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HomeMy WebLinkAbout1976-1924 LEASEHOLD EXCISE TAX. ORDINANCE NO. /9� f AN ORDINANCE relating to revenue and taxation; levying an excise tax on leasehold interests in publicly owned property; pro- viding for the administration and collection of such tax; declaring it unlawful to fail or refuse to pay such tax; and providing a penalty; authorizing the execution of a contract with the State of Washington for the administration and collection of such a tax; enacting Chapter 3.23 as a new chapter of the City of Yakima Municipal Code and prescribing an effective date thereof; and declaring an emergency. BE IT ORDAINED BY THE CITY OF YAKIMA: Section 1. Chapter 3.23, "Leasehold Excise Tax ", is hereby enacted as a new chapter of the City of Yakima. Municipal Code, which new chapter and the various sections thereof shall be numbered and shall read as follows: "Chapter 3.23 Leasehold Excise Tax 3.23.010 Tax levied -- Effective date. There is hereby levied and shall be collected a leasehold excise 4 ' tax on or after January 1, 1976, upon the act or privilege of occupying or using publicly owned real or personal property withidthe city of Yakima through a 'leasehold interest' as defined by section 2, chap- ter 61, Laws of 1975 -76, Second Extraordinary Session (hereafter 'the state act'). The tax shall be paid, collected, and remitted to the department of revenue of the State of Washington at the time and in the manner prescribed by section 5 of the state act. 3.23.020 Tax rate - - Credit a:ainst tax •a able. The rate of the tax imposed by section 3.23.010 of this chapter shall be four percent of the taxable rent (as defined by section 2 of the state act); PROVIDED, That the following credits shall be allowed in determining the tax payable: 1. With respect to a leasehold interest arising out of any lease or agreement, the terms of which were • binding on the lessee prior to July 1, 1970, where such lease or agreement has not been renegotiated (as defined by section 2 of the state act) since • that date, and excluding from such credit (a) any leasehold interest arising out of any lease of property covered by the provisions of RCW 28B.20.394 and (b) any lease or agreement including options to renew which extends beyond January 1, 1985, as follows: With respect to taxes due in calendar year 1976, a credit equal to eighty percent of the tax produced by the above rate. With respect to taxes due in calendar year 1977, a credit equal to sixty percent of the tax produced by the above rate. • With respect to taxes due in calendar year 1978, a credit equal to forty percent of the tax produced by the above rate. With respect to taxes due in calendar year 1979, a credit equal to twenty percent of the tax produced by the above rate. 2. With respect to a product lease (as defined by section 2 of the state act),, a. credit of thirty -three percent of the tax produced by the above rate. 3.23.030 Administration and collection. The adminis- tration and collection o t e tax impose. •y this chapter shall be in accordance with the provisions of the state act. 3.23.040 Exemptions. Leasehold interests exempted by section 13 of the state act as it now exists or may here- after be amended shall be exempt from the tax imposed pursuant to Section 3.23.010 of this chapter. 3.23.050 Inspection of records. The City of Yakima • hereby consents to the inspection of such records as are necessary to qualify the city for inspection of records of the department of revenue pursuant to RCW 82.32.330'. 3.23.060 Contract with State for administration and collection. The City Manager and City Clerk of the City of Yakima are hereby authorized to execute a contract with the department of revenue of the State of Washington for the administration and collection of the tax imposed by section 3.23.010 of this chapter; PROVIDED, that the city attorney shall first approve the form and content of said contract. 3.23.070 Invalidity- Savings clause. If any provision of this chapter, or its application to any person or circum- stance is held invalid, the remaining provisions of this chap- ter or their application to other persons or circumstances is not affected. 