[HISTORY: Adopted by the Mayor and Council of the Town of Middletown 12-5-2022 by Ord. No. 22-11-03.[1] Amendments noted where applicable.]
[1]
Editor's Note: This ordinance also repealed former Ch. 45, Business Licenses, adopted 12-1-2003, as amended. This ordinance provided that, for calendar year 2023, businesses renewing a business license shall be charged a fee using the same criteria applied for the fee charged in calendar year 2022, unless it is determined the calendar year 2022 business license fee was based on an incorrect trade, business or occupation category. In this case, the calendar year 2023 business license fee will be based on the cost of the correctly applied trade, business or occupation category. For calendar year 2023, new businesses applying for a business license shall be charged a fee in accordance with this ordinance.
Every person engaged either directly or indirectly in any calling, business, occupation, or profession, in whole or in part, within the corporate limits of the Town is required to pay an annual license fee for the privilege of doing business and obtain a business license as herein provided by the Town of Middletown Code of Ordinances.
The following words, terms, and phrases, when used in this chapter, shall have the meanings ascribed herein:
BASE OF OPERATION
A food service establishment or any other permitted location in which food, containers, or supplies are kept, handled, prepared, packaged, stored, or placed in containers for subsequent transport, sale or service elsewhere.
BUSINESS
A calling, occupation, profession, or activity engaged in with the object of gain, benefit or advantage, either directly or indirectly.
CHARITABLE ORGANIZATION
An organization that is determined by the Internal Revenue Service to be exempt from federal income taxes under 26 U.S.C. § 501(c)(3), (4), (6), (7), (8), (10) or (19).
CHARITABLE PURPOSE
A benevolent, philanthropic, patriotic, or eleemosynary purpose which does not result in personal gain to a sponsor, organizer, officer, director, trustee, or person with ultimate control of the organization.
CLASSIFICATION
That division of businesses by major groups subject to the same license rate as determined by a calculated index of ability to pay based on national averages, benefits, equalization of license fee burden, relationships of services, or another basis deemed appropriate by Town Council.
FIXED FOOD SERVICE ESTABLISHMENT (also referred to as BRICK-AND-MORTAR RESTAURANT)
A nonmobile public or private establishment which prepares and serves meals, lunches, short orders, sandwiches, frozen desserts, or other edible products directly to the consumer either for carryout or service within the establishment. The term includes restaurants, coffee shops, cafeterias, short-order cafes, luncheonettes, taverns, lunchrooms, places which sell retail sandwiches or salads, soda fountains, and similar facilities by whatever name called. This term shall not apply to establishments offering food service incidental to their operations.
GROSS INCOME
The gross receipts or gross revenue of a business, received or accrued, for one calendar year collected or to be collected from business done within the Town, excepting therefrom income earned outside of the Town on which a license fee is paid to some other municipality or a county and fully reported to the Town. Gross income for brokers or agents means gross commissions received or retained, unless otherwise specified. Gross income for insurance companies means gross premiums collected. Gross income for business license fee purposes shall not include taxes collected for a governmental entity, escrow funds, or funds which are the property of a third party. The value of bartered goods or trade-in merchandise shall be included in gross income. The gross income for business license purposes may be verified by inspection of returns and reports filed with the Internal Revenue Service, the Delaware Division of Revenue, the Delaware Department of Insurance, or other government agencies.
LICENSE OFFICIAL
A person designated to administer this chapter.
LICENSEE
The business, the person applying for the license on behalf of the business, an agent or legal representative of the business, a person who receives any part of the net profit of the business, or a person who owns or exercises control of the business.
MUNICIPALITY
The Town of Middletown, Delaware.
NONRESIDENT
Any business not having an established place of business within the corporate limits of the Town, but who comes into the Town to do business.
PERSON
Any individual, firm, partnership, LLP, LLC, cooperative nonprofit membership, corporation, joint venture, association, estate, trust, business trust, receiver, syndicate, holding company, or other group or combination acting as a unit in the singular or plural, and the agent or employee having charge or control of a business in the absence of the principal.
RESIDENT
A business which has an established place of business within the corporate limits of the Town.
TOWN
The Town of Middletown, Delaware.
Each license shall be issued for one calendar year ending December 31. The provisions of this chapter and the rates herein shall remain in effect from year to year as amended by Town Council.
A. 
The required license fee shall be paid for each business subject hereto according to the applicable rate classification on or before February 15 each year.
B. 
The license official shall determine the appropriate classification for each business in accordance with the latest issue of the North American Industry Classification System (NAICS) for the United States published by the Office of Management and Budget. No person shall be exempt from this chapter by reason of the payment of any other fee unless exempted by state law, and no person shall be relieved of liability for payment of any other fee by reason of application of this chapter.
