The provisions of this chapter shall be deemed an exercise of the power of the city of Poulsbo, pursuant to Washington Constitution Article XI, Section 12, RCW 35A.11.020 and 35A.82.020, to license business activity for the purpose of raising 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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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. Where provisions of Chapter 82.32 RCW are incorporated in this chapter, “department” as used in Chapter 82.32 RCW shall refer to the “director” as defined in this section and “warrant” as used in Chapter 82.32 RCW shall mean “citation or criminal complaint.”
A. 
“Business”
means and 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.
B. 
“Business and occupation 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.
C. 
“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.
D. 
“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 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 (RCW Title 62A) do not determine when or where delivery of tangible personal property occurs for purposes of taxation.
F. 
“Digital products”
means digital goods, digital codes, digital automated services, and the services described in RCW 82.04.050(2)(g) and (6)(b).
G. 
“Director”
means the city’s finance director or designee.
H. 
“Eligible gross receipts tax”
means a tax which:
1. 
Is imposed on the act or privilege of engaging in business activities within RCW 82.04.050; 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 nonlocal jurisdiction above the county level.
I. 
“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.
1. 
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 this subsection. 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.
2. 
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.
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.
l. 
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 acting on its behalf.
3. 
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.
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 the city’s trade show or multiple vendor event ordinances.
f. 
Conducting advertising through the mail.
g. 
Soliciting sales by phone from a location outside the city.
4. 
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 (I)(3) of this section.
5. 
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.
J. 
“Extracting”
means the activity engaged in by an extractor and is reportable under the extracting classification.
K. 
“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.
L. 
“Extractor for hire”
means a person who performs under contract necessary labor or mechanical services for an extractor.
M. 
“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.
N. 
“Gross income of the business”
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.
O. 
“In this city” or “within this city”
includes all areas lying within the corporate city limits of the city of Poulsbo, including all federal, state, county, and municipal property.
P. 
“Manufacturing”
means the activity conducted by a manufacturer and is reported under the manufacturing classification.
Q. 
Manufacturer or 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 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.
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 computer software if the computer software is delivered from the seller to the purchaser by means other than tangible storage media, including the delivery by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser.
R. 
“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, nonprofit, or otherwise and the United States or any instrumentality thereof.
S. 
“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 (annually).
T. 
“Retailing”
means the activity of engaging in making sales at retail and is reported under the retailing classification.
U. 
Retail Service.
“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, racquetball, handball, squash, tennis, batting cages, day trips for sightseeing purposes, and others, when provided to consumers. “Amusement and recreation services” also includes the provision of related facilities such as basketball courts, tennis courts, handball courts, swimming pools, and charges made for providing the opportunity to dance. The term “amusement and recreation services” does not include instructional lessons to learn a particular activity such as tennis lessons, swimming lessons, or archery lessons;
2. 
Abstract, title insurance, and escrow services;
3. 
Credit bureau services;
4. 
Automobile parking and storage garage services;
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.
V. 
“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.
W. 
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.
X. 
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
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; or
f. 
Purchases for the purpose of satisfying the person’s obligations under an extended warranty as defined in subsection (X)(8) 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.
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 subsection (X)(1)(a), (X)(1)(b), (X)(1)(c), (X)(1)(d), (X)(1)(e), or (X)(1)(f) of this section following such use.
The term also means every sale of tangible personal property to persons engaged in any business that is taxable under RCW 82.04.280(1)(a), (1)(b), and (1)(g), 82.04.290, and 82.04.2908.
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 RCW 82.04.050(1)(g).
3. 
The term “sale at retail” or “retail sale” includes 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:
a. 
Information technology training services, technical support, and other services including, but not limited to, assisting with network operations and support, help desk services, in-person training related to hardware or software, network system support services, data entry services, and data processing services; or
b. 
Custom website development services. For the purposes of this subsection (X)(3), “website development services” means the design, development, and support of a website provided by a website developer to a customer; or
c. 
Investigation, security services, security monitoring services, and armored car services including, but not limited to, background checks, security guard and patrol services, personal and event security, armored car transportation of cash and valuables, and security system services and monitoring. This does not include locksmith services; or
d. 
