Ordinance 08-014 Providing Utility Tax CITY OF SPOKANE VALLEY
SPOKANE COUNTY,WASHINGTON
ORDINANCE NO.08-014
AN ORDINANCE OF THE CITY OF SPOKANE VALLEY, SPOKANE COUNTY,
WASHINGTON, ESTABLISHING SPOKANE VALLEY MUNICIPAL CODE
CHAPTER 3.70 PROVIDING FOR A UTILITY TAX WITHIN TILE CITY OF
SPOKANE VALLEY, PROVIDING PROCEDURES FOR THE IMPLEMENTATION
THEREOF, INCLUDING CIVIL AND CRIMINAL PENALTIES, AND OTHER
MATTERS PROPERLY RELATED THERETO.
WHEREAS, the State of Washington pursuant to RCW 35A.82.020 and RCW 35.2I.870 has
authorized code cities to raise revenue for the privilege of conducting certain utility businesses in the City
and use the revenues to maintain the services,duties and obligations of the City; and
WHEREAS, an excise utility tax may be imposed upon gross receipts of a business provided the
tax is uniform in its application; and
WHEREAS,the City desires to provide for a City Utility Tax as authorized by law.
NOW, THEREFORE, the City Council of the City of Spokane Valley, Spokane County,
Washington,ordains as follows:
Section 1. Intent- The City of Spokane Valley declares that the intent of this Ordinance is
to establish Spokane Valley Municipal Code Chapter 3.70 to provide authority to charge a utility tax on
certain utility services.
Section 2. Creation of New Chapter Providing for Charging. Utility Tax. The City of
Spokane Valley adopts a new chapter to the Spokane Valley Municipal Code, 3.70 entitled "Utility Tax,"
which is set forth as follows:
3.70.010 Definitions. Unless the context clearly indicates otherwise, the words, phrases and
terms used in this Ordinance shall have the following meanings:
A. "Cellular Telephone Service" means a two-way voice and data
telephone/telecommunications system based in whole or substantially in part on wireless radio
communications which is not subject to regulation by the Washington State Utilities and
Transportation Commission (WUTC). This includes cellular mobile service and prepaid wireless
calling service. The definition of cellular mobile service includes other wireless radio
communications services such as specialized mobile radio (SMR), Personal communications
services (PCS), and any other evolving wireless radio communications technology which
accomplishes a purpose similar to cellular mobile service. Cellular Telephone Service is included
within the definition of"Telephone Business" for the purposes of this Ordinance.
B. "Call by Call Basis" means any method of charging for Telephone Business where the
price for the service is measured by individual calls.
C. "City Manager"means the City Manager and designees.
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D. "Competitive Telephone Service" means the providing by any Person of
telecommunications equipment or apparatus, or service related to that equipment or apparatus
such as repair or maintenance service, if the equipment or apparatus is of a type which can be
provided by Persons that are not subject to regulation as telephone companies under Title 80
RCW and for which a separate charge is made.
E. "Gross Income" means the value proceeding or accruing from the sale of tangible
property or service, and receipts (including all sums earned or charged, whether received or not)
by reason of investment of capital in the business engaged in (including rentals, royalties, interest
and other emoluments however designated)excluding receipts or proceeds from the sale or use of
real property or any interest therein and the proceeds from the sale of notes, bonds, mortgages,or
other evidences of indebtedness, or stocks and the like and without any deduction on account of
the cost of the property sold, cost of materials used, labor costs, interest or discount paid, or any
expenses whatsoever, and without any deduction on account of losses. Further deductions and
exceptions from Gross income upon which the fee or tax described in this Ordinance is computed
are set forth in 3.70.060.
F. "Pager Service" means service provided by means of an electronic device which has the
ability to send or receive voice or digital messages transmitted through the local telephone
network,via satellite or any other form of voice or data transmission. "Pager Service" is included
within the definition of"Telephone Business"for purposes of this Ordinance.
G. "P_erson or Person?' means persons of either sex, firms, co-partnerships, corporations,
limited liability companies, and other associations, whether acting by themselves or through
servants,agents or employees.
H. "Service Address" means the street address representative of where the customer's use of
the telecommunications service primarily occurs, which must be the residential street address or
the primary business street address of the customer. In the case of mobile telecommunications
services, "place of primary use" must be within the licensed service area of the home service
provider. For purposes of determining the Service Address of prepaid wireless calling services
the business location of the seller of the prepaid wireless calling service shall be the presumptive
Service Address, unless the Taxpayer has actual knowledge to the contrary.
