HomeMy WebLinkAboutORD 5734 CITY OF RENTON, WASHINGTON
ORDINANCE NO. 5734
AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, AMENDING TITLE V
(FINANCE AND BUSINESS REGULATIONS) OF THE RENTON MUNICIPAL CODE,
IMPOSING A BUSINESS AND OCCUPATION TAX AND ADOPTING A NEW
CHAPTER 5-25, ENTITLED "BUSINESS AND OCCUPATION TAX CODE".
WHEREAS, state law authorizes municipalities to impose a Business and Occupation tax
on-business activities within the City; and
WHEREAS, in 2003, the Legislature passed EHB 2030 (RCW Chapter 35.102), establishing
a more uniform system of City business and occupation taxes through mandatory adoption of a
model Business and Occupation tax ordinance; and
WHEREAS, the Council wishes to adopt a Business and Occupation Tax Code in
compliance with RCW Chapter 35.102 and the model ordinance;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON, DOES
ORDAIN AS FOLLOWS:
SECTION I. Title V (Finance and Business Regulations) of the Renton Municipal Code,
is hereby amended to add a new Chapter 25, entitled "Business and Occupation Tax Code" to
read as follows:
CHAPTER 25
BUSINESS AND OCCUPATION TAX CODE
SECTION:
5-25-1 Exercise of Revenue License Power
5-25-2 Definitions
5-25-3 Agency — Sales and Services by Agent Consignee Bailee Factor or
Auctioneer
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5-25-4 Imposition of the Tax — Tax or Fee Levied; Business License Fee
Exemption
5-25-5 Multiple Activities Credit When Activities Take Place in One or More
Cities With Eligible Gross Receipt Taxes
5-25-6 Deductions to Prevent Multiple Taxation of Manufacturing Activities
and Prior to January 1 2008 Transactions Involving More Than One
City With an Eligible Gross Receipts Tax
5-25-7 Assignment of Gross Income Derived From Intangibles
5-25-8 Allocation and Apportionment of Income When Activities Take Place
in More Than One Jurisdiction
5-25-9 Allocation and Apportionment of Printing and Publishing Income
When Activities Take Place in More Than One Jurisdiction
5-25-10 Exemptions
5-25-11 Deductions
5-25-12 New Business Tax Credit
5-25-13 Tax Part of Overhead
5-25-14 Administrative Provisions
5-25-15 Severability Clause
5-25-1 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 solely with the licensee or taxpayer
to reconfirm tax computation procedures and remain in compliance with the Citv
code.
5-25-2 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
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shall include the singular. In the event that a word term or phrase defined in
this section shall conflict with a word term or phrase as defined in this title this
chapter shall control to the extent of the conflict
A. "Administrator" shall mean the Administrative Services Administrator or
designee, unless otherwise specified
B. "Artistic or cultural organization," as used in this chapter means the
following:
1. The organization is organized and operated exclusively for the
Purpose of providing artistic or cultural exhibitions presentations or
Performances or cultural or art education programs as defined in subsection 10
of this section for viewing or attendance by the general public
2. The organization must be a not-for-profit corporation under RCW
Chapter 24.03,
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 under RCW Chapter 24.12.
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.
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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 non-profit 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 or the presence of
any mental or physical disability.
10. The term "artistic or cultural exhibitions presentations or
Performances or cultural or art education programs" is limited to•
a. An exhibition or presentation of works of art or objects of cultural
or historical significance such as those commonly displayed in art or history
museums:
b. A musical or dramatic performance or series of performances• or
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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.
C. "Business" includes all activities engaged in with the purpose of gain
benefit, or advantage to the taxoaver or to another person or class directly or
indirectly.
D. "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.
E. "Commercial or industrial use" means the following uses of products
including by-products by the extractor or manufacturer of the products:
1. Any use as a consumer; and
2. The manufacturing of products including articles substances or
commodities.
F. "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 buver is considered delivery to the buyer. Transfer of possession
of tangible personal property occurs when the buyer or the buyer's
representative first takes physical control of the property or exercises dominion
and control over the property. Dominion and control means the buyer has the
ability to possess, use, convey or dispose the property as the buyer chooses It
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means the buyer or the buyer's representative has made the final decision to
accept or refect 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 emplovee of the buyer, who has the buyer's written authorization to
receive tangible personal property and take dominion and control by making the
final decision to accept or reiect 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.
G. "Digital automated service," "digital code," and "digital lZoods" have the
same meaning as in RCW 82.04.192, Digital products definitions
H. "Digital products" means digital goods digital codes digital automated
services, and the services described in RCW 82 04 050(2)(g) and (6)(b) "Sale at
retail," "retail sale."
