HomeMy WebLinkAbout6814 CITY OF AUBURN, WASHINGTON
ORDINANCE NO. 6814
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
AUBURN, WASHINGTON, ADDING NEW CHAPTERS TO
TITLE 3 OF THE AUBURN CITY CODE (REVENUE AND
FINANCE) TO BE KNOWN AS BUSINESS AND
OCCUPATION TAX (CHAPTER 3.53) AND BUSINESS AND
OCCUPATION TAX ADMINISTRATIVE CODE (CHAPTER
3.54); PROVIDING FOR A REFERENDUM PROCESS; AND
PROVIDING A SEVERABILITY CLAUSE AND AN
EFFECTIVE DATE
WHEREAS, the City of Auburn, Washington (the "City") is a non-charter optional
municipal code city as provided in Title 35A RCW, incorporated under the laws of the state of
Washington; and
WHEREAS, in 2018, during the creation of the City's 2019/2020 biannual budget, the
City's long rang forecast identified a structural deficit on the General Fund financial condition
resulting from several factors, including the 1% limitation on regular property tax, the sunset of
streamlined sales tax mitigation revenue and pressure for increased services that outpace the
increase in property and sales tax; and
WHEREAS, the City subsequently engaged with BERK consultants to help the City
identify a strategy to overcome the structural deficit; and
WHEREAS, several options were identified as a result of that study, including reviewing
service delivery adjustments,updating the City's cost recovery model,increasing City utility taxes,
and imposing a business and occupation tax,in order to preserve the City's financial sustainability;
and
WHEREAS,the need for additional revenue sources and the options identified by the study
have been considered by City staff and City Council; and
WHEREAS, Washington Constitution Article XI, Section 12 and RCW 35A.82.020 and
RCW 35A.11.020 grant the City the authority to license for revenue and to define taxation
categories in order to respond to the unique concerns and responsibilities of the City; and
WHEREAS, these provisions of the law grant the City authority to impose a business and
occupation tax on businesses operating within the City; and
WHEREAS, RCW 35.102.040 requires the City utilize the mandatory provisions of the
model ordinances developed by Washington cities when imposing a business and occupation tax
and adopting administrative provisions related to the imposition and collection of such a tax, but
also allows for flexibility to customize the ordinances based on local goals and policies; and
WHEREAS, the model ordinance provides mandatory and standard exemptions for
potential inclusion but also gives the City the ability to create certain exemptions from business
and occupation tax including an annual gross receipts exemption threshold for small businesses to
meet the City's own objectives, exemptions to set economic policy, and exemptions to maintain
local control; and •
WHEREAS, the model ordinance also provides mandatory and standard deductions for
potential inclusion that ensures businesses are not taxed on the same revenue by multiple
jurisdictions; and
WHEREAS, the City Council has determined that imposition of a business and occupation
tax as provided herein and providing for uniform administration of the City's tax codes will be in
the best interest of the public health, safety, and welfare;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN,
WASHINGTON, DOES ORDAIN as follows:
Section 1. Amendment to Title 3 Revenue and Finance. A new chapter, Chapter 3.53
Business and Occupation Tax, is added to Title 3 as set forth in Exhibit A to this ordinance.
Section 2. Amendment to Title 3 Revenue and Finance. A new chapter, Chapter 3.54
Business and Occupation Tax Administrative Code, is added to Title 3 as set forth in Exhibit B to
this ordinance.
Section 3. Referendum. This ordinance is subject to referendum as set forth in
RCW 35.21.706. A referendum petition to repeal this ordinance may be filed with the City Clerk
within seven (7) days of adoption 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
and identifications number, and secure an accurate, concise, and positive ballot title from the City
Attorney. The petitioner shall then have thirty (30) days in which to secure the signatures of not
less than fifteen(15)percent of the City's registered voters as of the last municipal general election
upon petition forms which contain the ballot title and the full text of the measures 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).
Section 4. Severability; Ratification. Should any section, subsection, paragraph,
sentence,clause,or phrase of this ordinance or its application to any person or situation be declared
unconstitutional or invalid for any reason, such decision shall not affect the validity of the
remaining portions of this ordinance or its application to any person or situation. All acts taken
pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified
and confirmed.
Section 5. Corrections by City Clerk or Code Reviser. Upon approval of the City
Attorney, the City Clerk and/or the Code Reviser are authorized to make necessary corrections to
this ordinance and the Exhibits attached hereto, including the corrections of scrivener or clerical
errors; references to other local, state, or federal laws, codes, rules, or regulations; or ordinance
numbering and section/subsection numbering and references.
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Section 6. Publication and Effective Date. A summary of this ordinance consisting of
the title shall be published in the official newspaper of the City. In the event that no referendum
petition is filed, this ordinance shall take effect at 12:01 am on M(A, 1 , 2021.
PASSED by the City Council of the City of Auburn, Washington, at a regular meeting of
the City Council held on MAy x t4v1 , 2021.
INTRODUCED: MAY 17 2021
PASSED: P6111
APPROVED: I lU
CITY OF AUBURN, WASHINGTON
UAW
liky Backus, Mayor
ATTEST:
Shawn Campbell, City Clerk
APPROVED AS TO FORM:
V-61%.11, (�L
City Attorney
Po b%1\f d M a tl low 2C21
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EXHIBIT A
CHAPTER 3.53
BUSINESS AND OCCUPATION TAX
Sections:
3.53.010 Exercise of revenue license power.
3.53.020 Definitions.
3.53.030 Agency—sales and services by agent, consignee, bailee, factor or auctioneer.
3.53.040 Imposition of the tax—tax or fee levied; business license fee exemption.
3.53.050 Multiple activities credit when activities take place in one or more cities with eligible gross
receipt taxes.
3.53.060 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.
3.53.070 Assignment of gross income derived from intangibles.
3.53.080 Allocation and apportionment of income when activities take place in more than one
jurisdiction.
3.53.090 Allocation and apportionment of printing and publishing income when activities take place
in more than one jurisdiction.
3.53.100 Exemptions.
3.53.110 Deductions.
3.53.120 Tax credits.
3.53.130 Tax part of overhead.
3.53.140 Administrative provisions.
3.53.150 Severability clause.
3.53.010 Exercise of revenue license power.
The provisions of this chapter shall be deemed an exercise of the power of the City to license for
revenue. The provisions of this chapter are subject to periodic statutory or administrative rule
changes or judicial interpretations of the ordinances or rules. The responsibility rests with the
licensee or taxpayer to reconfirm tax computation procedures and remain in compliance with the City
code.
3.53.020 Definitions.
In construing the provisions of this chapter, the following definitions shall be applied. Words in the
singular number shall include the plural, and the plural shall include the singular.
A. "Agricultural product,""farmer"
1. "Agricultural product" means any product of plant cultivation or animal husbandry including, but
not limited to:A product of horticulture, grain cultivation, vermiculture, viticulture, or aquaculture as
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defined in RCW 15.85.020; plantation Christmas trees; turf; or any animal including but not limited to
an animal that is a private sector cultured aquatic product as defined in RCW 15.85.020, or a bird, or
insect, or the substances obtained from such animal. "Agricultural product"does not include animals
intended to be pets, marijuana, or marijuana infused products as defined by RCW 69.50.101(v) and
(ff).
2. "Farmer" means any person engaged in the business of growing or producing, upon the person's
own lands or upon lands in which the person has a present right of possession, any agricultural
product whatsoever for sale. "Farmer"does not include a person using such products as ingredients
in a manufacturing process, or a person growing or producing such products for the person's own
consumption. "Farmer" does not include a person selling any animal or substance obtained therefrom
in connection with the person's business of operating a stockyard or a slaughter or packing house.
"Farmer"does not include any person in respect to the business of taking, cultivating, or raising
timber. "Farmer" does not include any person engaged in the business of growing, producing,
processing, selling or distributing marijuana.
B. "Artistic or cultural organization"
1. The term "artistic or cultural organization" means an organization which is organized and
operated exclusively for the purpose of providing artistic or cultural exhibitions, presentations, or
performances or cultural or art education programs, as defined in subsection 10 of this definition,
for viewing or attendance by the general public.
2. The organization must be a not-for-profit corporation under Chapter 24.03 RCW.
3. The organization must be managed by a governing board of not less than eight (8)
individuals none of whom is a paid employee of the organization or by a corporation sole under
Chapter 24.12 RCW.
4. No part of its income may be paid directly or indirectly to its members, stockholders, officers,
directors, or trustees except in the form of services rendered by the corporation in accordance
with its purposes and bylaws.
5. Salary or compensation paid to its officers and executives must be only for actual services
rendered, and at levels comparable to the salary or compensation of like positions within the
state.
6. Assets of the corporation must be irrevocably dedicated to the activities for which the
exemption is granted and, on the liquidation, dissolution, or abandonment by the corporation,
may not inure directly or indirectly to the benefit of any member or individual except a non-profit
organization, association, or corporation which also would be entitled to the exemption.
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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, Vietnam or disabled veteran 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
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 object of gain, benefit, or advantage to the
taxpayer 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 thereof:
1. Any use as a consumer; and
2. The manufacturing of 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 buyer is considered delivery to
the buyer. Transfer of possession of tangible personal property occurs when the buyer or the buyer's
representative first takes physical control of the property or exercises dominion and control over the
property. Dominion and control means the buyer has the ability to put the property to the buyer's
own purposes. It means the buyer or the buyer's representative has made the final decision to
accept or reject the property, and the seller has no further right to possession of the property and the
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buyer has no right to return the property to the seller, other than under a warranty contract. A buyer
does not exercise dominion and control over tangible personal property merely by arranging for
shipment of the property from the seller to itself. A buyer's representative is a person, other than an
employee of the buyer, who is authorized in writing by the buyer to receive tangible personal property
and take dominion and control by making the final decision to accept or reject the property. Neither a
shipping company nor a seller can serve as a buyer's representative. It is immaterial where the
contract of sale is negotiated or where the buyer obtains title to the property. Delivery terms and
other provisions of the Uniform Commercial Code (Title 62A RCW) do not determine when or where
delivery of tangible personal property occurs for purposes of taxation.
G. "Director" means the Finance Director of the City or any officer, agent or employee of the City
designated to act on the Director's behalf.
H. "Digital automated service," "digital code" and "digital goods" have the same meaning as in RCW
82.04.192.
I. "Digital products" means digital goods, digital codes, digital automated services, and the services
described in RCW 82.04.050(2)(q) and (6)(b).
J. "Eligible gross receipts tax":
The term "eligible gross receipts tax" means a tax which:
1. Is imposed on the act or privilege of engaging in business activities within section ACC
3.53.040;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; 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.
K. "Engaging in business":
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1. The term "engaging in business" means commencing, conducting, or continuing in business,
and also the exercise of corporate or franchise powers, as well as liquidating a business when
the liquidators thereof hold themselves out to the public as conducting such business.
2. This section sets forth examples of activities that constitute engaging in business in the City,
and establishes safe harbors for certain of those activities so that a person who meets the criteria
may engage in de minimis business activities in the City without having to register and obtain a
business license or pay City business and occupation taxes. The activities listed in this section
are illustrative only and are not intended to narrow the definition of"engaging in business" in
subsection 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 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.
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.
