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HomeMy WebLinkAbout3085 Amending PTMC Chapter 5.01A and 5.04B Business and Occupation Tax Requirements Consistent with State Law Ordinance 3085 B&O Tax Ordinance Page I of 2 Ordinance No. 3085 AN ORDINANCE OF THE CITY OF PORT TOWNSEND AMENDING THE PORT TOWNSEND MUNICIPAL CODE CHAPTERS 5.04A (BUSINESS AND OCCUPATION TAX) AND PTMC 5.04B (ADMINISTRATIVE PROVISIONS FOR BUSINESS AND OCCUPATION TAXES) CONSISTENT WITH STATE LAW REQUIREMENTS. RECITALS: A. Legislation adopted in the 2003 state legislative session required the 39 cities with local Business & Occupation (B & O) taxes to adopt a city B&O tax model ordinance. (RCW 35.102). The last update occurred in 2007, with required changes to take effect by January 2008. In 2007, the City adopted the model provisions now codified in PTMC chapter 5.04A (B and O Tax) and PTMC chapter 5.0413 (Administrative Provisions for B and O Taxes). B. Over the summer a workgroup of cities revised the B&O Tax Model Ordinance to include changes to RCW 35.102 and to reflect other changes made to state law since 2008. The model ordinance revisions are now final and all cities with local B&O taxes have to adopt the mandatory portions of the changes by the end of the year, to take effect by January 1, 2013 (35.102.040(1)(c)). C. As summarized by the Association of Washington Cites (AWC), the 2012 revised model ordinance reflects six changes to the 2007 version of the model, primarily reflecting changes in state law: • Digital Goods definitions and apportionment—(.030 & .077) Adopt changes required by HB 2620 (Ch. 111 Laws of 2010), which amended apportionment for digital goods in RCW 35.102.130. These changes mirror those made to state law in 2009 with adoption of ESHB 2075 Digital Goods legislation required by Streamlined Sales Tax changes separating digital books, music, and videos goods from their tangible equivalents. • Board of Director licensing and tax—(.030) Engaging in business definition clarification that the board meeting nexus exclusion applies to the corporation, not the individual board members or consultants attending meetings. • "Super Nexus"provision repeal—(.060)reflects requirements that allocation and apportionment provisions in RCW 35.102.130 (.077 of model ordinance) should be used for contracts with the city executed after January 1, 2008. • Insurance business preemption—(.090) updates language to reflect preemption of taxation of insurers/appointed insurance producers in RCW 48.14.020(4) and repeal of RCW 48.17.010-020 (earlier version included in non-mandatory guidelines). • First mortgage deduction—(.100) updates language to refer to state required tax treatment in RCW 82.14A (earlier version included in non-mandatory guidelines). Ordinance 3085 B&O Tax Ordinance Page 2 of 2 ■ Confidentiality—(Administrative Provisions .200) Adopts language of state confidentiality provision RCW 82.32.330, reflecting option that cities may adopt under RCW 35.102.145 (Chapter 106, Laws of 2010). NOW, THEREFORE, the City Council of the City of Port Townsend ordains as follows: SECTION 1. Amendments. Chapters 5.04A (B and O Tax) and PTMC 5.0413 (Administrative Provisions for B and O Taxes) of the Port Townsend Municipal Code are hereby arnended to read as follows (text in strikeout is deleted, text in underline is added): See attached Exhibits A and B (incorporated by reference) 1. Unless a section or subsection of existing code is changed, it is not shown in Exhibits A and B. 2. Comments or other bracketed material are explanatory only from AWC unless otherwise indicated. They are not part of ordinance. 3. Legislative intent information is explanatory only from AWC and is not part of ordinance. 4. Numbering of sections, subsections and paragraphs may not be consistent. (The new provisions - from AWC - were cut and pasted into existing City code sections. The AWC numbering does not match the City numbering.) The numbering will be consistent in the final City code version. 5. In certain sections, the word "Mandatory" appears (as an AWC comment). It is explanatory only and is not part of the ordinance. SECTION 2. Severability. If any provision of this ordinance or its application to any person or circumstance is held invalid, the remainder of the ordinance, or the application of the provision to other persons or circumstances, is not affected. This ordinance shall take effect and be in force five days after the date of its publication in the manner provided by law. Adopted by the City Council of the City of Port Townsend, Washington, at a regular meeting thereof, held this 19th day of Novem r'9012. r David King, M yor Attest: Approved as to Form: Pamela Kolacy, MMC, City Clerl ' John P. Watts, City Attorney EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 1 of 11 Exhibit A Chapter 5.04A BUSINESS AND OCCUPATION TAX 5.04A.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. "Digital automated service," "digital code," and "digital goods" have the same meaning as in RCW 82.04.192. (Mandatory) "Digital products" means digital goods digital codes digital automated services, and the services described in RCW 82.04.050(2)(g) and (6)(b). (Mandatory) "Engaging in business" A. 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. B. 