Kate Garman MO TNC Tax ORD D2e 1 CITY OF SEATTLE 2 ORDINANCE __________________ 3 COUNCIL BILL __________________ 4 5 6 7 8 9 10 ..title AN ORDINANCE relating to taxation; imposing a tax on transportation network companies; adding a new Chapter 5.39 to the Seattle Municipal Code; and amending Sections 5.30.010, 5.30.060, 5.55.010, 5.55.040, 5.55.060, 5.55.150, 5.55.165, 5.55.220, and 5.55.230 of the Seattle Municipal Code. ..body WHEREAS, transportation network companies (TNCs) provide application dispatch services 11 that allow passengers to directly request the dispatch of drivers via the internet using 12 mobile interfaces such as smartphone applications; and 13 WHEREAS, over 24 million TNC trips were taken in Seattle in 2018; and 14 WHEREAS, the Mayor and City Council seek to invest in affordable housing near transit, 15 transportation and transit investments including the Center City Connector Streetcar, and 16 a driver conflict resolution center using proceeds from a tax on TNC companies 17 providing 1,000,000 rides per quarter or more on a per-ride basis; and 18 WHEREAS, the Director of Finance and Administrative Services (FAS) assesses a per-ride 19 regulatory fee for the costs to FAS of operating and enforcing the TNC regulatory 20 scheme; and 21 22 23 WHEREAS, as of the date of submitting this ordinance to establish a tax on TNC rides, the fee to regulate TNCs was $0.14; and WHEREAS, The City of Seattle intends to exercise its taxing authority, as granted by the 24 Washington State Constitution and as authorized by the Washington State Legislature, 25 and impose a tax on TNCs operating in Seattle; NOW, THEREFORE, Template last revised November 21, 2017 1 Kate Garman MO TNC Tax ORD D2e 1 2 BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS: Section 1. A new Chapter 5.39 is added to the Seattle Municipal Code as follows: 3 Chapter 5.39 TRANSPORTATION NETWORK COMPANY TAX 4 5.39.010 Administrative provisions 5 All provisions contained in Chapter 5.55 shall have full force and application with respect to 6 taxes imposed under this Chapter 5.39 except as may be expressly stated to the contrary herein. 7 5.39.020 Definitions 8 The definitions contained in Chapter 5.30 shall be fully applicable to this Chapter 5.39 except as 9 may be expressly stated to the contrary herein. The following additional definitions shall apply 10 11 throughout this Chapter 5.39: “Application dispatch” means technology that allows consumers to directly request 12 dispatch of drivers for trips and/or allows drivers or TNCs to accept payments for trips via the 13 internet using mobile interfaces such as, but not limited to, smartphone and tablet applications. 14 “For-hire vehicle” has the same meaning as given in Section 6.310.110. 15 “Motor vehicle” has the same meaning as given in Section 6.310.110. 16 “Operating in Seattle” means, with respect to a TNC, providing application dispatch 17 services to any affiliated driver at any time for the transport of any passenger for compensation 18 from a point within the geographical confines of Seattle. 19 “Personal vehicle” means a motor vehicle that is not a taxicab or for-hire vehicle, that is 20 subject to regulation under Chapter 6.310, and that is used by a driver to provide trips arranged 21 through a TNC application dispatch system. 22 “Taxicab” has the same meaning given in Section 6.310.110. 23 “TNC” means a transportation network company. Template last revised November 21, 2017 2 Kate Garman MO TNC Tax ORD D2e 1 “TNC dispatched trip” or “trip” means the provision of transportation by a transportation 2 network company driver to a passenger in a TNC vehicle through the use of a TNC’s application 3 dispatch system. The term “TNC dispatched trip” does not include transportation provided by 4 taxicabs or for-hire vehicles: 5 6 7 8 9 “TNC driver” or “driver” means a driver, licensed or required to be licensed under Chapter 6.310, affiliated with, and accepting dispatched trips from, a TNC. “TNC vehicle” means a personal motor vehicle used for the transportation of passengers for compensation that is affiliated with a TNC. “Transportation network company” means a person, licensed or required to be licensed 10 under Chapter 6.310, operating in Seattle that offers prearranged transportation services for 11 compensation using an online-enabled application or platform to connect passengers with drivers 12 using their personal vehicles. 13 “Trip that originates in Seattle” means a TNC dispatched trip where a passenger enters a 14 TNC vehicle within Seattle city limits. 