Temporary staffing services. For the purposes of this subsection (X)(3), “temporary staffing services” means providing workers to other businesses, except for hospitals licensed under Chapter 70.41 or 71.12 RCW, for limited periods of time to supplement their workforce and fill employment vacancies on a contract or for fee basis; or
e. 
Advertising Services.
i. 
For the purposes of this subsection (X)(3), “advertising services” means all digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements including, but not limited to:
(A) 
Layout, art direction, graphic design, mechanical preparation, production supervision, placement, referrals, acquisition of advertising space, and rendering advice concerning the best methods of advertising products or services; and
(B) 
Online referrals, search engine marketing, and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign.
ii. 
“Advertising services” does not include:
(A) 
Web hosting services and domain name registration;
(B) 
Services rendered in respect to the following:
(1) 
“Newspapers” as defined in RCW 82.04.214;
(2) 
Printing or publishing under RCW 82.04.280; and
(3) 
“Radio and television broadcasting” within this state as defined in Chapter 82.04 RCW (Section 1, Chapter 9, Laws of 2025); and
(C) 
Services rendered in respect to out-of-home advertising, including: billboard advertising; street furniture advertising; transit advertising; place-business advertising, such as in-store display advertising or point-of-sale advertising; dynamic or static signage at live events; naming rights; and fixed signage advertising. Out-of-home advertising does not include direct mail; or
f. 
Live presentations including, but not limited to, lectures, seminars, workshops, or courses where participants attend either in person or via the internet or telecommunications equipment that allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time.
For the purposes of subsections (X)(3)(a) through (X)(3)(c) and (X)(3)(e) of this section, the terms “sale at retail” and “retail sale” do not include a sale between members of an affiliated group as defined in RCW 82.04.299(1)(f).
4. 
“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 the tenants thereof, and also excluding sales of laundry service to nonprofit health care facilities, and excluding services rendered in respect to live animals, birds and insects;
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 month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same. For the purposes of this subsection, it shall be presumed that the sale of and charge made for the furnishing of lodging for a continuous period of one month or more to a person is a rental or lease of real property and not a mere license to enjoy the same;
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 subsections (X)(4)(a) through (X)(4)(g) of this section when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a “sale at retail” or “retail sale” even though such property, labor and services may be resold after such use or consumption. Nothing contained in this subsection shall be construed to modify subsection (X)(1) of this section and nothing contained in subsection (X)(1) of this section shall be construed to modify this subsection.
5. 
“Sale at retail” or “retail sale” shall also include the providing of competitive telephone service to consumers.
6. 
“Sale at retail” or “retail sale”:
a. 
Shall also include the sale of prewritten software, custom software, and customization of prewritten computer software to a consumer, 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 (X)(6)(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.
b. 
i. 
The term “sale at retail” or “retail sale” shall also include the charge made to consumers for the right to access and use prewritten computer software, custom software, and customization of prewritten computer software, where possession of the software is maintained by the seller or a third party, regardless of whether the charge for the service is on a per-use, per-user, per-license, subscription, or some other basis.
ii. 
(A) 
The service described in subsection (X)(6)(b)(i) of this section includes the right to access and use prewritten software, custom software, and customization of prewritten computer software to perform data processing.
(B) 
For purposes of this subsection (X)(6)(b)(ii), “data processing” means the systematic performance of operations on data to extract the required information in an appropriate form or to convert the data to usable information. Data processing includes check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities.
7. 
“Sale at retail” or “retail sale” shall also include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state, the state of Washington, or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind.
8. 
“Sale at retail” or “retail sale” shall also include the sale of or charge made for an extended warranty to a consumer. For purposes of this subsection, “extended warranty” means an agreement for a specified duration to perform the replacement or repair of tangible personal property at no additional charge or a reduced charge for tangible personal property, labor, or both, or to provide indemnification for the replacement or repair of tangible personal property, based on the occurrence of specified events. The term “extended warranty” does not include an agreement, otherwise meeting the definition of extended warranty in this subsection, if no separate charge is made for the agreement and the value of the agreement is included in the sales price of the tangible personal property covered by the agreement.