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 minimus 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 A of this definition. If an activity is not listed, whether it constitutes engaging in business in the city shall be determined by considering all the facts and circumstances and applicable law. C. Without being all inclusive, any one of the following activities conducted within the city by a person, or its employee, agent, representative, independent contractor, broker or another acting on its behalf constitutes engaging in business and requires a person to register and obtain a business license. 1. 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. 2. Owning, renting, leasing, using, or maintaining, an office, place of business, or other establishment in the city. 3. Soliciting sales. 4. Making repairs or providing maintenance or service to real or tangible personal property, including warranty work and property maintenance. EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 2 of 11 5. 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. 6. Installing, constructing, or supervising installation or construction of, real or tangible personal property. 7. Soliciting, negotiating, or approving franchise, license, or other similar agreements. 8. Collecting current or delinquent accounts. 9. Picking up and transporting tangible personal property, solid waste, construction debris, or excavated materials. 10. 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. 11. Rendering professional services such as those provided by accountants, architects, attorneys, auctioneers, consultants, engineers, professional athletes, barbers, baseball clubs and other sports organizations, chemists, consultants, psychologists, court reporters, dentists, doctors, detectives, laboratory operators, teachers, veterinarians. 12. Meeting with customers or potential customers, even when no sales or orders are solicited at the meetings. 13. 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. 14. Investigating, resolving, or otherwise assisting in resolving customer complaints. 15. 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. 16. Delivering goods in vehicles owned, rented, leased, used, or maintained by the person or another acting on its behalf. 17. Accepting or executing a contract with the City, irrespective of whether goods or services are delivered within or without the City, or whether the person's office or place of business is within or without the City. D. 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. 1. Meeting with suppliers of goods and services as a customer. 2. Meeting with government representatives in their official capacity, other than those performing contracting or purchasing functions. 3. Attending meetings, such as board meetings, retreats, seminars, and conferences, or other meetings wherein the person does not provide training in connection with tangible personal property sold by the person or on its behalf. 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. EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 3 of 11 4. Renting tangible or intangible property as a customer when the property is not used in the City. 5. 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. 6. Conducting advertising through the mail. 7. Soliciting sales by phone from a location outside the City. E. 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 D. The city expressly intends that engaging in business include any activity sufficient to establish nexus for purposes of applying the tax under the law and the constitutions of the United States and the State of Washington. Nexus is presumed to continue as long as the taxpayer benefits from the activity that constituted the original nexus generating contact or subsequent contacts. "Gross proceeds of sales." "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 or for services rendered, without any deduction on account of the cost of property sold, the cost of materials used, labor costs, interest, discount paid, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses. "Manufacturing." "Manufacturing" means the activity conducted by a manufacturer and is reported under the manufacturing classification. "Manufacturer," "To manufacture." A. "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 percent (20%) 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.) B. "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: 1. The production of special made or custom made articles; EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 4 of 11 2. The production of dental appliances, devices, restorations, substitutes, or other dental laboratory products by a dental laboratory or dental technician; 3. Crushing and/or blending of rock, sand, stone, gravel, or ore; and 4. The producing of articles for sale, or for commercial or industrial use from raw materials or prepared materials by giving such materials, articles, and substances of trade or commerce new forms, qualities, properties or combinations including, but not limited to, such activities as making, fabricating, processing, refining, mixing, slaughtering, packing, aging, curing, mild curing, preserving, canning, and the preparing and freezing of fresh fruits and vegetables. "To manufacture" shall not include the production of digital goods or the production of computer software if the computer software is delivered from the seller to the purchaser by means other than tangible storage media, including the delivery by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser. "Sale at retail," "retail sale." A. "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: 1. Purchases for the purpose of resale as tangible personal property in the regular course of business without intervening use by such person; or 2. 