C. 
A separate license shall be required for each place of business and for each classification or business conducted at one place. If gross income cannot be separated for classifications at one location, the license fee shall be computed on the combined gross income for the classification requiring the highest rate. A license fee based on gross income shall be computed on the gross income for the preceding calendar or fiscal year. The fee for a new business shall be based on the minimum payment (base fee) under the rate class in which the business falls. No refund shall be made for a business that is discontinued.
D. 
The fee for a new resident business during the first year of operation or portion thereof shall be the base fee for the classification for that business as determined by the license official using the classification rate schedules.
A. 
The owner, agent, or legal representative of every business subject to this chapter, whether listed in the classification index or not, shall register the business and make application for a business license on or before the due date of each year; provided, a new business shall be required to have a business license prior to operation within the municipality. A license for a bar (NAICS 722410) must be issued in the name of the individual who has been issued a state alcohol, beer, or wine permit or license and will have actual control and management of the business.
B. 
The applicant shall certify under oath that the information given in the application is true, that the gross income is accurately reported without any unauthorized deductions, and that all assessments and property taxes on business property, utilities, and other monies due and payable to the Town have been paid.
C. 
Insurance agents and brokers shall report the name of each insurance company for which a policy was issued and the total premiums collected for each company for each type of insurance coverage on a form approved by the license official. An insurance agent not employed by a company shall be licensed as a broker.
A. 
No person shall be exempt from the requirements of this chapter by reason of the lack of an established place of business within the municipality unless exempted by state or federal law.
B. 
A charitable organization shall be exempt from the business license fee on its gross income unless it is deemed a business subject to a business license fee on all or part of its gross income, as provided in this section. A charitable organization or any for-profit affiliate of a charitable organization that reports income from for-profit activities or unrelated business income for federal income tax purposes to the Internal Revenue Service shall be deemed a business subject to a business license fee on the part of its gross income from such for-profit activities or unrelated business income.
C. 
A charitable organization shall be deemed a business subject to a business license fee on its total gross income if: 1) any net proceeds of operation, after necessary expenses of operation, inure to the benefit of any individual or any entity that is not itself a charitable organization as defined in this chapter; or 2) any net proceeds of operation, after necessary expenses of operation, are used for a purpose other than a charitable purpose as defined in this chapter. Excess benefits or compensation in any form beyond fair market value to a sponsor, organizer, officer, director, trustee, or person with ultimate control of the organization shall not be deemed a necessary expense of operation.
A. 
License fees shall be in the amounts established in this chapter, and as further determined in this section.
B. 
The Mayor and Council shall establish the amounts of license fees with annual increases in fee rates not to exceed 5% annually for resident businesses and not to exceed 20% for nonresident businesses.
C. 
The license official shall require the payment of an additional or higher license fee, to be prorated for the balance of the license period, when a licensee places himself in that status under this chapter by:
(1) 
Increasing the number of his employees.
(2) 
Expanding the size of his business, plant, or premises.
(3) 
Making any other lawful and material change of any kind in his business.
D. 
Rebates or refunds.
(1) 
Except as provided, no rebate or refund of any license fee or part thereof shall be made by reason of the nonuse of the license or by reason of a change of location or business rendering the use of the license ineffective. The license official shall have the authority to refund a license fee or prorated portion thereof where:
(a) 
The license fee was collected through an error.
(b) 
Some particular hardship might be involved.
(c) 
The licensee has been prevented from enjoying the full license privilege due to his death or incapacity to engage in the business.
(d) 
The licensee has entered the armed services of the United States through induction or enlistment and is thereby rendered unable to conduct the business.
(2) 
A rebate or refund provided for in this section shall be based upon the number of days in the license period remaining after the occurrence of the event relied upon for rebate.
It shall be unlawful for any person subject to the provisions of this chapter to make a false application for a business license, to give or file, or direct the giving or filing of, any inaccurate information with respect to the license required by this chapter.
A. 
All persons shall display the license issued to them on the license official's original form in a conspicuous place in the business establishment at the address shown on the license. A transient or nonresident shall carry the license upon his person or in a vehicle used in the business readily available for inspection by any authorized agent of the Town.
B. 
A change of address must be reported to the license official within 10 days after removal of the business to a new location, and the license will be valid at the new address upon written notification by the license official and compliance with zoning and building codes. Failure to obtain the approval of the license official for a change of address shall invalidate the license and subject the licensee to prosecution for doing business without a license. A business license shall not be transferable. A transfer of controlling interest shall be considered a termination of the old business and the establishment of a new business requiring a new business license based on old business income.
