the city.
e. Attending but not participating in a "trade show" or
"multiple vendor events." Persons participating at a trade show shall
review the city's trade show or multiple vendor event ordinances.
f. Conducting advertising through the mail.
g. Soliciting sales by phone from a location outside the
city.
5. A seller located outside the city merely delivering goods into
the city by means of common carrier is not required to register and obtain
a business license; provided, that it engages in no other business activities
in the city. Such activities do not include those in subsection (N)(4) of this
section.
6. 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 taxpayer
benefits from the activity that constituted the original nexus generating
contact or subsequent contacts.
O. Extracting is the activity engaged in by an extractor and is
reportable under the extracting classification.
P. 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,
43Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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, 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, or persons
meeting the definition of"farmer."
Q. Extractor for hire means a person who performs under contract
necessary labor or mechanical services for an extractor.
R. Gross income of the business means the value proceeding or
accruing by reason of the transaction of the 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 cost of tangible property sold, the cost of
materials used, labor costs, interest, discount, delivery costs, taxes, or any
other expense whatsoever paid or accrued and without any deduction on
account of losses.
S. 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, discount paid, delivery costs, taxes, or any
other expense whatsoever paid or accrued and without any deduction on
account of losses.
T. Manufacturing means the activity conducted by a manufacturer and
is reported under the manufacturing classification.
44Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re; Tax Codes
U. 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,
45Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re; Tax Codes
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.
V. Newspaper means a publication offered for sale regularly at stated
intervals at least once a week and printed on newsprint in tabloid or
broadsheet format folded loosely together without stapling, glue, or any
other binding of any kind.
Magazine or periodical means any printed publication, other than a
newspaper, issued and offered for sale regularly at stated intervals at least
once every three (3) months, including any supplement or special edition
of the publication. Any publication meeting this definition qualifies
regardless of its content.
W. 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.
X. Office or place of business means a fixed location or permanent
facility where the regular business of the person is conducted and which is
46Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
either- owned by the person or over which the person exercises legal
dominion and control. The regular business of the person is presumed
conducted at a location:
1. Whose address the person uses as its business mailing
address;
2. Where the place of primary use is shown on a telephone
billing or a location 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 Focal 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.
Y. Person means any individual, receiver, administrator, executor,
assignee, trustee in bankruptcy, trust, estate, firm, copartnership, joint
venture, club, company, joint stock company, business trust, municipal
corporation, political subdivision of the state of Washington, corporation,
limited liability company, association, society, or any group of individuals
acting as a unit, whether mutual, cooperative, fraternal, nonprofit, or
otherwise, and the United States or any instrumentality thereof.
47Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Z. 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.
AA. Product means tangible personal property, including articles,
substances, or commodities created, brought forth, extracted, or
manufactured by human or mechanical effort.
Byproduct 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.
BB. Retailing means the activity of engaging in making sales at retail
and is reported under the retailing classification.
CC. 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 jumping, ski
48Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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 includes 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; and
7. The following personal services: physical fitness services,
tanning salon services, tattoo parlor services, steam bath services, Turkish
bath services, escort services, and dating services.
8. The term shall also include the renting or leasing of tangible
personal property to consumers and the rental of equipment with an
operator.
DD. 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
49Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
given to the purchaser but title is retained by the vendor as security for
the payment of the purchase price. It also includes the furnishing of food,
drink, or meals for compensation whether consumed upon the premises or
not.
2. Casual or isolated sale means a sale made by a person who is
not engaged in the business of selling the type of property involved on a
routine or continuous basis.
EE. 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
50Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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 (EE)(1)(a),
(b), (c), (d), or (e) of this section following such use; or
f. Purchases for the purpose of satisfying the person's
obligations under an extended warranty as defined in subsection (EE)(7) of
this section, if such tangible personal property replaces or becomes an
ingredient or component of property covered by the extended warranty
without intervening use by such person.
2. "Sale at retail" or "retail sale" also means every sale of
tangible personal property to persons engaged in any business activity
which is taxable under KCC 3.28.050(A)(7).
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
51Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
property of or for consumers, including the installing or attaching of any
article of tangible personal property therein or thereto, whether or not
such personal property becomes a part of the realty by virtue of
installation, and shall also include the sale of services or charges made for
the clearing of land and the moving of earth excepting the mere leveling of
land used in commercial farming or agriculture;
C. The charge for labor and services rendered in respect
to constructing, repairing, or improving any structure upon, above, or
under any real property owned by an owner who conveys the property by
title, possession, or any other means to the person performing such
construction, repair, or improvement for the purpose of performing such
construction, repair, or improvement and the property is then reconveyed
by title, possession, or any other means to the original owner;
d. The sale of or charge made for labor and services
rendered in respect to the cleaning, fumigating, razing, or moving of
existing buildings or structures, but shall not include the charge made for
janitorial services; and for purposes of this section the term '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 "janitorial
services" does not include painting, papering, repairing, furnace or septic
tank cleaning, snow removal, or sandblasting;
e. The sale of or charge made for labor and services
rendered in respect to automobile towing and similar automotive
transportation services, but not in respect to those required to report and
pay taxes under Chapter 82.16 RCW;
f. The sale of and charge made for the furnishing of
lodging and all other services, except telephone business and cable
service, by a hotel, rooming house, tourist court, motel, trailer camp, and
the granting of any similar license to use real property, as distinguished
52Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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;
h. The sale of or charge made for tangible personal
property, labor, and services to persons taxable under subsections
(EE)(3)(a), (b), (c), (d), (e), (f), and (g) of this section 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
(EE)(1) of this section and nothing contained in subsection (EE)(1) of this
section 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.a. "Sale at retail" or "retail sale" shall also include the sale of
prewritten 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 (EE)(5)(a) 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 be characterized by the vendor
or by the purchaser.
53Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
The term "sale at retail" or "retail sale" does not include the sale of or
charge made for:
i. Custom software; or
ii. The customization of prewritten software.
b.i. The term also includes the charge made to consumers for the
right to access and use prewritten computer software, where possession of
the software is maintained by the seller or a third party, regardless of
whether the charge for the service is on a per use, per user, per license,
subscription, or some other basis.
ii.(A) The service described in subsection (EE)(5)(b)(i) of this
section includes the right to access and use prewritten software to perform
data processing.
(B) For purposes of this subsection (EE)(5)(b)(ii) 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 processing, form processing, survey processing, payroll processing,
claim processing, 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.
7. "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,
54Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
labor, or both, or to provide indemnification for the replacement or repair
of tangible personal property, based on the occurrence of specified events.
The germ "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.
8. "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 ignited 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.
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 byproducts of weapons
production and nuclear research and development.
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.
11. "Sale at retail" or "retail sale" shall also include the following
sales to consumers of digital goods, digital codes, and digital automated
services:
a. Sales in which the seller has granted the purchaser the
right of permanent use;
55Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re; Tax Codes
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 (EE)(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, 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 improving of digital goods for consumers.
FF. Sale at wholesale or wholesale sale means any sale of tangible
personal property, digital goods, digital codes, digital automated services,
prewritten computer software, or services described in subsection
(EE)(5)(b)(i) of this section 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 and retail services, if such charge is
expressly defined as a retail sale or retail service when rendered to or for
consumers. Sale at wholesale also includes the sale of telephone business
56Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
to another telecommunications company as defined in RCW 80.04.010 for
the purpose of resale, as contemplated by RCW 35.21.715.
GG. Services includes those activities that do not fall within one of the
other tax classifications used by the city.
H H. Software, prewritten software, custom software, customization of
canned software, master copies, retained rights.
1. Prewritten software or canned software means computer
software, including prewritten upgrades, that is not designed and
developed by the author or other creator to the specifications of a specific
purchaser. The combining of two (2) or more prewritten computer software
programs or prewritten portions thereof does not cause the combination to
be other than prewritten computer software. Prewritten computer software
includes software designed and developed by the author or other creator
to the specifications of a specific purchaser when it is sold to a person
other than such purchaser. Where a person modifies or enhances computer
software of which such person is not the author or creator, the person shall
be deemed to be the author or creator only of the person's modifications
or enhancements. Prewritten computer software or a prewritten portion
thereof that is modified or enhanced to any degree, where such
modification or enhancement is designed and developed to the
specifications of a specific purchaser, remains prewritten computer
software; however, where there is a reasonable, separately stated charge
or an invoice or other statement of the price given to the purchaser for the
modification or enhancement, the modification or enhancement shall not
constitute prewritten computer software.
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.
57Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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 arising from copyrights, patents, and
trade secret laws, that are owned or are held under contract or license by
a software developer, author, inventor, publisher, licensor, sublicensor, or
distributor.
6. Software means any information, program, or routine, or any
set of one (1) or more programs, routines, or collections of information,
used, or intended for use, to convey information that causes one (1) or
more computers or pieces of computer-related peripheral equipment, or
any combination thereof, to perform a task or set of tasks. "Software"
includes the associated documentation, materials, or ingredients,
regardless of the media upon which that documentation is provided, that
describe the code and its use, operation, and maintenance and that
typically are delivered with the code to the consumer. All software is
classified as either canned or custom.
II. 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.
58Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
JJ. 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 coursework successfully completed through the
educational program, or an approved branch campus of a foreign degree-
granting institution in compliance with Chapter 2813.90 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.
KK. 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.
LL. Value of products.
1. The value of products, including byproducts, extracted or
manufactured, shall be determined by the gross proceeds derived from the
59Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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 byproducts by the seller.
2. Where such products, including byproducts, are extracted or
manufactured for commercial or industrial use; and where such products,
including byproducts, 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 similar
quantities by other taxpayers, plus the amount of subsidies or bonuses
ordinarily payable by the purchaser or by any third person with respect to
the extraction, manufacture, or sale of such products. In the absence of
sales of similar products as a guide to value, such value may be
determined upon a cost basis. In such cases, there shall be included every
item of cost attributable to the particular article or article extracted or
manufactured, including direct and indirect overhead costs. The director
may prescribe rules for the purpose of ascertaining such values.
3. Notwithstanding subsection (LL)(2) of this section, 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.
MM. Wholesaling means engaging in the activity of making sales at
wholesale, and is reported under the wholesaling classification.
60Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
Sec. 3.28.040. Agency - Sales and services by agent,
consignee, bailee, factor or auctioneer.
A. 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:
1. 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.
2. 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.
3. No ownership rights may be conferred to the agent unless the
principal refuses to pay, or refuses to abide by the agency agreement.
61Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
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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.
4. 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.
B. 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.
C. 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:
1. 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.
2. 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
62Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29
Re: Tax Codes
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 agen cy agreement.