I. Eligible gross receipts tax:
The term "eligible gross receipts tax" means a tax which:
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1. Is imposed on the act or privilege of engaging in business activities
within section RMC 5-25-4; and
2. Is measured by the gross volume of business in terms of gross
receipts and is not an income tax or value-added tax (VAT)• 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 non-
local jurisdiction above the county level.
1. 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 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 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
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only and are not intended to narrow the definition of "engaging in business" in
subsection 1. 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 of the following activities
conducted within the City by a person or its employee agent representative
independent contractor, broker or another person acting on its 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.
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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 ianitorial services appraising landscape
architectural services, security system services surveying and real estate
services including the listing of homes and managing real property.
k. Rendering professional services such as those provided by
accountants, architects, attorneys, auctioneers, consultants, engineers
professional athletes, barbers, baseball clubs and other sports organizations
chemists, consultants, psychologists, court reporters, dentists doctors
detectives, laboratory operators, teachers, 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 fob in the City, acting
on its behalf, or for customers or potential customers.
n. Investigating, resolving, or otherwise assisting in resolving
customer complaints.
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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
lace.
P. Delivering goods in vehicles owned rented leased used or
maintained by the person or another person acting on its behalf.
g. 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.
4. If a person, or its employee, agent, representative independent
contractor, broker or another person 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 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.
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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 RMC Chapter
5-22, Special Event Permits.
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 4. 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.
K. "Extracting" is the activity engaged in by an extractor and is reportable
under the extracting classification.
L. "Extractor" means every person who from that person's 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
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produces coal, oil, natural gas, ore, stone, sand, gravel, clay, mineral or other
natural resource product; or fells, cuts or takes timber, Christmas trees, other
than plantation Christmas trees, or other natural products; or takes fish,
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.
M. "Extractor for hire" means a person who performs under contract
necessary labor or mechanical services for an extractor.
N. "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.
0. "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,
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interest, discount paid, delivery costs, taxes, or any other expense paid or
accrued and without any deduction on account of losses.
P. "Inflation Adiustment" shall be an amount equal to the amount and
direction of change determined by the Settle-Tacoma-Bremerton Urban Wage
Earners and Clerical Workers Consumer Price Index (CPI-W) for each twelve (12)-
month period ending on August 31St as published by the United States
Department of Labor. To calculate this adjustment, the current rate will be
multiplied by one (1) plus or minus, as the case may be, the annual change in the
CPI-W.
Q. "Manufacturing" means the activity conducted by a manufacturer and is
reported under the manufacturing classification.
R. Manufacture, 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 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
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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 requiring the use of labor or skill, by hand or machinery, to materials or
ingredients resulting in a new, different or useful product for sale or commercial
or industrial use, and shall include:
a. The production of special made or custom made articles;
b. The production of dental appliances, devices, restorations,
substitutes, or other dental laboratory products by a dental laboratory or dental
technician;
c. Crushing and/or blending of rock, sand, stone, gravel, or ore; and
d. The producing of articles for sale, or for commercial or industrial
use from raw materials or prepared materials by giving such materials, articles,
and substances of trade or commerce new forms, qualities, properties or
combinations including, but not limited to, such activities as making, fabricating,
processing, refining, mixing, slaughtering, packing, aging, curing, mild curing,
preserving, canning, and the preparing and freezing of fresh fruits and
vegetables.
"To manufacture" shall not include the production of digital goods or
the production of computer software if the computer software is delivered from
the seller to the purchaser by means other than tangible storage media,
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including the delivery by use of a tangible storage media where the tangible
storage media is not physically transferred to the purchaser.
S. "Non-profit 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 Internal Revenue
Code Sec. 501(c)(3), or is specifically exempted from the requirement to apply
for tax exempt status under Internal Revenue Code Sec. 501(c)(3). Where the
term "non-profit organization" is used, it is meant to include a non-profit
corporation.
T. "Person" means any individual, receiver, administrator, executor,
assignee, trustee in bankruptcy, trust, estate, firm, co-partnership, 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, non-profit, or otherwise and the United
States of America or any of its instrumentalities.
U. "Processor 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
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to manufacture, materials or ingredients equal to twenty percent (20%) or more
of the total value of all materials or ingredients that become part of the finished
product the person will be deemed the manufacturer and not a processor for
hire.
V. "Retailing" means the activity of engaging in making sales at retail and is
reported under the retailing classification.
W. "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 lumping, ski lifts and tows,
basketball racquet ball, handball, squash, tennis, batting cages, day trips for
sightseeing purposes and others, when provided to consumers. "Amusement
and recreation services" also include the provision of related facilities such as
basketball courts tennis courts, handball courts, swimming pools, and charges
made for providing the opportunity to dance. The term "amusement and
recreation services" does not include instructional lessons to learn a particular
activity such as tennis lessons, swimming lessons, or archery lessons.