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 3. 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 4. Purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon; or 5. 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 (A)(1), (2), (3), (4), or (5) EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 5 of 11 of this subsection following such use. 6. Purchases for the purpose of satisfying the person's obligations under an extended warranty as defined in subsection (G) 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. B. "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 5.04A.050(1)(g). C. "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: 1. 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; 2. The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for consumers, including 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; 3. 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; 4. 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; 5. The sale of or charge made for labor and services rendered in respect to automobile towing and similar automotive transportation services, but not in EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 6 of 11 respect to those required to report and pay taxes under chapter 82.16 RCW; 6. The sale of and charge made for the furnishing of lodging and all other services, except telephone business and cable service, by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same. For the purposes of this subsection, it shall be presumed that the sale of and charge made for the furnishing of lodging for a continuous period of one month or more to a person is a rental or lease of real property and not a mere license to enjoy the same; 7 The installing repairing altering or improving of digital goods for consumers; 7-8. The sale of or charge made for tangible personal property, labor and services to persons taxable under (1), (2), (3), (4), (5), Viand (67) of this subsection 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 A of this section and nothing contained in subsection A of this section shall be construed to modify this subsection. D. "Sale at retail' or "retail sale" shall also include the providing of competitive telephone -service to consumers. [Comment: Cities can only include "competitive telephone service" since telephone business is taxed under the utility tax.] E. 1. "Sale at retail" or "retail sale" shall also include the sale of Canned-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, but shall nom ^' custern „ftw re or the GUStOmization OOTf-GanTned-software. For purposes of this subsection (E)(1) the sale of prewritten computer software includes the sale of or charge made for a key or an enabling or activation code where the key or code is required to activate prewritten computer software and put the software into use. There is no separate sale of the key or code from the prewritten computer software regardless of how the sale may characterized by the vendor or by the purchaser. The term "sale at retail' or "retail sale" does not include the sale of or charge made for: (a) Custom ((eustem)) software; or (b) The ((the)) customization of prewritten ((Eaneed)) software. (2)(a) 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 EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 7 of 11 the service is on a per use per user, per license subscription or some other basis. (b)(i) The service described in (2)(a) of this subsection E includes the right to access and use prewritten software to perform data processing. (ii) For purposes of this subsection (2)(b) "data processing" means the systematic performance of operations on data to extract the required information in an appropriate form or to convert the data to usable information Data processing includes check processing image processing, form processing survey processing payroll processing, claim processing, and similar activities. F. "Sale at retail" or "retail sale" shall also include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state, the State of Washington, or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind. (Public road construction) G. "Sale at retail" or "retail sale" shall also include the sale of or charge made for an extended warranty to a consumer. For purposes of this subsection, "extended warranty" means an agreement for a specified duration to perform the replacement or repair of tangible personal property at no additional charge or a reduced charge for tangible personal property, labor, or both, or to provide indemnification for the replacement or repair of tangible personal property, based on the occurrence of specified events. The term "extended warranty" does not include an agreement, otherwise meeting the definition of extended warranty in this subsection, if no separate charge is made for the agreement and the value of the agreement is included in the sales price of the tangible personal property covered by the agreement. GH. "Sale at retail" or "retail sale" shall also include the sale of or charge made for labor and services rendered in respect to the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to Chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation (government contracting). (HI) "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. [This should be reported under the service and other classification.] (fJ) "Sale at retail" or "retail sale" shall not include the sale of or charge made for labor EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 8 of l l and services rendered for environmental remedial action. [This should be reported under the service and other classification.] t K) "Sale at retail" or "retail sale" shall also include the following sales to consumers of digital goods digital codes and digital automated services: t1) Sales in which the seller has granted the purchaser the right of permanent use; t2) Sales in which the seller has granted the purchaser a right of use that is less than permanent: t3)Sales in which the purchaser is not obligated to make continued payment as a condition of the sale; and �4) 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 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. tl-) "Sale at retail" or "retail sale" shall also include the installing repairing, altering, or improving of digital goods for consumers. "Sale at wholesale," "wholesale sale." "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 "sale at retail" 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 to another telecommunications company as defined in RCW 80.04.010 for the purpose of resale, as contemplated by RCW 35.21.715. [The last sentence must be included since telephone business would normally be taxed under the utility tax. The wholesale treatment of telephone business to another telecommunications company is dictated by State law.] v ..Rd GGlleGted by the Gity fFOFn SUGh persen, there as hereby levied a tax on the tax shall be levied an EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 9 of 11 EXGept as provided in 5.04.077, aAs to SUGh persons the amount ef tax shall e equal to the grOSS GentraGt PFiGe multiplied by the rate under PTIVIG 5.04A.050 that w otheRNise apply if the sale or ser-viGe were taxable pursuant to that seGtien. Legislative intent information (NOTE — THIS INFORMATION IS NOT PART OF THE ADOPTED ORDINANCE): This "super-nexus" section is repealed to reflect changes effective January 1, 2008, when allocation and apportionment provisions in section .077 took effect for city B&O taxes The intent is that this change would not affect any rights under contracts executed for periods under the old language prior to the change. 5.04.077 Allocation and apportionment of income when activities take place in more than one jurisdiction. Effective January 1, 2008, gross income, other than 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 Section .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. 3) In the case of sales of digital products the activity takes place where delivery to the buyer occurs The delivery of digital products will be deemed to occur at: (a) The seller's place of business if the purchaser receives the digital product at the seller's place of business; (b) If not received at the seller's place of business the location where the purchaser or the purchaser's donee designated as such by the purchaser, receives the digital product including the location indicated by instructions for delivery to the purchaser or donee known to the seller; (c) If the location where the purchaser or the purchaser's done receives the digital product is not known the purchaser's address maintained in the ordinary course of the seller's business when use of this address does not constitute bad faith; (d) If no address for the purchaser is maintained in the ordinary course of the seller's business the purchaser's address obtained during the consummation of the sale including the address of a purchaser's payment instrument if no other address is available when use of this address does not constitute bad faith; and (e) If no address for the purchaser is obtained during the consummation of the sale the address where the digital good or digital code is first made available for transmission by the seller or the address from which the digital automated service or EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 10 of 11 service described in RCW 82 04 050 (2)(q) or (6)(b) was provided disregarding for these purposes any location that merely provided the digital transfer of the product sold. (4) If none of the methods in PTMC 5.04A.077 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 PTMC 5.04A.077, 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 PTMC 5.04A.077. The city may employ an alternative method for allocating the income from the sale of digital products if the methods provided in in PTMC 5.04A.077 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 dig_ ital products. (5) For purposes of in PTMC 5.04A.077, "Receive" has the same meaning as in RCW 82.32.730. Legislative intent information(NOTE — THIS INFORMATION IS NOT PART OF THE ADOPTED ORDINANCE): This section is required by RCW 35.102.130 and provides allocation and apportionment formulas to be applied when a single taxable activity takes place in more than one jurisdiction whether or not that jurisdiction imposes a gross receipts tax. A definition of delivery has been added in section 030 Retail services will be allocated to where the activity takes place Digital goods will be allocated according to the new factors set out in RCW 35.102.130, as amended. 