Sec. 3.28.050. Imposition of the tax — Tax or fee levied.
Except as provided in subsection (C) 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 the gross
proceeds of sale, gross income of business, or value of products, including
byproducts, and by application of rates against the square footage of
business office or facility space within the city, as the case may be, as
follows:
A. Gross receipts tax.
1. 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 byproducts,
extracted within the city for sale or for commercial or industrial use,
multiplied by the rate of 0.152 hundredths of one percent (0.00152)
through December 31, 2021, and multiplied by the rate of 0.200
hundredths of one percent (0.002) effective January 1, 2022. The measure
of the tax is the value of the products, including byproducts, so extracted,
regardless of the place of sale or the fact that deliveries may be made to
points outside the city.
2. 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
byproducts, manufactured within the city, multiplied by the rate of 0.046
hundredths of one percent (0.00046) through December 31, 2021, and
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multiplied by the rate of 0.100 hundredths of one percent (0.001) effective
January 1, 2022. The measure of the tax is the value of the products,
including byproducts, so manufactured, regardless of the place of sale or
the fact that deliveries may be made to points outside the city.
3. 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 0.152
hundredths of one percent (0.00152) through December 31, 2019, and
multiplied by the rate of 0.200 hundredths of one percent (0.002) effective
January 1, 2020.
4. 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 0.046 hundredths of one
percent (0.00046) through December 31, 2021, and multiplied by the rate
of 0.100 hundredths of one percent (0.001) effective January 1, 2022.
5. Upon every person engaging within the city in the business of
(a) printing, (b) both printing and publishing newspapers, magazines,
periodicals, books, music, and other printed items, (c) publishing
newspapers, magazines and periodicals, (d) extracting for hire, and (e)
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 0.046 hundredths of one percent (0.00046) through December
31, 2021, and multiplied by the rate of 0.100 hundredths of one percent
(0.001) effective January 1, 2022.
6. 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
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multiplied by the rate of 0.152 hundredths of one percent (0.00152)
through December 31, 2021, and multiplied by the rate of 0.200
hundredths of one percent (0.002) effective January 1, 2022.
7. 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 0.152 hundredths of one percent (0.00152) through
December 31, 2021, and multiplied by the rate of 0.200 hundredths of one
percent (0.002) effective January 1, 2022. 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, a sale at wholesale, or a retail service.
B. Square footage tax. Upon every person who leases, owns, occupies,
or otherwise maintains an office, warehouse, or other place of business
within the city for purposes of engaging in business activities in the city,
the tax shall be measured by the number of square feet of warehouse
business floor space or other business floor space for each office,
warehouse, or other place of business leased, owned, occupied, or
otherwise maintained within the city during the reporting period, calculated
to the nearest square foot.
1. Subject to the reductions established in subsection (13)(6) of
this section, the amount of the tax due shall be equal to the sum of the
number of square feet of business warehouse floor space for each business
warehouse leased, owned, occupied, or otherwise maintained within the
city multiplied by the rate for each calendar year listed below, and the
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number of square feet of other business floor space for each office or other
place of business leased, owned, occupied, or otherwise maintained within
the city multiplied by the rate for each calendar year listed below.
Business
Effective Other Business
Warehouse Floor
Date Floor Space
Space
1/1/2019 0.06 quarterly rate 0.02 quarterly rate
0.24 annual rate 0.08 annual rate
1/1/2020 0.09 quarterly rate 0.02 quarterly rate
0.36 annual rate 0.08 annual rate
1/1/2025 0.12 quarterly rate 0.02 quarterly rate
0.48 annual rate 0.08 annual rate
1/1/2028 0.15 quarterly rate 0.03 quarterly rate
0.60 annual rate 0.12 annual rate
2. For purposes of this section, business warehouse means a
building or structure, or any part thereof, in which goods, wares,
merchandise, or commodities are received or stored, whether or not for
compensation, in furtherance of engaging in business.
3. For purposes of this section, other business floor space means
the floor space of an office or place of business, other than a business
warehouse.
4. For purposes of this section, the square footage shall be
computed by measuring to the inside finish of permanent outer building
walls and shall include space used by columns and projections necessary to
the building. Square footage shall not include stairs, elevator shafts, flues,
pipe shafts, vertical ducts, heating or ventilation shafts, janitor closets,
and electrical or utility closets.
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5. Persons with more than one office, warehouse, or other place
of business within the city must include all business warehouse floor space
and other business floor space for all locations within the city. When a
person rents space to another person, the person occupying the rental
space is responsible for the square footage business tax on that rental
space only if the renter has exclusive right of possession in the space as
against the landlord. Space rented for the storage of goods in a warehouse
where no walls separate the goods, and where the exclusive right of
possession in the space is not held by the person to whom the space is
rented, shall be included in the warehouse business floor space of the
person that operates the warehouse business, and not by the person
renting the warehouse space.
6. If the square footage tax imposed in this subsection (B) is
less than or equal to the gross receipts tax imposed in subsection (A) of
this section, no square footage tax will be due; if the square footage tax
imposed in this subsection (B) exceeds the gross receipts tax imposed in
subsection (A) of this section, the taxpayer shall also remit the excess over
the gross receipts tax payable under subsection (A) of this section.
C. Gross receipts and square footage threshold.
1. Gross receipts threshold. The gross receipts tax imposed in
subsection (A) of this section shall not apply to any person engaging in any
one or more business activities which are otherwise taxable pursuant to
this section, whose value of products, including byproducts, gross proceeds
of sales, and gross income of the business, as the case may be, from all
activities conducted within the city during any calendar year does not
exceed the threshold amount of $250,000.
2. Square footage threshold. The square footage tax imposed in
subsection (B) of this section shall not apply to any person unless that
person's total floor area of business space within the city exceeds the
following threshold:
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a. Four thousand taxable square feet of business
warehouse space; or
b. Twelve thousand taxable square feet of other business
floor space.
If the square footage tax applies, it applies to all business space leased,
owned, occupied, or otherwise maintained by the taxpayer during the
applicable reporting period.
D. Gross receipts maximum - Retailing activities. Eeffective January 1,
2022, the gross receipts tax imposed in subsection (A) of this section shall
not apply to retailing activities exceeding $20,000,000 in any calendar
year which are otherwise taxable pursuant to this section.
E. Rules. The director may promulgate rules and regulations regarding
the manner, means, and method of calculating any tax imposed under this
section.
Sec. 3.28.070. Multiple activities credit when activities take
place in one (1) or more cities with eligible gross receipt taxes.
A. Persons who engage in business activities that are within the
purview of two (2) or more subsections of KCC 3.28.050 shall be taxable
under each applicable subsection.
B. Notwithstanding anything to the contrary herein, if imposition of the
city's tax would place an undue burden upon interstate commerce or
violate constitutional requirements, a taxpayer shall be allowed a credit to
the extent necessary to preserve the validity of the city's tax, and still
apply the city tax to as much of the taxpayer's activities as may be subject
to the city's taxing authority.
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C. 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.
D. 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 (1) with
respect to the manufacturing of the products sold in the city, and (2) 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.
E. 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.
F. 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
69Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
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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.
Sec. 3.28.071 Tax credit.
Persons with taxable gross receipts in excess of $62,500 who engage in
business activities that are within the subsections of KCC 3.28.050(A) shall
be taxable under each applicable subsection during a quarter in the city
and shall be allowed a credit against the gross receipts taxes paid to the
city on $62,500 under this chapter during the quarter. The amount of the
credit shall not exceed the gross receipts tax liability arising under this
chapter.
Sec. 3.28.075. Deductions to prevent multiple taxation of
certain manufacturing activities involving more than one (1) city
with an eligible gross receipts tax.
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 to the other jurisdiction with respect to manufacturing such
products.
Sec. 3.28.076. 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).
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Sec. 3.28.077. Allocation and apportionment of income when
activities take place in more than one (1) jurisdiction.
Gross income, other than for persons subject to the provisions of
Chapter 82.14A RCW, shall be allocated and apportioned as follows:
A. Gross income derived from all activities other than those taxed as
service or royalties under KCC 3.28.050(A)(7) shall be allocated to the
location where the activity takes place.
B. In the case of sales of tangible personal property, the activity takes
place where delivery to the buyer occurs.
C. 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:
1. The seller's place of business if the purchaser receives the
digital product at the seller's place of business;
2. If not received at the seller's place of business, the location
where the purchaser or the purchaser's 71one, designated as such by the
purchaser, receives the digital product, including the location indicated by
instructions for delivery to the purchaser or 71one, known to the seller;
3. If the location where the purchaser or the purchaser's 71one
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;
4. 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, 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
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5. 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.
D. If none of the methods in subsection (C) of this section for
determining where the delivery of digital products occurs are available
after a good faith effort by the taxpayer to apply the methods provided in
subsections (C)(1) through (5) of this section, then the city and the
taxpayer may 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 under this subsection. The city may employ an alternative method
for allocating the income from the sale of digital products if the methods
provided in subsections (C)(1) through (5) of this section are not available
and the 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.
E. For purposes of subsections (C)(1) through (5) of this section, the
following definitions apply:
1. "Digital automated services," "digital codes," and "digital
goods" have the same meaning as in RCW 82.04.192;
2. "Digital products" means digital goods, digital codes, digital
automated services and the services described in RCW 282.04.050 (2)(q)
and (6)(c); and
3. -"Rfeceive" has the same meaning as in RCW 82.32.730.
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F. Effective January 1, 2020, 6gross income derived from activities
taxed as services and other activities taxed under KCC 3.28.050(A)(7)
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).
1. 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:
a. The individual is primarily assigned within the city;
b. 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
C. 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.
2. The service income factor is a fraction, the numerator of
which is the total service income of the taxpayer in the city during the tax
period, and the denominator of which is the total service income of the
taxpayer everywhere during the tax period. Service income is in the city if
a= tThe customer location is in the city_
3. Gross income of the business from engaging in an
apportionable activity must be excluded from the denominator of the
service income factor if, in respect to such activity, at least some of the
activity is performed in the city, and the gross income is attributable under
(2) of this subsection (F) to a city or unincorporated area of a county
within the United States or to a foreign country in which the taxpayer is
not taxable. For purposes of this subsection (F)(3), "not taxable" means
that the taxpayer is not subject to a business activities tax by that city or
county within the United States or by that foreign country, except that a
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taxpayer is taxable in a city or county within the United States or in a
foreign country in which it would be deemed to have a substantial nexus
with the city or county within the United States or with the foreign country
under the standards in RCW 35.102.050 regardless of whether that city or
county within the United States or that foreign country imposes such a
tax.
en eests ef peFfeFFnanee, and the taxpayeF is not taxable at the eustenqeF
within the eity, and the taxpayeF is net taxable in the eustemeF leeatien.