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j. Providing disinfecting and pest control services, employment and labor pool services,
home nursing care,janitorial services, appraising, landscape architectural services, security
system services, surveying, and real estate services including the listing of homes and
managing real property.
k. Rendering professional services such as those provided by accountants, architects,
attorneys,auctioneers, consultants, engineers, professional athletes, barbers, baseball clubs
and other sports organizations, chemists, consultants, psychologists, court reporters,
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 job in the City, acting on its behalf, or for customers or potential
customers.
n. Investigating, resolving, or otherwise assisting in resolving customer complaints.
o. In-store stocking or manipulating products or goods, sold to and owned by a customer,
regardless of where sale and delivery of the goods took place.
p. Delivering goods in vehicles owned, rented, leased, used, or maintained by the person or
another person acting on its behalf.
4. If a person, or its employee, agent, representative, independent contractor, broker or another
acting on the person's behalf, engages in no other activities in or with the City but the following, it
need not register and obtain a business license and pay tax:
a. Meeting with suppliers of goods and services as a customer.
b. Meeting with government representatives in their official capacity, other than those
performing contracting or purchasing functions.
c. Attending meetings, such as board meetings, retreats, seminars, and conferences, or
other meetings wherein the person does not provide training in connection with tangible
personal property sold by 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 ACC Chapter 2.23 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.
6. The City expressly intends that engaging in business include any activity sufficient to
establish nexus for purposes of applying the tax under the law and the constitutions of the United
States and the State of Washington. Nexus is presumed to continue as long as the taxpayer
benefits from the activity that constituted the original nexus generating contact or subsequent
contacts.
L. "Extracting" is the activity engaged in by an extractor and is reportable under the extracting
classification.
M. "Extractor" means every person who from the person's own land or from the land of another
under a right or license granted by lease or contract, either directly or by contracting with others for
the necessary labor or mechanical services, for sale or for commercial or industrial use, mines,
quarries, takes or produces coal, oil, natural gas, ore, stone, sand, 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.
N. "Extractor for hire" means a person who performs under contract necessary labor or mechanical
services for an extractor.
0. "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.
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P. "Gross proceeds of sales" means the value proceeding or accruing from the sale of tangible
personal property, digital goods, digital codes, digital automated services or for other services
rendered, without any deduction on account of the cost of property sold, the cost of materials used,
labor costs, interest, discount paid, delivery costs, taxes, or any other expense whatsoever paid or
accrued and without any deduction on account of losses.
Q. "Manufacturing" means the activity conducted by a manufacturer and is reported under the
manufacturing classification.
R. "Manufacturer," "to manufacture":
1. "Manufacturer" means every person who, either directly or by contracting with others for the
necessary labor or mechanical services, manufactures for sale or for commercial or industrial
use from the person's own materials or ingredients any products. When the owner of equipment
or facilities furnishes, or sells to the customer prior to manufacture, materials or ingredients equal
to less than twenty percent(20%) of the total value of all materials or ingredients that become a
part of the finished product, the owner of the equipment or facilities will be deemed to be a
processor for hire, and not a manufacturer. A business not located in this City that is the owner
of materials or ingredients processed for it in this City by a processor for hire shall be deemed to
be engaged in business as a manufacturer in this City.
2. "To manufacture" means all activities of a commercial or industrial nature wherein labor or skill
is applied, by hand or machinery, to materials or ingredients so that as a result thereof a new,
different or useful product is produced for sale or commercial or industrial use, and shall include:
a. The production of special made or custom made articles;
b. The production of dental appliances, devices, restorations, substitutes, or other dental
laboratory products by a dental laboratory or dental technician;
c. Crushing and/or blending of rock, sand, stone, gravel, or ore; and
d. The producing of articles for sale, or for commercial or industrial use from raw materials
or prepared materials by giving such materials, articles, and substances of trade or
commerce new forms, qualities, properties or combinations including, but not limited to, such
activities as making, fabricating, processing, refining, mixing, slaughtering, 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
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than tangible storage media, including the delivery by use of a tangible storage media where the
tangible storage media is not physically transferred to the purchaser.
S. "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 or any instrumentality thereof.
T. "Processing for hire" means the performance of labor and mechanical services upon materials or
ingredients belonging to others so that as a result a new, different or useful product is produced for
sale, or commercial or industrial use. A processor for hire is any person who would be a
manufacturer if that person were performing the labor and mechanical services upon that person's
own materials or ingredients. If a person furnishes, or sells to the customer prior to manufacture,
materials or ingredients equal to twenty percent (20%) or more of the total value of all materials or
ingredients that become a part of the finished product the person will be deemed to be a
manufacturer and not a processor for hire.
U. "Product" means tangible personal property, including articles, substances, or commodities
created, brought forth, extracted, or manufactured by human or mechanical effort. "Byproduct"
means any additional product, other than the principal or intended product, which results from
extracting or manufacturing activities and which has a market value, without regard to whether or not
such additional product was an expected or intended result of the extracting or manufacturing
activities.
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 jumping, 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;
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3. Credit bureau services;
4. Automobile parking and storage garage services;
5. Landscape maintenance and horticultural services but excluding (a) horticultural services
provided to farmers and (b) pruning, trimming, repairing, removing, and clearing of trees and
brush near electric transmission or distribution lines or equipment, if performed by or at the
direction of an electric utility;
6. Service charges associated with tickets to professional sporting events; and
7. The following personal services: Physical fitness services, tanning salon services, tattoo
parlor services, steam bath services, Turkish bath services, escort services, and dating services.
8. The term shall also include the renting or leasing of tangible personal property to consumers
and the rental of equipment with an operator.
X. "Sale," "casual or isolated sale":
1. "Sale" means any transfer of the ownership of, title to, or possession of, property for a
valuable consideration and includes any activity classified as a "sale at retail," "retail sale," or
"retail service." It includes renting or leasing, conditional sale contracts, leases with option to
purchase, and any contract under which possession of the property is given to the purchaser but
title is retained by the vendor as security for the payment of the purchase price. It also includes
the furnishing of food, drink, or meals for compensation whether consumed upon the premises or
not.
2. "Casual or isolated sale" means a sale made by a person who is not engaged in the business
of selling the type of property involved on a routine or continuous basis.
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, among others, without limiting the scope hereof, persons who install,
repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers,
other than a sale to a person who presents a resale certificate under RCW 82.04.470, and who:
a. Purchases for the purpose of resale as tangible personal property in the regular course of
business without intervening use by such person; or
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b. Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates real or
personal property of or for consumers, if such tangible personal property becomes an
ingredient or component of such real or personal property without intervening use by such
person; or
c. Purchases for the purpose of consuming the property purchased in producing for sale a
new article of tangible personal property or substance, of which such property becomes an
ingredient or component or is a chemical used in processing, when the primary purpose of
such chemical is to create a chemical reaction directly through contact with an ingredient of a
new article being produced for sale; or
d. Purchases for the purpose of consuming the property purchased in producing ferrosilicon
which is subsequently used in 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 e 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 property to persons
engaged in any business activity which is taxable under ACC 3.53.040.A.7.
3. "Sale at retail" or"retail sale" shall include the sale of or charge made for tangible personal
property consumed and/or for labor and services rendered in respect to the following:
a. The installing, repairing, cleaning, altering, imprinting, or improving of tangible personal
property of or for consumers, including charges made for the mere use of facilities in respect
thereto, but excluding charges made for the use of coin-operated laundry facilities when such
facilities are situated in an apartment house, rooming house, or mobile home park for the
exclusive use of tenants thereof, and also excluding sales of laundry service to non-profit
health care facilities, and excluding services rendered in respect to live animals, birds and
insects;
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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 article of tangible personal property therein or thereto, whether or not such
personal property becomes a part of the realty by virtue of installation, and shall also include
the sale of services or charges made for the clearing of land and the moving of earth
excepting the mere leveling of land used in commercial farming or agriculture;
c. The charge for labor and services rendered in respect to constructing, repairing, or
improving any structure upon, above, or under any real property owned by an owner who
conveys the property by title, possession, or any other means to the person performing such
construction, repair, or improvement for the purpose of performing such construction, repair,
or improvement and the property is then reconveyed by title, possession, or any other means
to the original owner;
d. The sale of or charge made for labor and services rendered in respect to the cleaning,
fumigating, razing or moving of existing buildings or structures, but shall not include the
charge made for janitorial services; and for purposes of this section the term "janitorial
services" shall mean those cleaning and caretaking services ordinarily performed by
commercial janitor service businesses including, but not limited to, wall and window washing,
floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery. The term
"janitorial services" does not include painting, papering, repairing, furnace or septic tank
cleaning, snow removal or sandblasting;
e. The sale of or charge made for labor and services rendered in respect to automobile
towing and similar automotive transportation services, but not in respect to those required to
report and pay taxes under Chapter 82.16 RCW;
f. The sale of and charge made for the furnishing of lodging and all other services, except
telephone business and cable service, by a hotel, rooming house, tourist court, motel, trailer
camp, and the granting of any similar license to use real property, as distinguished from the
renting or leasing of real property, and it shall be presumed that the occupancy of real
property for a continuous period of one (1) month or more constitutes a rental or lease of real
property and not a mere license to use or enjoy the same. For the purposes of this
subsection, it shall be presumed that the sale of and charge made for the furnishing of
lodging for a continuous period of one (1) month or more to a person is a rental or lease of
real property and not a mere license to enjoy the same;
g. The installing, repairing, altering, or improving of digital goods for consumers;
h. The sale of or charge made for tangible personal property, labor and services to persons
taxable under 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
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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. "Sale at retail" or"retail sale" shall also include the sale of prewritten software other than
a sale to a person who presents a resale certificate under RCW 82.04.470, regardless of the
method of delivery to the end user. For purposes of this subsection 5.a the sale of prewritten
computer software includes the sale of or charge made for a key or an enabling or activation
code, where the key or code is required to activate prewritten computer software and put the
software into use. There is no separate sale of the key or code from the prewritten computer
software, regardless of how the sale may be characterized by the vendor or by the
purchaser. 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. 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.
i. The service described in this subsection 5.b includes the right to access and use
prewritten software to perform data processing.
ii. For purposes of subsection 5.b.i "data processing" means the systematic
performance of operations on data to extract the required information in an appropriate
form or to convert the data to usable information. Data processing includes check
processing, image processing, form processing, survey processing, payroll processing,
claim processing, and similar activities.
6. "Sale at retail" or"retail sale" shall also include the sale of or charge made for labor and
services rendered in respect to the building, repairing, or improving of any street, place, road,
highway, easement, right of way, mass public transportation terminal or parking facility, bridge,
tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state,
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the State of Washington, or by the United States and which is used or to be used primarily for
foot or vehicular traffic including mass transportation vehicles of any kind (Public road
construction).
7. "Sale at retail" or"retail sale" shall also include the sale of or charge made for an extended
warranty to aconsumer. 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, upon, or above real property of or for the United
States, any instrumentality thereof, or a county or city housing authority created pursuant to
Chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal
property therein or thereto, whether or not such personal property becomes a part of the realty by
virtue of installation (government contracting).
9. "Sale at retail" or"retail sale" shall not include the sale of services or charges made for the
clearing of land and the moving of earth of or for the United States, any instrumentality thereof, or
a county or city housing authority. Nor shall the term include the sale of services or charges
made for cleaning up for the United States, or its instrumentalities, radioactive waste and other
byproducts of weapons production and nuclear research and development. (This should be
reported under the service and other classification as defined under ACC 3.53.040.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 ACC 3.53.040.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;
b. Sales in which the seller has granted the purchaser a right of use that is less than
permanent;
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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" 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, 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.