I. "Taxpayer" means any Person liable for the license fee or tax imposed by this Ordinance.
J. "Tax Year or Taxable Year" means (1) the year commencing January l st and ending on
December 31st, of such year, or (2) the Taxpayer's fiscal year when permission is obtained from
the City Manager to,use that period as the tax year.
K. "Telephone Business" means the providing access by a person or business to a local
telephone network, local telephone network switching service, toll service, cellular telephone
service,coin telephone services, or providing telephonic, video, data or similar communication or
transmission for hire, via a local telephone network, toll line or channel cable, microwave, or
similar communication or transmission system. The term includes cooperative or farmer line
telephone companies or associations operating an exchange. Telephone Business also includes the
provision of telephone service through technology commonly referred to as voice over internet
protocol (VOIP). Telephone Business does not include the providing of Competitive Telephone
Service, nor the providing of broadcast services by radio and Telephone stations.
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3.70.020 Utility Tax Levied- Rate. There is levied on and shall be collected from every Person a
tax for the act or privilege of engaging in utility business activities, measured by multiplying the below
respective rates against Gross Income as follows:
A. Telephone Business. Upon every Person engaged in or carrying' on any Telephone
Business (including Cellular Telephone Service and Pager Service) within the City a fee or tax
equal to 6% of the total Gross Income from such business`in the City.Tax liability imposed under
this Section shall not apply to that portion of Gross Income derived from charges to another
telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching
charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or
charges for, interstate services, or charges for network telephone service that is purchased for the
purpose of resale.
3.70.030 Allocation of Income-Cellular Telephone Service.
A. Service Address. Payments by a customer for the telephone service from telephones
without a fixed location shall be allocated among taxing jurisdictions to the location of the
customer's principal Service Address during the period for which the tax applies.
B. Presumption. There is a presumption that the service address a customer supplies to the
Taxpayer is current and accurate, unless the Taxpayer has actual knowledge to the contrary.
C. Call-by-Call Based Service. When the Cellular Telephone Service is provided by the
Telephone Business to a subscriber on a Call-by-Call basis, the Gross Income shall be assigned
consistent with the Taxpayer's accounting system to 1) the location in which the call originates
and terminates,or 2)the location in which the call either originates or terminates and in which the
service address is located.
D. Dispute Resolution. If there is a dispute between or among the City and one or more
other cities, as to the service address of a customer who is receiving Cellular Telephone Services
and the dispute is not resolved by negotiation among the parties, then the dispute shall be
resolved by the City and the other city or cities by submitting the issue for settlement to the
Association of Washington Cities (AWC). Once the taxes on the disputed revenues have been
paid to one of the contesting cities, the Cellular Telephone Service company shall have no further
liability with respect to additional taxes on the disputed revenues so long as it changes its billing
records for future revenues to comport with the settlement facilitated by AWC.
E. City Manager Authority. The City Manager is authorized to represent the City in
negotiations with other cities for the proper allocation of Cellular Telephone Service taxes
imposed pursuant to this Ordinance. Any agreement with respect to the allocation of the Cellular
Telephone Service taxes shall receive the final approval of the City Council.
3.70.040 Remittance.
A. Monthly Remittance. The tax imposed by this Ordinance shall be collected, reported and
remitted to the City monthly on or before the last day Of the subsequent month. If a Taxpayer
commences to engage in business at any time other than the first day of the month, then the
Taxpayer's first return and tax payment shall be based upon and cover the portion of the month
during which the Taxpayer engaged in business.
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B. Returns. The remittance shall be in legal tender and shall be accompanied by a return on
a form to be provided and prescribed by the City. The Taxpayer shall be required to swear or
affirm in writing on the return that the information therein given is full and true and that the
Taxpayer knows it to be so. if the total tax for which any Person is liable under this Ordinance is
not reasonably expected to exceed $100 in any month, the Taxpayer may file a written request
with the City Manager to file and pay taxes due under this Ordinance annually. Such requests are
subject to approval by the City Manager.
3.70.050 Taxpayer engaged in more than one business. Any Person engaged in, or carrying on
more than one activity or business subject to the tax imposed by this Ordinance, shall pay the tax so
imposed on each such business or activity.
3.70.060 Deductions. In computing the tax imposed by this Ordinance, the following may be
deducted from the measure of the tax:
A. Adjustments made to a billing or to a customer account or to a telecommunications
company accrual account in order to reverse a billing or charge that had been made as a result of
third-party fraud or other crime and for which the Taxpayer can provide documentation to the
City.