9. 
“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.
10. 
“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 by-products of weapons production and nuclear research and development.
11. 
“Sale at retail” or “retail sale” shall not include the sale of or charge made for labor and services rendered for environmental remedial action.
12. 
a. 
“Sale at retail” or “retail sale” shall also include the following sales to consumers of digital goods, digital codes, and digital automated services:
i. 
Sales in which the seller has granted the purchaser the right of permanent use;
ii. 
Sales in which the seller has granted the purchaser a right of use that is less than permanent;
iii. 
Sales in which the purchaser is not obligated to make continued payment as a condition of the sale; and
iv. 
Sales in which the purchaser is obligated to make continued payment as a condition of the sale.
b. 
A retail sale of digital goods, digital codes, or digital automated services under this subsection (X)(12)(b) 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.
c. 
A retail sale of digital goods, digital codes, or digital automated services does not include the following services if the sale occurs between members of an affiliated group as defined in RCW 82.04.299(1)(f):
i. 
Any service that primarily involves the application of human effort by the seller, and the human effort originated after the customer requested the service;
ii. 
Live presentations, such as lectures, seminars, workshops, or courses, where participants are connected to other participants via the internet or telecommunications equipment, which allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time;
iii. 
Advertising Services. For purposes of this subsection, “advertising services” means all services directly related to the creation, preparation, production, or dissemination of advertisements. Advertising services include layout, art direction, graphic design, mechanical preparation, production supervision, placement, and rendering advice to a client concerning the best methods of advertising that client’s products or services. Advertising services also include online referrals, search engine marketing and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign. Advertising services do not include web hosting services and domain name registration; and
iv. 
Data Processing Services. For purposes of this subsection, “data processing service” means a primarily automated service provided to a business or other organization where the primary object of the service is the systematic performance of operations by the service provider on data supplied in whole or in part by the customer to extract the required information in an appropriate form or to convert the data to usable information. Data processing services include check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities. Data processing does not include the service described in subsection (X)(6)(b) of this section.
d. 
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.
13. 
“Sale at retail” or “retail sale” shall also include the installing, repairing, altering, or improving of digital goods for consumers.
Y. 
“Sale at wholesale” or “wholesale sale”
means any sale of tangible personal property, digital goods, digital codes, digital automated services, prewritten computer software, custom software, customization of prewritten software to a consumer, or services described in subsection (X)(6)(b)(i) of this section, 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.
Z. 
“Services.”
In the absence of a definition of “service” in state law, the cities generally use this term and classification to include those activities that do not fall within one of the other tax classifications used by a city.
AA. 
“Successor”
means any person to whom a tax-payer 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.
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. 
“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.
EE. 
“Value of products”
means:
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 (EE)(2) of this section, the value of a product manufactured or produced for purposes of serving as a prototype for the development of a new or improved product shall correspond to (a) the retail selling price of such new or improved product when first offered for sale; or (b) the value of materials incorporated into the prototype in cases in which the new or improved product is not offered for sale.
FF. 
“Wholesaling”
means engaging in the activity of making sales at wholesale, and is reported under the wholesaling classification.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
Except as provided in subsection B of this section, 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, whether the person’s office or place of business be within or without the city. The tax shall be in amounts to be determined by application of rates against gross proceeds of sale, gross income of business, or value of products, including by-products, as the case may be, as follows:
1. 
Upon every person engaging within the city in business as an extractor; as to such persons the amount of the tax with respect to such business shall be equal to the value of the products, including by-products, extracted within the city for sale or for commercial or industrial use, multiplied by the rate of two-tenths of one percent (0.002). 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 two-tenths of one percent (0.002). 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, except persons taxable under subsection B of this section; 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 two-tenths of one percent (0.002).
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 two-tenths of one percent (0.002).
5. 
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 two-tenths of one percent (0.002).
6. 
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 two-tenths of one percent (0.002). 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. 
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 less than one hundred twenty-five thousand dollars or is equal to or less than thirty-one thousand two hundred fifty dollars during any quarter if on a quarterly reporting basis.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2024-07 § 2, 2024; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
Applicability. Persons who engage in business activities that are within the purview of two or more subsections of Section 3.34.030 shall be taxable under each applicable subsection herein.