2. Abstract,title insurance, and escrow services;
3. Credit bureau services;
4. Automobile parking and storage garage services;
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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.
X. Sale, casual or isolated sale:
1. "Sale" means any transfer of the ownership of, title to, right to
control, or possession of, property for a valuable consideration and includes any
activity classified as a "sale at retail," "retail sale," or "retail service." It includes
renting or leasing, conditional sale contracts, leases with option to purchase, and
any contract under which possession of the property is given to the purchaser
but title is retained by the vendor as security for the payment of the purchase
price. It also includes the furnishing of food, drink, or meals for compensation
whether consumed upon the premises or not.
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2. "Casual or isolated sale" means a sale made by a person who is not
engaged in the business of selling the type of property involved on a routine or
continuous basis.
Y. 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 but not limited to,
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, Wholesale sale — Reseller
permit—Exemption certificates— Burden of proof—Tax liability, 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
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reaction directly through contact with an ingredient of a new article being
produced for sale; or
d. Purchases for the purpose of consuming the property purchased
in producing ferrosilicon which is subsequently used in producing magnesium for
sale, if the primary purpose of such property is to create a chemical reaction
directly through contact with an ingredient of ferrosilicon; or
e. Purchases for the purpose of providing the property to consumers
as part of competitive telephone service, as defined in RCW 82.04.065. The term
shall include every sale of tangible personal property which is used or consumed
or to be used or consumed in the performance of any activity classified as a "sale
at retail" or "retail sale" even though such property is resold or utilized as
provided in a through a of this subsection following such use.
f. Purchases for the purpose of satisfying the person's obligations
under an extended warranty as defined in subsection 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 propertV to persons engaged in any business activity which is taxable
under this chapter.
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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, but excluding charges made for the use of
coin-operated laundry facilities when such facilities are situated in and for the
exclusive use of tenants of an apartment house, rooming house, or mobile home
park, and also excluding sales of laundry service to nonprofit health care
facilities, and excluding services rendered in respect to live animals, birds and
insects;
b. The constructing, repairing, decorating, or improving of new or
existing buildings or other structures under, upon, or above real property of or
for consumers, including the installing or attaching of any tangible personal
Property, 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
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improvement for the purpose of performing such construction, repair, or
improvement and the property is then reconvened by title, possession, or anv
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 pan taxes under RCW Chapter
82.16, Public Utility Tax;
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 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
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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 enioy 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 a through g 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 1 of this section and nothing
contained in subsection 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. "Sale at retail" or "retail sale":
a. 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 5.a the
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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 use the software. 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:
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 b.i of this subsection 5 includes
the right to access and use prewritten software to perform data processing.
(b) For purposes of this subsection 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.
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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 the United States of America and which is used or to be
used primarily for foot or vehicular traffic including mass transportation vehicles
of any kind (public road construction).
7. "Sale at retail" or "retail sale" shall also include the sale of or charge
made for 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.
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,
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ORDINANCE NO. 5734
upon or above real property of or for the United States, any instrumentality
thereof, or a county or city housing authority created pursuant to RCW Chapter
35.82 including the installing, or attaching of any article of tangible personal
Property, whether or not such personal property becomes a part of the real
property by virtue of installation (government contracting).
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 of America or any of its instrumentality, or a county or city
housing authority. The term does not include the sale of services or charges
made for cleaning up for the United States of America, or any of 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 as defined under 5-25-4.A.7.)
10. "Sale at retail" or "retail sale" shall not include the sale of or charge
made for labor and services rendered for environmental remedial action. (This
should be reported under the service and other classification as defined under 5-
25-4.A.7.)
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;
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ORDINANCE NO. 5734
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 Y.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.
Z. 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 subsection Y.5.b.i, "Sale at retail",
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ORDINANCE N0. 5734
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, Taxes
on network telephone services.
AA."Service" means any sale or charge made for personal, business or
professional service, including amounts designated as rents, fees, or admissions,
not otherwise included within any other tax classification defined herein;
provided that, the term "service" excludes retail or wholesale services.
BB. "Taxpayer" means any "person", as defined in subsection T, 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.
CC. "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.
DD. Value of products:
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ORDINANCE NO. 5734
1. The value of products, including by-products extracted or
manufactured, shall be determined by the gross proceeds derived from the sale
of those products, whether such sale is at wholesale or at retail to which shall be
added all subsidies and bonuses received from the purchaser or from any other
person with respect to the extraction, manufacture, or sale of such products or
by-products by the seller.