B. All cash discounts allowed and actually granted to customers of the Taxpayer during the
tax year and for which the Taxpayer can provide documentation to the City.
C. Amounts derived from transactions in interstate or foreign commerce, or from business
done for the government of the United States, its,officers or agents in their official capacity, and
any amount paid by the Taxpayer to the United States or the State of Washington,as excise taxes.
D. The amount of credit losses actually sustained by Taxpayers whose regular books are
kept on an accrual basis.
E. Amounts derived from business which the City is prohibited from taxing under the
Constitution or the laws of this State or the United States.
3.70.070 Record Retention Requirements. It shall be the duty of every Person liable for payment
of the tax hereunder to obtain an occupation license, as prescribed by Spokane Valley Municipal Code
Chapter 5.05, and to keep and preserve for a period of five years such books and records as will
accurately reflect the amount of Gross income from the business, and from which can be determined the
amount of any tax for which the Person may be liable under the provisions of this Ordinance. The term
"books and records"as used in this section includes but is not limited to copies of the Taxpayer's Federal
income tax returns, Federal excise tax returns, State of Washington excise tax returns, and copies of
income tax and excise tax audits made by the United States or the State of Washington and furnished to
such Person. The Taxpayer's books and records shall be available for examination at all reasonable times
by the City Manager and his or her duly authorized designees.
In the case of any Taxpayer who does not keep the necessary books and records within the City
for examination, it shall be sufficient if such Person produce the same within the City as instructed or
required by the City Manager.
Any Taxpayer who fails, neglects, or refuses to produce such books and records in accordance
with this Ordinance, or fails to file a return, in addition to being subject to other civil and criminal
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penalties provided by this Ordinance, is subject to a tax assessment in an amount determined by the City
Manager in accordance with the provisions of this Ordinance, which tax assessment shall be deemed
prima facie correct and shall be the amount of fee or tax owing to the City by the Taxpayer unless the
Person can prove otherwise by competent evidence. The Taxpayer shall be notified by certified mail of
the amount of tax assessment imposed pursuant to this Section, together with any penalty and/or interest
due,and the total of such amounts shall thereupon become immediately due and payable.
3.70.080 Tax Delinquency--Unlawful Acts.
A. Penalties and Interest. For each payment due, if such payment is not made by the due
date thereof,there shall be added penalty and interest as follows:
(I) If paid 1 - 10 days late, there shall be a penalty of 5%added to the amount of tax
due.
(2) If paid 11 - 20 days late, there shall be a penalty of 7% added to the amount of
tax due.
(3) If paid 21 - 30 days late,there shall be a penalty of 10% added to the amount of
tax due.
(4) If paid 31 - 60 days late, there shall be a penalty of 15% added to the amount of
tax due.
(5) If paid in excess of 60 days late, there shall be a penalty of 20% added to the
amount of tax due.
(6) In addition to the above penalty, the City shall charge the Taxpayer interest on all
taxes due at the rate Of one percent (1%) per month or portion thereof that said amounts
are past due.
(7) The tax imposed by this Ordinance, and all penalties and interest thereon, shall
constitute a debt to the City, and may be collected by court proceedings in the same
manner as any other debt which remedy shall be in addition to all other available
remedies. Any judgment entered in favor of the City may include an award to the City of
all court and collection costs including attorneys' fees to the extent permitted by law.
Amounts delinquent more than sixty days may be assigned to a third party for collection,
in which case the amount of any collection charges shall be in addition to all other
amounts owed. Amounts due shall not be considered paid until the City has received
payment for the full amount due or has discharged the amount due and not paid.
B. Unlawful Acts. It is unlawful for any Person liable for the tax imposed by this Ordinance
to fail to pay the tax when due or for any Person, firm, or corporation to make any false or
fraudulent return or any false statement in connection with the return.
C. Criminal Penalties. Any Person who intentionally violates any provision of this
Ordinance shall be guilty of a misdemeanor and upon conviction thereof punished pursuant to
state law or City ordinance.