B. 
Exemptions. 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.
C. 
Credit Authorized. 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 and that the taxpayer paid the amount of tax sought to be credited.
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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 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 jurisdiction on the gross income derived from intangibles such as royalties, trademarks, patents, or goodwill shall assign those gross receipts to the jurisdiction where the person is domiciled (its headquarters is located).
3. 
A taxpayer that has paid an eligible gross receipts tax on the privilege of accepting or executing a contract with another city may deduct an amount equal to the contract price used to measure the tax due to the other city from the measure of the tax owed to the city.
B. 
Person Manufacturing Products Within and Without. A person manufacturing products within the city using products manufactured by the same person outside the city may deduct from the measure of the manufacturing tax the value of products manufactured outside the city and included in the measure of an eligible gross receipts tax paid to the other jurisdiction with respect to manufacturing such products.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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).
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
Effective January 1, 2008, gross income, other than persons subject to the provisions of Chapter 82.14A RCW, shall be allocated and apportioned as follows:
1. 
Gross income derived from all activities other than those taxed as service or royalties under Section 3.34.030(A)(6) shall be allocated to the location where the activity takes place.
2. 
In the case of sales of tangible personal property, the activity takes place where delivery to the buyer occurs.
3. 
In the case of sales of digital products, the activity takes place where delivery to the buyer occurs. The delivery of digital products will be deemed to occur at:
a. 
The seller’s place of business if the purchaser receives the digital product at the seller’s place of business;
b. 
If not received at the seller’s place of business, the location where the purchaser or the purchaser’s donee, designated as such by the purchaser, receives the digital product, including the location indicated by instructions for delivery to the purchaser or donee, known to the seller;
c. 
If the location where the purchaser or the purchaser’s 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;
d. 
If no address for the purchaser is maintained in the ordinary course of the seller’s business, the purchaser’s address obtained during the consummation of the sale, including the address of a purchaser’s payment instrument, if no other address is available, when use of this address does not constitute bad faith; and
e. 
If no address for the purchaser is obtained during the consummation of the sale, the address where the digital good or digital code is first made available for transmission by the seller or the address from which the digital automated service or service described in RCW 82.04.050(2)(g) or (6)(b) was provided, disregarding for these purposes any location that merely provided the digital transfer of the product sold.
4. 
If none of the methods in subsection (A)(3) of this section 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 (A)(3)(a) through (A)(3)(e) of this section, 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 subsection (A)(6)(d) of this section. The city may employ an alternative method for allocating the income from the sale of digital products if the methods provided in subsections (A)(3)(a) through (A)(3)(e) of this section are not available and the tax-payer 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.
5. 
For purposes of subsections (A)(3)(a) through (A)(3)(e) of this section, the following definitions apply:
a. 
“Digital automated services,” “digital codes,” and “digital goods” have the same meaning as in RCW 82.04.192;
b. 
“Digital products” means digital goods, digital codes, digital automated services, and the services described in RCW 82.04.050(2)(g) and (6)(c); and
c. 
“Receive” has the same meaning as in RCW 82.32.730.
6. 
Gross income derived from activities taxed as services and other activities taxed under Section 3.34.030(A)(6) 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.
a. 
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:
i. 
The individual is primarily assigned within the city;
ii. 
The individual is not primarily assigned to any place of business for the tax period and the employee performs fifty percent or more of his or her service for the tax period in the city; or
iii. 
The individual is not primarily assigned to any place of business for the tax period, the individual does not perform fifty percent or more of his or her service in any city and the employee resides in the city.
b. 
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.
c. 
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 (A)(6)(b) of this subsection 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 (A)(6)(c), “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.
d. 
If the allocation and apportionment provisions of this subsection (A)(6) do not fairly represent the extent of the taxpayer’s business activity in the city, the taxpayer may petition for or the tax administrators may require, in respect to all or any part of the taxpayer’s business activity, if reasonable:
i. 
Separate accounting;
ii. 
