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ORD 18-857 ORDINANCE NO. 18-857 AN ORDINANCE of the City of Federal Way, Washington, relating to business registration within Federal Way; and amending FWRC 12.05.010, 12.05.040, and 12.05.070; and adding new section FWRC 12.05.008. (Amending Ordinance Nos. 91-086, 09-599, 09-600, and 12- 717) WHEREAS, the City of Federal Way ("City") is a non-charter code city under Title 35A of the Revised Code of Washington("RCW"); and WHEREAS, pursuant to RCW 35A.11.020, the City may adopt and enforce ordinances of all kinds relating to and regulating its local or municipal affairs and appropriate to the good government of the city; and WHEREAS, as required by Washington Laws of 2017, Chapter 209 (Engrossed House Bill 2005), the model ordinance development committee organized by the Association of Washington Cities, developed and adopted mandatory model ordinance provisions on general business license requirements; and WHEREAS, RCW 35.90.080 requires that a city that imposes a general business license requirement must adopt the mandatory provisions by January 1, 2019. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. FWRC 12.05.010 is hereby amended to read: 12.05.010 Definitions. The definitions in this section apply throughout this title unless the context clearly requires otherwise. Terms not defined here are defined according to FWRC 1.05.020. Ordinance No. 18-857 Page 1 of 7 private profit or benefit, not for profit er benefit, pecuniary gain, or advantage to any person, or within the city. "Engaging business"Egg g in s ess means: (1) 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. (2) 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 minimus business activities in the City without having to pay a business license fee. The activities listed in this section are illustrative only and are not intended to narrow the definition of"engaging in business" in subsection (1). If an activity is not listed, whether it constitutes engagingin business in the City shall be determined bYconsidering all the facts and circumstances and applicable law. (3) 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. Ordinance No. 18-857 Page 2 of 7 (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 sold bythe person or on its behalf. property (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. ii) Picking up and transporting tangible personal property, solid waste, construction debris, or excavated materials. (i) 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. (1) Meeting with customers or potential customers, even when no sales or orders are solicited at the meetings. Ordinance No. 18-857 Page 3 of 7 (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 (4) 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. (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 Ordinance No. 18-857 Page 4 of 7 vendor event ordinances. (f) Conducting advertising through the mail. (g) Soliciting sales by phone from a location outside the City. (5) 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(4). (6) The City expressly intends that engaging in business include any activity sufficient to establish nexus for purposes of applying the license fee 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. "Premises" means all lands, structures and places, and also any personal property which either is affixed to, or is used in connection with any such business conducted on such premises. Section 2. FWRC 12.05.040 is hereby amended to read as follows: 12.05.040 Business registration. All No persons shall transact, engaginge in or carry on any business, trade, profession, occupation, calling or activity in the city of Federal Way witheut shall first obtain having been issued a proper and current registration, or if applicable, a temporary business registration as provided in FWRC 12.25.020, in addition to any other required federal, state, local, or city licenses; unless the person has filed and qualified for exemptions therefrom. Section 3. FWRC 12.05.070 is hereby amended to read as follows: 12.05.070 Exemptions. Ordinance No. 18-857 Page 5 of 7 The following shall be required to obtain a registration under this chapter, but shall not be required to pay any fee: (1) Business activities carried on by nonprofit organizations, including but not limited to religious, civic, charitable, benevolent, nonprofit, cultural, or youth organizations. (2) Any business or activity which is exempt from payment of such fees as prescribed by this chapter by virtue of applicable provisions of the federal or state constitution or applicable federal or state statutes shall be exempt from the registration requirement of this chapter. (3) Any religious society, association or corporation which operates any charitable hospital, clinic, or institution devoted