-3-.4. If the allocation and apportionment provisions of this
subsection do not fairly represent the extent of the taxpayer's business
activity in the city eF cities On whieh the taxpayeF dees 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,
if reasonable:
a. Separate accounting;
b. The exclusion of any one or more use of a single
factors;
C. The inclusion of one (1) or more additional factors that
will fairly represent the taxpayer's business activity in the city; or
d. The employment of any other method to effectuate an
equitable allocation and apportionment of the taxpayer's income.
5. The party petitioning for, or the tax administrator requiring,
the use of any method to effectuate an equitable allocation and
apportionment of the taxpayer's income pursuant to subsection (4) of this
subsection (F) must prove by a preponderance of the evidence:
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(a) That the allocation and apportionment provisions of this
subsection(F) do not fairly represent the extent of the taxpayer's business
activity in the city; and
(b) That the alternative to such provisions is reasonable.
The same burden of proof shall apply whether the taxpayer is petitioning
for, or the tax administrator is requiring, the use of an alternative,
reasonable method to effectuate an equitable allocation and apportionment
of the taxpayer's income.
6. If the tax administrator requires any method to effectuate an
equitable allocation and apportionment of the taxpayer's income, the tax
administrator cannot impose any civil or criminal penalty with reference to
the tax due that is attributable to the taxpayer's reasonable reliance solely
on the allocation and apportionment provisions of this subsection (F).
7. A taxpayer that has received written permission from the tax
administrator to use a reasonable method to effectuate an equitable
allocation and apportionment of the taxpayer's income shall not have that
permission revoked with respect to transactions and activities that have
already occurred unless there has been a material change in, or a material
misrepresentation of, the facts provided by the taxpayer upon which the
tax administrator reasonably relied in approving a reasonable alternative
method.
G. The definitions in this subsection apply throughout this section.
1. 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.
2. Business activities tax means a tax measured by the amount
of, or economic results of, business activity conducted in a city or county
within the United States or within a foreign country. The term includes
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taxes measured in whole or in part on net income or gross income or `
receipts. "Business activities tax" does not include a sales tax, use tax, or
a similar transaction tax, imposed on the sale or acquisition of goods or
services whether or not denominated a gross receipts tax or a tax
imposed on the privilege of doing business.
3.2. 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.
4. Customer means a person or entity to whom the taxpayer
makes a sale or renders services or from whom the taxpayer otherwise
receives gross income on the business.
5. Customer location means the following:
(i) For a customer not engaged in business, if the service
requires the customer to be physically present, where the service is
performed.
(ii) For a customer not engaged in business, if the service
does not require the customer to be physically present:
(A) The customer's residence; or
(B) If the customer's residence is not known, the
customer's billing/mailing address.
(iii) For a customer engaged in business:
(A) Where the services are ordered from;
(B) At the customer's billing/mailing address if the
location from which the services are ordered is not known; or
(C) At the customer's commercial domicile if none of
the above are known.
6.-3-. 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.
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7§. Primarily assigned means the business location of the
taxpayer where the individual performs his or her duties.
85. Service-taxable income or service income means gross
income of the business subject to tax under either the service or royalty
classification.
9-7. 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. 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.
Sec. 3.28.078. Allocation and apportionment of printing and
publishing income when activities take place in more than one (1)
jurisdiction.
Notwithstanding RCW 35.102.130, 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
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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.
Sec. 3.28.090. Exemptions.
A. Nonprofit corporations or nonprofit organizations. This chapter 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.
B. Certain fraternal and beneficiary organizations. This chapter shall
not apply to fraternal benefit societies or fraternal fire insurance
associations, as described in RCW Title 48; nor to beneficiary corporations
or societies organized under and existing by virtue of RCW Title 24, if such
beneficiary corporations or societies provide in their bylaws for the
payment of death benefits. This exemption is limited, however, to gross
income from premiums, fees, assessments, dues, or other charges directly
attributable to the insurance or death benefits provided by such societies,
associations, or corporations.
C. Certain corporations furnishing aid and relief. This chapter shall not
apply to the gross sales or the gross income received by corporations
which have been incorporated under any act of the congress of the United
States of America and whose principal purposes are to furnish volunteer
aid to members of the armed forces of the United States and also to carry
on a system of national and international relief and to apply the same in
mitigating the sufferings caused by pestilence, famine, fire, floods, and
other national calamities and to devise and carry on measures for
preventing the same.
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D. Operation of sheltered workshops. This chapter shall not apply to ,
income received from the Department of Social and Health Services for the
cost of care, maintenance, support, and training of persons with
developmental disabilities at non-profit group training homes as defined by
Chapter 71A.22 RCW or to the business activities of non-profit
organizations from the operation of sheltered workshops. For the purposes
of this subsection, "the operation of sheltered workshops" means
performance of business activities of any kind on or off the premises of
such nonprofit organizations which are performed for the primary purpose
of:
1. Providing gainful employment or rehabilitation services to the
handicapped as an interim step in the rehabilitation process for those who
cannot be readily absorbed in the competitive labor market or during such
time as employment opportunities for them in the competitive labor
market do not exist; or
2. Providing evaluation and work adjustment services for
handicapped individuals.
E. Credit unions. This chapter shall not apply to the gross income of
credit unions organized under the laws of the state, any other state, or the
United States.
F. Health maintenance organization, health care service contractor,
certified health plan. 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.
G. 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 utility tax provisions of Chapter 3.18 KCC.
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H. 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.
I. 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 U.S.C. Sections 611 through 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 U.S.C. Sections 601 through 604(a), that includes
only international banking facility time deposits (as defined in subsection
(a)(2) of Section 204.8 of Regulation D (12 CFR Part 204), as promulgated
by the Board of Governors of the Federal Reserve System), and
international banking facility extensions of credit (as defined in subsection
(a)(3) of Section 204.8 of Regulation D).
J. Insurance business. This chapter shall not apply to amounts
received by any person 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 bonding company from tax with
respect to gross income derived from the completion of any contract as to
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which it is a surety, or as to any liability as successor to the liability of the
defaulting contractor.
K. 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.
L. 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.
M. 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.
N. 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.
O. Employees.
1. This chapter shall not apply to 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.
2. A booth renter is an independent contractor for purposes of
this chapter.
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P. 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.
Q. 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.
R. 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 82.386.010 and exempt under RCW 82.386.44280; 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.
S. 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.
T. Casual and isolated sales. This chapter shall not apply to the gross
proceeds derived from casual or isolated sales.
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U. 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 (1) 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 (2) 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.
V. 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.
W. United States, Washington State governmental entities. This chapter
shall not apply to gross income received by the United States or any
instrumentality thereof and by the state of Washington or any municipal
subdivision thereof.
X. Research and development under federal contracts. This chapter
shall not apply to amounts received for research and development
activities performed on behalf of, under contract to, or in partnership with
the United States government. For purposes of this section, research and
development activities means activities performed to discover
technological information, and technical and nonroutine activities
concerned with translating technological information into new or improved
products, processes, techniques, formulas, inventions, or software, the
application of which is intended to be useful in the development of a new
or improved federal project or component thereof.
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Sec. 3.28.100. Deductions.
In computing the license fee or tax, there may be deducted from the
measure of tax the following items:
A. Membership fees and certain service fees by nonprofit youth
organization. For purposes of this subsection, "nonprofit youth
organization" means a nonprofit organization engaged in character building
of youth which is exempt from property tax under RCW 84.36.030. In
computing tax due under this chapter, there may be deducted from the
measure of tax all amounts received by a nonprofit youth organization:
1. As membership fees or dues, irrespective of the fact that the
payment of the membership fees or dues to the organization may entitle
its members, in addition to other rights or privileges, to receive services
from the organization or to use the organization's facilities; or
2. From members of the organization for camping and
recreational services provided by the organization or for the use of the
organization's camping and recreational facilities.
B. Initiation (Fees, dues, and certain charges received by non-profit
organization. In computing tax, a non-profit organization theFe may be
deducted from the measure of tax amounts derived from bona fide:
1. Initiation fees;
2. Dues;
3. Contributions;
4. Donations;
5. Tuition fees;
6. Charges made by a nonprofit trade or professional
organization for attending or occupying space at a trade show, convention,
or educational seminar sponsored by the nonprofit trade or professional
organization, which trade show, convention, or educational seminar is not
open to the general public;
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7. Charges made for operation of e+y—n :-profite#efa-te-
kindergartens; and
8. Endowment funds.
This subsection shall not be construed to exempt any person, association,
or society from tax liability upon selling tangible personal property or upon
providing facilities or services for which a special charge is made to
members or others. If dues are in exchange for any significant amount of
goods or services rendered by the recipient thereof to members without
any additional charge to the member, or if the dues are graduated upon
the amount of goods or services rendered, the value of such goods or
services shall not be considered as a deduction under this subsection.
C. Artistic and cultural organizations - Income from business activities.
In computing tax, there may be deducted from the measure of tax those
amounts received by artistic or cultural organizations, as defined in this
chapter, which represent:
1. Income derived from business activities conducted by the
organization; provided, that this deduction does not apply to retail sales
made by artistic and cultural organizations;
2. Amounts received from the United States or any
instrumentality thereof or from the state of Washington or any municipal
corporation or subdivision thereof as compensation for, or to support,
artistic or cultural exhibitions, performances, or programs provided by an
artistic or cultural organization for attendance or viewing by the general
public; or
3. Amounts received as tuition charges collected for the privilege
of attending artistic or cultural education programs.
D. Artistic or cultural organization - Deduction for tax under the
manufacturing classification - Value of articles for use in displaying art
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objects or presenting artistic or cultural exhibitions, performances, or
programs. In computing tax, there may be deducted from the measure of
tax by persons subject to payment of the tax under the manufacturing
classification the value of articles to the extent manufacturing activities are
undertaken by an artistic or cultural organization, as defined in this
chapter, solely for the purpose of manufacturing articles for use by the
organization in displaying art objects or presenting artistic or cultural
exhibitions, performances, or programs for attendance or viewing by the
general public.
E. Day care activities. In computing tax, there may be deducted from
the measure of tax amounts derived from day care activities by any
organization organized and operated for charitable, educational, or other
purposes which is exempt from taxation pursuant to Section 501(c)(3) of
the Internal Revenue Code, as hereafter amended; provided, however,
that amounts derived from selling, altering, or repairing tangible personal
property shall not be deductible.
