Loading...
HomeMy WebLinkAbout6963ORDINANCE NO. 6963 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON AMENDING SECTIONS 3.53.120, 3.54.030, 3.54.060, 3.54.070, 3.54.080, 3.54.140, 3.54.155, AND 3.54.210 OF THE AUBURN CITY CODE (ACC) RELATING TO THE IMPOSITION AND ADMINISTRATION OF THE CITY BUSINESS & OCCUPATION (B&O) TAX WHEREAS, Auburn City Code (ACC) Chapter 3.53 enacts the City's B&O tax and ACC 3.54 provides for administration of the B&O tax; and WHEREAS, sections of Chapter 3.53 and Chapter 3.54 ACC would benefit from amendments for clarity, Code consistency, and to match City updates related to administration of the Chapters; WHEREAS, Section 3.53.120.13 ACC as amended would repeal the Auburn Business Improvement Area (BIA) Assessment credit. Prior to September 27, 2021, there existed a credit equal to the BIA assessment fee imposed by Chapter 2.98 ACC. The BIA assessment was eliminated by Ordinance 6831 in September 2021, and therefore no further credits issued. No further credits shall issue under this section; and WHEREAS, Sections 3.54.030 and 3.54.060 ACC as amended would modify the definition for "reporting period" to exclude a monthly filing requirement; Section 3.54.070 ACC as amended would remove tax payment methods no longer available; and Section 3.54.080 ACC as amended would to change the records retention period from five to ten years to maintain consistency with City Code; and WHEREAS, Section 3.54.140 ACC related to "penalties" for late payments, evasion, and disregard of written instructions. This Section previously referenced the penalties imposed for the same under State law contained in RCW 82.32.090, but as Ordinance No. 6963 February 6, 2025 Page 1 of 3 amended incorporates the language and alters it to the extent necessary to maintain consistency with City Code and City administration; and WHEREAS, Section 3.54.155.13 ACC as amended corrects a reference to ACC 3.54.140; and WHEREAS, Section 3.54.210 ACC as amended adds an electronic method of submission of tax notice; and WHEREAS, the revisions proposed in this ordinance are in the best interest of the City and its taxpayers. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, DO ORDAIN as follows: Section 1. Amendment to City Code. Section 3.53.120 ACC is hereby amended to read as set forth in Exhibit A attached to this Ordinance. Section 2. Amendment to City Code. Sections 3.54.030; 3.54.060; 3.54.070; 3.54.080; 3.54.140; 3.54.155; and 3.54.210 ACC are hereby amended to read as set forth in Exhibit B attached to this Ordinance. Section 3. Implementation. The Mayor ' is authorized to implement those administrative procedures necessary to carry out the directives of this legislation. Section 4. Severability. The provisions of this ordinance are declared to be separate and severable. The invalidity of any clause, sentence, paragraph, subdivision, section, or portion of this ordinance, or the invalidity of the application of it to any person or circumstance, will not affect the validity of the remainder of this ordinance, or the validity of its application to other persons or circumstances. Ordinance No. 6963 February 6, 2025 Page 2 of 3 ORD 6963 — EXHIBITA Page 1 of 2 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 maybe credited against the tax imposed by ACC 3.53.040, the amount up to $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 years preceding application of the tax credit; b. The taxpayer employs 20 or more full-time equivalent positions in Auburn. An FTE position is defined as each 1,920 worker hours per calendar year; 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; and e. The taxpayer must employ a minimum of 20 FTEs in each quarter the credit is being applied. 3. The tax credit can be taken for the first 12 consecutive reporting quarters or three 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 Chapter 3.54 ACC, or any other ORD 6963 — EXHIBIT A Page 2 of 2 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. 5. The director is authorized to promulgate rules implementing, interpreting, and enforcing the provisions of this section. A-MIST-17. MA _. .. ;• . .. . .. .. :. _ w .. .. . 0. • . .. I 1 . • . - .74" • _ I . .. . • u. .. .. .. .. MUST" .. ORD 6963 - EXHIBIT B Page 1 of 10 3.54.030 Definitions. For purposes of this chapter: The definitions contained in Chapter 3.53 ACC 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. "Cash basis" means a basis of accounting which recognizes revenues and expenses as occurring in the reporting period when they were actually either received or paid. B. "City" means the city of Auburn and all of its departments, including Auburn public libraries and Auburn public utilities. C. "Department" means the tax division of the finance department of the city or any successor department. D. "Director" means the director of the finance department of the city or any officer, agent, or employee of the city designated to act on the director's behalf. E. "Generally accepted accounting principles" means those national accounting standards promulgated by the Financial Accounting Standards Board for businesses and nonprofit associations or by the Governmental Accounting Standards Board for state agencies or local governments. F. "Records" means the books of accounts and other business -related records of a taxpayer subject to the city's tax code or license code. Such records include ledgers, subsidiary ledgers, invoices, receipts, registration and incorporation documents, federal, state and local tax returns, and any other records necessary to establish the amounts due under the provisions of this code. G. "Reporting period" means: 12-. A three-month period beginning the first day of January, April, July or October of each year (quarterly); or ORD 6963 - EXHIBIT B Page 2of10 2-. A 12-month period beginning the first day of January of each year (annual). H. "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. I. "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. J. 