The license official shall administer the provisions of this chapter, collect license fees, issue licenses, make or initiate investigations and audits to ensure compliance, initiate denial or suspension and revocation procedures, report violations to the Town Manager, assist in the prosecution of violators, produce forms, make reasonable regulations relating to the administration of this chapter, and perform such other duties as may be duly assigned.
A. 
For the purpose of enforcing the provisions of this chapter, the license official or other authorized agent of the Town is empowered to enter upon the premises of any person subject to this chapter to make inspections, examine, and audit books and records. It shall be unlawful for any such person to fail or refuse to make available the necessary books and records. If an audit or inspection reveals that the licensee has filed false information, the costs of the audit shall be added to the correct license and late penalties in addition to other penalties provided herein. Each day of failure to pay the proper amount of license fee shall constitute a separate offense.
B. 
The license official, or other authorized agent of the Town, Fire Marshal, Board of Health, and all Town officers shall have the authority to make systematic inspections and random audits of all businesses within the Town to ensure compliance with the chapter during all business hours. Financial information obtained by inspections and audits shall not be deemed public records. The license official shall not release the amount of license fees paid or the reported gross income of any person by name without written permission of the licensee, except as authorized by this chapter, state or federal law, or proper judicial order. Statistics compiled by classifications are public records.
C. 
Persons inspecting licensees, their businesses or premises shall report all violations of this chapter to the license official and shall submit any other reports that the license official shall order.
If a person fails to obtain a business license or to furnish the information required by this chapter or the license official, the license official shall examine such records of the business, or any other available records as may be appropriate, and conduct such investigations and statistical surveys as the license official may deem appropriate to assess a license fee and penalties as provided herein.
A. 
Any person aggrieved by any decision of the license official after a hearing conducted pursuant to this chapter shall have the right to appeal to the Mayor and Council by filing a written appeal with the Mayor and Council within 30 days following the effective date of the action or decision in dispute. The appeal shall set out a copy of the order or decision appealed from and shall include a statement of the facts relied upon to avoid the order.
B. 
The Mayor and Council shall fix a time and place for hearing the appeal. It shall serve a written notice upon the person requesting the appeal, informing him of the hearing. The Mayor and Council shall also give notice to the license official, and he shall be entitled to appear and defend the order. The findings of the Mayor and Council shall be final and conclusive and shall be served upon the person who requested the appeal.
For nonpayment of all or any part of the correct license fee, the license official shall levy and collect a late penalty of 10% of the unpaid fee for each month or portion thereof after the due date until paid.
A. 
The amount of any unpaid fee, the payment of which is required pursuant to this chapter, shall constitute a debt due to the Town.
B. 
If any license fee remains unpaid for 60 days after its due date, absent extraordinary and compelling circumstances, the license official shall report it to the Town Manager and/or Town Solicitor for appropriate action.
C. 
No civil judgment or any act by the Town Solicitor, the license official, or the violating licensee shall bar or prevent a criminal prosecution for each violation of this chapter.
A. 
The license official shall, upon disapproving any application submitted under the provisions of this chapter, refund all fees paid in advance by the applicant pursuant to the application, less a reasonable application processing charge, provided the applicant is not otherwise indebted to the Town, in which case the fees shall be applied to the Town-owned debts.
B. 
When the issuance of a license is denied, and any action is instituted by the applicant to compel its issuance, the applicant shall not engage in the business for which the license was refused unless a license is issued to him pursuant to a judgment ordering it.
The Town Manager, or designee, may suspend and/or revoke any license issued under the provisions of this chapter whenever the licensee, or any officer, employee, partner or agent thereof:
A. 
Has been mistakenly or improperly issued a license or has obtained a license issued contrary to law;
B. 
Has breached any condition upon which the license was issued or has failed to comply with the provisions of this chapter;
C. 
Has obtained a license through fraud, misrepresentation, a false or misleading statement, evasion, omission, or suppression of a material fact in the license application;
D. 
Has been convicted of an offense under a law or ordinance regulating business, a crime involving dishonest conduct or moral turpitude, or an unlawful sale of merchandise or prohibited goods;
E. 
Has engaged in any unlawful activity, safety violation, or other nuisance related to the business, or has permitted the same; or
F. 
Is delinquent in the payment to the Town of any tax, betterment, fine, fee, or other municipal charges, including but not limited to property tax, lodging tax, or utility payments owed to the Town.
Except in accordance with a proper judicial order or as otherwise provided by law, it shall be unlawful for any official, employee, or designated representative to divulge or make known in any manner the amount of income or any particulars set forth or disclosed in any report or return required under this chapter. Nothing in this chapter shall be construed to prohibit the publication of statistics so classified as to prevent the identification of particular reports or returns. Any license data may be shared with other public officials or employees, or designated representatives in the performance of their duties, whether or not those duties relate to enforcement of this chapter.