F. Compensation from public entities for health or social welfare
services - Exception. In computing tax, there may be deducted from the
measure of tax amounts received from the United States or any
instrumentality thereof or from the state of Washington or any municipal
corporation or political subdivision thereof as compensation for, or to
support, health or social welfare services rendered by a health or social
welfare organization (as defined in RCW 82.04.431) or by a municipal
corporation or political subdivision, except deductions are not allowed
under this subsection for amounts that are received under an employee
benefit plan. For purposes of this subsection, "employee benefit plan"
includes the military benefits program authorized in 10 U.S.C. Section
1071 et seq., as amended, or amounts payable pursuant thereto.
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G. 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 nontransient residential properties.
H. 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.
I. Interest on loans to farmers and ranchers, producers or harvesters
of aquatic products, or their cooperatives. In computing tax, there may be
deducted from the measure of tax amounts derived as interest on loans to
bona fide farmers and ranchers, producers or harvesters of aquatic
products, or their cooperatives by a lending institution which is owned
exclusively by its borrowers or members and which is engaged solely in
the business of making loans and providing finance-related services to
bona fide farmers and ranchers, producers or harvesters of aquatic
products, their cooperatives, rural residents for housing, or persons
engaged in furnishing farm-related or aquatic-related services to these
individuals or entities.
1. 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.
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K. Cash discount taken by purchaser. In computing tax, there may be
deducted from the measure of tax the cash discount amounts actually
taken by the purchaser. This deduction is not allowed in arriving at the
taxable amount under the extracting or manufacturing classifications with
respect to articles produced or manufactured, the reported values of
which, for the purposes of this tax, have been computed according to the
"value of product" provisions.
L. 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.
M. Repair, maintenance, replacement, etc., of residential structures and
commonly held property - Eligible organizations.
1. 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:
a. A cooperative housing association, corporation, or
partnership from a person who resides in a structure owned by the
cooperative housing association, corporation, or partnership;
b. 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
C. 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
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residential property in a defined area who all hold the same property in
common within the area.
2. 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.
3. To qualify for the deductions under this subsection:
a. 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
country wherein the property is located;
b. 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;
C. 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.
N. 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:
1. Advertising agencies' fees when such fees or allowances are
shown as discount or price reduction in the billing or that the billing is on a
net basis, i.e., less the discount;
2. Actual gross receipts from national network, and regional
advertising or a "standard deduction" as provided by RCW 82.04.280; and
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3. Local advertising revenue that represents advertising which 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.
O. 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.
P. Receipts from the sale of tangible personal property and retail
services delivered outside the city but within Washington. Amounts
included in the gross receipts reported on the tax return derived from the
sale of tangible personal property 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.
Q. 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.
Sec. 3.28.120. 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
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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.
Sec. 3.28.130. Limitation of revenue received.
Revenue received from the taxes imposed by this chapter shall be
dedicated to the general operations of the city subject to the following two
exceptions:
A. Revenues equivalent to the original gross receipts and square
footage rates in effect from 2013 through 2018 shall first be applied to the
actual cost to staff and operate the business and eeeupatien tax division,
but not to exceed the amount budgeted for that division by the city
council. Remaining revenue shall be allocated to the design, construction,
maintenance, improvement, operation, and repair of the city's
transportation infrastructure and appurtenant improvements including,
without limitation, streets, curbs, gutters, sidewalks, bicycle and
pedestrian lanes and paths, street trees, drainage, lighting, and
signalization.
B. Square footage revenues equivalent to 0.03 quarterly on business
warehouse floor space and 0.01 quarterly on other business floor space
shall be allocated to the city's capital resource fund.
Sec. 3.28.140. 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 5. - Amendment - KCC 3.29. Chapter 3.29 of the Kent
City Code entitled "Business and Occupation Tax - Administrative
Provisions," is hereby amended as follows:
CHAPTER 3.29
BUSINESS AND
A/ GUPAT-ION TAX - ADMINISTRATIVE
PROVISIONS
Sec. 3.29.010. Purpose.
The purpose of this chapter is to provide administrative guidelines and
provisions to implement, administer, and enforce the city's business arr
eeeu tax=codes .
Sec. 3.29.015. Application of chapter stated.
The provisions of this chapter shall apply with respect to the taxes imposed
under Chapter 3.28 3.18 KCC Utility Tax, 3.21 KCC Gambling Tax, 3.26
KCC Admissions Tax and 3.28 KCC Business and Occupation Tax and under
other titles, chapters, and sections in such manner and to such extent as
expressly indicated in each such title, chapter, or section.
Sec. 3.29.020. Definitions.
For purposes of this chapter, the definitions contained in Chapter 3.18 KCC
Utility Tax, 3.21 KCC Gambling Tax, 3.26 KCC Admissions Tax and 3.28
KCC Business and Occupation Tax shall apply equally to the provisions of
this chapter unless the term is defined otherwise in this chapter. In
addition, the following definitions will apply:
A. Reporting period means:
1. A one (1) month period beginning the first day of each
calendar month (monthly); or
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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).
B. 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.
C. 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.
D. Tax year or taxable year means the calendar year.
Sec. 3.29.021. Definitions — References to Chapter 82.32
RCW.
Where provisions of Chapter 82.32 RCW are incorporated in KCC 3.29.090,
"department" as used in the RCW shall refer to the "director" as defined in
KCC 3.28.030 and "warrant" as used in the RCW shall mean "citation or
criminal complaint."
Sec. 3.29.025. Registration requirements.
A. Except as provided in subsection (B) of this section, any person who
engages in any business or performs any act that is subject to the
provisions of KCC Title 5 or Chapter 3.18 KCC, relating to utility business
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taxes, Chapter 3.20 KCC, relating to natural or manufactured gas line use
taxes, Chapter 3.21 KCC, relating to gambling taxes, Chapter 3.23 KCC,
relating to lodging taxes, Chapter 3.26 KCC, relating to admissions taxes,
and Chapter 3.28 KCC, relating to business and occupation taxes, even if
that person is not subject to any tax imposed thereby, shall apply under
the rules and regulations as the department may prescribe and, upon
approval, receive from the department a registration certificate applicable
to all such business engaged in or activity performed.
Except as provided in subsection (B) of this section, no person shall
engage in any business without being registered in compliance with the
provisions of this section, and any person who is so registered must also
comply with Chapter 5.01 KCC.
B. Nonregistration status. Any person whose worldwide gross proceeds
of sale, gross income of business, or value of products, including
byproducts, as the case may be, from all activities during any calendar
year are $12,000 or less and the number of square feet of warehouse
business floor space or other business floor space for each office,
warehouse, or other place of business leased, owned, occupied, or
otherwise maintained within the city during the reporting period, calculated
to the nearest foot, is less than 550 square feet is not required to obtain a
registration certificate.
Sec. 3.29.030. Registration certificates.
The city will issue a registration certificate, free of charge, acknowledging
registration. The registration certificate shall be personal and
nontransferable and shall be valid as long as the taxpayer continues in that
business and pays any tax imposed by the city.
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In the event business is transacted at two (2) or more separate places by
one (1) taxpayer, a separate registration certificate for each place at which
business is transacted shall be required. These additional certificates shall
be issued at no additional fee. Where a taxpayer changes the nature of
business conducted or conducts additional activities upon which a tax is
imposed by KCC Title 5 or Chapter 3.18 KCC, relating to utility business
taxes, Chapter 3.20 KCC, relating to natural or manufactured gas line use
taxes, Chapter 3.21 KCC, relating to gambling taxes, Chapter 3.23 KCC,
relating to lodging taxes, Chapter 3.26 KCC, relating to admissions taxes,
and Chapter 3.28 KCC, relating to business and occupation taxes, that
taxpayer shall apply for and receive a new registration certificate at no
additional fee.
Each registration certificate shall be numbered and shall show the name,
business location, mailing address, and any other information that the
director deems necessary. The certificate of registration shall be posted in
a conspicuous place at the place of business for which it is issued.
Where a place of business of the taxpayer is changed, the taxpayer shall
notify the department and, upon approval, the department will issue a new
certificate at no additional fee.
Sec. 3.29.040. When due and payable — Reporting periods —
Monthly, quarterly, and annual returns — Threshold provisions or
relief from filing requirements — Computing time periods — Failure
to file returns.
A. The tax imposed by this chapter shall be due and payable in
quarterly installments. At the director's discretion, businesses may be
assigned to a monthly, annual or nonreporting period depending on the tax
amount owing or type of tax. Until December 31, 2020, tTax payments are
due on or before the last day of the next month following the end of the
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assigned reporting period covered by the return. Effective January 1,
2021 tax payments are due on or before the time as provided in RCW
82.32.045 (1), (2), and (3).
B. Taxes shall be paid as provided in this chapter and accompanied by
a return on forms as prescribed by the director. The return shall be signed
by the taxpayer personally or by a responsible officer or agent of the
taxpayer. The individual signing the return shall swear or affirm that the
information in the return is complete and true.
C. Tax returns must be filed and returned by the due date whether or
not any tax is owed, unless the taxpayer is in active nonreporting status.
D. Nonreporting status.
1. Notwithstanding subsection (A) of this section, the director
may relieve any person of the requirement to file returns if the person
meets exemption criteria under subsection (D)(2) of this section.
2. For purposes of the tax imposed by Chapter 3.28 KCC, any
person whose annual worldwide value of products, gross proceeds of sales,
or gross income of the business, subject to tax after all allowable
deductions, is more than $12,000 but less than or equal to $250,000 and
whose combined taxable business warehouse square footage within the
city is 4,000 square feet or less, and whose combined taxable other
business floor space is 12,000 square feet or less, need not file and submit
a return to the director. Persons whose value of products, gross proceeds
of sales, or gross income of the business, subject to tax after all allowable
deductions, is greater than the above thresholds shall file and submit a
return to the director. The gross receipts and deduction amounts shall be
entered on the tax return even though no tax may be due.
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E. A taxpayer that commences to engage in business activity shall file
a return and pay the tax or fee for the portion of the reporting period
during which the taxpayer is engaged in business activity subject to the
conditions set forth in subsection (D) of this section.
F. Except as otherwise specifically provided by any other provision of
this chapter, in computing any period of days prescribed by this chapter
the day of the act or event from which the designated period of time runs
shall not be included. The last day of the period shall be included unless it
is a Saturday, Sunday, or city or federal legal holiday, in which case the
last day of such period shall be the next succeeding day which is neither a
Saturday, Sunday, nor city or federal legal holiday.