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."Software", "prewritten software", "custom software", "customization of canned software", "master
copies", "retained rights":
1. "Prewritten software"or"canned software" means computer software, including prewritten
upgrades, that is not designed and developed by the author or other creator to the specifications of a
specific purchaser. The combining of two or more prewritten computer software programs or
prewritten portions thereof does not cause the combination to be other than prewritten computer
software. Prewritten computer software includes software designed and developed by the author or
other creator to the specifications of a specific purchaser when it is sold to a person other than such
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purchaser. Where a person modifies or enhances computer software of which such person is not the
author or creator, the person shall be deemed to be the author or creator only of the person's
modifications or enhancements. Prewritten computer software or a prewritten portion thereof that is
modified or enhanced to any degree, where such modification or enhancement is designed and
developed to the specifications of a specific purchaser, remains prewritten computer software;
however, where there is a reasonable, separately stated charge or an invoice or other statement of
the price given to the purchaser for the modification or enhancement, the modification or
enhancement shall not constitute prewritten computer software.
2. "Custom software"means software created for a single person.
3. "Customization of canned software"means any alteration, modification, or development of
applications using or incorporating canned software to specific individualized requirements of a single
person. Customization of canned software includes individualized configuration of software to work
with other software and computer hardware but does not include routine installation. Customization of
canned software does not change the underlying character or taxability of the original canned
software.
4. "Master copies" of software means copies of software from which a software developer, author,
inventor, publisher, licensor, sublicensor, or distributor makes copies for sale or license. The software
encoded on a master copy and the media upon which the software resides are both ingredients of the
master copy.
5. "Retained rights"means any and all rights, including intellectual property rights such as those
rights arising from copyrights, patents, and trade secret laws, that are owned or are held under
contract or license by a software developer, author, inventor, publisher, licensor, sublicensor, or
distributor.
6. "Software" means any information, program, or routine, or any set of one or more programs,
routines, or collections of information, used, or intended for use, to convey information that causes
one or more computers or pieces of computer-related peripheral equipment, or any combination
thereof, to perform a task or set of tasks. "Software" includes the associated documentation,
materials, or ingredients, regardless of the media upon which that documentation is provided, that
describe the code and its use, operation, and maintenance and that typically are delivered with the
code to the consumer. All software is classified as either canned or custom.
CC."Taxpayer" means any "person", as herein defined, required to have a business license under
this chapter or liable for the collection of any tax or fee under this chapter, or who engages in any
business or who performs any act for which a tax or fee is imposed by this chapter.
DD."Tuition fee" includes library, laboratory, health service, and other special fees, and amounts charged
for room and board by an educational institution when the property or service for which such charges are
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made is furnished exclusively to the students or faculty of such institution. "Educational institution,"as
used in this section, means only those institutions created or generally accredited as such by the state
and includes educational programs that such educational institution cosponsors with a non-profit
organization, as defined by the Internal Revenue Code Section 501(c)(3), as hereafter amended, if such
educational institution grants college credit for coursework successfully completed through the
educational program, or an approved branch campus of a foreign degree-granting institution in
compliance with Chapter 286.90 RCW, and in accordance with RCW 82.04.4332 or defined as a degree-
granting institution under RCW 286.85.010(3) and accredited by an accrediting association recognized by
the United States Secretary of Education, and offering to students an educational program of a general
academic nature or those institutions which are not operated for profit and which are privately endowed
under a deed of trust to offer instruction in trade, industry, and agriculture, but not including specialty
schools, business colleges, other trade schools, or similar institutions.
EE."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.
FF. "Value of products":
1. The value of products, including by-products, extracted or manufactured, shall be determined
by the gross proceeds derived from the sale thereof whether such sale is at wholesale or at
retail, to which shall be added all subsidies and bonuses received from the purchaser or from any
other person with respect to the extraction, manufacture, or sale of such products or 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 Director may prescribe rules for the purpose of ascertaining such
values.
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
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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.
GG. "Wholesaling" means engaging in the activity of making sales at wholesale, and is reported
under the wholesaling classification.
3.53.030 Agency—sales and services by agent, consignee, bailee,factor or auctioneer.
A. Sales in Own Name— Sales or Purchases as Agent. Every person, including agents,
consignees, bailees, factors or auctioneers having either actual or constructive possession of
tangible personal property or having possession of the documents of title thereto, with power to sell
such tangible personal property in the person's own name and actually so selling, shall be deemed
the seller of such tangible personal property within the meaning of this chapter.
The burden shall be upon the taxpayer in every case to establish the fact that such taxpayer is not
engaged in the business of selling tangible personal property but is acting merely as broker or agent
in promoting sales or making purchases for a principal. Such claim will be recognized only when the
contract or agreement between such persons clearly establishes the relationship of principal and
agent and when the following conditions are complied with:
1. The books and records of the broker or agent show the transactions were made in the name
and for the account of the principal, and show the name of the actual owner of the property for
whom the sale was made, or the actual buyer for whom the purchase was made.
2. The books and records show the amount of the principal's gross sales, the amount of
commissions and any other incidental income derived by the broker or agent from such sales.
The principal's gross sales must not be reflected as the agent's income on any of the agent's
books and records. Commissions must be computed according to a set percentage or amount,
which is agreed upon in the agency agreement.
3. No ownership rights may be conferred to the agent unless the principal refuses to pay, or
refuses to abide by the agency agreement. 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 commingled 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 commingled or lost their identity as belonging to the
principal shall be taxed as retail or wholesale sales.
B. If the above requirements are not met the consignor, bailor, principal or other shall be deemed a
seller of such property to the agent, consignee, bailee, factor or auctioneer.
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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 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.
3.53.040 Imposition of the tax—tax or fee levied.
Except as provided in subsection C of this section, effective January 1, 2022 at 12:01 a.m. there is
hereby levied upon and shall be collected from every person a tax for the act or privilege of engaging
in business activities within the City of Auburn, 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:
A. Gross receipts tax
1. Upon every person engaging within the City in business as an extractor; as to such persons,
the amount of the tax with respect to such business shall be equal to the value of the products,
including by-products, extracted within the City for sale or for commercial or industrial use,
multiplied by the rate of.100 of one percent (.001). The measure of the tax is the value 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 .100 of
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one percent (.001). 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 .180 of one percent (.0018).
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 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 .100 of one percent(.001).
6. Upon every person engaging within the City in the business of making sales of retail
services; as to such persons, the amount of tax with respect to such business shall be equal to
the gross proceeds of sales multiplied by the rate of.150 of one percent (.0015).
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 .100 of one percent(.001). This subsection includes, among others, and without limiting the
scope hereof(whether or not title to material used in the performance of such business passes
to another by accession, merger or other than by outright sale), persons engaged in the business
of developing, or producing custom software or of customizing canned software, producing
royalties or commissions, and persons engaged in the business of rendering any type of service
which does not constitute a sale at retail, a sale at wholesale, or a retail service.
B. Square footage tax
1. Upon every person who leases, owns, occupies, or otherwise maintains a warehouse or outdoor
warehouse within the city for purposes of engaging in business activities in the city there shall be a
tax measured by the number of square feet of business warehouse floor space or outdoor warehouse
space. The amount of the tax shall be equal to$0.10 for each quarterly period of a calendar year for
each square foot of warehouse or outdoor warehouse floor space that is leased, owned, occupied, or
otherwise maintained within the city during the reporting period, calculated to the nearest square foot.
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2. For purposes of this section, "warehouse"means a building or structure, or any part thereof, in
which goods, wares, merchandise, or commodities are received or stored, whether or not for
compensation, in furtherance of engaging in business.
3. For purposes of this section, "outdoor warehouse" means an area that is outdoors and is primarily
used for the transloading of goods, wares, merchandise, or commodities on property for purposes of
switching modes or vehicles of conveyance for the primary purpose of wholesaling, distributing, or
reorganizing goods, wares, merchandise, or commodities en route to final destinations of sale or
other transaction. Transloading generally involves the transfer of goods from one mode of
transportation to another en route to an ultimate destination and, for purposes of the square footage
tax, includes areas used for crossdocking, waylaying, temporary embarkment, and other similar
activities.
4. For purposes of this section, the square footage of a business warehouse shall be computed by
measuring to the inside finish of permanent outer building walls and shall include space used by
columns and projections necessary to the building. Square footage shall not include stairs, elevator
shafts, flues, pipe shafts, vertical ducts, heating or ventilation shafts,janitor closets, and electrical or
utility closets.
5. For purposes of this section, the square footage of an outdoor warehouse shall only include those
areas used for the receipt or storage of goods, wares, merchandise, or commodities that are being
received and temporarily stored for transloading, whether or not for compensation, in furtherance of
engaging in business. Such areas will typically include those areas where goods, wares,
merchandise, and commodities, in transit to their ultimate destination, are parked, packaged, or
stored after transloading, waylaying, or crossdocking. Square footage shall not include areas used
only for employee, customer, or visitor parking, dock high loading areas used primarily for a business
warehouse, buildings, areas used only for direct sales or rentals to consumers, landscaped areas,
stormwater facilities, maneuvering areas and drive aisles, areas used only for garbage or recycling
pickup, rights-of-way, or other areas clearly not used for the temporary storage of goods, wares,
merchandise, and commodities in transit. Outdoor areas used for storage of agricultural products or
for ancillary storage of materials utilized in, or products resulting from, onsite manufacturing
operations are not considered outdoor warehouses.
6. Persons with more than one business warehouse or outdoor warehouse within the city must
include all business warehouse floor space and outdoor warehouse space for all locations within the
city. When a person rents space to another person, the person occupying the rental space is
responsible for the square footage business tax on that rental space only if the renter has exclusive
right of possession in the space as against the landlord. Space rented for the storage of goods in a
warehouse or outdoor warehouse where no walls or other barriers separate the goods, and where the
exclusive right of possession in the space is not held by the person to whom the space is rented, shall
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be included in the business warehouse floor space of the person that operates the business
warehouse, and not by the person renting the warehouse space.
7. If the square footage tax imposed in this subsection (B) is less than or equal to the gross receipts
tax imposed in subsection (A) of this section, no square footage tax will be due; if the square footage
tax imposed in this subsection (B) exceeds the gross receipts tax imposed in subsection (A)of this
section, the taxpayer shall also remit the excess over the gross receipts tax payable under subsection
(A)of this section.
C. Gross receipt and square footage tax thresholds
1. Gross Receipts Threshold. The gross receipts tax imposed in this section shall not apply to
any person whose gross proceeds of sales, gross income of the business, and value of products,
including by-products, as the case may be, from all activities conducted within the City during
any calendar year is equal to or less than $500,000 or is equal to or less than $125,000 during
any quarter if on a quarterly reporting basis.
2. Square Footage Threshold. The square footage tax imposed in subsection (B)of this section
shall not apply to any person unless that person's total area of business space within the city exceeds
one of the following thresholds:
a. Four thousand taxable square feet of business warehouse space; or
b. Two hundred sixty-one thousand three hundred sixty taxable square feet(six acres) of
outdoor warehouse space;
If the square footage tax applies, it applies to all business space leased, owned, occupied, or
otherwise maintained by the taxpayer during the applicable reporting period.
3.53.050 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 ACC 3.53.040.A shall be taxable under each applicable subsection.
B. Notwithstanding anything to the contrary herein, if imposition of the City's tax would place an
undue burden upon interstate commerce or violate constitutional requirements, a taxpayer shall be
allowed a credit to the extent necessary to preserve the validity of the City's tax, and still apply the
City tax to as much of the taxpayer's activities as may be subject to the City's taxing authority.