15 5.39.030 Tax imposed—Rates 16 17 18 A. There is imposed a tax on every TNC operating in Seattle. The amount of the tax due shall be the tax rate under subsection 5.39.030.B per trip that originates in Seattle. B. The tax rate shall be: 19 1. Fifty-one cents per trip; and 20 2. In addition to the tax rate per trip imposed under subsection 5.39.030.B.1, 21 the taxpayer shall pay a supplemental rate per trip in an amount to be set by the Director. For the 22 period from July 1, 2020, through December 31, 2020, the Director shall set the supplemental 23 rate under this subsection 5.39.030.B.2 at an amount equal to $0.14 minus the total fees per ride Template last revised November 21, 2017 3 Kate Garman MO TNC Tax ORD D2e 1 imposed under subsection 6.310.150.B. If the total fees per ride imposed under subsection 2 6.310.150.B exceed $0.14, then the supplemental rate shall be zero. For the period after 3 December 31, 2020, the Director shall set the supplemental rate under this subsection 4 5.39.030.B.2 at $0.06. 5 5.39.040 Deductions 6 A taxpayer may deduct from the measure of the tax any trip that originates in Seattle and 7 terminates outside the state of Washington. 8 5.39.050 Tax threshold 9 No tax shall be due under Section 5.39.030 from a TNC that reports fewer than 1,000,000 trips 10 that originate in Seattle in the prior calendar quarter. Any TNC below this threshold shall 11 complete and file a return and declare no tax due on the return. The TNC shall enter on the tax 12 return the number of trips originating in Seattle even though no tax may be due. 13 5.39.060 Transportation network company tax—When due 14 The tax imposed by this Chapter 5.39 shall be due and payable in accordance with Section 15 5.55.040. The transportation network company tax shall be due and payable in quarterly 16 installments. The Director may use discretion to assign businesses to a monthly or annual 17 reporting period. Forms for such filings shall be prescribed by the Director. Persons 18 discontinuing their business activities in Seattle shall report and pay the transportation network 19 company tax at the same time as they file their final business license tax return. 20 5.39.070 Excise tax in addition to other license fees and taxes—Part of operating overhead 21 22 A. The tax imposed by Chapter 5.39 is a general excise tax on the privilege of conducting certain business within Seattle and shall be in addition to any license fee or tax Template last revised November 21, 2017 4 Kate Garman MO TNC Tax ORD D2e 1 imposed or levied under any other law, statute, or ordinance whether imposed or levied by the 2 City, state, or other governmental entity or political subdivision. 3 B. It is not the intention of this Chapter 5.39 that the tax imposed herein be construed 4 as a tax upon the purchasers or customer, but that tax shall be levied upon, and collectible from, 5 the person engaging in the business activities herein designated and that such tax shall constitute 6 a part of the operating overhead or cost of doing business of such persons. 7 5.39.080 Transportation network company tax—Constitutional limitation 8 Notwithstanding anything to the contrary in this Chapter 5.39, if imposition of the tax under this 9 Chapter 5.39 would place an undue burden upon interstate commerce or violate constitutional 10 requirements, a taxpayer shall be allowed a credit to the extent necessary to preserve the validity 11 of the tax, and still apply the tax to as much of the taxpayer’s activities as may be subject to the 12 City’s taxing authority. 13 Section 2. Section 5.30.010 of the Seattle Municipal Code, last amended by Ordinance 14 125324, is amended as follows: 15 5.30.010 Definition provisions 16 The definitions contained in this Chapter 5.30 shall apply to the following chapters of the Seattle 17 Municipal Code: Chapters 5.32 (Amusement Devices), 5.35 (Commercial Parking Tax), 5.39 18 (Transportation Network Company Tax), 5.40 (Admission Tax), 5.45 (Business License Tax), 19 5.46 (Square Footage Tax), 5.48 (Business Tax—Utilities), 5.50 (Firearms and Ammunition 20 Tax), 5.52 (Gambling Tax), 5.53 (Sweetened Beverage Tax), and 5.55 (General Administrative 21 Provisions) unless expressly provided for otherwise therein, and shall also apply to other 22 chapters and sections of the Seattle Municipal Code in the manner and to the extent expressly Template last revised November 21, 2017 5 Kate Garman MO TNC Tax ORD D2e 1 indicated in each chapter or section. Words in the singular number shall include the plural and 2 the plural shall include the singular. Words in one gender shall include ((the)) all other genders. 3 Section 3. Subsection 5.30.060.C of the Seattle Municipal Code, which section was last 4 amended by Ordinance 125324, is amended as follows: 5 5.30.060 Definitions, T—Z 6 7 *** C. “Taxpayer” means any “person,” as herein defined, required by Chapter 5.55 to 8 have a business license tax certificate, or liable for any license, tax, or fee, or for the collection of 9 any tax or fee, under Chapters 5.32 (Revenue Code), 5.35 (Commercial Parking Tax), 5.39 10 (Transportation Network Company Tax), 5.40 (Admission Tax), 5.45 (Business License Tax), 11 5.46 (Square Footage Tax), 5.48 (Business Tax—Utilities), 5.50 (Firearms and Ammunition 12 Tax), 5.52 (Gambling Tax), and 5.53 (Sweetened Beverage Tax), or who engages in any 13 business or who performs any act for which a tax or fee is imposed under those chapters. 