exclusively to the care or healing of human beings. (4) Any farmer, gardener or other person who sells, delivers, or peddles any fruit, vegetables, berries, butter, eggs, fish, milk, poultry, or meats or any farm produce or edibles raised, caught, produced, or manufactured by such person in any place in this state. (5) Any person or business whose annual value of products, gross proceeds of sales, or gross income of the business in the city is equal to or less than $2,000 and who does not maintain a place of business within the city. Section 4. Severability. Should any section, subsection, paragraph, sentence, clause, phrase, or portion of this ordinance, or its application to any person or situation, be declared unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of this ordinance or its application to any other person or situation. The City Council of the City of Federal Way hereby declares that it would have adopted this ordinance and each section, subsection, paragraph, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, paragraphs, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional. Ordinance No. 18-857 Page 6 of 7 Section 5. Corrections. The City Clerk and the codifiers of this ordinance are authorized to make necessary corrections to this ordinance including, but not limited to, the correction of scrivener/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto. Section 6. Ratification. Any act consistent with the authority and prior to the effective date of this ordinance is hereby ratified and affirmed. Section 7. Effective Date. This ordinance shall take effect and be in force beginning January 1, 2019. PASSED by the City Council of the City of Federal Way this 20th day of November, 2018. CITY OF FEDERAL WAY: JI► RR. 'L, MAYOR ATTEST: 1 S . ' ANIE COURTNE C, CITY CLERK APPROVED AS TO FORM: Q-EL- J. RYAN CALL, CITY ATTORNEY FILED WITH THE CITY CLERK: 10/31/2018 PASSED BY THE CITY COUNCIL: 11/20/2018 PUBLISHED: 1 W23/2418 I I 10,a 12t71 i EFFECTIVE DATE: 01/01/2019 ORDINANCE NO.: 18-857 Ordinance No. 18-857 Page 7 of 7 Exhibit A CERTIFICATION OF ENROLLMENT ENGROSSED HOUSE BILL 2005 Chapter 209, Laws of 2017 65th Legislature 2017 Regular Session MUNICIPAL BUSINESS LICENSING--STATE PARTNERSHIP--TAX APPORTIONMENT EFFECTIVE DATE: 7/23/2017 Passed by the House April 17, 2017 CERTIFICATE Yeas 97 Nays 0 I, Bernard Dean, Chief Clerk of the House of Representatives of the FRANK CHOPP State of Washington, do hereby Speaker of the House of Representatives certify that the attached is ENGROSSED HOUSE BILL 2005 as passed by House of Representatives and the Senate on the dates hereon set Passed by the Senate April 12, 2017 forth. Yeas 49 Nays 0 BERNARD DEAN CYRUS HABIB Chief Clerk President of the Senate Approved May 5, 2017 10:37 AM FILED May 5, 2017 Secretary of State JAY INSLEE State of Washington Governor of the State of Washington ENGROSSED HOUSE BILL 2005 AS AMENDED BY THE SENATE Passed Legislature - 2017 Regular Session State of Washington 65th Legislature 2017 Regular Session By Representatives Lytton, Nealey, Kagi, and Ormsby Read first time 02/07/17 . Referred to Committee on Finance. 1 AN ACT Relating to improving the business climate in this state 2 by simplifying the administration of municipal general business 3 licenses; adding a new chapter to Title 35 RCW; and creating a new 4 section. 5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON: 6 NEW SECTION. Sec. 1. The definitions in this section apply 7 throughout this chapter unless the context clearly requires 8 otherwise. 9 (1) "Business licensing service, "business licensing system, " 10 and "business license" have the same meaning as in RCW 19 . 02 . 020 . 11 (2) "City" means a city, town, or code city. 12 (3) "Department" means the department of revenue. 13 (4) "General business license" means a license, not including a 14 regulatory license or a temporary license, that a city requires all 15 or most businesses to obtain to conduct business within that city. 16 (5) "Partner" means the relationship between a city and the 17 department under which general business licenses are issued and 18 renewed through the business licensing service in accordance with 19 chapter 19 . 02 RCW. 20 (6) "Regulatory business license" means a license, other than a 21 general business license, required for certain types of businesses p. 1 EHB 2005 .SL 1 that a city has determined warrants additional regulation, such as 2 taxicab or other for-hire vehicle operators, adult entertainment 3 businesses, amusement device operators, massage parlors, debt 4 collectors, door-to-door sales persons, trade-show operators, and 5 home-based businesses . 