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C. To take the credit authorized by this section, a taxpayer must be able to document that the
amount of tax sought to be credited was paid upon the same gross receipts used in computing the
tax against which the credit is applied.
D. Credit for Persons That Sell in the City Products That They Extract or Manufacture. Persons
taxable under the retailing or wholesaling classification with respect to selling products in this City
shall be allowed a credit against those taxes for any eligible gross receipts taxes paid (1) with
respect to the manufacturing of the products sold in the City, and (2)with respect to the extracting of
the products, or the ingredients used in the products, sold in the City. The amount of the credit shall
not exceed the tax liability arising under this chapter with respect to the sale of those products.
E. Credit for Persons That Manufacture Products in the City Using Ingredients They Extract.
Persons taxable under the manufacturing classification with respect to manufacturing products in
this City shall be allowed a credit against those taxes for any eligible gross receipts tax paid with
respect to extracting the ingredients of the products manufactured in the City. The amount of the
credit shall not exceed the tax liability arising under this chapter with respect to the manufacturing of
those products.
F. Credit for Persons That Sell Within the City Products That They Print, or Publish and Print.
Persons taxable under the retailing or wholesaling classification with respect to selling products in
this City shall be allowed a credit against those taxes for any eligible gross receipts taxes paid with
respect to the printing, or the printing and publishing, of the products sold 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.
3.53.060 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.
2. Notwithstanding the above, a person that is subject to an eligible gross receipts tax in more
than one (1)jurisdiction on the gross income derived from intangibles such as royalties,
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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.
3.53.070 Assignment of gross income derived from intangibles.
Gross income derived from the sale of intangibles such as royalties, trademarks, patents, or goodwill
shall be assigned to the jurisdiction where the person is domiciled (its headquarters is located).
3.53.080 Allocation and apportionment of income when activities take place in more than
one jurisdiction.
Gross income, other than persons subject to the provisions of Chapter 82.14A RCW, shall be
allocated and apportioned as follows:
A. Gross income derived from all activities other than those taxed as service or royalties under ACC
3.53.040.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;
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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 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)(q)
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 ACC 3.53.080.0 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
subsections ACC 3.53.080.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
this subsection ACC 3.53.080.D. The City may employ an alternative method for allocating the
income from the sale of digital products if the methods provided in subsections ACC 3.53.080.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 subsections ACC 3.53.080.C.1 through 5, the following definitions apply:
1. "Digital automated services," "digital codes," and "digital goods" have the same meaning as
in RCW 82.04.192;
2. "Digital products" means digital goods, digital codes, digital automated services, and the
services described in RCW 82.04.050(2)(q)and(6)(c); and
3. "Receive" has the same meaning as in RCW 82.32.730.
F. Effective January 1, 2020, gross income derived from activities taxed as services and other
activities taxed under ACC 3.53.040.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).
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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 the
customer location is in the City.
3. Gross income of the business from engaging in an apportionable activity must be excluded
from the denominator of the service income factor if, in respect to such activity, at least some of
the activity is performed in the City, and the gross income is attributable under subsection 2 of
this subsection F to a city or unincorporated area of a county within the United States or to a
foreign country in which the taxpayer is not taxable. For purposes of this subsection F.3, "not
taxable" means that the taxpayer is not subject to a business activities tax by that city or county
within the United States or by that foreign country, except that a taxpayer is taxable in a city or
county within the United States or in a foreign country in which it would be deemed to have a
substantial nexus with the city or county within the United States or with the foreign country under
the standards in RCW 35.102.050 regardless of whether that city or county within the United
States or that foreign country imposes such a tax.
4. If the allocation and apportionment provisions of this subsection F do not fairly represent the
extent of the taxpayer's business activity in the City, the taxpayer may petition for or the tax
administrator may require, in respect to all or any part of the taxpayer's business activity, if
reasonable:
a. Separate accounting;
b. The exclusion of any one (1) or more of the factors;
c. The inclusion of one (1) or more additional factors that will fairly represent the taxpayer's
business activity in the City; or
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d. The employment of any other method to effectuate an equitable allocation and
apportionment of the taxpayer's income.
5. The party petitioning for, or the tax administrator requiring, the use of any method to
effectuate an equitable allocation and apportionment of the taxpayer's income pursuant to
subsection 4 of this subsection F must prove by a preponderance of the evidence:
a. That the allocation and apportionment provisions of this subsection F do not fairly
represent the extent of the taxpayer's business activity in the City; and
b. That the alternative to such provisions is reasonable.
The same burden of proof shall apply whether the taxpayer is petitioning for, or the tax
administrator is requiring, the use of an alternative, reasonable method to effectuate an equitable
allocation and apportionment of the taxpayer's income.
6. If the tax administrator requires any method to effectuate an equitable allocation and
apportionment of the taxpayer's income, the tax administrator cannot impose any civil or criminal
penalty with reference to the tax due that is attributable to the taxpayer's reasonable reliance
solely on the allocation and apportionment provisions of this subsection F.
7. A taxpayer that has received written permission from the tax administrator to use a
reasonable method to effectuate an equitable allocation and apportionment of the taxpayer's
income shall not have that permission revoked with respect to transactions and activities that
have already occurred unless there has been a material change in, or a material
misrepresentation of, the facts provided by the taxpayer upon which the tax administrator
reasonably relied in approving a reasonable alternative method.
G. The definitions in this subsection apply throughout this section:
1. "Apportionable income" means the gross income of the business taxable under the service
classifications of a city's gross receipts tax, including income received from activities outside the
City if the income would be taxable under the service classification if received from activities
within the City, less any exemptions or deductions available.
2. "Business activities tax" means a tax measured by the amount of, or economic results of,
business activity conducted in a city or county within the United States or within a foreign country.
The term includes taxes measured in whole or in part on net income or gross income or receipts.
"Business activities tax" does not include a sales tax, use tax, or a similar transaction tax,
imposed on the sale or acquisition of goods or services, whether or not denominated a gross
receipts tax or a tax imposed on the privilege of doing business.
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3. "Compensation" means wages, salaries, commissions, and any other form of remuneration
paid to individuals for personal services that are or would be included in the individual's gross
income under the federal Internal Revenue Code.
4. "Customer" means a person or entity to whom the taxpayer makes a sale or renders services
or from whom the taxpayer otherwise receives gross income of the business.
5. "Customer location" means the following:
a. For a customer not engaged in business, if the service requires the customer to be
physically present, where the service is performed.
b. For a customer not engaged in business, if the service does not require the customer to
be physically present:
i. The customer's residence; or
ii. If the customer's residence is not known, the customer's billing/mailing address.
c. For a customer engaged in business:
i. Where the services are ordered from;
ii. At the customer's billing/mailing address if the location from which the services are
ordered is not known; or
iii. At the customer's commercial domicile if none of the above are known.
6. "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.
7. "Primarily assigned" means the business location of the taxpayer where the individual
performs his or her duties.
8. "Service-taxable income" or"service income" means gross income of the business subject to
tax under either the service or royalty classification.
9. "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
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the reporting for the previous year when the factors are calculated for that year, but not later than
the end of the first quarter of the following year.
H. Assignment or apportionment of revenue under this section shall be made in accordance with
and in full compliance with the provisions of the interstate commerce clause of the United States
Constitution where applicable.
3.53.090 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.
3.53.100 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.
C. Child Care Resource and Referral Services by Non-profit Organizations. This chapter does not
apply to non-profit 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), as hereafter
amended, 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.
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E. Non-profit Organizations—Credit and Debt Services. This chapter does not apply to non-profit
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 subsections 1, 2, or 3, above, of
this subsection E.
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 Title 24 RCW, 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 and whose principal purposes are to furnish volunteer aid to members
of the armed forces of the United States and also to carry on a system of national and international
relief and to apply the same in mitigating the sufferings caused by pestilence, famine, fire, floods, and
other national calamities and to devise and carry on measures for preventing the same.
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 non-profit group training homes as defined by Chapter
71A.22 RCW or to the business activities of non-profit organizations from the operation of sheltered
workshops. For the purposes of this subsection, "the operation of sheltered workshops" means
performance of business activities of any kind on or off the premises of such non-profit organizations
which are performed for the primary purpose of:
1. Providing gainful employment or rehabilitation services to the handicapped as an interim step
in the rehabilitation process for those who cannot be readily absorbed in the competitive labor
market or during such time as employment opportunities for them in the competitive labor market
do not exist; or
2. Providing evaluation and work adjustment services for handicapped individuals.
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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. The City of Auburn is exempt from the tax levied by this chapter.
K. Gross Receipts Taxed Under Other Auburn City Code (ACC) Section. 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 ACC Chapter 3-88 (Utility Tax); or
2. Any person in respect to a business activity with respect to which tax liability is specifically
imposed under the provisions of ACC Chapter 3-80 (Gambling Tax).
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, an "international banking facility" means a
facility represented by a set of asset and liability accounts segregated on the books and records of a
commerci7bank the principal office of which is located in this state, and which is incorporated and
doing business under the laws of the United States or of this state, a United States branch or agency
of a foreign bank, an Edge corporation organized under Section 25(A) of the Federal Reserve Act, 12
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 601-604a, 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).
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.
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Q. 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.
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.
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 the person's employment in
the capacity as an employee or servant as distinguished from that of an independent contractor. For
the purposes of this subsection, the definition of employee shall include those persons that are
defined in the Internal Revenue Code, as hereafter amended. A booth renter is an independent
contractor for purposes of this chapter.
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) 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 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 82.38.020 and exempt under RCW 82.38.280, 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 exempt in RCW 66.08.120.
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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 the vendor in
the acquisition of the article; and
2. The sale is made as an accommodation to the buyer to enable the buyer to fill a bona fide
existing order of a customer or is made within fourteen (14) days to reimburse in kind a previous
accommodation sale by the buyer to the seller.
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 and occupation 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, and admission tax.
BB.Health Maintenance Organization, Health Care Service Contractor, Certified Health Plan. This
chapter does not apply to any health maintenance organization, health care service contractor, or
certified health plan with respect to premiums or prepayments that are taxable under RCW
48.14.0201. However, per RCW 48.14.0201(7), this exemption is not intended to, and shall not,
impair the City's ability to impose a tax hereunder upon the health care services directly delivered by
the employees of a health maintenance organization under Chapter 48.46 RCW.
CC.Nonprofit health care organization fees. This chapter shall not apply to amounts derived from medical,
nursing, ambulance, hospital, and other appropriate outpatient care as charges and service fees by
nonprofit health care organizations for the benefit of subscribers where none of such fees and charges
inure to the benefit of the organization or any of its employees, provided further that if a nonprofit health
care organization's annual gross income, minus any allowed deductions or exemptions as provided in this
chapter, exceeds$30,000,000.00 for any calendar year,the exemption in this subsection A shall not
apply to the amounts derived from health care organization service fees and charges. Non-profit health
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care organizations exceeding the$30,000.000 gross income threshold may take deductions in ACC
3.53.110S.
3.53.110 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.
B. Fees, Dues, and Charges Received by Non-Profit Organizations or Non-Profit Corporations. In
computing tax, a non- profit organization may deduct 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 for operation of privately operated kindergartens;
7. 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 public; and
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8. Endowment funds.