5.04A.090 Exemptions. A. Public utilities. This chapter shall not apply to any person in respect to a business activity with respect to which tax liability is specifically imposed under the provisions of PTMC 5.84.030. B. Investments — Dividends from Subsidiary Corporations. (a) 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. (3) 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 which it is a surety or as to any liability as successor to the liability of the defaulting contractor. 4 3 EXHIBIT A to ORDINANCE 3085 BUSINESS AND OCCUPATION TAX Chapter 5.04A Page 11 of 11 5.04A.100 Deductions. In computing the license fee or tax, there may be deducted from the measure of tax the following items: tG) Interest on investments or loans secured by mortgages or deeds of trust. In computing tax to the extent permitted by Chapter 82.14A RCW there may be deducted from the measure of tax by those engaged in banking loan security or other financial businesses amounts derived from interest received on investments or loans primarily secured by first mortgages or trust deeds on non-transient residential properties. EXHIBIT B to ORDINANCE 3085 ADMINISTRATIVE PROVISIONS FOR BUSINESS AND OCCUPATION TAX Chapter 5.04B Page 1 of 6 CHAPTER 5.04B Administrative Provisions for Business and Occupation Taxes 5.0413.200 Public disclosure - Confidentiality - Information sharing. EACH CITY [AWC NOTE — NOT PART OF ADOPTED SECTION: SHOULD D DEVE OP ITS OWN PUBLIC DISC OS ODE REQUIREMENTS. THE FOLLOWING nr,n ING CONT INS SUGGESTED i NG U GE))MAY ADOPT PROVISIONS OF 82.32.330 TO ADDRESS CONFIDENTIALITY OF TAX INFORMATION UNDER PUBLIC DISCLOSURE (RCW 35.102.145):] CITY ATTORNEY NOTE 10/29/12 — NOT PART OF ADOPTED SECTION — DRAFT ACCEPTS AWC RECOMMENDED LANGUAGE. THE LANGUAGE CLOSELY PARALLELS RCW 82.32.330 WHICH GOVERNS THE STATE'S DISCLOSURE OF RETURNS OR TAX INFORMATION.] A. For purposes of this section, (( Unl° a Jiff°r°n+ meaning is nlearly established by nnn+°v+ the following definitions app! ))defined terms shall be as set forth PTMC 5.04A.030 and PTMC 5.046.020:: in addition, unless a different meaning is clearly established by context, the following definitions also apply: (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 (d) Other data received by, recorded by, prepared by, or provided to the Director Sift with respect to the determination or the existence, or possible existence of liability or the amount thereof, of a person under the City code for a tax penalty, interest fine forfeiture or other imposition or offense. However, ((a PROVIDED, That tax infnrmo+inn shall nn+ ingf d° )) taxpayer;jamvided, that tax 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. (c) "City agency" means every City office department division, bureau, board, commission or other City agency. EXHIBIT B to ORDINANCE 3085 ADMINISTRATIVE PROVISIONS FOR BUSINESS AND OCCUPATION TAX Chapter 5.048 Page 2 of 6 (d) "Taxpayer identity" means the taxpayer's name address telephone number, registration number, or any combination thereof, or any other information disclosing the identity of the taxpayer. (2) Returns and tax information are confidential and privileged and except as authorized by this section neither the Director nor any other person may disclose any return or tax information. (3) This section does not prohibit the Director from: (a) Disclosing such return or tax information in a civil or criminal judicial proceeding or an administrative proceeding: (i) In respect of any tax imposed under City code if the taxpayer or its officer or other person liable under this title is a party in the proceeding; or (ii) In which the taxpayer about whom such return or tax information is sought and another state agency are adverse parties in the proceeding. (b) Disclosing subject to such requirements and conditions as the Director prescribes by rules adopted pursuant to City code such return or tax information regarding a taxpayer to such taxpayer or to such person or persons as that taxpayer may designate in a request for or consent to such disclosure or to any other person at the taxpayer's request to the extent necessary to comply with a request for 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; (c) Publishing statistics so classified as to prevent the identification of particular returns or reports or items thereof; (d) 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; (e) Permitting the City's records to be audited and examined by the proper state officer, his or her agents and employees; EXHIBIT B to ORDINANCE 3085 ADMINISTRATIVE PROVISIONS FOR BUSINESS AND OCCUPATION TAX Chapter 5.04B Page 3 of 6 (f) Disclosing anVsuch return or tax information to a peace officer as defined in RCW 9A.04.1 10 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 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; (g) Disclosing any such return or tax information to the proper officer of the internal revenue service of the United States the Canadian government or provincial governments of Canada or to the proper officer of the tax department of any state or city or town or county, for official purposes but only if the statutes of the United States Canada or its provincial governments or of such other state or city or town or county, as the case may be grants substantially similar privileges to the proper officers of the City; (h) Disclosing any such return or tax information to the United States department of 0ustice 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; (i) Publishing