6 NEW SECTION. Sec. 2. (1) Except as otherwise provided in 7 subsection (7) of this section, a city that requires a general 8 business license of any person that engages in business activities 9 within that city must partner with the department to have such 10 license issued, and renewed if the city requires renewal, through the 11 business licensing service in accordance with chapter 19 . 02 RCW. 12 (a) Except as otherwise provided in subsection (3) of this 13 section, the department must phase in the issuance and renewal of 14 general business licenses of cities that required a general business 15 license as of July 1, 2017, and are not already partnering with the 16 department, as follows: 17 (i) Between January 1, 2018, and December 31, 2021, the 18 department must partner with at least six cities per year; 19 (ii) Between January 1, 2022, and December 31, 2027, the 20 department must partner with the remaining cities; or 21 (iii) Between July 1, 2017 and December 31, 2022, the department 22 must partner with all cities requiring a general business license if 23 specific funding for the purposes of this subsection (iii) is 24 appropriated in the omnibus appropriations act . 25 (b) A city that imposes a general business license requirement 26 and does not partner with the department as of January 1, 2018, may 27 continue to issue and renew its general business licenses until the 28 city partners with the department as provided in subsection (4) of 29 this section. 30 (2) (a) A city that did not require a general business license as 31 of July 1, 2017, but imposes a new general business license 32 requirement after that date must advise the department in writing of 33 its intent to do so at least ninety days before the requirement takes 34 effect . 35 (b) If a city subject to (a) of this subsection (2) imposes a new 36 general business license requirement after July 1, 2017, the 37 department, in its sole discretion, may adjust resources to partner 38 with the imposing city as of the date that the new general business 39 licensing requirement takes effect . If the department cannot p. 2 EHB 2005 .SL 1 reallocate resources, the city may issue and renew its general 2 business license until the department is able to partner with the 3 city. 4 (3) The department may delay assuming the duties of issuing and S renewing general business licenses beyond the dates provided in 6 subsection (1) (a) of this section if : 7 (a) Insufficient funds are appropriated for this specific 8 purpose; 9 (b) The department cannot ensure the business licensing system is 10 adequately prepared to handle all general business licenses due to 11 unforeseen circumstances; 12 (c) The department determines that a delay is necessary to ensure 13 that the transition to mandatory department issuance and renewal of 14 general business licenses is as seamless as possible; or 15 (d) The department receives a written notice from a city within 16 sixty days of the date that the city appears on the department ' s 17 biennial partnership plan, which includes an explanation of the 18 fiscal or technical challenges causing the city to delay joining the 19 system. A delay under this subsection (3) (d) may be for no more than 20 three years . 21 (4) (a) In consultation with affected cities and in accordance 22 with the priorities established in subsection (5) of this section, 23 the department must establish a biennial plan for partnering with 24 cities to assume the issuance and renewal of general business 25 licenses as required by this section. The plan must identify the 26 cities that the department will partner with and the dates targeted 27 for the department to assume the duties of issuing and renewing 28 general business licenses . 29 (b) By January 1, 2018, and January 1st of each even-numbered 30 year thereafter, the department must submit the partnering plan 31 required in (a) of this subsection (4) to the governor; legislative 32 fiscal committees; house local government committee; senate 33 agriculture, water, trade and economic development committee; senate 34 localgovernment committee; affected cities; association of 35 Washington cities; association of Washington business; national 36 federation of independent business; and Washington retail 37 association. 38 (c) The department may, in its sole discretion, alter the plan 39 required in (a) of this subsection (4) with a minimum notice of 40 thirty days to affected cities . p. 3 EHB 2005 . SL 1 (5) When determining the plan to partner with cities for the 2 issuance and renewal of general business licenses as required in 3 subsection (4) of this section, cities that notified the department 4 of their wish to partner with the department before January 1, 2017, 5 must be allowed to partner before other cities . 6 (6) A city that partners with the department for the issuance and 7 renewal of general business licenses through the business licensing 8 service in accordance with chapter 19 . 02 RCW may not issue and renew 9 those licenses . 