A. 
In the case of failure of any person to obtain or renew a business license required under the provisions of Chapter 45 of the Town of Middletown Code of Ordinances, unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount of the business license fee required to be paid a penalty in the amount of $100.
B. 
Whenever a penalty has been proposed for assessment under this section, the license official shall not be required to issue a business license to the business owner to whom such assessment has been proposed unless and until the business owner has paid any license fee necessary for issuance of such license and has either:
(1) 
Paid the assessment provided under this section (subject to any claim for refund); or
(2) 
Filed a written appeal regarding such assessment of penalty pursuant to § 45-13.
A determination that any portion of this chapter is invalid or unenforceable shall not affect the remaining portions.
A. 
Manufacturers, laboratories, research and development facilities, regardless of rate class, shall pay a license fee at the rate of $0.00046 on their aggregate gross receipts over $400,000; provided, however, that the minimum license fee shall be $125.
B. 
Merchants, accommodation establishments and bottlers shall pay a license fee at the rate of $0.00046 on their aggregate gross receipts over $400,000; provided, however, that the minimum license fee shall be $125.
C. 
Businesses will sign an affidavit stating their aggregate gross receipts or aggregate gross purchases for resale.
D. 
Exemption. Any business that has aggregate gross receipts or aggregate gross purchases for resale under $100,000 will pay a license fee of $50; however, the licensing office must receive a letter stating this by February 15.
Chart A: Rate Schedule
Rate Class
Resident Minimum Rate
Nonresident Minimum Rate
1
$125
$125
2
$125
$125
3
$250
$250
4
$250
$250
5
$250
N/A
6
$6 (per space)
N/A
7
$125
$125
8
$125
$125
9
$825
$825
10
$50
$50
11
$125
$125
Resident Rate
See § 45-7, Determination of license fee; additional fees; rebates or refunds.
Nonresident Rates
See § 45-7, Determination of license fee; additional fees; rebates or refunds.
A. 
The Class Structure Model by the North American Industry Classification System (NAICS) code, designated as "Chart B: Business License Class Schedule by NAICS Code" to this chapter, may be amended by the Mayor and Council from time to time, and current copies shall be filed in the office of the Municipal Clerk. Chart B is a tool for classification and not a limitation on businesses subject to a license fee. The license official shall determine the proper class for a business according to the applicable NAICS code.
B. 
The license fee for each class of businesses subject to this chapter shall be computed in accordance with the rate schedule, designated as "Chart A: Rate Schedule" to this chapter, which may be amended by the Mayor and Council from time to time and a current copy filed in the office of the Municipal Clerk.
C. 
When a business owner(s) maintains two or more resident business locations under the same NAICS code as deemed proper by the license official, each location may deduct 10% from its annual gross income in its annual license fee calculation. This does not apply to any other fees paid to other agencies for the Town.
Chart B: Business License Class Schedule By Naics Code
NAICS Sector/Subsector
Industry Sector
Class
11
Agriculture, forestry, hunting and fishing
2
21
Mining, quarrying, and oil and gas extraction
3
221
Natural gas distribution, electric power generation, transmission and distribution
Franchise - covered under franchise
22
Utilities
1
23
Construction
8
31-33
Manufacturing
11
42
Wholesale trade
1
44-45
Retail trade
11
51
Information
2
515
Broadcasting (except internet) and telecommunications
2
52
Finance and insurance
4
524
Insurance agents, brokers, and related activities
1
53
Real estate and rental and leasing
5
5311
Lessors of residential buildings and dwellings
7
54
Professional, scientific, and technical services
3
55
Management of companies
4
56
Administrative and support and waste management and remediation services
2
61
Educational services
2
62
Health care and social assistance
2
621
Ambulatory health care services
3
622
Hospitals
3
623
Nursing and residential care facilities
1
6244
Day-care centers (7 children or more)
5
71
Arts, entertainment, and recreation
2
72
Accommodation and food services
11
81
Other services
2
812111
Barber shops (3 or more barbers)
5
812112
Beauty salons (3 or more beauticians)
5
A. 
Review and consideration of an application shall be conducted in accordance with principles of due process. Applications may be denied where an applicant fails to demonstrate that he or she meets the conditions and requirements of this chapter or where an applicant fails to comply with applicable local, state, or federal law. Any false statements, material omissions, or substantially misleading information provided in an application or furnished by an applicant in connection with an application constitute grounds for any one or combination of the following sanctions: denial; refusal to renew; revocation; suspension; and the imposition of penalties.
B. 
The Town of Middletown may inspect each unit every six months or as needed to ensure compliance with all applicable requirements. Provisional licenses may be suspended if it is determined that requirements or conditions are unmet until such time as remedies are made.