3.23.080 Violation -- Penalty- Continuing Offense. A. It shall be unlawful for any person, firm or cor- • poration to fail or refuse to pay the leasehold excise tax imposed by this chapter when that person, firm or corporation is required to pay such tax under the provisions of this chapter and applicable state laws. B. Any person, firm or corporation convicted of failing or refusing to pay the leasehold excise tax imposed by this chapter shall be punished by a fine not to exceed $250 or by imprisonment in the city jail facility for not more than ninety days for each conviction. C. The failure or refusal to pay the leasehold excise tax imposed by this chapter, after the payment of such tax _7_ becomes due, is a violation of continuing duration, and each day of such violation shall constitute a separate offense." Section 2. Chapter 3.23 of the City of Yakima Municipal Code, as enacted by Section 1 of this ordinance, shall became effective 410 on April 1, 1976; and the City Manager and City Clerk of the City of Yakima are hereby authorized and directed to immediately execute a contract with the State of Washington, Department of Revenue, for the administration and collection of the tax imposed by Chapter 3.23 of the City of Yakima Municipal Code, as enacted by Section 1 of this ordinance, so that such contract may be executed prior to the effective date of Chapter 3.23 of the City of Yakima Municipal Code, all as required by Section 8 of Chapter 61, Laws of 1975-76, Second Extraordinary Session, of the Laws of the State of Washing- ton, a copy of which contract, as apprqved for execution by this section, is attached hereto and by reference made a part hereof. Section 3. This ordinance is one to provide for the immediate preservation of the public peace, property, health, safety and wel- fare of the people of the City of Yakima and an emergency is hereby declared to exist and this ordinance shall be in full force and effect immediately upon its passage, approval and publication as provided by law and by the City Charter. PASSED BY THE CITY COUNCIL, signed and approved thig3ay o , 1976. • Mayor A ft ATTEST: AP Cit Clerk =1= SfAf F PA, DANIEL 3. EVANS, GOVERNOR MARY ELLEN ItCCAFFREE, DIRECTOR } { �kd 1889 °y STATE OF WASHINGTON DEPARTMENT OF REVENUE OLYMPIA 98504 April 14, 1976 Fred H. Andrews, City Attorney City Hall City of Yakima Yakima, Washington 98901 Dear Mr. Andrews: Enclosed please find your signed copy of the Agreement for Leasehold Tax participation. First distribution will possibly be made during the month of June, 1976. Sincerely yours, OFFICE OPERATIONS SECTION L. Heady, Assistant Dire --'* RLH /ld Enclosure s AGREEMENT BETWEEN THE STATE OF WASHINGTON, DEPARTMENT OF REVENUE AND THE CITY OF YAKIMA REGARDING ADMINISTRATION AND COLLECTION OF LOCAL LEASEHOLD EXCISE TAX THIS AGREEMENT, Made this /s day of , 197 4 , by and between the State of Washington, Department'of Revenue, herein- after referred to as the Department, and the above designated city, 0 hereinafter referred to as the city, WITNESSETH: WHEREAS, The Legislature of the State of Washington has by chap- ter 61, Laws of 1975-76, 2nd ex. sess., authorized cities and counties to impose a local leasehold excise tax, and WHEREAS, It is provided in section 8 of said act that any city or county imposing a local leasehold excise tax by ordinance shall, prior to the effective date thereof, contract with the Department for the administration and collection of said tax, and WHEREAS, The city has by ordinance, a copy of which is attached hereto, elected to impose a leasehold excise tax commencing on the first day of January , 19 76 , NOW, THEREFORE, To effectuate section 8 of the aforementioned act, the parties hereto agree as follows: 1. The Department shall exclusively perform all functions incident to the administration and collection of the taxes imposed by the said ordinance, other than criminal prosecutions. 2. The Department shall retain from the taxes so collected the amount of two percent thereof as expenses of administration and collection. Said amount shall be subject to review during January of 0 each year. 3. The remainder of said taxes so collected shall be deposited by the Department in the Local Leasehold Excise Tax Revolving Fund under the custody of the State Treasurer. 4. In carrying out its administration and collection duties hereunder, the Department shall, insofar as the same are applicable, apply the administrative provisions contained in chapters 82.02 and 82.32 RCW, and the Department's rules and regulations promulgated pursuant to RCW 82.32.300, as the same exist or may hereafter be amended. The Department shall adopt additional rules and regulations, in accordance with the State Administrative Procedure Act, to facili- tate the administration and collection of the local taxes as it may deem necessary or desirable. 