2. Where such products, including by-products, are extracted or
manufactured for commercial or industrial use; and where such products,
including by-products, are shipped, transported or transferred out of the City, or
to another person, without prior sale or are sold under circumstances such that
the gross proceeds from the sale are not indicative of the true value of the
subject matter of the sale; the value shall correspond as nearly as possible to the
gross proceeds from sales in this state of similar products of like quality and
character, and in 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 Administrator may prescribe
rules for the purpose of ascertaining such values.
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ORDINANCE N0. 5734
3. Notwithstanding subsection 2 above 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.
EE. "Wholesaling" means engaging in the activity of making sales at
wholesale, and is reported under the wholesaling classification.
5-25-3 AGENCY — SALES AND SERVICES BY AGENT, CONSIGNEE, BAILEE, FACTOR
OR AUCTIONEER:
A. Sales in Own Name — Sales or Purchases as Agent: Consistent with RCW
82.04.480, 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, 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. Furthermore, the consignor, bailor, principal, or owner is deemed a seller
of such property to the consignee, bailee,factor,or auctioneer.
The burden shall be solely 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
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ORDINANCE NO. 5734
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. 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
comingled 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 comingled or lost their identity as belonging to the principal shall be taxed as
retail or wholesale sales.
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ORDINANCE NO. 5734
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 agent's income on any
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ORDINANCE NO. 5734
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
D. A consignee, bailee, factor, agent or auctioneer, as used in this section
refers to one who has either actual or constructive possession of tangible personal
Property,the actual ownership of such property being in another, or one calling for
bids on such property. The term "constructive possession" means possession of the
power to pass title to tangible personal property of others.
5-25-4 IMPOSITION OF THE TAX — TAX OR FEE LEVIED; BUSINESS LICENSE FEE
EXEMPTION:
A. Except as provided in RMC 5-25-4.0 (Tax Thresholds) and 5-25-4.1)
(Amounts in Excess of Cap), effective January 1 2016 at 12:01 a.m. there is
levied upon and shall be collected from every person a tax for the act or privilege
of engaging in business activities in the City of Renton, whether the person's
office or place of business be within or without the City. The tax shall be in
amounts to be determined by application of rates against gross proceeds of sale
gross income of business, or value of products, including by-products as the case
may be, as follows:
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 by-products
extracted within the City for sale or for commercial or industrial use multiplied
by the rate of .085 of one percent (.00085). The measure of the tax is the value
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ORDINANCE NO. 5734
of the products, including by-products, so extracted, regardless of the place of
sale or the fact that deliveries may be made to points outside the City.
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 by-products,
manufactured within the City, multiplied by the rate of .085 of one percent
(.00085). The measure of the tax is the value of the products, including by-
products, so manufactured, regardless of the place of sale or the fact that
deliveries may be made to points outside the City.
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.085 of one percent (.00085).
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.050 of one percent (.00050).
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
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ORDINANCE NO. 5734
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.085 of one percent (.00085).
6. Upon every person engaging within the City in the business of sales of
retail services; as to such persons, the amount of tax with respect to such
business shall be equal to the gross proceeds of sales multiplied by the rate of
.085 of one percent (.00085).
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.085 of one percent
(.00085). This subsection includes, among others, and without limitation
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. Limitation of the Tax Rate Adiustment: The rates in subsection A above
shall not be increased by more than the Inflation Adjustment in any given year.
C. Tax Thresholds: This chapter shall not apply to any person engaging in
any one (1) or more business activities which are otherwise taxable pursuant to
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ORDINANCE NO. 5734
RMC 5-25-4.A, whose value of products, including by-products, 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, is less than or equal to the
threshold amount of one million five hundred thousand dollars ($1,500,000).
D. Amounts in Excess of Cap: This chapter shall not apply to that portion of
the gross proceeds of sales, gross income of the business, and value of products,
including by-products, from all activities conducted within the City, less
applicable deductions and other exemptions, that are in excess of five billion
dollars ($5,000,000,000) during any calendar year. The cap set forth in this
subsection shall be administratively adjusted by the Administrator on January 1st
of each year, beginning on January 1, 2017, to reflect the inflation adiustment, as
defined and calculated pursuant to RMC 5-25-2.P. The amount of the cap so
calculated shall be rounded to the nearest five thousand dollars ($5,000).
E. Business License Fee Exemption: Any business subject to payment of a tax
imposed pursuant to RMC 5-25 (Business and Occupation Tax Code) shall be
exempt from the payment of the per employee business license fees.
5-25-5 MULTIPLE ACTIVITIES CREDIT WHEN ACTIVITIES TAKE PLACE IN ONE 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 RMC 5-25-4.A shall be taxable under each
applicable subsection.