The exclusion of any one or more of the factors;
iii. 
The inclusion of one or more additional factors that will fairly represent the taxpayer’s business activity in the city; or
iv. 
The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer’s income.
e. 
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 (A)(6)(d)(iv) of this section must prove by a preponderance of the evidence:
i. 
That the allocation and apportionment provisions of this subsection (A)(6) do not fairly represent the extent of the taxpayer’s business activity in the city; and
ii. 
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.
f. 
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 (A)(6).
g. 
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.
h. 
The definitions in this subsection apply throughout this section.
i. 
“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.
ii. 
“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 tax imposed on the privilege of doing business.
iii. 
“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.
iv. 
“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.
v. 
“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:
(1) 
The customer’s residence; or
(2) 
If the customer’s residence is not known, the customer’s billing/mailing address.
(C) 
For a customer engaged in business:
(1) 
Where the services are ordered from;
(2) 
At the customer’s billing/mailing address if the location from which the services are ordered is not known; or
(3) 
At the customer’s commercial domicile if none of the above are known.
vi. 
“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.
vii. 
“Primarily assigned”
means the business location of the taxpayer where the individual performs his or her duties.
viii. 
“Service-taxable income” or “service income”
means gross income of the business subject to tax under either the service or royalty classification.
ix. 
“Tax period”
means the calendar year during which tax liability is accrued. If taxes are reported by a taxpayer on a basis more frequent than once per year, taxpayers shall calculate the factors for the previous calendar year for reporting in the current calendar year and correct the reporting for the previous year when the factors are calculated for that year, but not later than the end of the first quarter of the following year.
7. 
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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 until December 31, 2023, 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. Beginning January 1, 2024, until January 1, 2034, as used in this section, the activities of printing, and of publishing newspapers and periodicals or magazines are those activities to which the exemption in RCW 82.04.759 and the tax rate in RCW 82.04.280(1)(a) apply.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
Public Utilities. This chapter shall not apply to any person in respect to a business activity with respect to which tax liability is specifically imposed under the provisions of Chapter 3.36.
B. 
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.
C. 
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.
D. 
Employees.
1. 
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.
2. 
A booth renter is an independent contractor for purposes of this chapter.
E. 
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 days or longer.
F. 
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.
G. 
Amounts Derived From Manufacturing, Selling or Distributing Motor Vehicle Fuel. This chapter shall not apply to the manufacturing, selling, or distributing motor vehicle fuel, as the term “motor vehicle fuel” is defined in RCW 82.36.010 and 82.38.020 and exempt under RCW 82.36.440 and 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.
H. 
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.
I. 
Casual and Isolated Sales. This chapter shall not apply to the gross proceeds derived from casual or isolated sales.
J. 
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 days to reimburse in kind a previous accommodation sale by the buyer to the seller.
K. 
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.
L. 
Nonprofit Corporations or Nonprofit Organizations. This chapter shall not apply to nonprofit organizations exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, as hereafter amended, except with respect to retail sales of such persons.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
In computing the license fee or tax, there may be deducted from the measure of tax the following items:
1. 
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.
2. 
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.
3. 
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.
4. 
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.
5. 
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.
6. 
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.
7. 
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 nontransient residential properties.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
No person shall engage in any business in the city without having first obtained and being the holder of a valid business license issued under Chapter 5.04 and after paying the proper license fee for such business license.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 quarterly or annual reporting period depending on the tax amount owing or type of tax. For annual filers, tax payments, along with reports and returns on forms prescribed by the department, are due on or before April 15th of the year immediately following the end of the 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 tax-payer 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 this chapter, 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 one hundred twenty-five thousand dollars in the current calendar year, 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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2024-07 § 3, 2024; Ord. 2025-21 § 2 (Exh. A), 2025)
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. 
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 “nonsufficient funds” (NSF) charge of twenty dollars is received by the director. Any license issued upon payment with an NSF check will be considered void, and shall be returned to the director. No license shall be reissued until payment (including the twenty-dollar 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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
Every person liable for any fee or tax imposed by this chapter shall keep and preserve, for a period of five 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.
B. 
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.
C. 