G. If any taxpayer fails, neglects, or refuses to make a return as and
when required in this chapter, the director is authorized to determine the
amount of the tax or fees payable by obtaining facts and information upon
which to base the director's estimate of the tax or fees due. Such
assessment shall be deemed prima facie correct and shall be the amount
of tax owed to the city by the taxpayer. The director shall notify the
taxpayer by mail of the amount of tax so determined, together with any
penalty, interest, and fees due; the total of such amounts shall thereupon
become immediately due and payable.
Sec. 3.29.050. Payment methods — Mailing returns or
remittances — Time extension — Deposits — Recording payments —
Payment must accompany return — NSF checks.
A. Taxes shall be paid to the director in United States currency by bank
draft, certified check, cashier's check, personal check, money order, cash,
or by wire transfer or electronic payment if such wire transfer or electronic
payment is authorized by the director. If payment so received is not paid
by the bank on which it is drawn, the taxpayer, by whom such payment is
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tendered, shall remain liable for payment of the tax and for all legal
penalties, the same as if such payment had not been tendered. Acceptance
of any sum by the director shall not discharge the tax or fee due unless the
amount paid is the full amount due.
B. A return or remittance that is transmitted to the city by United
States mail shall be deemed filed or received on the date shown by the
cancellation mark stamped by the Post Office upon the envelope containing
it. The director may allow electronic filing of returns or remittances from
any taxpayer. A return or remittance which is transmitted to the city
electronically shall be deemed filed or received according to procedures set
forth by the director.
C. If a written request is received prior to the due date, the director,
for good cause, may grant, in writing, additional time within which to make
and file returns.
D. The director shall keep full and accurate records of all funds received
or refunded. The director shall apply payments first against all penalties
and interest owing, and then upon the tax, without regard to any direction
of the taxpayer.
E. For any return not accompanied by a remittance of the tax shown to
be due thereon, the taxpayer shall be deemed to have failed or refused to
file a return and shall be subject to the penalties and interest provided in
this chapter.
F. Any payment made that is returned for lack of sufficient funds or for
any other reason will not be considered received until payment by certified
check, money order, or cash of the original amount due, plus a
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AAnonsufficient funds" (NSF) charge of twenty-five dollars ($25), is received
by the director.
G. The director is authorized, but not required, to mail tax return forms
to taxpayers, but failure of the taxpayer to receive any such forms shall
not excuse the taxpayer from filing returns and making payment of the
taxes or fees, when and as due under this chapter.
H. For gambling tax, in addition to the tax return, a copy of the
taxpayer's quarterly report to the Washington State Gambling Commission
required by Chapter 230-08 WAC for the period in which the tax accrued
shall accompany remittance of the tax amount due.
Sec. 3.29.060. Records to be preserved — Examination —
Estoppel to question assessment.
Every person liable for any fee or tax imposed by this chapter shall keep
and preserve, for a period of five (5) years after filing a tax return, such
records as may be necessary to determine the amount of any fee or tax for
which the person may be liable, which records shall include copies of all
federal income tax and state tax returns and reports made by the person.
All books, records, papers, invoices, vendor lists, inventories, stocks of
merchandise, and other data including federal income tax and state tax
returns and reports shall be open for examination at any time by the
director or its duly authorized agent. Every person's business premises
shall be open for inspection or examination by the director or a duly
authorized agent.
A. If a person does not keep the necessary books and records within
the city, it shall be sufficient if such person (1) produces within the city
such books and records as may be required by the director, or (2) bears
the cost of examination by the director's agent at the place where such
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books and records are kept; provided, that the person electing to bear
such cost shall pay in advance to the director the estimated amount
thereof including round-trip fare, lodging, meals, and incidental expenses,
subject to adjustment upon completion of the examination.
B. If national security clearance status or federal regulation bars access
to certain documents, facilities, or other necessary information, the auditor
can implement alternative audit methods that determine, as accurately as
possible and with the least possible expenditure of time, the amount of tax
due.
C. Any person who fails, or refuses a department request, to provide or
make available records, or to allow inspection or examination of the
business premises, shall be forever barred from questioning in any court
action the correctness of any assessment of taxes made by the city for any
period for which such records have not been provided, made available, or
kept and preserved, or in respect of which inspection or examination of the
business premises has been denied. The director is authorized to
determine the amount of the tax or fees payable by obtaining facts and
information upon which to base the estimate of the tax or fees due. Such
fee or tax assessment shall be deemed prima facie correct and shall be the
amount of tax owing the city by the taxpayer. The director shall notify the
taxpayer by mail the amount of tax so determined, together with any
penalty, interest, and fees due; the total of such amounts shall thereupon
become immediately due and payable.
Sec. 3.29.070. Accounting methods.
A. A taxpayer may file tax returns in each reporting period with
amounts based upon cash receipts only if the taxpayer's books of account
are kept on a cash receipts basis. A taxpayer that does not regularly keep
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books of account on a cash receipts basis must file returns with amounts
based on the accrual method.
B. The taxes imposed and the returns required hereunder shall be upon
a calendar year basis.
Sec. 3.29.080. Public work contracts — Payment of fee and
tax before final payment for work.
The director may, before issuing any final payment to any person
performing any public work contract for the city, require such person to
pay in full all license fees or taxes due under this title from such person on
account of such contract or otherwise, and may require such taxpayer to
file with the director a verified list of all subcontractors supplying labor
and/or materials to the person in connection with said public work.
Sec. 3.29.090. Underpayment of tax, interest, or penalty —
Interest.
A. If, upon examination of any returns, or from other information
obtained by the director, it appears that a tax or penalty less than that
properly due has been paid, the director shall assess the additional amount
found to be due and shall add thereto interest on the tax only. The director
shall notify the person by mail of the additional amount, which shall
become due and shall be paid within thirty (30) days from the date of the
notice, or within such time as the director may provide in writing.
B. 1. The director shall compute interest in accordance with RCW
82.32.050 as it now exists or as it may be amended.
2. If subsection (113)(1) of this section is held to be invalid, then
the provisions of RCW 82.32.050 existing at the effective date of the
ordinance codified in this chapter shall apply.
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Sec. 3.29.095. Time in which assessment may be made.
The director shall not assess, or correct an assessment for, additional
taxes, penalties, or interest due more than four (4) years after the close of
the calendar year in which they were incurred, except that the director
may issue an assessment:
A. Against a person who is not currently registered or licensed or has
not filed a tax return as required by this chapter for taxes due within the
period commencing ten (10) years prior to the close of the calendar year in
which the person was contacted in writing by the director;
B. Against a person that has committed fraud or who misrepresented a
material fact; or
C. Against a person that has executed a written waiver of such
limitations.
Sec. 3.29.100. Overpayment of tax, penalty, or interest —
Credit or refund — Interest rate — Statute of limitations.
A. If, upon receipt of an application for a refund, or during an audit or
examination of the taxpayer's records and tax returns, the director
determines that the amount of tax, penalty, or interest paid is in excess of
that properly due, the excess amount shall be credited to the taxpayer's
account or shall be refunded to the taxpayer. Except as provided in
subsection (B) of this section, no refund or credit shall be made for taxes,
penalties, or interest paid more than four (4) years prior to the beginning
of the calendar year in which the refund application is made or
examination of records is completed.
B. The execution of a written waiver shall extend the time for applying
for or making a refund or credit of any taxes paid during, or attributable
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to, the years covered by the waiver if, prior to the expiration of the waiver
period, an application for refund of such taxes is made by the taxpayer or
the director discovers that a refund or credit is due.
C. Refunds shall be made by means of vouchers approved by the
director and by the issuance of a city check or warrants drawn upon and
payable from such funds as the city may provide.
D. Any final judgment for which a recovery is granted by any court of
competent jurisdiction for tax, penalties, interest, or costs paid by any
person shall be paid in the same manner, as provided in subsection (C) of
this section, upon the filing with the director a certified copy of the order
or judgment of the court.
E. 1. The director shall compute interest on refunds or credits of
amounts paid or other recovery allowed a taxpayer in accordance with
RCW 82.32.060 as it now exists or as it may be amended.
2. If subsection (E)(1) of this section is held to be invalid, then
the provisions of RCW 82.32.060 existing at the effective date
of the ordinance codified in this chapter shall apply.
Sec. 3.29.110. Late payment — Disregard of written
instructions — Evasion — Penalties.
A. If payment of any tax due on a return to be filed by a taxpayer is
not received by the director by the due date, the director shall add a
penalty in accordance with RCW 82.32.090(1), as it now exists or as it
may be amended.
B. If the director determines that any tax has been substantially
underpaid as defined in RCW 82.32.090(2), there shall be added a penalty
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in accordance with RCW 82.32.090(2), as it now exists or as it may be
amended.
C. If a citation or criminal complaint is issued by the director for the
collection of taxes, fees, assessments, interest, or penalties, there shall be
added thereto a penalty in accordance with RCW 82.32.090(3), as it now
exists or as it may be amended.
D. If the director finds that a person has engaged in any business or
performed any act upon which a tax is imposed under this title and that
person has not obtained from the director a registration certificate as
required by KCC 3.29.025 and 3.29.030, the director shall impose a
penalty in accordance with RCW 82.32.090(4), as it now exists or as it
may be amended. No penalty shall be imposed under this subsection (D) if
the person who has engaged in business without a registration certificate
obtains a registration certificate prior to being notified by the director of
the need to be registered.
E. If the director determines that all or any part of a deficiency resulted
from the taxpayer's failure to follow specific written tax reporting
instructions, there shall be assessed a penalty in accordance with RCW
82.32.090(5), as it now exists or as it may be amended.
F. If the director finds that all or any part of the deficiency resulted
from an intent to evade the tax payable, the director shall assess a penalty
in accordance with RCW 82.32.090(6), as it now exists or as it may be
amended.
G. The penalties imposed under subsections (A) through (E) of this
section can each be imposed on the same tax found to be due. This
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subsection does not prohibit or restrict the application of other penalties
authorized by law.
H. The director shall not impose both the evasion penalty and the
penalty for disregarding specific written instructions on the same tax found
to be due.
I. For the purposes of this section, return means any document a
person is required by the city to file to satisfy or establish a tax or fee
obligation that is administered or collected by the city, and that has a
statutorily defined due date.
J. If incorporation into the Kent City Code of future changes to RCW
82.32.090 is deemed invalid, then the provisions of RCW 82.32.090
existing at the time the ordinance codified in this chapter is effective shall
apply.
Sec. 3.29.120. Cancellation of penalties.