10 (7) A city may decline to partner with the department for the 11 issuance and renewal of a general business license as provided in 12 subsection (1) of this section if the city participates in the online 13 local business license nand tax filing portal known as "FileLocal" as 14 of July 1, 2020 . For the purposes of this subsection (7) , a city is 15 considered to be a FileLocal participant as of the date that a 16 business may access FileLocal for purposes of applying for or 17 renewing that city' s general business license and reporting and 18 paying that city' s local business and occupation taxes. A city that 19 ceases participation in FileLocal after July 1, 2020, must partner 20 with the department for the issuance and renewal of its general 21 business license as provided in subsection (1) of this section. 22 (8) By January 1, 2019, and each January 1st thereafter through 23 January 1, 2028, the department must submit a progress report to the 24 legislature. The report required by this subsection must provide 25 information about the progress of the department ' s efforts to partner 26 with all cities that impose a general business license requirement 27 and include: 28 (a) A list of cities that have partnered with the department as 29 required in subsection (1) of this section; 30 (b) A list of cities that have not partnered with the department; 31 (c) A list of cities that are scheduled to partner with the 32 department during the upcoming calendar year; 33 (d) A list of cities that have declined to partner with the 34 department as provided in subsection (7) of this section; 35 (e) An explanation of lessons learned and any process 36 efficiencies incorporated by the department; 37 (f) Any recommendations to further simplify the issuance and 38 renewal of general business licenses by the department; and 39 (g) Any other information the department considers relevant . p. 4 EHB 2005 .SL 1 NEW SECTION. Sec. 3. (1) A general business license that must 2 be issued and renewed through the business licensing service in 3 accordance with chapter 19 .02 RCW is subject to the provisions of 4 this section. 5 (2) (a) A city has broad authority to impose a fee structure as 6 provided by RCW 35.22 .280, 35 .23 .440, and 35A.82 . 020 . However, any 7 fee structure selected by a city must be within the department 's 8 technical ability to administer. The department has the sole 9 discretion to determine if it can administer a city' s fee structure. 10 (b) If the department is unable to administer a city' s fee 11 structure, the city must work with the department to adopt a fee 12 structure that is administrable by the department. If a city fails to 13 comply with this subsection (2) (b) , it may not enforce its general 14 business licensing requirements on any person until the effective 15 date of a fee structure that is administrable by the department. 16 (3) A general business license may not be renewed more frequently 17 than once per year except that the department may require a more 18 frequent renewal date as may be necessary to synchronize the renewal 19 date for the general business license with the business ' s business 20 license expiration date . 21 (4) The business licensing system need not accommodate any 22 monetary penalty imposed by a city for failing to obtain or renew a 23 general business license. The penalty imposed in RCW 19. 02 . 085 24 applies to general business licenses that are not renewed by their 25 expiration date. 26 (5) The department may refuse to administer any provision of a 27 city business license ordinance that is inconsistent with this 28 chapter. 29 NEW SECTION. Sec. 4 . The department is not authorized to 30 enforce a city' s licensing laws except to the extent of issuing or 31 renewing a license in accordance with this chapter and chapter 19 . 02 32 RCW or refusing to issue a license due to an incomplete application, 33 nonpayment of the appropriate fees as indicated by the license 34 application or renewal application, or the nonpayment of any 35 applicable penalty for late renewal . 36 NEW SECTION. Sec. 5. Cities whose general business licenses are 37 issued through the business licensing system retain the authority to 38 set license fees, provide exemptions and thresholds for these p. 5 EHB 2005 .SL 1 licenses, approve or deny license applicants, and take appropriate 2 administrative actions against licensees . 3 NEW SECTION. Sec. 6 . Cities may not require a person to obtain 4 or renew a general business license unless the person engages in 5 business within its respective city. For the purposes of this 6 section, a person may not be considered to be engaging in business 7 within a city unless the person is subject to the taxing jurisdiction 8 of a city under the standards established for interstate commerce 9 under the commerce clause of the United States Constitution. 