'Tax" means the amount, usually based upon gross income, assessed upon a person doing business under the provisions of Chapter 3.53 ACC. K. 'Tax year" or "taxable year" means the calendar year. 3.54.060 When due and payable - Reporting periods - Qquarterly, and annual returns - Threshold provisions or relief from filing requirements - Computing time periods - Failure to file returns. A. Other than any annual license fee or registration fee assessed under this chapter, the tax imposed by Chapter 3.53 ACC shall be submitted using only city -authorized tax return forms, and shall be due and payable as follows: 1. Taxpayers with gross income of less than $2,000 per calendar year that do not maintain a permanent operating location within the city are exempt from the tax and return requirements imposed by this chapter. 2. Taxpayers who were directly contacted by the director or the total estimated tax due imposed under Chapter 3.53 ACC for a calendar year exceeds $3,000, shall be due in quarterly installments, and paid on or before the thirtieth day of the month after the end of the quarterly period in which the income was received. ORD 6963 - EXHIBIT B Page 3 of 10 3. All other businesses who did not receive a written notification from the director or whose estimated annual tax due imposed by this chapter is less than $3,000 shall be due annually and paid on or before April 30th of the year following the year in which the income was received. The gross receipts and deduction amounts shall be entered on the tax return even though no tax may be due. B. Director reserves the right to review and reassign tax return filing frequency on a case -by -case basis, as warranted by administrative requirements and applicable under this chapter. C. For purposes of the tax imposed by Chapter 3.53 ACC, any person whose value of products, gross proceeds of sales, or gross income of the business 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 declaring no tax due 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. D. Taxes shall be paid as provided in this chapter and accompanied by a return on city -authorized 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. E. Tax returns must be filed and returned by the due date whether or not any taxis owed, unless a taxpayer qualifies for an exemption under subsections LAX11 and(O of this section and will be placed on the nonreporting status. Each taxpayer who claims a tax filing exemption must submit a written request to the director providing the detailed explanations. The director will inform a taxpayer in writing about the status change and only written notice from the director confirms the nonreporting status. F. 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. G. 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 ORD 6963 - EXHIBIT B Page 4 of 10 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. H. Unless otherwise provided in this chapter, 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. 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. 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. ORD 6963 - EXHIBIT B Page 5 of 10 D. 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. E. 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 "nonsufficient funds" (NSF) charge of $35.00 is received by the director. Any license issued upon payment with a NSF check will be considered void, and shall not be reissued until payment (including the $35.00 NSF fee) is received. F. The director is authorized, but not required, to mail tax return forms to taxpayers, but failure of the taxpayer to obtain 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. (Ord. 6898 § 2 (Exh. B), 2023; Ord. 6814 § 2 (Exh. B), 2021.) 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 ten 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. ORD 6963 - EXHIBIT B Page 6 of 10 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 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. 3.54.140 Late payment - Disregard of written instructions - Evasion - Penalties. A. Delinquent Penalty received by the directer by the due date, the direGteF shall add a peRalty on aGGeFdaRce with "P 4� ga�� �, a� it r,^'"' o„'s+s ^r it may be ram,^n do.� If a taxpayer fails to pay any tax due on a return by its due date there may be assessed a penalty of nine percent of the amount of the tax: and if the tax is not received on or before the last day of the month following the due date there is assessed a total penalty of nineteen percent of the amount of the tax under this subsection: and if the tax is not received on or before the last day of the second month following the due date there is assessed a total penalty of twenty-nine percent of the amount of the tax under this subsection No penalty so added may be Jess than five dollars B. Substantially Undernaid_Penalty. a Geerdanceyieth RQU Q2 22 QQQQ as ;+ new o + nr as ;+ may be rnenrior� If the director m rc new c� �c�-- a a determines that a taxpayer has substantially underpaid any tax, the director may add a penalty to the tax as follows: 1_. There may be assessed a penalty of five percent of the amount of the tax determined by the department to be due ORD 6963 - EXHIBIT B Page 7 of 10 2 If payment of any tax determined by the director or designee to be due is not received by the City by the due date specified in the notice, or any extension thereof, there is assessed a total penalty of fifteen percent of the amount of the tax under this subsection; and if payment of any tax determined by the director to be due is not received on or before the thirtieth day following the due date specified in the notice of tax due or any extension thereof, there is assessed a total penalty of twenty-five percent of the amount of the tax under this subsection. 