A. The director may cancel any penalties imposed under KCC
3.29.110(A) if the taxpayer shows that its failure to timely file or pay the
tax was due to reasonable cause and not willful neglect. Willful neglect is
presumed unless the taxpayer shows that it exercised ordinary business
care and prudence in making arrangements to file the return and pay the
tax but was, nevertheless, due to circumstances beyond the taxpayer's
control, unable to file or pay by the due date. The director has no authority
to cancel any other penalties or to cancel penalties for any other reason
except as provided in subsection (C) of this section.
B. A request for cancellation of penalties must be received by the
director within 30 days after the date the department mails the notice that
the penalties are due. The request must be in writing and contain
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competent proof of all pertinent facts supporting a reasonable cause
determination. In all cases the burden of proving the facts rests upon the
taxpayer.
C. The director may cancel the penalties in KCC 3.29.110(A) one time
if a person:
1. Is not currently registered and filing returns;
2. Was unaware of its responsibility to file and pay tax; and
3. Obtained a registration certificate and any applicable business
licenses and filed past due tax returns within 30 days after being notified
by the department.
D. The director shall not cancel any interest charged upon amounts
due.
E. The director may cancel the penalties imposed under KCC
3.29.110(A) one time for a person:
1. If payment of any tax due on a return to be filed by a
taxpayer was received by the director by the due date for the previous 24
months; or
2. If payment of any tax due on a return to be filed by a
taxpayer was received by the director by the due date for all previous
months, if the person has not been required to file a return for the
previous 24 months.
Sec. 3.29.125. Voluntary disclosure program.
A person that has not obtained from the director a registration certificate
as required by KCC 3.29.025 and 3.29.030 that voluntarily obtains a
registration certificate prior to being notified by the department may have
certain penalties waived under the voluntary disclosure program.
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A. To be eligible for the program, the unregistered person:
1. Must not have been contacted by the city regarding
registration; and
2. Must not have engaged in evasion or misrepresentation in
reporting taxes properly due.
If the director determines that the person had been previously contacted in
order to determine registration and reporting requirements or other
enforcement issues, the person will not qualify for the voluntary disclosure
program.
B. The director shall not assess for taxes due more than four years
prior to the beginning of the calendar year of registration.
C. The director shall cancel the penalties in KCC 3.29.110(A), (B), and
(D).
D. The director shall not cancel any interest charged upon amounts
due.
E. Underpayment of tax. If a person has obtained from the director a
registration certificate as required by KCC 3.29.025 and 3.29.030, but
discovers that tax less than that properly due has been paid, then an
amended return shall be filed. No penalty in accordance with KCC
3.29.110(B) shall be imposed for voluntarily correcting tax due on a filed
return. The penalty imposed under KCC 3.29.110(B) shall not be waived
during an audit or examination of the taxpayer's records and tax returns.
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Sec. 3.29.130. Taxpayer quitting business — Liability of
successor.
A. Whenever any taxpayer quits business, sells out, exchanges, or
otherwise disposes of his business or his stock of goods, any tax payable
hereunder shall become immediately due and payable. Such taxpayer
shall, within ten (10) days thereafter, make a return and pay the tax due.
B. Any person who becomes a successor shall become liable for the full
amount of any tax owing. The successor shall withhold from the purchase
price a sum sufficient to pay any tax due to the city from the taxpayer until
such time as: (1) the taxpayer shall produce a receipt from the city
showing payment in full of any tax due or a certificate that no tax is due,
or (2) more than six (6) months has passed since the successor notified
the director of the acquisition and the director has not issued and notified
the successor of an assessment.
C. Payment of the tax by the successor shall, to the extent thereof, be
deemed a payment upon the purchase price. If such payment is greater in
amount than the purchase price, the amount of the difference shall
become a debt due such successor from the taxpayer.
D. Notwithstanding the above, if a successor gives written notice to the
director of the acquisition, and the director does not within six (6) months
of the date it received the notice issue an assessment against the taxpayer
and mail a copy of that assessment to the successor, the successor shall
not be liable for the tax.
Sec. 3.29.140. Administrative appeal.
A. Correction of tax. Any person, except one who has failed to comply
with KCC 3.29.060, having been issued a notice of additional taxes,
delinquent taxes, interest, or penalties assessed by the director may,
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within 30 days after the issuance of such notice or within the period
covered by any extension of the due date granted by the director, request
a correction of the amount of the assessment and a conference with the
director for review of the assessment. Interest and penalties assessed shall
continue to accrue during the director's review of a request for a
correction, except and to the extent that the director later determines that
a tax assessment was too high or the delay in issuing a determination is
due to unreasonable delays caused by the director. The director shall make
a final determination regarding the assessment and shall notify the
taxpayer of the director's determination within 60 days after the
conference, unless otherwise notified in writing by the director. Such
determination shall be subject to appeal pursuant to subsection (B) of this
section. If no request for correction is filed within the time period provided
herein, the assessment covered by such notice shall become final and
immediately due and payable, and no appeal to the hearing examiner shall
be allowed.
B. Appeal to the hearing examiner. Any person aggrieved by the
amount of any fee, tax, interest, or penalty determined by the director to
be due under the provisions of this chapter or Chapter 3.18 KCC Utility
Tax, 3.21 KCC Gambling Tax, 3.26 KCC Admissions Tax and 3.28 KCC
Business and Occupation Tax may, upon full payment of the amount
assessed, appeal such determination pursuant to the following procedures:
1. Form of appeal. It must be in writing and must contain the
following:
a. The name and address of the taxpayer;
b. A statement identifying the determination of the
director from which the appeal is taken;
C. A statement setting forth the grounds upon which the
appeal is taken and identifying specific errors the director is alleged to
have made in making the determination; and
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d. A statement identifying the requested relief from the
determination being appealed.
2. Time and place to appeal. The appeal shall be filed with the
office of the city clerk with a copy to the director no later than 30 days
following the date on which the determination of the director was mailed to
the taxpayer. A $250 filing fee shall be submitted with the appeal, which
filing fee is required to process the appeal. If no appeal is filed within the
time period provided herein, the assessment covered by such notice shall
become final and immediately due and payable. No refund request may be
made for the audit period covered in that assessment. Failure to follow the
appeal procedures in this section shall preclude the taxpayer's right to
appeal.
3. Appeal hearing. The city's hearing examiner shall, as soon as
practical, fix a time and place for the hearing of such appeal, and shall
cause a notice of the time and place thereof to be delivered or mailed to
the parties. The hearing shall be conducted in accord with the provisions of
Chapter 1.04 KCC and procedures developed by the hearing examiner, at
which time the appellant taxpayer and the director shall have the
opportunity to be heard and to introduce evidence relevant to the subject
of the appeal.
4. Burden of proof. The appellant taxpayer shall have the burden
of proving by a preponderance of the evidence that the determination of
the director is erroneous.
5. Hearing record. The hearing examiner shall make an
electronic sound recording of each appeal unless the hearing is conducted
solely in writing. The hearing examiner may, by subpoena, require the
attendance of any person at the hearing, and may also require him or her
to produce pertinent books and records. Any person served with such a
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
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him or her pertinent to the appeal; and it shall be unlawful for him or her
to fail or refuse to do so. The city attorney shall seek enforcement of a
hearing examiner subpoena in an appropriate court.
6. Decision of the hearing examiner. Following the hearing, the
hearing examiner shall enter a decision on the appeal, supported by
written findings and conclusions in support thereof. A copy of the findings,
conclusions, and decision shall be mailed to the appellant taxpayer and to
the director. The decision shall state the correct amount of the fee, tax,
interest or penalty owing.
7. Interest accrual or payment. Interest and/or penalties shall
continue to accrue on all unpaid amounts, in accordance with KCC
3.29.090 and 3.29.110, notwithstanding the fact that an appeal has been
filed. If the hearing examiner determines that the taxpayer is owed a
refund, such refund amount shall be paid to the taxpayer in accordance
with KCC 3.29.100.
Sec. 3.29.150. Judicial review of director's determination.
Any person, except one who has failed to comply with KCC 3.29.060,
having paid any tax as required and feeling aggrieved by the amount of
the tax assessed, and after first exhausting the right of administrative
appeal set forth in this chapter, may seek judicial review in the King
County sSuperior Ceourt within twenty-one (21) days of the date of the
decision of the hearing examiner. The taxpayer shall set forth the amount
of the tax imposed upon the taxpayer that the taxpayer concedes to be the
correct amount of tax and the reason why the tax imposed should be
reduced or abated. The trial in the superior court shall be de novo in
accordance with the laws of the state of Washington. The burden shall rest
upon the taxpayer to prove that the tax paid by the taxpayer is incorrect,
either in whole or in part, and to establish the correct amount of the tax.
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Sec. 3.29.160. Director to make rules.
The director shall have the power, from time to time, to adopt, publish,
and enforce rules and regulations not inconsistent with this chapter and
Chapter 318 KCC Utility Tax, 3.21 KCC Gambling Tax, 3.26 KCC
Admissions Tax and 3.28 KCC Business and Occupation Tax or with law for
the purpose of carrying out the provisions of this chapter and for the
administration of Chapters 3.18, 3.21, 3.26 and 3.28. I+t shall be unlawful
to violate or fail to comply with any such rule or regulation.
Sec. 3.29.170. Ancillary allocation authority of director.
The director is authorized to enter into agreements with other Washington
cities which impose an "eligible gross receipts tax":
A. To conduct an audit or joint audit of a taxpayer by using an auditor
employed by the city of Kent, another city, or a contract auditor; provided,
that such contract auditor's pay is not in any way based upon the amount
of tax assessed;
B. To allocate or apportion in a manner that fairly reflects the gross
receipts earned from activities conducted within the respective cities the
gross proceeds of sales, gross receipts, or gross income of the business, or
taxes due from any person that is required to pay an eligible gross receipts
tax to more than one (1) Washington city;
C. To apply the city's tax prospectively where a taxpayer has no office
or place of business within the city and has paid tax on all gross income to
another Washington city where the taxpayer is located; provided, that the
other city maintains an eligible gross receipts tax, and the income was not
derived from contracts with the city.
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Sec. 3.29.180. Mailing of notices.
Any notice required by this chapter to be mailed to any taxpayer,
registrant, or licensee shall be sent by ordinary mail, addressed to the
address of the taxpayer, registrant, or licensee as shown by the records of
the director. Failure of the taxpayer, registrant, or licensee to receive any
such mailed notice shall not release the taxpayer, registrant, or licensee
from any tax, fee, interest, or any penalties thereon, nor shall such failure
operate to extend any time limit set by the provisions of this chapter. It is
the responsibility of the taxpayer to inform the director in writing about a
change in the taxpayer's address.