10 NEW SECTION. Sec. 7 . A general business license change enacted 11 by a city whose general business license is issued through the 12 business licensing system takes effect no sooner than seventy-five 13 days after the department receives notice of the change if the change 14 affects in any way who must obtain a license, who is exempt from 15 obtaining a license, or the amount or method of determining any fee 16 for the issuance or renewal of a license. 17 NEW SECTION. Sec. 8 . (1 The cities, working through the ) {a) 18 association of Washington cities, must form a model ordinance 19 development committee made up of a representative sampling of cities 20 that impose a general business license requirement . This committee 21 must work through the association of Washington cities to adopt a 22 model ordinance on general business license requirements by July 1, 23 2018 . The model ordinance and subsequent amendments developed by the 24 committee must be adopted using a process that includes opportunity 25 for substantial input from business stakeholders and other members of 26 the public. Input must be solicited from statewide business 27 associations and from local chambers of commerce and downtown 28 business associations in cities that require a person that conducts 29 business in the city to obtain a general business license. 30 (b) The department, association of Washington cities, and 31 municipal research and services center must post copies of, or links 32 to, the model ordinance on their internet web sites. Additionally, a 33 city that imposes a general business license requirement must make 34 copies of its general business license ordinance or ordinances 35 available for inspection and copying as provided in chapter 42 . 56 36 RCW. p. 6 EHB 2005 .SL 1 (c) The definitions in the model ordinance may not be amended 2 more frequently than once every four years, except that the model 3 ordinance may be amended at any time to comply with changes in state 4 law or court decisions. Any amendment to a mandatory provision of the 5 model ordinance must be adopted with the same effective date by all 6 cities . 7 (2) A city that imposes a general business license requirement 8 must adopt the mandatory provisions of the model ordinance by January 9 1, 2019 . The following provisions are mandatory: 10 (a) A definition of "engaging in business within the city" for 11 purposes of delineating the circumstances under which a general 12 business license is required; 13 (b) A uniform minimum licensing threshold under which a person 14 would be relieved of the requirement to obtain a city' s general 15 business license. A city retains the authority to create a higher 16 threshold for the requirement to obtain a general business license 17 but must not deviate lower than the level required by the model 18 ordinance. 19 (3) (a) A city may require a person that is under the uniform 20 minimum licensing threshold as provided in subsection (2) of this 21 section to obtain a city registration with no fee due to the city. 22 (b) A city that requires a city registration as provided in (a) 23 of this subsection must partner with the department to have such 24 registration issued through the business licensing service in 25 accordance with chapter 19 . 02 RCW. This subsection (3) (b) does not 26 apply to a city that is excluded from the requirement to partner with 27 the department for the issuance and renewal of general business 28 licenses as provided in section 2 of this act . 29 NEW SECTION. Sec. 9. Cities that impose a general business 30 license must adopt the mandatory provisions of the model ordinance as 31 provided in section 8 of this act by January 1, 2019 . A city that has 32 not complied with the requirements of this section by January 1, 33 2019, may not enforce its general business licensing requirements on 34 any person until the date that the mandatory provisions of the model 35 ordinance take effect within the city. 36 NEW SECTION. Sec. 10. Cities must coordinate with the 37 association of Washington cities to submit a report to the governor; 38 legislative fiscal committees; house local government committee; and p. 7 EHB 2005 .SL 1 the senate agriculture, water, trade and economic development 2 committee by January 1, 2019 . The report must : 3 (1) Provide information about the model ordinance adopted by the 4 cities as required in section 8 of this act; 5 (2) Identify cities that have and have not adopted the mandatory 6 provisions of the model ordinance; and 7 (3) Incorporate comments from statewide business organizations 8 concerning the process and substance of the model ordinance. 9 Statewide business organizations must be allowed thirty days to 10 submit comments for inclusion in the report. 