C. Artistic and Cultural Organizations—Income From Business Activities. In computing tax, there
may be deducted from the measure of tax those amounts received by artistic or cultural
organizations, as defined in this chapter, which represent:
1. Income derived from business activities conducted by the organization, provided that this
deduction does not apply to retail sales made by artistic and cultural organizations;
2. Amounts received from the United States or any of instrumentality thereof or from the State of
Washington or any municipal corporation or subdivision thereof as compensation for; or to
support, artistic or cultural exhibitions, performances, or programs provided by an artistic or
cultural organization for attendance or viewing by the general public; or
3. Amounts received as tuition charges collected for the privilege of attending artistic or cultural
education programs.
D. Artistic or Cultural Organization— Deduction For Tax Under the Manufacturing Classification—
Value of Articles For Use In Displaying Art Objects or Presenting Artistic or Cultural Exhibitions,
Performances, or Programs. In computing tax, there may be deducted from the measure of tax by
persons subject to payment of the tax under the manufacturing classification, the value of articles to
the extent manufacturing activities are undertaken by an artistic or cultural organization, as defined in
this chapter, solely for the purpose of manufacturing articles for use by the organization in displaying
art objects or presenting artistic or cultural exhibitions, performances, or programs for attendance or
viewing by the general public.
E. Day Care Activities. In computing tax, there may be deducted from the measure of tax amounts
derived from day care activities by any organization organized and operated for charitable,
educational, or other purposes which is exempt from taxation pursuant to Internal Revenue Code
Section 501(c)(3), as hereafter amended, provided, however, that amounts derived from selling,
altering or repairing tangible personal property shall not be deductible.
F. Compensation from public entities for health or social welfare services—exception. In computing tax,
there may be deducted from the measure of tax amounts received from the United States or any
instrumentality thereof or from the State of Washington or any municipal corporation or political
subdivision thereof as compensation for, or to support, health or social welfare services rendered by a
health or social welfare organization (as defined in RCW 82.04.431) or by a municipal corporation or
political subdivision, except deductions are not allowed under this subsection for amounts that are
received under an employee benefit plan. For purposes of this subsection, "employee benefit plan"
includes the military benefits program authorized in 10 U.S.C. 1071 et seq., as amended, or amounts
payable pursuant thereto.
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G. Interest on Investments or Loans Secured By Mortgages or Deeds of Trust. In computing tax, to
the extent permitted by Chapter 82.14A RCW, there may be deducted from the measure of tax by
those engaged in banking, loan, security or other financial businesses, amounts derived from interest
received on investments or loans primarily secured by first mortgages or trust deeds on non-transient
residential properties.
H. Interest on Obligations of the State, its Political Subdivisions, and Municipal Corporations. In
computing tax, there may be deducted from the measure of tax by those engaged in banking, loan,
security or other financial businesses, amounts derived from interest paid on all obligations of the
State of Washington, its political subdivisions, and municipal corporations organized pursuant to the
laws thereof.
I. Interest on Loans to Farmers and Ranchers, Producers or Harvesters of Aquatic Products, or
Their Cooperatives. In computing tax, there may be deducted from the measure of tax amounts
derived as interest on loans to bona fide farmers and ranchers, producers or harvesters of aquatic
products, or their cooperatives by a lending institution which is owned exclusively by its borrowers or
members and which is engaged solely in the business of making loans and providing finance-related
services to bona fide farmers and ranchers, producers or harvesters of aquatic products, their
cooperatives, rural residents for housing, or persons engaged in furnishing farm-related or aquatic-
related services to these individuals or entities.
J. 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.
K. Cash Discount Taken by Purchaser. In computing tax, there may be deducted from the measure
of tax the cash discount amounts actually taken by the purchaser. This deduction is not allowed in
arriving at the taxable amount under the extracting or manufacturing classifications with respect to
articles produced or manufactured, the reported values of which, for the purposes of this tax, have
been computed according to the "value of product" provisions.
L. Credit Losses of Accrual Basis Taxpayers. In computing tax, there may be deducted from the
measure of tax the amount of credit losses actually sustained by taxpayers whose regular books of
account are kept upon an accrual basis.
M. Repair, Maintenance, Replacement, etc., of Residential Structures and Commonly Held Property
—Eligible Organizations.
1. In computing tax, there may be deducted from the measure of tax amounts used solely for
repair, maintenance, replacement, management, or improvement of the residential structures
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and commonly held property, but excluding property where fees or charges are made for use by
the public who are not guests accompanied by a member, which are derived by:
a. A cooperative housing association, corporation, or partnership from a person who resides
in a structure owned by the cooperative housing association, corporation, or partnership;
b. An association of owners of property as defined in RCW 64.32.010, as now or hereafter
amended, from aperson 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 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 rebated to the members of the association;
c. Assets of the association or organization must be distributable to all members and must
not inure to the benefit of any single member or group of members.
N. Radio and Television Broadcasting—Advertising Agency Fees—National, Regional, and Network
Advertising—Interstate Allocations. In computing tax, there may be deducted from the measure of
tax by radio and television broadcasters amounts representing the following:
1. Advertising agencies' fees when such fees or allowances are shown as 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
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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 Director may
issue a rule that provides detailed guidance as to how these deductions are to be calculated.
O. Constitutional Prohibitions. In computing tax, there may be deducted from the measure of the tax
amounts derived from business which the City is prohibited from taxing under the Constitution of the
State of Washington or the Constitution of the United States.
P. Receipts from the Sale of Tangible Personal Property and Retail Services Delivered Outside the
City but Within Washington. 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.
Q. Professional Employer Services. In computing the tax, a professional employer organization may
deduct from the calculation of gross income the gross income of the business derived from
performing professional employer services that is equal to the portion of the fee charged to a client
that represents the actual cost of wages and salaries, benefits, workers' compensation, payroll
taxes, withholding, or other assessments paid to or on behalf of a covered employee by the
professional employer organization under a professional employer agreement.
R. Amounts Derived from the Sale or Lease of Clean Alternative Fuel and Plug-in Hybrid Vehicle Sales.
The deduction applies as follows:
1. This chapter shall not include the proceeds collected on the sale or lease of new or used
passenger cars, light duty trucks, or medium duty passenger vehicles that are either exclusively
powered by clean alternative fuel; or is a plug-in hybrid vehicle that can travel at least 30 miles on
battery power alone.
2. Up to$45,000 per new vehicle or up to $30,000 per used vehicles may be deducted from taxable
revenue.
3. The sale of accessories purchased as part of the qualifying vehicle may be included in the
deduction, provided the total deduction does not exceed the total amounts listed in ACC
3.53.110.R.2.
4. Extended warranties and maintenance agreements cannot be included in the amount to be
deducted.
5. This deduction is eligible beginning January 1, 2022 and will expire December 31, 2025.
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S. Nonprofit health care organization fees. In computing the tax, nonprofit health care organizations may
deduct up to$30,000,000 in revenue derived from medical, nursing, ambulance, hospital, and other
appropriate outpatient care as charges and service fees by the nonprofit health care organization.
3.53.120 Tax credits.
A. New business tax credit
1. 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 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 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.
2. There may be credited against the tax imposed by ACC 3.53.040, the amount up to one
thousand dollars ($1,000) per FTE position in the City of Auburn per quarter. To take the credit
authorized by this section, a taxpayer must be able to document all of the following:
a. The taxpayer has not, for any period of time, engaged in business in the City of Auburn
within the five (5) years preceding application of the tax credit;
b. The taxpayer employs twenty (20) or more full-time equivalent positions in Auburn. An
FTE position is defined as each one thousand nine hundred and twenty (1,920) worker hours
per calendar year; and
c. The taxpayer may be required to submit its payroll information and/or other
documentation in support of such employee hours worked in the City.
d. The taxpayer must report, on each return filed, the taxpayer's total number of full-time
employment positions created and positions currently filled.
e. The taxpayer must employ a minimum of twenty (20) FTE's in each quarter the credit is being
applied.
3. The tax credit can be taken for the first twelve (12) consecutive reporting quarters or three
(3) reporting years.
4. This credit is not considered a payment of taxes for purposes of seeking a refund of
overpayment of tax pursuant to the provisions contained in ACC Chapter 3.54, or any other
39
purpose. As such, unused creditamounts will not be refunded, carried over from reporting
period(s) to reporting period(s), and will not accrue interest.
5. The Director is authorized to promulgate rules implementing, interpreting, and enforcing the
provisions of this section.
B. Auburn business area improvement assessment credit
1. Purpose: Certain businesses operating within the Business Area Improvement(BIA) boundaries,
as identified in ACC Chapter 2.98, are subject to an annual assessment. The purpose of the
assessment is to enhance trade, economic vitality, and livability within the City of Auburn. The City
believes that providing business and occupation tax relief to local businesses that are subject to the
BIA assessment helps ensure their continued downtown presence,which contributes towards a
vibrant downtown core and further benefits other local businesses not subject to the BIA assessment.
2. There may be credited against the tax imposed by ACC 3.53.040, an amount equal to the BIA
assessment fee paid as imposed by ACC Chapter 2.98.
3. This credit is not considered a payment of taxes for purposes of seeking a refund of
overpayment of tax pursuant to the provisions contained in ACC Chapter 3.54, or any other
purpose. As such, unused credit amounts will not be refunded, carried over from reporting
period(s) to reporting period(s), and will not accrue interest.
4. The Director is authorized to promulgate rules implementing, interpreting, and enforcing the
provisions of this section.
3.53.130 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.
3.53.140 Administrative provisions.
The administrative provisions contained in ACC Chapter 3.54 shall be fully applicable to the
provisions of this chapter except as expressly stated to the contrary herein.
3.53.150 Severability clause.
40
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.
41
Chapter 3.54 TAX ADMINISTRATIVE
Exhibit B
CHAPTER 3.54
BUSINESS AND OCCUPATION TAX
ADMINISTRATIVE CODE
Sections:
3.54.010 Purpose.
3.54.020 Application of chapter stated.
3.54.030 Definitions.
3.54.040 Definitions—References to Chapter 82.32 RCW
3.54.050 Registration/license requirements.
3.54.060 When due and payable—Reporting periods—Monthly, quarterly, and annual returns—Threshold
provisions or relief from filing requirements—Computing time periods—Failure to file returns.
3.54.070 Payment methods—Mailing returns or remittances—Time extension—Deposits—Recording
payments—Payment must accompany return—NSF checks.
3.54.080 Records to be preserved— Examination—Estoppel to question assessment.
3.54.090 Accounting methods.
3.54.100 Public work contracts—Payment of fee and tax before final payment for work.
3.54.110 Underpayment of tax, interest, or penalty—Interest.
3.54.120 Time in which assessment may be made.
3.54.130 Over payment of tax, penalty, or interest—Credit or refund—Interest rate—Statute of limitations.
3.54.140 Late payment—Disregard of written instructions—Evasion—Penalties.
3.54.150 Cancellation of penalties.
3.54.160 Taxpayer quitting business—Liability of successor.
3.54.170 Administrative appeal.
3.54.180 Judicial review of hearing examiner decision.
3.54.190 Director to make rules.
3.54.200 Ancillary allocation authority of Director.
3.54.210 Mailing of notices.
3.54.220 Tax declared additional.
3.54.230 Public disclosure—Confidentiality—Information sharing.
3.54.240 Tax constitutes debt.
3.54.250 Unlawful actions—Violation—Penalties.
3.54.260 Suspension or revocation of business license and/or registration.
3.54.270 Closing agreement provisions.
3.54.280 Charge-off of uncollectible taxes.
3.54.290 Severability.
3.54.010 Purpose.
This chapter implements Washington Constitution Article XI, Section 12 and RCW 35A.82.020 and
35A.11.020 (code cities); RCW 35.22.280(32) (first class cities); RCW 35.23.440(8) (second class cities);
and RCW 35.27.370(9) (fourth class cities and towns), which give municipalities the authority to license for
revenue. In the absence of a legal or constitutional prohibition, municipalities have the power to define
taxation categories as they see fit in order to respond to the unique concerns and responsibilities of local
government. It is intended that this chapter be as uniform as possible among the various municipalities and
Chapter 3.54 TAX ADMINISTRATIVE
consistent with the mandatory requirements of Chapter 35.102 RCW for municipalities. Uniformity with
provisions of state tax laws should not be presumed, and references in this chapter to statutory or
administrative rule changes do not mean state tax statutes or rules promulgated by the Finance Department
of Revenue automatically apply. This chapter is to provide administrative specific guidelines and provisions
to implement, administer, and enforce the city tax codes.