Sec. 3.29.190. Tax declared additional.
The tax and any applicable fee herein levied shall be additional to any
license fee or tax imposed or levied under any law or any other ordinance
of the city of Kent except as herein otherwise expressly provided.
Sec. 3.29.200. Public disclosure — Confidentiality —
Information sharing.
A. For purposes of this section, defined terms shall be as set forth in
KCC 3.29.020:
1. Disclose means to make known to any person in any manner
whatever a return or tax information.
2. Tax information means:
a. A taxpayer's identity;
b. 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;
C. Whether the taxpayer's return was, is being, or will be
examined or subject to other investigation or processing; or
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d. Other data received by, recorded by, prepared by, or
provided to the city with respect to the determination or the existence, or
possible existence, of liability, or the amount thereof, of a person under
Chapter 3.28 KCC 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, material, or documents made
confidential and privileged by this section to delete information from such
data, material, or documents so as to permit its disclosure.
3. City agency means every city office, department, division,
bureau, board, commission, or other city agency.
4. 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.
B. 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.
C. This section does not prohibit the director from:
1. Disclosing such return or tax information in a civil or criminal
judicial proceeding or an administrative proceeding:
a. In respect of any tax imposed under Chapter 3.28 KCC
if the taxpayer or its officer or other person liable under this title is a party
in the proceeding; or
b. In which the taxpayer about whom such return or tax
information is sought and another state agency are adverse parties in the
proceeding;
2. Disclosing, subject to such requirements and conditions as the
director prescribes by rules adopted pursuant to KCC 3.29.160, such
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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 information
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 criminal liability of the taxpayer or another
person, or that such disclosure would identify a confidential informant, or
that such disclosure is contrary to any agreement entered into by the
department 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 court;
3. Publishing statistics so classified as to prevent the
identification of particular returns or reports or items thereof;
4. Disclosing such return or tax information, 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;
5. Permitting the city's records to be audited and examined by
the proper state officer, his or her agents, and employees;
6. Disclosing any such return or tax information to a peace
officer as defined in RCW 9A.04.110 or county prosecuting attorney, for
official purposes. The disclosure may be made only in response to a search
warrant, subpoena, or other court order, unless the disclosure is for the
purpose of criminal tax enforcement. A peace officer or county prosecuting
attorney who receives the return or tax information may disclose that
return or tax information only for use in the investigation and a related
115Amend KCC 3.18, 3.21, 3.26, 3.28, 3.2 -
Re: Tax Codes
court proceeding, or in the court proceeding for which the return or tax
information originally was sought or where otherwise allowed to be
disclosed under this section;
7. 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 similar privileges to the proper
officers of the city;
8. Disclosing any such return or tax information to the United
States Department of Justice, including the Bureau of Alcohol, Tobacco,
Firearms and Explosives, the Department of Defense, the Immigration and
Customs Enforcement and the Customs and Border Protection Agencies of
the United States Department of Homeland Security, the United States
Coast Guard, the Alcohol and Tobacco Tax and Trade Bureau of the United
States Department of Treasury, and the United States Department of
Transportation, or any authorized representative of these federal agencies
or their successors, for official purposes;
9. Publishing or otherwise disclosing the text of a written
determination designated by the director as a precedent pursuant to RCW
82.32.410;
10. Disclosing, in a manner that is not associated with other tax
information, the taxpayer name, entity type, business address, mailing
address, revenue tax registration numbers and the active/closed status of
such registrations, state or local business 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
American Industry Classification System or Standard Industrial
Classification code of a taxpayer, and the dates of opening and closing of
116Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
business. Except that this subsection may not be construed as giving
authority to the city or any recipient to give, sell, or provide access to any
list of taxpayers for any commercial purpose;
11. Disclosing such return or tax information that is also
maintained 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;
12. Disclosing such return or tax information to the United States
Department of Agriculture, or successor department or agency, for the
limited purpose of investigating food stamp fraud by retailers;
13. Disclosing to a financial institution, escrow company, or title
company, in connection with specific real property that is the subject of a
real estate transaction, current amounts due the city for a filed tax
warrant, judgment, or lien against the real property;
14. Disclosing to a person against whom the director has asserted
liability as a successor under KCC 3.29.130 return or tax information
pertaining to the specific business of the taxpayer to which the person has
succeeded;
15. Disclosing real estate excise tax affidavit forms filed under
Chapter 3.19 KCC in the possession of the city, including real estate excise
tax affidavit forms for transactions exempt or otherwise not subject to tax;
16. Disclosing such return or tax information to the court or
hearing examiner in respect to the city's application 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.
D. 1. The director may disclose return or taxpayer information to a
person under investigation or during any court or administrative
proceeding against a person under investigation as provided in this
117Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
subsection (D). The disclosure must be in connection with the director's
official duties under KCC Title 3, 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 director may disclose return
or tax information such as invoices, contracts, bills, statements, resale or
exemption certificates, or checks. However, the director may not disclose
general ledgers, sales or cash receipt journals, check registers, accounts
receivable/payable ledgers, general journals, financial statements, expert's
workpapers, income tax returns, state tax returns, tax return workpapers,
or other similar data, materials, or documents.
2. Before disclosure of any tax return or tax information under
this subsection (D), 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 may not disclose any tax return or
tax information under this subsection (D) until the time period allowed in
subsection (D)(3) of this section has expired or until the court has ruled on
any challenge brought under subsection (D)(3) of this section.
3. The person in possession of the data, materials, or documents
to be disclosed by the director has twenty (20) days from the receipt of
the written request required under subsection (D)(2) of this section 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 determines that:
a. 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;
b. The production of the data, materials, or documents
sought would be unduly burdensome or expensive, taking into account the
118Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
needs of the director, the amount in controversy, limitations on the
petitioner's resources, and the importance of the issues at stake; or
C. The data, materials, or documents sought for disclosure
contain trade secret information that, if disclosed, could harm the
petitioner.
4. 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.
5. Requesting information under subsection (D)(2) of this
section that may indicate that a taxpayer is under investigation does not
constitute a disclosure of tax return or tax information under this section.
E. Service of a subpoena issued by the court or by the hearing
examiner pursuant to Chapter 2.32 KCC and the ancillary administrative
rules 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 court or by the hearing
examiner may disclose the existence or content of the subpoena to that
person's legal counsel.
F. Any person acquiring knowledge of any return or tax information in
the course of his or her employment with the city and any person
acquiring knowledge of any return or tax information as provided under
subsection (C)(4), (5), (6), (7), (8), (9), or (11) 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 guilty of a misdemeanor. If the person guilty of such
violation is an officer or employee of the state, such person must forfeit
such office or employment and is incapable of holding any public office or
employment in this city for a period of two (2) years thereafter.
119Amend KCC 3.18, 3.21, 3.26, 3.28, 3.2 -
Re: Tax Codes
Sec. 3.29.210. Tax constitutes debt.
Any applicable fee or tax due and unpaid under this chapter, and all
interest and penalties thereon, shall constitute a debt to the city of Kent
and may be collected in the same manner as any other debt in like
amount, which remedy shall be in addition to all other existing remedies.
Sec. 3.29.220. Unlawful actions — Violation — Penalties.
A. It shall be unlawful for any person subject to the tax, fee, or
registration provisions of this chapter:
1. To violate or fail to comply with any of the provisions of this
chapter or any lawful rule or regulation adopted by the director;
2. To make any false statement on any license or registration
application or tax return;
3. To aid or abet any person in any attempt to evade payment of
a license, or fee, or tax;
4. To fail to appear or testify in response to a subpoena;
5. To testify falsely in any investigation, audit, or proceeding
conducted pursuant to this chapter.
B. Violation of any of the provisions of this chapter is a gross
misdemeanor. Any person convicted of a violation of this chapter may be
punished by a fine not to exceed one thousand dollars ($1,000),
imprisonment not to exceed one (1) year, or both fine and imprisonment.
Penalties or punishments provided in this chapter shall be in addition to all
other penalties provided by law.
C. Any person, or officer of a corporation, convicted of continuing to
engage in business after the revocation of a registration certificate shall be
guilty of a gross misdemeanor and may be punished by a fine not to
exceed five thousand dollars ($5,000), or imprisonment not to exceed one
(1) year, or both fine and imprisonment.
120Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
Sec. 3.29.230. Suspension or revocation of registration
certificate.
A. The director, or designee, shall have the power and authority to
suspend or revoke any registration certificate issued under the provisions
of this chapter. The director, or designee, shall notify such registrant in
writing by certified mail of the suspension or revocation of his or her
registration certificate and the grounds therefor. Any registration
certificate issued under this chapter may be suspended or revoked based
on one (1) or more of the following grounds:
1. The registration certificate was procured by fraud or false
representation of fact.
2. The registrant has failed to comply with any provisions of
Chapter 3.28 KCC and this chapter.
3. The registrant has failed to comply with any provisions of the
Kent City Code.
4. The registrant is in default in any payment of any license fee
or tax under Chapter 3.28 KCC and this chapter.
5. The registrant or employee has been convicted of a crime
involving the business.
B. Any registrant may, within thirty (30) days from the date that the
suspension or revocation notice was mailed to the registrant, appeal from
such suspension or revocation by filing a written notice of appeal
('petition") setting forth the grounds therefor with the director. A copy of
the petition must be provided by the registrant to the director and the city
attorney on or before the date the petition is filed with the city clerk. The
hearing shall be conducted in accordance with the procedures for hearing
contested cases set out in KCC 3.29.140. The hearing examiner shall set a
date for hearing said appeal and notify the registrant by mail of the time
and place of the hearing. After the hearing thereon the hearing examiner
121Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
shall, after appropriate findings of fact, and conclusions of law, affirm, `
modify, or overrule the suspension or revocation and reinstate the
registration certificate, and may impose any terms upon the continuance of
the registration certificate.
No suspension or revocation of a registration certificate issued pursuant to
the provisions of this section shall take effect until thirty (30) days after
the mailing of the notice thereof by the director, and if appeal is taken as
herein prescribed the suspension or revocation shall be stayed pending
final action on the appeal. All registration certificates which are suspended
or revoked shall be surrendered to the city on the effective date of such
suspension or revocation.
The decision of the hearing examiner shall be final. The registrant and/or
the director may seek review of the decision by the superior court of
Washington in and for King County. If review is sought as herein
prescribed the suspension or revocation shall be stayed pending final
action by the superior court.
Sec. 3.29.240. Closing agreement provisions.