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ORDINANCE N0. 5734
B. Notwithstanding any provision to the contrary, if the Administrator finds
that the 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.
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.
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
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ORDINANCE NO. 5734
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 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.
5-25-6 DEDUCTIONS TO PREVENT MULTIPLE TAXATION OF MANUFACTURING
ACTIVITIES AND PRIOR TO JANUARY 1, 2008, TRANSACTIONS INVOLVING MORE
THAN ONE CITY WITH AN ELIGIBLE GROSS RECEIPTS TAX:
A. Amounts Subject to an Eligible Gross Receipts Tax in Another City That
Also Maintains Nexus Over the Same Activity: For taxes due prior to January 1,
2008, a taxpayer that is subject to an eligible gross receipts tax on the same
activity in more than one (1) jurisdiction may be entitled to a deduction as
follows:
1. A taxpayer that has paid an eligible gross receipts tax, with respect to
a sale of goods or services, to a jurisdiction in which the goods are delivered or
the services are provided may deduct an amount equal to the gross receipts
used to measure that tax from the measure of the tax owed to the City.
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ORDINANCE NO. 5734
2. Notwithstanding the above, a person that is subiect to an eligible
gross receipts tax in more than one (1) jurisdiction on the gross income derived
from intangibles such as royalties, trademarks, patents, or goodwill shall assign
those gross receipts to the jurisdiction where the person is domiciled (its
headquarters is located).
3. A taxpayer that has paid an eligible gross receipts tax on the privilege
of accepting or executing a contract with another city may deduct an amount
equal to the contract price used to measure the tax due to the other city from
the measure of the tax owed to the City.
B. Person Manufacturing Products Within and Without: A person
manufacturing products within the City using products manufactured by the
same person outside the City may deduct from the measure of the
manufacturing tax the value of products manufactured outside the City and
included in the measure of an eligible gross receipts tax paid to the other
jurisdiction with respect to manufacturing such products.
5-25-7 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 iurisdiction where the person is
domiciled (its headquarters is located).
5-25-8 ALLOCATION AND APPORTIONMENT OF INCOME WHEN ACTIVITIES
TAKE PLACE IN MORE THAN ONE JURISDICTION:
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ORDINANCE N0. 5734
Gross income, other than persons subject to the provisions of RCW Chapter
82.14A, shall be allocated and apportioned as follows:
A. Gross income derived from all activities other than those taxed as service
or royalties under RMC 5-25-4.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 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;
3. If the location where the purchaser or the purchaser's donee receives
the digital product is not known, the purchaser's address maintained in the
ordinary course of the seller's business when use of this address does not
constitute bad faith;
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
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ORDINANCE N0. 5734
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
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 RMC 5-25-8.0 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 RMC 5-25-8.C.1 through 5, 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 RMC 5-25-8.D. The City may employ an alternative method for
allocating the income from the sale of digital products if the methods provided in
RMC 5-25-8.C.1 through 5 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 RMC 5-25-8.C.1 through 5, "Receive" has the same
meaning as in RCW 82.32.730.
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ORDINANCE NO. 5734
F. Gross income derived from activities taxed as services and other activities
taxed under RMC 5-25-4.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 percent (50%) 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 percent (50%)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. The customer location is in the City; or
b. The income-producing activity is performed in more than one (1)
location and a greater proportion of the service-income-producing activity is
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ORDINANCE NO. 5734
performed in the City than in any other location, based on costs of performance,
and the taxpayer is not taxable at the customer location; or
c. The service-income-producing activity is performed within the
City, and the taxpayer is not taxable in the customer location.
3. If the allocation and apportionment provisions of this subsection do
not fairly represent the extent of the taxpayer's business activity in the City or
cities in which the taxpayer does business, the taxpayer may petition for or the
tax administrators may jointly require, in respect to all or any part of the
taxpayer's business activity, that one (1) of the following methods be used iointly
by the cities to allocate or apportion gross income, if reasonable:
a. Separate accounting;
b. The use of a single factor;
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.
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.
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ORDINANCE NO. 5734
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.
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.
4. "Customer location" means the city or unincorporated area of a
county where the majority of the contacts between the taxpayer and the
customer take place.
5. "Primarily assigned" means the business location of the taxpayer
where the individual performs his or her duties.
6. "Service-taxable income" or "service income" means gross income of
the business subject to tax under either the service or royalty classification.
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.
8. "Taxable in the customer location" means either that a taxpayer is
subject to a gross receipts tax in the customer location for the privilege of doing
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ORDINANCE NO. 5734
business, or that the government where the customer is located has the
authority to subiect the taxpayer to gross receipts tax regardless of whether, in
fact, the government does so.
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.