3.54.020 Application of chapter stated.
The provisions of this chapter shall apply with respect to the taxes imposed under chapter 3.53 and under other
titles, chapters, and sections in such manner and to such extent as indicated in each such title, chapter or
section.
3.54.030 Definitions.
For purposes of this chapter:
The definitions contained in chapter 3.53 shall apply equally to the provisions of this chapter unless the term is
defined otherwise in this chapter. In addition, the following definitions will apply.
A. "Reporting period"means:
1. A one-month period beginning the first day of each calendar month (monthly); or
2. A three-month period beginning the first day of January, April, July or October of each year(quarterly); or
3. A twelve-month period beginning the first day of January of each year(annual).
B. "Return" means any document a person is required by the City to file to satisfy or establish a tax or fee
obligation that is administered or collected by the City and that has a statutorily defined due date.
C. "Successor" means any person to whom a taxpayer quitting, selling out, exchanging, or disposing of a
business sells or otherwise conveys, directly or indirectly, in bulk and not in the ordinary course of the
taxpayer's business, any part of the materials, supplies, merchandise, inventory, fixtures, or equipment of
the taxpayer. Any person obligated to fulfill the terms of a contract shall be deemed a successor to any
contractor defaulting in the performance of any contract as to which such person is a surety or guarantor.
D. "Tax year" or"taxable year" means the calendar year.
3.54.040 Definitions—References to Chapter 82.32 RCW
Where provisions of Chapter 82.32 RCW are incorporated in 3.54.110 of this Title, "Department" as used in the
RCW shall refer to the"Director"as defined in ACC 3.53.020 and "warrant" as used in the RCW shall mean
"citation or criminal complaint."
3.54.050 Registration/license requirements.
No person shall engage in any business or conduct any business activity without first obtaining a valid
current business registration as required by ACC 5.10, General Business License.
3.54.060 When due and payable— Reporting periods—Monthly, quarterly, and annual returns—
Threshold provisions or relief from filing requirements—Computing time periods—Failure to file returns.
Chapter 3.54 TAX ADMINISTRATIVE
A. Other than any annual license fee or registration fee assessed under this chapter, the tax imposed by this
chapter shall be due and payable in quarterly installments. At the Director's discretion, businesses may be
assigned to a monthly or annual reporting period depending on the tax amount owing or type of tax. Until
December 31, 2020, tax payments are due on or before the last day of the next month following the end of the
assigned reporting period covered by the return. Effective January 1, 2021, tax payments are due on or before
the time as provided in RCW 82.32.045(1), (2), and (3).
B. Taxes shall be paid as provided in this chapter and accompanied by a return on forms as prescribed by the
Director. The return shall be signed by the taxpayer personally or by a responsible officer or agent of the
taxpayer. The individual signing the return shall swear or affirm that the information in the return is complete and
true.
C. Tax returns must be filed and returned by the due date whether or not any tax is owed.
D. For purposes of the tax imposed by chapter 3.53, any person whose value of products, gross proceeds of
sales, or gross income of the business, subject to tax after all allowable deductions, is equal to or less than
$500,000 in the current calendar year and/or whose combined taxable business warehouse square footage
within the city is 4,000 square feet or less, shall file a return, declare no tax due on their return, and submit the
return to the Director. The gross receipts and deduction amounts shall be entered on the tax return even though
no tax may be due.
E. A taxpayer that commences to engage in business activity shall file a return and pay the tax or fee for the
portion of the reporting period during which the taxpayer is engaged in business activity.
F. Except as otherwise specifically provided by any other provision of this chapter, in computing any period of
days prescribed by this chapter the day of the act or event from which the designated period of time runs shall
not be included. The last day of the period shall be included unless it is a Saturday, Sunday, or City or Federal
legal holiday, in which case the last day of such period shall be the next succeeding day which is neither a
Saturday, Sunday, or City or Federal legal holiday.
G. If any taxpayer fails, neglects or refuses to make a return as and when required in this chapter, the Director
is authorized to determine the amount of the tax or fees payable by obtaining facts and information upon which to
base the Director's estimate of the tax or fees due. Such assessment shall be deemed prima facie correct and
shall be the amount of tax owed to the City by the taxpayer. The Director shall notify the taxpayer by mail of the
amount of tax so determined, together with any penalty, interest, and fees due; the total of such amounts shall
thereupon become immediately due and payable.
3.54.070 Payment methods—Mailing returns or remittances—Time extension—Deposits—
Recording payments—Payment must accompany return—NSF checks.
A. Taxes shall be paid to the Director in United States currency by bank draft, certified check, cashier's check,
personal check, money order, cash, or by wire transfer or electronic payment if such wire transfer or electronic
payment is authorized by the Director. If payment so received is not paid by the bank on which it is drawn, the
taxpayer, by whom such payment is tendered, shall remain liable for payment of the tax and for all legal
penalties, the same as if such payment had not been tendered. Acceptance of any sum by the Director shall not
discharge the tax or fee due unless the amount paid is the full amount due.
Chapter 3.54 TAX ADMINISTRATIVE
B. A return or remittance that is transmitted to the City by United States mail shall be deemed filed or received
on the date shown by the cancellation mark stamped by the Post Office upon the envelope containing it. The
Director may allow electronic filing of returns or remittances from any taxpayer. A return or remittance which is
transmitted to the City electronically shall be deemed filed or received according to procedures set forth by the
Director.
C. If a written request is received prior to the due date, the Director, for good cause, may grant, in writing,
additional time within which to make and file returns.
D. The Director shall keep full and accurate records of all funds received or refunded. The Director shall apply
payments first against all penalties and interest owing, and then upon the tax, without regard to any direction of
the taxpayer.
E. For any return not accompanied by a remittance of the tax shown to be due thereon, the taxpayer shall be
deemed to have failed or refused to file a return and shall be subject to the penalties and interest provided in this
chapter.
F. Any payment made that is returned for lack of sufficient funds or for any other reason will not be considered
received until payment by certified check, money order, or cash of the original amount due, plus a"non-sufficient
funds" (NSF)charge of twenty dollars ($20.00) is received by the Director.Any license issued upon payment with
a NSF check will be considered void, and shall be returned to the Director. No license shall be reissued until
payment (including the twenty dollars ($20.00) NSF fee) is received.
G. The Director is authorized, but not required, to mail tax return forms to taxpayers, but failure of the taxpayer
to receive any such forms shall not excuse the taxpayer from filing returns and making payment of the taxes or
fees, when and as due under this chapter.
3.54.080 Records to be preserved —Examination —Estoppel to question assessment.
Every person liable for any fee or tax imposed by this chapter shall keep and preserve, for a period of five(5)
years after filing a tax return, such records as may be necessary to determine the amount of any fee or tax for
which the person may be liable; which records shall include copies of all federal income tax and state tax returns
and reports made by the person. All books, records, papers, invoices, vendor lists, inventories, stocks of
merchandise, and other data including federal income tax and state tax returns and reports shall be open for
examination at any time by the Director or its duly authorized agent. Every person's business premises shall be
open for inspection or examination by the Director or a duly authorized agent.
A. If a person does not keep the necessary books and records within the City, it shall be sufficient if such
person (1) produces within the City such books and records as may be required by the Director, or(2) bears the
cost of examination by the Director's agent at the place where such books and records are kept; provided that
the person electing to bear such cost shall pay in advance to the Director the estimated amount thereof including
round-trip fare, lodging, meals and incidental expenses, subject to adjustment upon completion of the
examination.
B. Any person who fails, or refuses a Finance Department request, to provide or make available records, or to
allow inspection or examination of the business premises, shall be forever barred from questioning in any court
action, the correctness of any assessment of taxes made by the City for any period for which such records have
not been provided, made available or kept and preserved, or in respect of which inspection or examination of the
business premises has been denied. The Director is authorized to determine the amount of the tax or fees
Chapter 3.54 TAX ADMINISTRATIVE
payable by obtaining facts and information upon which to base the estimate of the tax or fees due. Such fee or
tax assessment shall be deemed prima facie correct and shall be the amount of tax owing the City by the
taxpayer. The Director shall notify the taxpayer by mail the amount of tax so determined, together with any
penalty, interest, and fees due; the total of such amounts shall thereupon become immediately due and payable.
3.54.090 Accounting methods.
A. A taxpayer may file tax returns in each reporting period with amounts based upon cash receipts only if the
taxpayer's books of account are kept on a cash receipts basis.A taxpayer that does not regularly keep books of
account on a cash receipts basis must file returns with amounts based on the accrual method.
B. The taxes imposed and the returns required shall be upon a calendar year basis.
3.54.100 Public work contracts—Payment of fee and tax before final payment for work.
The Director may, before issuing any final payment to any person performing any public work contract for the
City, require such person to pay in full all license fees or taxes due under this title from such person on account
of such contract or otherwise, and may require such taxpayer to file with the Director a verified list of all
subcontractors supplying labor and/or materials to the person in connection with said public work.
3.54.110 Underpayment of tax, interest, or penalty—Interest.
If, upon examination of any returns, or from other information obtained by the Director, it appears that a tax or
penalty less than that properly due has been paid, the Director shall assess the additional amount found to be
due and shall add thereto interest on the tax only. The Director shall notify the person by mail of the additional
amount, which shall become due and shall be paid within thirty (30) days from the date of the notice, or within
such time as the Director may provide in writing.
3.54.120 Time in which assessment may be made.
The Director shall not assess, or correct an assessment for, additional taxes, penalties, or interest due more than
four years after the close of the calendar year in which they were incurred, except that the Director may issue an
assessment:
A. Against a person who is not currently registered or licensed or has not filed a tax return as required by this
chapter for taxes due within the period commencing 10 years prior to the close of the calendar year in which the
person was contacted in writing by the Director;
B. Against a person that has committed fraud or who misrepresented a material fact; or
C. Against a person that has executed a written waiver of such limitations.
3.54.130 Over payment of tax, penalty, or interest—Credit or refund—Interest rate—Statute of
limitations.
A. If, upon receipt of an application for a refund, or during an audit or examination of the taxpayer's records and
tax returns, the Director determines that the amount of tax, penalty, or interest paid is in excess of that properly
due, the excess amount shall be credited to the taxpayer's account or shall be refunded to the taxpayer. Except
as provided in subsection B of this section, no refund or credit shall be made for taxes, penalties, or interest paid
more than four(4) years prior to the beginning of the calendar year in which the refund application is made or
examination of records is completed.
Chapter 3.54 TAX ADMINISTRATIVE
B. The execution of a written waiver shall extend the time for applying for, or making a refund or credit of any
taxes paid during, or attributable to, the years covered by the waiver if, prior to the expiration of the waiver period,
an application for refund of such taxes is made by the taxpayer or the Director discovers that a refund or credit is
due.