or otherwise disclosing the text of a written determination designated by the Ddirector as a precedent pursuant to RCW 82.32.410; (i) 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 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; (k) 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; (1) 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; EXHIBIT B to ORDINANCE 3085 ADMINISTRATIVE PROVISIONS FOR BUSINESS AND OCCUPATION TAX Chapter 5.048 Page 4 of 6 (m) 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; (n) Disclosing to a person against whom the department has asserted liability as a successor under City code return or tax information pertaining to the specific business of the taxpayer to which the person has succeeded; (o) Disclosing real estate excise tax affidavit forms filed under applicable City code fra+„'c real estate exd e tax Gede if .,ppkab4e4 in the possession of the City, including real estate excise tax affidavit forms for transactions exempt or otherwise not subject to tax; (p) Disclosing such return or tax information to the court or hearing examiner in respect to the 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. (4)(a) 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 subsection (4) The disclosure must be in connection with the department's official duties under this Title or a civil or criminal investigation. The disclosure may occur only when the person under investigation and the person in possession of data materials or documents are parties to the return or tax information to be disclosed The department may disclose return or tax information such as invoices contracts bills statements resale or exemption certificates or checks. However, the department 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. (b) Before disclosure of any tax return or tax information under this subsection (4), the Director must through written correspondence inform the person in possession of the data materials or documents to be disclosed The correspondence must clearly identify the data materials or documents to be disclosed The Director may not disclose any tax return or tax information under this subsection (4) until the time period allowed in (c) of this subsection has expired or until the court has ruled on any challenge brought under (c) of this subsection. (c) The person in possession of the data materials or documents to be disclosed by the department has twenty days from the receipt of the written request required under (b) of this subsection to petition the superior court of the county in which the petitioner resides for injunctive relief. The court must limit or deny the request of the Director if the court determines that: EXHIBIT B to ORDINANCE 3085 ADMINISTRATIVE PROVISIONS FOR BUSINESS AND OCCUPATION TAX Chapter 5.04B Page 5 of 6 (i) 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; (ii) The production of the data materials or documents sought would be unduly burdensome or expensive taking into account the needs of the department, the amount in controversy, limitations on the petitioner's resources and the importance of the issues at stake; or (iii) The data materials or documents sought for disclosure contain trade secret information that if disclosed could harm the petitioner. (d) The Director must reimburse reasonable expenses for the production of data, materials or documents incurred by the person in possession of the data, materials, or documents to be disclosed. (e) Requesting information under (b) of this subsection that may indicate that a taxpayer is under investigation does not constitute a disclosure of tax return or tax information under this section. (5) Service of a subpoena issued by the court or under applicable City code r^;+ nrrn . . authnrizzinn_he riven mo er to 'ssue subpeena-sl does not constitute a disclosure of a 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 under applicable City code may disclose the existence or content of the subpoena to that person's legal counsel. (6) 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 (3) (d) (e) (f) (g), (h), (i), or (k) of this section who discloses any such return or tax information to another person not entitled to knowledge of such return or tax information under the provisions of this section, is guilty of a misdemeanor. If the person guilty of such violation is an officer or employee of the Citystate 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 years thereafter. purposes;B. Tax returns and Wormation may be "publiG reGerds" as that term is defined On RGW RGW Chapter 42.17 or any ether law proWbiting disdosure. (1) The Mayer, Gity Manager, members of the Gity GounGil, Gity Attorney, City Clerk, or their auther3zed designees, for offidal (2) ARy agen 3y er effiGer of the United States ef ArneriGa, the State of Wash 0 ngto R-,-Gr� EXHIBIT B to ORDINANCE 3085 ADMINISTRATIVE PROVISIONS FOR BUSINESS AND OCCUPATION TAX Chapter 5.04B Page 6 of 6 grants substantially similar privi s°n designate in writing as the taxpayer's designee; eXGept that tax infermatien not reGeived frem the taxpayer shall net be se diSGIesed of the Directer determines that su diSGIOSUre would Gempremise any er litigation by aRy federal, state, e ether agenGy an any GiVil or Griminal aGtien invelViRg any InGense, tax, interest, er penalty, under thes seGtmen Is guilty ef a misdemeaRer, and if the person vielating this }hoar effino nr employment