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3.70.090 Quitting, Selling, or Transferring Business. Whenever any Taxpayer quits business, or
sells out, exchanges, or otherwise disposes of such business, any tax payable under this Ordinance shall
become immediately due and payable, and such Taxpayer shall, within ten (10) days thereafter, make a
return and pay the tax due; and any Person who becomes a successor shall become liable for the full
amount of any unpaid tax, interest, and penalties and shall withhold from the purchase price an amount
sufficient to pay any tax due from the Taxpayer until such time as 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. If such tax,
interest or penalty has not been paid by the Taxpayer within 10 days from the date of such sale, exchange,
or disposal, the successor shall become liable for the payment of the full amount of tax, interest and
penalties. The successor's liability shall be limited to the purchase price or fair market value of the
business purchased if no cash transaction took place.No successor shall be liable for any tax due from the
Taxpayer from whom the successor has acquired a business or stock of goods if the successor gives
written notice to the City Manager of such acquisition and no assessment is issued by the City Manager
within six (6) months of receipt of such notice against the former operator of the business. Taxpayer's
account will remain on an active status and be subject to all taxes, penalties, and interest until such time
as the City Manager is notified in writing that the Taxpayer has discontinued business activity within the
City. Nothing in this Ordinance is intended nor shall it be construed to prohibit the successor from
engaging in business in the City pending resolution ofthe-successor's tax liability.
3.70.100 Tax Not Exclusive. The tax levied herein shall be additional to any license fee or tax
imposed or levied under any other law or under any other ordinance of the City.
3.70.110 Rate Changes. No change in the rate of tax upon Persons engaging in the business of
furnishing utility services, shall apply to business activities occurring before the effective date of the
change. Furthermore; except for a change in the tax rate authorized by RCW 35.21.870, no change in the
rate of the tax on Persons engaging in the business of providing utility services may take effect sooner
than sixty(60)days following the enactment of the ordinance establishing the change.
3.70.120 Appeal Procedure. Any Taxpayer aggrieved by the amount of the fee or tax found by
the City Manager to be required under the provisions of this Ordinance may, upon full payment of the
amount assessed, appeal from such finding by filing a written notice of appeal with the City Clerk within
fourteen (14) days from the date such Taxpayer was given notified in writing of such-amount. The Clerk
shall, as soon as practicable, fix a time and place for the hearing of such appeal before the Hearing
Examiner, which time shall be not more than sixty (60) days after the filing of the notice of appeal, and
shall cause a notice of the time and place thereof to be delivered or mailed to the appellant. At such
hearing before the Hearing Examiner,the Taxpayer shall be entitled to be heard and to introduce evidence
in his or her own behalf.The Hearing Examiner shall render a decision, together with findings Of fact and
conclusions of law, based upon the evidence presented at the time of the hearing and all material on file in
the case. The Hearing Examiner's decisions shall indicate-the correct amount of the fee or tax owing. The
Hearing Examiner's decision shall be final. The appellant or the City may appeal the decision of the
Hearing Examiner to the Superior Court of Washington in and for Spokane County within thirty(30)days
after the date of the Hearing Examiner's decision. The Hearing Examiner may, by subpoena, require the
attendance of'any Person, and may also require him/her to produce any pertinent books and records. Any
Person served with such subpoena shall appear at the time and place therein stated and produce the books
and records required, if any, and shall testify truthfully under oath administered by the Hearing Examiner
as to any matter required of him/her pertinent to the appeal,and it shall be unlawful for him/her to fail or
refuse so to do.
3.70.130 Over or Underpayment of Tax. In the event that any Person makes an overpayment,
and within two years of the date of such overpayment makes application for a refund or credit, the
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Person's claims shall be allowed and a refund made by the City upon determination by the City Manager
that no other sums are owed by the Person to the City. If a Person determines that the tax has been
underpaid and without notice by any party pays the amount due to the City, such amount shall not be
subject to penalty.
3.70.140 Designation of Use of Funds Generated by Telephone Utility Tax. All net revenues
generated through taxation of telephone business pursuant to this chapter shall be designated for use
exclusively in the City road fund.
Section 3. Severability. If any section, sentence, clause or phrase of this Ordinance should be
held to be invalid or unconstitutional by, a court of competent jurisdiction, such invalidity or
unconstitutionality shall not affect the validity or constitutionality of any other section,sentence,clause or
phrase of this Ordinance.
Section 4 Effective Date. This Ordinance shall be in full force and effect thirty (30) days after
date of publication of this Ordinance or a summary thereof in the official newspaper of the City, and the
taxes imposed herein shall take effect on January 1,2009.
PASSED by the City Council of the City of Spokane Valley on : .;ust 12,2008.
1,
l'op"ryor, Rich t unson
ATTES '
1• -
c - . 4)—(City Clerk,Christine Bainbridge 6,1L------
Approved as to Form:
r
C
Officevof the Cr Attorney
Date of Publication: August 22. 2008
Effective Date: September 22.2008
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