C. Refunds shall be made by means of vouchers approved by the Director and by the issuance of a City check
or warrants drawn upon and payable from such funds as the City may provide.
D. Any final judgment for which a recovery is granted by any court of competent jurisdiction for tax, penalties,
interest, or costs paid by any person shall be paid in the same manner, as provided in subsection C of this
section, upon the filing with the Director a certified copy of the order or judgment of the court.
3.54.140 Late payment—Disregard of written instructions—Evasion—Penalties.
A. If payment of any tax due on a return to be filed by a taxpayer is not received by the Director by the due date,
the Director shall add a penalty in accordance with RCW 82.32.090(1), as it now exists or as it may be amended.
B. If the Director determines that any tax has been substantially underpaid as defined in RCW 82.32.090(2),
there shall be added a penalty in accordance with RCW 82.32.090(2), as it now exists or as it may be amended.
C. If a citation or criminal complaint is issued by the Director for the collection of taxes, fees, assessments,
interest or penalties, there shall be added thereto a penalty in accordance with RCW 82.32.090(3), as it now
exists or as it may be amended.
D. If the Director finds that a person has engaged in any business or performed any act upon which a tax is
imposed under this title and that person-has not obtained from the Director a license as required by ACC 5.10,
the Director shall impose a penalty in accordance with RCW 82.32.090(4), as it now exists or as it may be
amended. No penalty shall be imposed under this subsection D if the person who has engaged in business
without a license obtains a license prior to being notified by the Director of the need to be licensed.
E. If the Director determines that all or any part of a deficiency resulted from the taxpayer's failure to follow
specific written tax reporting instructions, there shall be assessed a penalty in accordance with RCW
82.32.090(5), as it now exists or as it may be amended.
F. If the Director finds that all or any part of the deficiency resulted from an intent to evade the tax payable, the
Director shall assess a penalty in accordance with RCW 82.32.090(6), as it now exists or as it may be amended.
G. The penalties imposed under subsections A through E above of this section can each be imposed on the
same tax found to be due. This subsection does not prohibit or restrict the application of other penalties
authorized by law.
H. The Director shall not impose both the evasion penalty and the penalty for disregarding specific written
instructions on the same tax found to be due.
I. For the purposes of this section, "return" means any document a person is required by the City of Auburn to
file to satisfy or establish a tax or fee obligation that is administered or collected by the City, and that has a
statutorily defined due date.
Chapter 3.54 TAX ADMINISTRATIVE
J. If incorporation into the City of Auburn code of future changes to RCW 82.32.090 is deemed invalid, then the
provisions of RCW 82.32.090 existing at the time this ordinance is effective shall apply.
3.54.150 Cancellation of penalties.
A. The Director may cancel any penalties imposed under subsection 3.54.140.A if the taxpayer shows that its
failure to timely file or pay the tax was due to reasonable cause and not willful neglect. Willful neglect is
presumed unless the taxpayer shows that it exercised ordinary business care and prudence in making
arrangements to file the return and pay the tax but was, nevertheless, due to circumstances beyond the
taxpayer's control, unable to file or pay by the due date. The Director has no authority to cancel any other
penalties or to cancel penalties for any other reason except as provided in subsection C.
B. A request for cancellation of penalties must be received by the Director within 30 days after the date the
Finance Department mails the notice that the penalties are due. The request must be in writing and contain
competent proof of all pertinent facts supporting a reasonable cause determination. In all cases the burden of
proving the facts rests upon the taxpayer.
C. The Director may cancel the penalties in subsection 3.54.140.A one time if a person:
1. Is not currently licensed and filing returns,
2. Was unaware of its responsibility to file and pay tax, and
3. Obtained business licenses and filed past due tax returns within 30 days after being notified by the
Finance Department.
D. The Director shall not cancel any interest charged upon amounts due.
3.54.160 Taxpayer quitting business—Liability of successor.
A. Whenever any taxpayer quits business, sells out, exchanges, or otherwise disposes of his business or his
stock of goods, any tax payable hereunder shall become immediately due and payable. Such taxpayer shall,
within ten (10)days thereafter, make a return and pay the tax due.
B. Any person who becomes a successor shall become liable for the full amount of any tax owing. The
successor shall withhold from the purchase price a sum sufficient to pay any tax due to the City from the taxpayer
until such time as: 1)the taxpayer shall produce a receipt from the City showing payment in full of any tax due or
a certificate that no tax is due, or 2) more than six(6) months has passed since the successor notified the
Director of the acquisition and the Director has not issued and notified the successor of an assessment.
C. Payment of the tax by the successor shall, to the extent thereof, be deemed a payment upon the purchase
price. If such payment is greater in amount than the purchase price, the amount of the difference shall become a
debt due such successor from the taxpayer.
D. Notwithstanding the above, if a successor gives written notice to the Director of the acquisition, and the
Finance Department does not within six(6) months of the date it received the notice issue an assessment
Chapter 3.54 TAX ADMINISTRATIVE
against the taxpayer and mail a copy of that assessment to the successor, the successor shall not be liable for
the tax.
3.54.170 Administrative appeal.
A. Any person, except one who has failed to comply with section 3.54.080, having been issued a notice of
additional taxes, delinquent taxes, interest, or penalties assessed by the Finance Department may, within
thirty (30) days after the issuance of such notice or within the period covered by any extension of the due
date granted by the Finance Department, request a correction of the amount of the assessment and a
conference for review of the assessment. Interest and penalties assessed shall continue to accrue during
the Finance Department's review of a request for a correction, except and to the extent that the Finance
Department later determines that a tax assessment was too high or the delay in issuing a determination is
due to unreasonable delays caused by the Finance Department. After the conference, the Finance
Department will make a final determination regarding the assessment and shall notify the taxpayer of the
Finance Department's determination within sixty (60) days, unless otherwise notified in writing by the
Finance Department. Such determination shall be subject to appeal pursuant to subsection B of this
section. If no request for correction is filed within the time period provided herein, the assessment covered
by such notice shall become final and immediately due and payable.
B. Any person aggrieved by the amount of any fee, tax, interest or penalty determined by the Director to be due
under the prohibitions of this chapter ACC 3.53 Business and Occupation Tax may, upon full payment of the
amount assessed, appeal such determination pursuant to the following procedures:
C. Filing Fee. A filing fee, as determined by ACC 2.46, shall be submitted with the appeal, which filing fee is
required to process the appeal.
D. Form of Appeal. Any appeal must be in writing and must contain the following:
1. The taxpayer's name, business address, and phone number;
2. A statement identifying the determination of the Finance Department from which the appeal is taken;
3. A receipt or other proof of payment of the assessment in the amount determined by the Finance
Department;
4. A statement setting forth the grounds upon which the appeal is taken and identifying specific errors
the Finance Department is alleged to have made in making the determination;
5. A statement identifying the requested relief from the determination being appealed; and
6. A receipt from the Finance Department, as proof of payment"under protest", for the amount of the
fee, tax, interest and penalty determined to be owing by the Finance Department. Such payment shall
be a condition precedent to the right to appeal to the hearing examiner.
E. Time and Place to Appeal. Any appeal shall be filed with the office of the City Clerk with a copy to the
Director no later than twenty (20) days following the date on which the determination of the Finance
Department was mailed to the taxpayer. Failure to follow the appeal procedures in this section, including
paying the filing fee and payment"under protest", shall preclude the taxpayer's right to appeal.
Chapter 3.54 TAX ADMINISTRATIVE
F. Appeal Hearing. The hearing examiner shall schedule a hearing date, notify the taxpayer and the
Director of such hearing date and shall then conduct an appeal hearing in accordance with this chapter and
procedures developed by the hearing examiner, at which time the appellant taxpayer and the Director shall
have the opportunity to be heard and to introduce evidence relevant to the subject of the appeal.
G. Burden of Proof. The appellant taxpayer shall have the burden of proving by a preponderance of the
evidence that the determination of the Finance Department is erroneous.
H. Hearing Record. The hearing examiner shall preserve a record of the hearing in such a form and
manner as he/she deems proper.
I. Decision of the Hearing Examiner. Following the hearing, the hearing examiner shall enter a decision on
the appeal, supported by written findings and conclusions in support thereof. A copy of the findings,
conclusions and decision shall be mailed to the appellant taxpayer and to the Director. The decision shall
state the correct amount of the fee, tax, interest or penalty owing.
J. Interest accrual or payment. Interest and/or penalties shall continue to accrue on all unpaid amounts, in
accordance with ACC 3.54.110 and ACC 3.54.140, notwithstanding the fact that an appeal has been filed.
If the hearing examiner determines that the taxpayer is owed a refund, such refund amount shall be paid to
the taxpayer in accordance with ACC 3.54.130.
3.54.180 Judicial review of hearing examiner decision.
The taxpayer or the City may obtain judicial review of the hearing examiner's administrative decision by applying
for a Writ of Review in the King County Superior Court within 21 days from the date of the hearing examiner's
decision in accordance with the procedure set forth in Chapter 7.16 RCW, other applicable law, and court rules.
The City shall have the same right of review from the administrative decision as does a taxpayer.
3.54.190 Director to make rules.
The Director shall have the power, from time to time, to adopt, publish and enforce rules and regulations not
inconsistent with this chapter or with law for the purpose of carrying out the provisions of this chapter and it shall
be unlawful to violate or fail to comply with, any such rule or regulation.
3.54.200 Ancillary allocation authority of Director.
The Director is authorized to enter into agreements with other Washington cities which impose an "eligible
gross receipts tax":
A. To conduct an audit or joint audit of a taxpayer by using an auditor employed by the City of Auburn,
another city, or a contract auditor, provided, that such contract auditor's pay is not in any way based upon
the amount of tax assessed;
B. To allocate or apportion, in a manner that fairly reflects the gross receipts earned from activities
conducted within the respective cities, the gross proceeds of sales, gross receipts, or gross income of the
business, or taxes due from any person that is required to pay an eligible gross receipts tax to more than
one Washington city;
C. To apply the City's tax prospectively where a taxpayer has no office or place of business within the City
and has paid tax on all gross income to another Washington city where the taxpayer is located; provided,
Chapter 3.54 TAX ADMINISTRATIVE
that the other city maintains an eligible gross receipts tax, and the income was not derived from contracts
with the City.
3.54.210 Mailing of notices.
Any notice required by this chapter to be mailed to any taxpayer or licensee shall be sent by ordinary mail,
addressed to the address of the taxpayer or licensee as shown by the records of the Director. Failure of the
taxpayer.or licensee to receive any such mailed notice shall not release the taxpayer or licensee from any tax,
fee, interest, or any penalties thereon, nor shall such failure operate to extend any time limit set by the provisions
of this chapter. It is the responsibility of the taxpayer to inform the Director in writing about a change in the
taxpayer's address.
3.54.220 Tax declared additional.
The license fee and tax herein levied shall be additional to any license fee or tax imposed or levied under any law
or any other ordinance of the City of Auburn except as herein otherwise expressly provided.
3.54.230 Public disclosure—Confidentiality—Information sharing.
A. For purposes of this section, defined terms shall be as set forth in ACC 3.54.030:
1. "Disclose" means to make known to any person in any manner whatever a return or tax information.