5-25-9 ALLOCATION AND APPORTIONMENT OF PRINTING AND PUBLISHING
INCOME WHEN ACTIVITIES TAKE PLACE IN MORE THAN ONE JURISDICTION:
Notwithstanding RCW 35.102.130, effective January 1, 2008, gross income from
the activities of printing, and of publishing newspapers, periodicals, or magazines,
shall be allocated to the principal place in this state from which the taxpayer's
business is directed or managed. As used in this section, the activities of printing,
and of publishing newspapers, periodicals, or magazines, have the same meanings
as attributed to those terms in RCW 82.04.280(1) by the Department of Revenue.
5-25-10 EXEMPTIONS:
A. Adult Family Homes: This chapter does not apply to adult family homes
which are licensed as such, or which are specifically exempt from licensing, under
rules of the Washington State Department of Social and Health Services.
B. Day Care Provided By Churches: This chapter shall not apply to amounts
derived by a church that is exempt from property tax under RCW 84.36.020 from
the provision of care for children for periods of less than twenty-four (24) hours.
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ORDINANCE NO. 5734
C. Child Care Resource and Referral Services by Nonprofit Organizations: This
chapter does not apply to nonprofit organizations in respect to amounts derived
from the provision of child-care resource and referral services.
D. Non-Profit Organizations That are Guarantee Agencies, Issue Debt, or
Provide Guarantees for Student Loans: This chapter does not apply to gross income
received by non-profit organizations exempt from federal income tax under
Internal Revenue Code Section 501(c)(3),that:
1. Are guarantee agencies under the federal guaranteed student loan
program or that issue debt to provide or acquire student loans;or
2. Provide guarantees for student loans made through programs other
than the federal guaranteed student loan program.
E. Nonprofit Organizations—Credit and Debt Services: This chapter does not
apply to nonprofit organizations in respect to amounts derived from provision of
the following services:
1. Presenting individual and community credit education programs
including credit and debt counseling;
2. Obtaining creditor cooperation allowing a debtor to repay debt in an
orderly manner;
3. Establishing and administering negotiated repayment programs for
debtors; or
4. Providing advice or assistance to a debtor with regard to 1, 2, or 3,
above, of this subsection E.
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ORDINANCE NO. 5734
F. Certain fraternal and beneficiary organizations: This chapter shall not apply
to fraternal benefit societies or fraternal fire insurance associations as described in
Title 48 RCW; 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.
G. 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 the United States of
America armed force members 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.
H. 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
nonprofit group training homes as defined by RCW Chapter 71A.22 or to the
business activities of nonprofit organizations from the operation of sheltered
workshops. For the purposes of this subsection, RMC 5-25-10.1-1, "the operation of
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ORDINANCE N0. 5734
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 or disabled 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 or
disabled individuals.
I. 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.
J. United States, Washington State governmental entities: The City of Renton
is exempt from the tax levied by this chapter.
K. Gross Receipts Taxed Under Other Renton Municipal Code (RMC) Sections:
This chapter shall not apply to:
1. Any person in respect to a business activity with respect to which tax
liability is specifically imposed under the provisions of RMC Chapter 5-11 (Utility
Tax)• or
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ORDINANCE NO. 5734
2. Anv bona fide charitable or nonprofit organization, as defined in RCW
9.46.0209, subject to a tax pursuant to RMC 5-8-5 (bona fide charitable or
nonprofit organization gambling activity, bingo, raffle and fundraising activities;
pulltabs and punchboards; card games; and, amusement games).
L. Credit Unions: This chapter shall not apply to the gross income of credit
unions organized under the laws of this state, any other state, or the United States.
M. International Banking Facilities: This chapter shall not apply to the gross
receipts of an international banking facility. As used in this subsection, RMC 5-25-
10.M, 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 of America or of this state,
a United States branch or agency of a foreign bank, an Edge corporation organized
under Section 25(A) of the Federal Reserve Act, 12 United States Code 611-631, or
an Agreement corporation having an agreement or undertaking with the Board of
Governors of the Federal Reserve System under Section 25 of the Federal Reserve
Act, 12 United States Code 11 601-604(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).
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N. 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.
O. 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. "Agricultural product" does not include animals
intended to be pets, marijuana, or marijuana infused products as defined by RCW
69.50.101(t) and W. "Farmer" does not include any person engaged in the
business of growing, producing, processing, selling or distributing marijuana.
P. 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.
Q. Racing: This chapter shall not apply to any person in respect to the business
of conducting race meets for the conduct of which a license must be secured from
the Washington State Horse Racing Commission.