5. The Department shall perform its duties hereunder so that as far as possible the local leasehold excise tax adopted by the city shall be administered and collected in a manner which is as consistent . . and uniform as possible with the state leasehold excise tax and facilitates the imposition of the local leasehold excise tax upon individual taxable events simultaneously with the imposition of the state leasehold excise tax. 6. The city shall have the right from time to time to examine the records of the Department as they concern taxpayers subject to the aforementioned ordinance. II/ 7. The allocation of local leasehold excise tax collections among the various cities and counties will be sent by the Department to the State Treasurer within 60 days after the close of the first bimonthly period for which the tax is imposed and thereafter on a bimonthly basis. 8. All refunds and credits for local leasehold excise tax made by the Department shall be charged to the city. 9. The Department shall require redistribution to the affected counties or cities, of any tax, penalty and interest distributed to a county or city other than the county or city entitled thereto but such redistribution shall not be made as to amounts originally distributed earlier than three bimonthly periods prior to the bimonthly period in which the Department obtains knowledge of the improper distribution. 10. This agreement shall take effect on the 4 „•_ day of ' 197/, and shall thereafter be automatically renewed on DedeMber 31 of each year unless one of the parties gives written notice of termination on or before November 1 of each such year 11. In witness whereof the parties hereto have affixed their signature the day and year first above written. 410 DEPARTMENT OF REVENUE STATE OF WASHINGTON :: Ong . / 7 As .,.. (' BY 7 . •_ ........ ' .7il . , Direct° istant Attorney Geo,ral '—'8'2 [CITY] CITY OF YAKIMA, a municipal corporation . By i _..,. Title/ ity Manager ATTEST: 2 ;‘ 1 ' . • I City/Clerk / Appro fd: , ... Yakima City 'ttorney CITY OF YAKIMA • Legal Depariment CITY HALL, YAKIMA, WASHINGTON 9e961 Phe: (509) 20;21211 FRED H. ANDREWS CITY ATTORNEY RODERT ;. SOUNDS AGOISTANT CITY ATTONNEY # O .,ir L N E-1N VANE e‘ , '/ , '1 ....:..2.....1 ,, L,,;,%; 1 Ta:'' .,,, „,,•.i„,./.,.-„..,.„ ,04... _.,-„:.', - .... , ,„ 2 „,,,wd 'J _.;.i.....,e,,„; 7i ,Z. .),.,.. 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It repeals both the property tax and the in lieu tax on leasehold interests in publicly owned land (except for operating properties of public utilities) and cancels all assessments or levies of such property taxes for collection in 1976. In lieu of these taxes, the new law provides for a 12% leasehold excise tax effective January 1, 1976, on the act or privilege of occupying or using publicly owned real or personal property through a leasehold interest. "Leasehold interest" is broadly defined by the law to include any interest granting possession and use less than fee simple arising from a lease, permit, license, or other agreement • (whether written or verbal) between a public owner of the property and a person who would pay property taxes if the person were the owner. The measure of the tax is "taxable rent" which generally is the contract rent paid to the lessor (or to another for the benefit of the lessor) for the use or occupation of the property, including expenditures for protection of the lessor's interest and expenditures for improvements which become property of the lessor. The tax is to be collected by the lessor from the lessee and paid over to the state Department of Revenue on monthly tax returns. Cities and counties are author- ized to a share of the 12% excise tax by 1. enacting an ordinance levying the tax, and 2. contracting with the State Department of Revenue for collection of the tax prior to the effective date of the levying ordinance. The maximum local tax is 6% (one-half of the tax). If a county and a city within that county both levy the maximum tax, the county's share is a 2% rate and the city's is 4%. The statutory scheme is that the county may levy at 6% but must permit a credit for the city tax of up to 4% on the same taxable event. The leasehold excise tax is patterned after the general retail sales tax. For example: 111 1. Generally, the lessor is the collector of the tax. 2. The tax must be separately stated as an additional amount to the rent. 3. The tax is to be paid by the lessee to the lessor at the time "rental" payments are due. 4. The lessor is fully liable for collection and remittance of the tax and the law makes the tax a debt owed by the lessee to the lessor. 5. In the case of federally owned land or federal trust land, the Department will collect the tax directly from the lessee. The state treasurer will distribute the leasehold excise tax collected for counties and cities bimonthly. Counties are to further distribute taxes received in accordance with RCW 84.56.230 (i.e., the same general proportional distribution used for the regular property tax).