Any person who fails, or refuses a 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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 hereunder shall be upon a calendar year basis.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
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 days from the date of the notice, or within such time as the director may provide in writing.
B. 
The director shall compute interest in accordance with RCW 82.32.050 as it now exists or as it may be amended.
C. 
If subsection B of this section is held to be invalid, then the provisions of RCW 82.32.050 existing at the effective date of the ordinance codified in this chapter shall apply.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
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:
1. 
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 ten years prior to the close of the calendar year in which the person was contacted in writing by the director;
2. 
Against a person that has committed fraud or who misrepresented a material fact; or
3. 
Against a person that has executed a written waiver of such limitations.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 years prior to the beginning of the calendar year in which the refund application is made or examination of records is completed.
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.
E. 
For tax periods after December 31, 2004, the director shall compute interest on refunds or credits of amounts paid or other recovery allowed a taxpayer in accordance with RCW 82.32.060 as it now exists or as it may be amended.
F. 
If subsection E of this section is held to be invalid, then the provisions of RCW 82.32.060 existing at the effective date of the ordinance codified in this chapter shall apply.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 Chapter 5.04, 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 F 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 Poulsbo 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.
J. 
If incorporation into the city of Poulsbo code of future changes to RCW 82.32.090 is deemed invalid, then the provisions of RCW 82.32.090 existing at the time the ordinance codified in this chapter is effective shall apply.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
The director may cancel any penalties imposed under Section 3.34.210(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 of this section.
B. 
A request for cancellation of penalties must be received by the director within thirty days after the date the 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 Section 3.34.210 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 thirty days after being notified by the department.
D. 
The director shall not cancel any interest charged upon amounts due.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 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 months have 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 tax-payer.
D. 
Notwithstanding the above, if a successor gives written notice to the director of the acquisition, and the department does not within six months of the date it received the notice issue an assessment against the taxpayer and mail a copy of that assessment to the successor, the successor shall not be liable for the tax.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
Any person, except one who has failed to comply with Section 3.34.150, aggrieved by the amount of the fee or tax determined by the director to be required under the provisions of this chapter may pay the appeal fee established herein, and appeal from such determination by filing a written notice of appeal with the hearing examiner, within thirty days from the date written notice of such amount was mailed to the taxpayer. A filing fee, as determined by the director, shall be submitted with the appeal, which filing fee is required to process the appeal. The hearing examiner shall, as soon as practical, fix a time and place for the hearing of such appeal, and shall cause a notice of the time and place thereof to be delivered or mailed to the parties. The hearing shall be conducted in accord with the provisions of Chapter 2.46. The decision of the hearing examiner shall indicate the correct amount of the fee or tax owing.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 Kitsap County superior court within thirty 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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
The director is authorized to enter into agreements with other Washington cities which impose an “eligible gross receipts tax”:
1. 
To conduct an audit or joint audit of a tax-payer by using an auditor employed by the city of Poulsbo, 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;
2. 
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;
3. 
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, that the other city maintains an eligible gross receipts tax, and the income was not derived from contracts with the city.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
Any notice required by this chapter to be mailed to any taxpayer 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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
The 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 Poulsbo except as herein otherwise expressly provided.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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 Poulsbo 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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
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;
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 one thousand dollars, 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 five thousand dollars, or imprisonment not to exceed one year, or both fine and imprisonment.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
The director, or designee, shall have the power and authority to suspend or revoke any business license issued pursuant to the provisions of Chapter 5.04 for failure to comply with the provisions of this chapter.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
A. 
The director may propose to the city council that the city 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 by city council, evidenced by approval at a council meeting and accepted in writing by 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:
1. 
The case shall not be reopened as to the matters agreed upon, or the agreement modified, by the director at the direction of the city council or the tax-payer; and
2. 
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.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)
The director may charge off any tax, penalty, or interest that is owed by a taxpayer less than one thousand dollars, if the director demonstrates the cost of collecting such amounts would be greater than the total amount that is owed or likely to be collected from the taxpayer.
(Ord. 2023-18 § 2 (Exh. A), 2023; Ord. 2025-21 § 2 (Exh. A), 2025)