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ORDINANCE NO. 5734
R. 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.
S. Employees: This chapter shall not apply to any person in respect to his or
her employment in the capacity as an employee or servant as distinguished from
that of an independent contractor. For the purposes of this subsection, RMC 5-25-
10.S the definition of employee shall include those persons that are defined in
section 3121(d)(3)(B) of the Internal Revenue Code, as hereafter amended. For
purposes of this chapter, a booth renter, as defined by RCW 18.16.020, is an
independent contractor.
T. 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)
calendar days or longer.
U. 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
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ORDINANCE N0. 5734
manner consistent with RCW 19.146.050 and any rules adopted by the director of
financial institutions.
V. Amounts Derived From Manufacturing,Selling or Distributing Motor Vehicle
Fuel:This chapter shall not apply to the manufacturing, selling or distributing motor
vehicle fuel, as the term "motor vehicle fuel' is defined in RCW 82.36.010 and
exempted under RCW 82.36.440, provided that any fuel not subjected to the state
fuel excise tax, or any other applicable deduction or exemption, will be taxable
under this chapter.
W. 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 exempted in
RCW 66.08.120.
X. Casual and Isolated Sales:This chapter shall not apply to the gross proceeds
derived from casual or isolated sales.
Y. 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 his 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)
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calendar days to reimburse in kind a previous accommodation sale by the buyer to
the seller.
Provided, that where the seller holds himself or herself out as being
regularly engaged in the business of making sales at wholesale of such property,
such sales shall be included in his principal business activity, and not exempt from
tax.
Z. Real Estate Brokers and Associated Brokers, Agents, or Salesmen: This
chapter does not apply to that portion of a real estate commission assigned to
another brokerage office pursuant to the division of revenue between the
originating brokerage office and a cooperating brokerage office on a particular
transaction. Each brokerage office shall pay the tax upon its respective revenue
share of the transaction. Furthermore, where a brokerage office has paid the
business license tax on the gross commission earned by that brokerage office,
associate brokers, salesmen or agents within the same office shall not be required
to pay the tax upon their share of the commission from the same transaction.
AA.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, commercial parking tax, and admission
tax.
AB.Health Maintenance Organization, Health Care Service Contractor,
Certified Health Plan: This chapter does not apply to any health maintenance
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organization, health care service contractor, or certified health plan with respect
to premiums or prepayments that are taxable under RCW 48.14.0201.
AC.Certain Commercial Airplane Parts: This chapter does not apply to the sale
of certain parts to a manufacturer of a commercial airplane that are not taxable
under RCW 82.04.627(1). "Commercial airplane' has the same meaning given in
RCW 82.32.550.
5-25-11 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 Non-Profit Youth
Organization: For purposes of this subsection, "non-profit youth organization"
means a non-profit 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 non-profit 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.
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ORDINANCE N0. 5734
B. Fees, Dues, Charges: In computing tax, there 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 non-profit trade or professional organization for
attending or occupying space at a trade show, convention, or educational
seminar sponsored by the non-profit trade or professional organization, which
trade show, convention, or educational seminar is not open to the general
ublic•
7. Charges made for operation of privately operated 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 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.
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ORDINANCE N0. 5734
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 of America or any of its
instrumentalities 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 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
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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 Internal Revenue Code Section 501(c)(3),
provided, however, that amounts derived from selling, altering or repairing
tangible personal property shall not be deductible.
F. 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.
G. 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,
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ORDINANCE NO. 5734
or persons engaged in furnishing farm-related or aquatic-related services to
these individuals or entities.
H. 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.
I. 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.
J. 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.
K. 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
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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 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
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the salary or compensation of like positions within the county 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 refunded 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.
L. 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
a 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
3. Local advertising revenue that represent advertising which is
intended to reach potential customers of the advertiser who are located outside
the State of Washington. The Administrator may issue a rule that provides
detailed guidance as to how these deductions are to be calculated.
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M. Constitutional and Statutory 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 or laws of the State of
Washington or the United States of America.
N. Receipts From The Sale of Tangible Personal Property and Retail Services
Delivered Outside the City But Within Washington: Effective January 1, 2008,
amounts included in the gross receipts reported on the tax return derived from
the sale of tangible personal property 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.
O. 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.
P. Interest on Investments or Loans Secured By Mortgages or Deeds of
Trust: In computing tax, to the extent permitted by RCW Chapter 82.14A, there
may be deducted from the measure of tax by those engaged in banking, loan,
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ORDINANCE NO. 5734
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.
Q. Compensation from Public Entities for Health or Social Welfare Services—
Deduction: 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 section for amounts that are received
under an employee benefit plan. For purposes of this subsection, "employee
benefit plan" does not include the military benefits program authorized in 10
U.S.C. Sec. 1071 et seq., as amended (CHAMPUS), or amounts payable.