3 No penalty so added may be less than five dollars. 4 As used in this section, "substantially underpaid" means that the taxpayer has paid less than eighty percent of the amount of tax determined by the director to be due for all of the types of taxes included in and for the entire period of time covered by. the City's examination and the amount of underpayment is at least one thousand dollars. • e C-D. Failure to Register Penalty. If the riiror+nr finds, th;#-a person has engaged in aRy 1961cineSS- frc)m thp dirpeter a license- as requiFed by Chapter Ez4-9 ACC, the directer shall impose peRaity shall be imposed under this subser-Aip-A D if the PeFSG)R who has engaged iR 1961soness ii eRsed. If the director finds that a person has engaged in any taxable business or activities under this title without a license required by Chapter 5.10 ACC the director must impose a penalty of five percent of the amount of tax due from that person for the period that the person was not registered as required No penalty shall be imposed under this subsection if the person obtains the required license before receiving written notice of the licensing requirement from the director. D€. Failure to Follow Written Tax Reporting Instructions. LtII•f7�7iTIrl. mm, ORD 6963 - EXHIBIT B Page 8 of 10 taxpayer's deficient tax payment resulted from the taxpayer's failure to follow specific city written tax reporting instructions the director shall assess a penalty of ten percent of the amount of the tax that should have been reported or the additional tax found due if there is a deficiency because of the failure to follow the instructions. 1 A taxpayer disregards specific written instructions when the City has informed the taxpayer in writing of the taxpayer's tax obligations and the taxpayer fails to act in accordance with those instructions unless, in the case of a deficiency. the City has not issued final instructions because the matter is under appeal pursuant to this chapter or City Code. 2 The City may not assess the penalty under this section upon any taxpayer who has made a good faith effort to comply with the specific written instructions provided by the City to that taxpayer. A taxpayer will be considered to have made a good faith effort to comply with specific written instructions to file returns only -if -the taxpayer can show good cause for the failure to comply with such instructions. 3 "Good cause" means the inability of a taxpayer to comply with the requirements_ of this Chapter because any circumstance or condition exists that, in the director's judgment prevents the taxpayer from complying with the requirements of this section. "Good cause" also includes any circumstance that in the director's judgment, supports the efficient or effective administration of the tax code of the City. 4 Specific written instructions maybe given as a part of a tax assessment, audit, determination closing agreement or other written communication provided that such specific written instructions apply only to the taxpayer addressed or referenced on such communication Any specific written instructions by the director must be clearly_ identified as such and must inform the taxpayer that failure to follow the instructions may subject the taxpayer to the penalties imposed by this subsection. 5 If the director determines that it is necessary to provide specific written instructions to a taxpayer that does not comply with the requirement to file returns as provided by this Chapter, the specific written instructions must provide the taxpayer with a minimum of forty-five days to come into compliance with its payment obligations before the City may impose the penalty authorized in this subsection. ORD 6963 - EXHIBIT B Page 9 of 10 E-F. Evasion penalty. 0 RteRt W evade the tax payable, the c-lirp-rut-A-r Shall assess a peRalty in aGG()rr-J-;;nr--P- Ihfot-h RQU g� 2� nanrti) ac it ROW eXlStS er s it may be ameRded. If the director finds that all or any part of _.. - a taxpayer's deficient tax payment resulted from an intent to evade the tax, the director shall assess a further penalty of fifty percent of the additional tax found to be due. FG. The penalties imposed under subsections A through Dof 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. G#. 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. .. ... . .- Me r • Mom-- . • 0 . • . # • • #ONSILOTAWRIM... 3.54.155 Voluntary registration prior to director contact. If an unregistered taxpayer doing business in the city voluntarily registers with the director pursuant to ACC 3.54.050 prior to being contacted by the director: A. The director's assessment of taxes and/or interest pursuant to ACC 3.54.060(G) shall be limited to four calendar years before the year of registration; and B. The taxpayer's payments for the registration year and prior assessed years shall not be subject to the fate "Failure to Register" penalty in ACC 3.54.140. ORD 6963 - EXHIBIT B Page 10 of 10 3.54.210 Mailing Submission of notices. Any notice required by this chapter to be mailed to any taxpayer or licensee shall be sent by ordinary mail and/or electronically submitted to, add.ressed 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 maid 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 mailing and/or email addresses.