11 NEW SECTION. Sec. 11 . (1) The legislature directs cities, 12 towns, and identified business organizations to partner in 13 recommending changes to simplify the two factor apportionment formula 14 provided in RCW 35 . 102 . 130 . 15 (2) (a) The local business and occupation tax apportionment task 16 force is established. The task force must consist of the following 17 seven representatives: 18 (i) Three voting representatives selected by the association of 19 Washington cities that are tax managers representing municipalities 20 that impose a local business and occupation tax, including at least 21 one jurisdiction that has performed an audit where apportionment 22 errors were discovered. 23 (ii) Three voting representatives selected by the association of 24 Washington business, including at least one tax practitioner or legal 25 counsel with experience representing business clients during 26 municipal audits that involved apportionment errors or disputes . 27 (iii) One nonvoting representative from the department. 28 (b) The task force may seek input or collaborate with other 29P arties, as it deems necessary. The department must serve as the task 30 force chair and must staff the task force. 31 (c) Beginning in the first month following the effective date of 32 this section, the task force must meet no less frequently than once 33 per month until it reports to the legislature as provided under 34 subsection (3) of this section. 35 (3) By October 31, 2018, the task force established in subsection 36 (2) of this section must prepare a report to the legislature to 37 recommend changes to RCW 35 . 102 . 130 and related sections, as needed, 38 to develop a method for assigning gross receipts to a local 39 jurisdiction using a market-based model . The task force must focus on p. 8 EHB 2005 .SL 1 methods that rely on information typically available in commercial 2 transaction receipts and captured by common business recordkeeping 3 systems. 4 (4) The task force terminates January 1, 2019, unless legislation 5 is enacted to extend such termination date. 6 NEW SECTION. Sec. 12. Sections 1 through 10 of this act 7 constitute a new chapter in Title 35 RCW. Passed by the House April 17, 2017 . Passed by the Senate April 12, 2017 . Approved by the Governor May 5, 2017 . Filed in Office of Secretary of State May 5, 2017 . END p. 9 EHE 2005 .SL Exhibit B Model Business License Threshold Final Version June 2018 Model business license threshold options:(cities would adopt one of the options) 1. Threshold Exemption: To the extent set forth in this section,the following persons and businesses shall be exempt from the registration, license and/or license fee requirements as outlined in this chapter: (1) Any person or business whose annual value of products,gross proceeds of sales,or gross income of the business in the city is equal to or less than $2,000(or higher threshold as determined by city)and who does not maintain a place of business within the city shall be exempt from the general business license requirements in this chapter.The exemption does not apply to regulatory license requirements or activities that require a specialized permit. 2. Threshold with Fee-free License/Registration-only Option: For purposes of the license by this chapter,any person or business whose annual value of products, gross proceeds of sales,or gross income of the business in the city is equal to or less than$2,000(or higher threshold as determined by city)and who does not maintain a place of business within the city, shall submit a business license registration to the Director or designee.The threshold does not apply to regulatory license requirements or activities that require a specialized permit. [City would list this fee-free license in its business license rates section as$0 or no fee.] 1 Engaging in business model definition; "Engaging in business" (1)The term"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. (2)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 minimus business activities in the City without having to pay a business license fee.The activities listed in this section are illustrative only and are not intended to narrow the definition of "engaging in business" in subsection (1). 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. (3)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. 2 (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. (I) 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. (4) 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. (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. (5)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 (4). 3 The City expressly intends that engaging in business include any activity sufficient to establish nexus for purposes of applying the license fee 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. 4