5-25-12 NEW BUSINESS TAX CREDIT:
A. Purpose: The City believes that providing a temporary tax credit relating
to new businesses is a meaningful method of fostering such new businesses to
establish a solid financial foundation during its start-up process. Further, the City
finds that a credit related to the creation of fifty (50) or more new full-time
equivalent ("FTE") employees within the City will benefit other local businesses.
Therefore, considering situations particular and unique to the City, the City finds
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that it is appropriate to differ from the business and occupation tax model
ordinance in providing for a new business tax credit as described in this section.
B. There may be credited against the tax imposed by this chapter, the
amount up to one thousand dollars ($1,000) per FTE in the City of Renton.
C. To take the credit authorized by this section, a taxpayer must be able to
document all of the following:
1. The taxpayer has not, for any period of time, engaged in business in
the City of Renton for a period of ten (10) or more years prior to application for
the tax credit;
2. The taxpayer employees fifty (50) or more full-time equivalent
employees in Renton. An FTE is defined as each one thousand nine hundred and
twenty (1,920) worker hours per calendar year; and
3. The taxpayer may be required to submit its quarterly reports to the
State Department of Labor and Industries and/or other documentations in
support of such employee hours worked in the City.
4. The taxpayer must report, on each return filed, the taxpayer's total
number of full-time employment positions.
D. The tax credit can be taken for the first twelve (12) consecutive reporting
quarters or three (3) reporting years.
E. This credit is not considered a payment of taxes for purposes of seeking a
refund of overpayment of tax pursuant to the provisions of 5-25-14 or any other
purpose. As such unused credit amounts will not be refunded, carried over
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ORDINANCE NO. 5734
from reporting period(s)to reporting period(s), and will not accrue interest.
F. The Administrator is authorized to promulgate rules implementing,
interpreting, and enforcing the provisions of this section.
5-25-13 TAX PART OF OVERHEAD:
It is not the intention of this chapter that the taxes or fees herein levied upon
persons engaging in business be construed as taxes or fees upon the purchasers
or customer, but that such taxes or fees shall be levied upon, and collectible
from the person engaging in the business activities herein designated and that
such taxes or fees shall constitute a part of the cost of doing business of such
persons.
5-25-14 ADMINISTRATIVE PROVISIONS:
The Administrator shall, in consultation with the City Attorney, prepare
administrative provisions in conformance with Chapter 35.102 RCW for review
and approval by ordinance of the City Council, providing for the uniform
administration of the tax levied by this chapter with respect to returns, deadline,
penalties, interest, refund, additional assessments, appeals, time limitations for
bringing actions and other related administrative matters.
5-25-15 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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ORDINANCE NO. 5734
SECTION II. Referendum Authorized. A referendum petition to repeal this ordinance
may be filed with the City Clerk within seven (7) calendar days of passage of this ordinance.
Within ten (10) days of such filing, the City Clerk shall confer with the petitioner concerning
form and style of the petition, issue the petition an identification number, and secure an
accurate, concise, and positive ballot title from the designated local official. The petitioner shall
have thirty (30) calendar days in which to secure the signatures of not less than fifteen percent
(15%) of the registered voters of the City, as of the last municipal general election, upon
petition forms that contain the ballot title and the full text of the measure to be referred. The
City Clerk shall verify the sufficiency of the signatures on the petition and, if sufficient valid
signatures are properly submitted, shall certify the referendum measure to the next election
ballot within the City or at a special election ballot as provided pursuant to RCW 35.17.260(2).
Except as otherwise provided, all provisions set forth in RCW 35.17.250 through RCW 35.17.360
that are applicable to the character and form for an initiative petition, to the examination and
certification, and to the submission to the vote of the people of the ordinance proposed, shall
apply to the referendum petition authorized and to this ordinance.
SECTION III. Severability. Should any section, paragraph, sentence, clause or phrase
of this ordinance, or its application to any person or circumstance, be declared unconstitutional
or otherwise invalid for any reason, or should any portion of this ordinance be pre-empted by
state or federal law or regulation, such decision or pre-emption shall not affect the validity of
the remaining portions of this ordinance or its application to other persons or circumstances.
SECTION IV. This ordinance shall be effective upon its passage, approval, and thirty
(30) calendar days after publication.
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ORDINANCE N0. 5734
PASSED BY THE CITY COUNCIL this 3rd day of November / 2014.
4,,�a a
Jason . Seth, Acting City Clerk
APPROVED BY THE MAYOR this 3rd day of November ' 2014.
Denis Law, Mayor
Approved as to form:
CSF.-j%XL
A Ir
Lawrence J. Warren, City Attorney
Date of Publication: 11/7/2014 (summary)
ORD:1839:10/22/14:scr
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