The director may enter into an agreement in writing with any person
relating to the liability of such person in respect of any tax imposed by any
of the chapters within this title and administered by this chapter for any
taxable period(s). Upon approval of such agreement, evidenced by
execution thereof by the director and the person so agreeing, the
agreement shall be final and conclusive as to the tax liability or tax
immunity covered thereby, and, except upon a showing of fraud or
malfeasance, or misrepresentation of a material fact:
A. The case shall not be reopened as to the matters agreed upon, or
the agreement modified, by the director or the taxpayer; and
122Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
B. In any suit, action or proceeding, such agreement, or any
determination, assessment, collection, payment, abatement, refund, or
credit made in accordance therewith, shall not be annulled, modified, set
aside, or disregarded.
Sec. 3.29.250. Charge-off uncollectible taxes.
The director may charge off any tax, penalty, or interest that is owed by a
taxpayer, if the director reasonably ascertains that the cost of collecting
such amounts would be greater than the total amount that is owed or
likely to be collected from the taxpayer.
SECTION 6. - Severability. If any one or more section, subsection,
or sentence of this ordinance is 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 7. - Corrections by City Clerk or Code Reviser. Upon
approval of the city attorney, the city clerk and the code reviser are
authorized to make necessary corrections to this ordinance, including the
correction of clerical errors; ordinance, section, or subsection numbering;
or references to other local, state, or federal laws, codes, rules, or
regulations.
SECTIONS. - Effective Date. This ordinance shall take effect and
be in force thirty days from and after its passage, as provided by law. The
amendments to the Kent City Code herein, however, shall not be effective
until January 1, 2020.
November 19, 2019
DANA RALPH, MAYOR Date Approved
123Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
ATTEST:
+L�twL a - w t November 19, 2019
KIMBERLEY A OMOTO, CITY CIfRK Date Adopted
November 22, 2019
Date Published
APPROVED AST ORM:
HUR PAT' FITZPATRIC , CITY ATTORNEY
IR
00
124Amend KCC 3.18, 3.21, 3.26, 3.28, 3.29 -
Re: Tax Codes
STATE OF WASHINGTON, COUNTY OF KING }
AFFIDAVIT OF PUBLICATION
PUBLIC NOTICE
Polly Shepherd, being first duly sworn on oath that she is the Publisher of the
Kent - Covington Reporter
a weekly newspaper, which newspaper is a legal newspaper of general
circulation and is now and has been for more than six months prior to the date
of publication hereinafter referred to, published in the English language
continuously as a weekly newspaper in King County, Washington. The
Kent - Covington Reporter has been approved as a Legal Newspaper by order of
the Superior Court of the State of Washington for King County.
The notice in the exact form annexed was published in regular issues of
the Kent - Covington Reporter (and not in supplement form) which was regularly
distributed to its subscribers during the below stated period. The annexed
notice (881426), a:
Public Notice
was published on November 22nd, 2019.
The amo e fee charged for said foregoing publication is the sum of$542.99.
``111111111111/
LE..ta[ 10 e
•.
Polly Shepherd, Publisher, Kent - Covington Reporter ;
Cl):Z NOTARY r'a;
nd �'.0 PUBLICw Z
Subscri nd sworn to me this 22 day of November, 2019. �A:o� ��;O
�i /V0.
• ��1i11111111\
!ale Gwin, Notary Public for the State of Washington, Residing in Covington,WA
Classified Proof
CITY OF KENT
NOTICE OF
i ORDINANCES
PASSED BY THE
CITY COUNCIL
The following are sum-
manes of ordinances j
passed by the Kent City i
Council on November
19,2019_
ORDINANCE NO. 4338 I
AN ORDINANCE of I
! the City Council of the
City of Kent, Washing-
ton,was adopted on No-
vember 5, 2019, which
granted Zayo Group;
LLC; a 10-year non-ex-
clusive telecommunica-
tions franchise agree-
ment; authorized the
Mayor to sign all docu-
ments necessary to im-
plement the full terms of
the negotiated agree-
ment; and directed the
City Clerk to publish no-
tice of Council's grant of
this telecommunications l
franchise. A complete
copy of the Telecommu-
nications Franchise
Agreement is available
through the City Clerk's
Office, located at 220
Fourth Avenue South in
the City of Kent, or on-
line at https/Mocu-
ments.kentwa.govL
This ordinance,being an
exercise of a power spe-
cifically delegated to the
City's legislative body,is
not subject to referen-
dum. It shall be pub-
lished and will take ef-
fect 30 days after its
Passage. The Franchise
Agreement, however,
shall become effective
only upon its acceptance
by Zayo Group,LLC and
execution by the Mayor.
Should Zayo fail to time-
ly file its written accep-
tance of the Franchise
Agreement,Zayo will be
deemed to have rejected
Classified Proof
and repudiated the Fran-
chise Agreement and
the franchise will be
voidable by the City.
ORDINANCE NO. 4339
- AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, amending chapters i
15.02 and 15.04 of the
r Kent
lating
ogroup re homes, board-
ing homes, short-tens
rentals and communal
residences.
This ordinance shall take
effect and be in force 30
days from and after its
passage,as provided by
law.
ORDINANCE NO. 4340
AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, amending sections
6.07.020 and 6,07.050
of the Kent City Code,
(regulating signage in the
public right of way, and
amending chapters
15,02 and 15.06 of the
Kent City Cade,regulat-
ing signage generally
within the City.
This ordinance shall take
effect and be in force
thirty days from and after
its passage,as provided
by law.
ORDINANCE NO. 4341
- AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, relating to local
sales or use taxes; im-
posing the maximum ca-
pacity of the tax author-
ized under the
provisions of RCW
82.14.540 for affordable
and supportive housing;
amending Chapter 3.16
of the Kent City Code by
adding a new section
3,16.035, entitled
'Additional sales or use
tax for housing';and au-
thorizing the Mayor to
use the funds and pool
resources with South
King Housing and
Homelessness Partners.
This ordinance,pursuant
to RCW 35A.11.090(7),
shall take effect and be
in force five days after its
publication, as provided
by law.
ORDINANCE NO. 4342
- AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, amending chapters
3.18, 3.21, 3.26, 3.26
and 3,29, of the Kent
City Code to consolidate
administrative provisions
for all taxes, align the
City's 9&O tax provi-
sions with the model or
dinance, and add vari-
ous clarifications.
This ordinance shall take
effect and be in force
thirty days from and after
its passage,as provided
by law. The amend-
ments to the Kent City
Code herein, however,
shaft not be effective un-
til January 1,2020.
ORDINANCE NO. 4343
AN ORDINANCE of
Classified Proof
the City Council or the
City of Kent, Washing-
ton, approving the con-
solidating budget adjust-
ments made between
July 1, 2019 and Sep-
tember 30,2019,reflect- j
ing an overall budget in-
crease of$12,002,345.
This ordinance shall take
effect and be in force
five days after publica-
tion,as provided by law.
ORDINANCE NO. 43"
- AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, relating to the mid-
biennial review and
modification of the 2019-
2020 biennial budget as
required by RCW
35A.34.130 and Ordi-
nance No. 4230; adopt-
ing certain modifications
to the 2020 budget;and
establishing an effective
date.
This ordinance shall take
effect and be in force
January 1, 2020, which
is more than five days
after its publication, as
provided by law.
ORDINANCE NO. 4345
AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton,levying 2019 proper-
ty taxes for the 2020 bi-
ennial budget for the
City of Kent
This ordinance shall take
effect and be in force
January 1, 2020, which
is more than five days
after its publication, as
provided by law.
ORDINANCE NO.4346
AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, amending the Kent
Comprehensive Plan
and its Capital Facilities
Element to reflect a six-
year plan for capital im-
provement projects
(2)020-2025)(CPA-2019-
This ordinance shall take
effect and be in force 30
days from and after its
Passage,as provided by
law.
ORDINANCE NO. 4347
AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, amending the Kent
Comprehensive Plan
and its Capital Facilities
Element to include the
Capital Facilities Plans
of the Kent, Federal
Way, Auburn and High-
line School Districts
(CPA-2019-1).
This ordinance will take
effect and be in force 30
days from and after its
passage,as provided by
law.
ORDINANCE NO. 4348
- AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton, amending Section
12-13.160 of the Kent
City Code to adjust the
school impact fee sched-
ules(CPA-2019-1).
This ordinance shall take
Classified Proof
_ I
erreci ano De in force ou
days from and after its
passage,as provided by
law.
I ORDINANCE NO. 4349 I
AN ORDINANCE of
the City Council of the
City of Kent, Washing-
ton,providing for the ac-
quisition by eminent do-
main of real property I
generally located on the i
north side of the Green
River and commonly
known as 7641_S,259th
St., which property is
needed for the construc-
tion of the Milwaukee 11
Levee Improvement Pro-
ject.This ordinance pro-
vides for the condemna-
tion, appropriation,
taking,and damaging of
real property necessary
for that project and pro-
vides for the payment
thereof out of the Mil-
Waukee 11 Levee Inn
provement Project(Fund
No. 1)20090). This or&
nance also directs the
City Attorney to prose-
cute the appropriate le
gal condemnation pro-
ceedings in King County
Superior Court,to retain
any legal counsel re-
quired,and to enter into
settlements,stipulations,
or,other agreements as
may be necessary,
This ordinance shall take
effect and be in force
thirty days from and after
its passage,as provided
by law.
ORDINANCE NO, 4360
AN ORDINANCE of
the .City Council of the
City of Kent, Washing-
ton,providing for the ac-
quisition by eminent do-
main of real property
generally located on the
north side of the Green
River, along S. .251st
Street,west of Washing-
ton Ave. S.,which prop-
erty is needed for the
construction of the Sig-
nature Pointe Levee Im-
provement Project. This
ordinance provides for
the condemnation, ap-
propriation, taking, and
damaging of real proper-
ty necessary for that pro-
ject and provides for the
payment thereof out of
the Signature Pointe
Levee Improvement Pro-
ject(Fund No. D20085).
This ordinance also di-
rects the City Attorney to
prosecute the appropri-
ate legal condemnation
proceedings in King
County Superior Court,
to retain any legal coun-
sel required,and to en-
ter into settlements,
stipulations, or other
agreements as may be
necessary.
This ordinance shall take
effect and be in force
thirty days from and after
its passage,as provided
by law.
A copy of the complete
text of any ordinance will
be mailed upon request
of the City Clerk.
v:..,�.,.a,.., � v...... _
Classified Proof
nuiiuciey n. ��iW
(dcomom-KentWA aov
253-856-5725
Published in the Kent-
Covington Reporter
November 22, 2019.
#881428