2. "Tax information" means:
a. A taxpayer's identity;
b. The nature, source, or amount of the taxpayer's income, payments, receipts, deductions, exemption,
credits, assets, liability, net worth, tax liability deficiencies, over assessments, or tax payments, whether
taken from the taxpayer's books and records or ariy other source;
c. Whether the taxpayer's return was, is being, or will be examined or subject to other investigation or
processing; or
d. Other data received by, recorded by, prepared by, or provided to the City with respect to the
determination or the existence, or possible existence, of liability, or the amount thereof, of a person under
the City's tax code for a tax, penalty, interest, fine, forfeiture, or other imposition, or offense. However,
data, material, or documents that do not disclose information related to a specific or identifiable taxpayer
do not constitute tax information under this section. Nothing in this chapter requires any person
possessing data, material, or documents made confidential and privileged by this section to delete
information from such data, material or documents so as to permit its disclosure.
3. "City agency" means every City office, department, division, bureau, board, commission, or other City
agency.
4. "Taxpayer identity" means the taxpayer's name, address, telephone number, registration number, or any
combination thereof, or any other information disclosing the identity of the taxpayer.
B. Returns and tax information are confidential and privileged, and except as authorized by this section, neither
the Director nor any other person may disclose any return or tax information.
Chapter 3.54 TAX ADMINISTRATIVE
C. This section does not prohibit the Director from:
1. Disclosing such return or tax information in a civil or criminal judicial proceeding or an administrative
proceeding:
a. In respect of any tax imposed under the City's tax code if the taxpayer or its officer or other person
liable under this title is a party in the proceeding; or
b. In which the taxpayer about whom such return or tax information is sought and another state agency
are adverse parties in the proceeding.
2. Disclosing, subject to such requirements and conditions as the Director prescribes by rules adopted
pursuant to ACC 3.54.190 such return or tax information regarding a taxpayer to such taxpayer or to such
person or persons as that taxpayer may designate in a request for, or consent to, such disclosure, or to any
other person, at the taxpayer's request, to the extent necessary to comply with a request for information or
assistance made by the taxpayer to such other person. However, tax information not received from the
taxpayer must not be so disclosed if the Director determines that such disclosure would compromise any
investigation or litigation by any federal, state, or local government agency in connection with the civil or
criminal liability of the taxpayer or another person, or that such disclosure would identify a confidential
informant, or that such disclosure is contrary to any agreement entered into by the Finance Department that
provides for the reciprocal exchange of information with other government agencies which agreement
requires confidentiality with respect to such information unless such information is required to be disclosed to
the taxpayer by the order of any court;
3. Publishing statistics so classified as to prevent the identification of particular returns or reports or items
thereof;
4. Disclosing such return or tax information, for official purposes only, to the mayor or city attorney, or to
any City agency, or to any member of the city council or their authorized designees dealing with matters of
taxation, revenue, trade, commerce, the control of industry or the professions;
5. Permitting the City's records to be audited and examined by the proper state officer, his or her agents
and employees;
6. Disclosing any such return or tax information to a peace officer as defined in RCW 9A.04.110 or county
prosecuting attorney, for official purposes. The disclosure may be made only in response to a search
warrant, subpoena, or other court order, unless the disclosure is for the purpose of criminal tax enforcement.
A peace officer or county prosecuting attorney who receives the return or tax information may disclose that
return or tax information only for use in the investigation and a related court proceeding, or in the court
proceeding for which the return or tax information originally was sought or where otherwise allowed to be
disclosed under this Section;
7. Disclosing any such return or tax information to the proper officer of the Internal Revenue Service of the
United States, the Canadian government or provincial governments of Canada, or to the proper officer of the
tax department of any state or city or town or county, for official purposes, but only if the statutes of the
United States, Canada or its provincial governments, or of such other state or city or town or county, as the
case may be, grants substantially similar privileges to the proper officers of the City;
Chapter 3.54 TAX ADMINISTRATIVE
8. Disclosing any such return or tax information to the United States Department of Justice, including the
Bureau of Alcohol, Tobacco, Firearms and Explosives, the Department of Defense, the Immigration and
Customs Enforcement and the Customs and Border Protection agencies of the United States Department of
Homeland Security, the United States Coast Guard, the Alcohol and Tobacco Tax and Trade Bureau of the
United States Department of Treasury, and the United States Department of Transportation, or any
authorized representative of these federal agencies or their successors, for official purposes;
9. Publishing or otherwise disclosing the text of a written determination designated by the Director as a
precedent pursuant to RCW 82.32.410;
10. Disclosing, in a manner that is not associated with other tax information, the taxpayer name, entity type,
business address, mailing address, revenue tax registration numbers and the active/closed status of such
registrations, state or local business license registration identification and the active/closed status and
effective dates of such licenses, reseller permit numbers and the expiration date and status of such permits,
North American industry classification system or standard industrial classification code of a taxpayer, and the
dates of opening and closing of business. Except that this subsection may not be construed as giving
authority to the City or any recipient to give, sell, or provide access to any list of taxpayers for any
commercial purpose;
11. Disclosing such return or tax information that is also maintained by another Washington state or local
governmental agency as a public record available for inspection and copying under the provisions of chapter
42.56 RCW or is a document maintained by a court of record and is not otherwise prohibited from disclosure;
12. Disclosing such return or tax information to the United States Department of Agriculture, or successor
department or agency, for the limited purpose of investigating food stamp fraud by retailers;
13. Disclosing to a financial institution, escrow company, or title company, in connection with specific real
property that is the subject of a real estate transaction, current amounts due the City for a filed tax warrant,
judgment, or lien against the real property;
14. Disclosing to a person against whom the Finance Department has asserted liability as a successor under
ACC 3.54.160 return or tax information pertaining to the specific business of the taxpayer to which the
person has succeeded;
15. Disclosing real estate excise tax affidavit forms filed under ACC 3.56 in the possession of the City,
including real estate excise tax affidavit forms for transactions exempt or otherwise not subject to tax;
16. Disclosing such return or tax information to the court or hearing examiner in respect to the City's
application for a subpoena if there is probable cause to believe that the records in possession of a third party
will aid the Director in connection with its official duties under this title or a civil or criminal investigation.
D. The Director may disclose return or taxpayer information to a person under investigation or during any court
or administrative proceeding against a person under investigation as provided in this subsection D.
1. The disclosure must be in connection with the Finance Department's official duties under this Title, or a
civil or criminal investigation. The disclosure may occur only when the person under investigation and the
person in possession of data, materials, or documents are parties to the return or tax information to be
Chapter 3.54 TAX ADMINISTRATIVE
disclosed. The Finance Department may disclose return or tax information such as invoices, contracts, bills,
statements, resale or exemption certificates, or checks. However, the Finance Department may not disclose
general ledgers, sales or cash receipt journals, check registers, accounts receivable/payable ledgers,
general journals, financial statements, expert's workpapers, income tax returns, state tax returns, tax return
workpapers, or other similar data, materials, or documents.
2. Before disclosure of any tax return or tax information under this subsection D, the Director must, through
written correspondence, inform the person in possession of the data, materials, or documents to be
disclosed. The correspondence must clearly identify the data, materials, or documents to be disclosed. The
Director may not disclose any tax return or tax information under this subsection D until the time period
allowed in 3 of this subsection has expired or until the court has ruled on any challenge brought under 3 of
this subsection.
3. The person in possession of the data, materials, or documents to be disclosed by the Finance
Department has twenty days from the receipt of the written request required under 2 of this subsection to
petition the superior court of the county in which the petitioner resides for injunctive relief. The court must
limit or deny the request of the Director if the court determines that:
a. The data, materials, or documents sought for disclosure are cumulative or duplicative, or are
obtainable from some other source that is more convenient, less burdensome, or less expensive;
b. The production of the data, materials, or documents sought would be unduly burdensome or
expensive, taking into account the needs of the Finance Department, the amount in controversy,
limitations on the petitioner's resources, and the importance of the issues at stake; or
c. The data, materials, or documents sought for disclosure contain trade secret information that, if
disclosed, could harm the petitioner.
4. The Director must reimburse reasonable expenses for the production of data, materials, or documents
incurred by the person in possession of the data, materials, or documents to be disclosed.
5. Requesting information under 2 of this subsection that may indicate that a taxpayer is under investigation
does not constitute a disclosure of tax return or tax information under this section.
E. Service of a subpoena issued by the court or under ACC 2.46 does not constitute a disclosure of return or
tax information under this section. Notwithstanding anything else to the contrary in this section, a person served
with a subpoena issued by the court or under ACC 2.46 may disclose the existence or content of the subpoena to
that person's legal counsel.
F. Any person acquiring knowledge of any return or tax information in the course of his or her employment with
the City and any person acquiring knowledge of any return or tax information as provided under subsection C.4,
5, 6, 7, 8, 9, or 11 of this section, who discloses any such return or tax information to another person not entitled
to knowledge of such return or tax information under the provisions of this section, is guilty of a misdemeanor. If
the person guilty of such violation is an officer or employee of the city, such person must forfeit such office or
employment and is incapable of holding any public office or employment in this city for a period of two years
thereafter.
3.54.240 Tax constitutes debt.
Chapter 3.54 TAX ADMINISTRATIVE
Any license fee or tax due and unpaid under this chapter, and all interest and penalties thereon, shall constitute a
debt to the City of Auburn and may be collected in the same manner as any other debt in like amount, which
remedy shall be in addition to all other existing remedies.
3.54.250 Unlawful actions—Violation —Penalties.
A. It shall be unlawful for any person liable for fees under this chapter(or other chapters as listed):
1. To violate or fail to comply with any of the provisions of this chapter or any lawful rule or regulation
adopted by the Director;
2. To make any false statement on any license application or tax return;
3. To aid or abet any person in any attempt to evade payment of a license fee or tax;
4. To fail to appear or testify in response to a subpoena issued pursuant to the rules of procedure of the
office of the hearing examiner;
5. To testify falsely in any investigation, audit, or proceeding conducted pursuant to this chapter.
B. Violation of any of the provisions of this chapter is a gross misdemeanor. Any person convicted of a violation
of this chapter may be punished by a fine not to exceed $1,000, imprisonment not to exceed one year, or both
fine and imprisonment. Penalties or punishments provided in this chapter shall be in addition to all other penalties
provided by law.
C. Any person, or officer of a corporation, convicted of continuing to engage in business after the revocation of a
license shall be guilty of a gross misdemeanor and may be punished by a fine not to exceed $5,000, or
imprisonment not to exceed one year, or both fine and imprisonment.
3.54.260 Suspension or revocation of business license and/or registration.
See ACC Chapter 5.15.
3.54.270 Closing agreement provisions.
The Director may enter into an agreement in writing with any person relating to the liability of such person in
respect of any tax imposed by any of the chapters within this title and administered by this chapter for any
taxable period(s). Upon approval of such agreement, evidenced by execution thereof by the Director and the
person so agreeing, the agreement shall be final and conclusive as to the tax liability or tax immunity covered
thereby, and, except upon a showing of fraud or malfeasance, or misrepresentation of a material fact:
A. The case shall not be reopened as to the matters agreed upon, or the agreement modified, by the
Director or the taxpayer; and
B. In any suit, action or proceeding, such agreement, or any determination, assessment, collection, payment,
abatement, refund, or credit made in accordance therewith, shall not be annulled, modified, set aside, or
disregarded.
3.54.280 Charge-off of uncollectible taxes.
Chapter 3.54 TAX ADMINISTRATIVE
The Director may charge off any tax, penalty, or interest that is owed by a taxpayer, if the Director
reasonably ascertains that the cost of collecting such amounts would be greater than the total amount that
is owed or likely to be collected from the taxpayer.
3.54.290 Severability.
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.