14 15 *** Section 4. Section 5.55.010 of the Seattle Municipal Code, last amended by Ordinance 16 125324, is amended as follows: 17 5.55.010 Application of chapter stated 18 Unless expressly stated to the contrary in each chapter, the provisions of this Chapter 5.55 shall 19 apply with respect to the licenses and taxes imposed under this Chapter 5.55 and Chapters 5.32 20 (Amusement Devices), 5.35 (Commercial Parking Tax), ((5.37 (Employee Hours Taxes),)) 5.39 21 (Transportation Network Company Tax), 5.40 (Admission Tax), 5.45 (Business License Tax), 22 5.46 (Square Footage Tax), 5.48 (Business Tax—Utilities), 5.50 (Firearms and Ammunition Template last revised November 21, 2017 6 Kate Garman MO TNC Tax ORD D2e 1 Tax), 5.52 (Gambling Tax), 5.53 (Sweetened Beverage Tax), and under other titles, chapters, and 2 sections in such manner and to such extent as indicated in each such title, chapter, or section. 3 Section 5. Subsection 5.55.040.A of the Seattle Municipal Code, which section was last 4 amended by Ordinance 125324, is amended as follows: 5 5.55.040 When due and payable—Reporting periods—Monthly, quarterly, and annual 6 returns—Threshold provisions—Computing time periods—Failure to file returns 7 A. Other than any annual license fee or registration fee assessed under this Chapter 8 5.55, the taxes imposed by Chapters 5.32 (Amusement Devices), 5.35 (Commercial Parking 9 Tax), 5.39 (Transportation Network Company Tax), 5.40 (Admission Tax), 5.45 (Business 10 License Tax), 5.46 (Square Footage Tax), 5.48 (Business Tax—Utilities), 5.50 (Firearms and 11 Ammunition Tax), 5.52 (Gambling Tax), and 5.53 (Sweetened Beverage Tax) shall be due and 12 payable in quarterly installments. The Director may use discretion to assign businesses to a 13 monthly or annual reporting period depending on the tax amount owing or type of tax. Taxes 14 imposed by subsections 5.52.030.A.2 and 5.52.030.B.2 for ((punchboards)) punch boards and 15 pull-tabs shall be due and payable in monthly installments. Tax returns and payments are due on 16 or before the last day of the next month following the end of the assigned reporting period 17 covered by the return. 18 19 20 *** Section 6. Subsection 5.55.060.A of the Seattle Municipal Code, which section was last amended by Ordinance 125324, is amended as follows: Template last revised November 21, 2017 7 Kate Garman MO TNC Tax ORD D2e 1 5.55.060 Records to be preserved—Examination—Inspection—Search warrants—Estoppel 2 to question assessment 3 A. Every person liable for any fee or tax imposed by this Chapter 5.55 and Chapters 4 5.32, 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, and 5.53 shall keep and preserve, for a period 5 of five years after filing a tax return, such records as may be necessary to determine the amount 6 of any fee or tax for which the person may be liable; which records shall include copies of all 7 federal income tax and state tax returns and reports made by the person. All books, records, 8 papers, invoices, ticket stubs, vendor lists, gambling games, and payout information, inventories, 9 stocks of merchandise, and other data, including federal income tax and state tax returns, and 10 reports needed to determine the accuracy of any taxes due, shall be open for inspection or 11 examination at any time by the Director or a duly authorized agent. Every person’s business 12 premises shall be open for inspection or examination by the Director or a duly authorized agent. 13 For the purposes of this Section 5.55.060, for the tax imposed by Chapter 5.53, “business 14 premises” means wherever the person’s business records and tax documents are maintained and 15 does not mean every site owned or operated by the person. 16 17 *** Section 7. Subsection 5.55.150.E of the Seattle Municipal Code, which section was last 18 amended by Ordinance 125324, is amended as follows: 19 5.55.150 Appeal to the Hearing Examiner 20 21 *** E. The Hearing Examiner shall ascertain the correct amount of the tax, fee, interest, 22 or penalty due either by affirming, reversing, or modifying an action of the Director. Reversal or 23 modification is proper if the Director’s assessment or refund denial violates the terms of this Template last revised November 21, 2017 8 Kate Garman MO TNC Tax ORD D2e 1 Chapter 5.55, or Chapters 5.30, 5.32, 5.35, ((5.37,)) 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, or 2 5.53. 3 Section 8. Section 5.55.165 of the Seattle Municipal Code, last amended by Ordinance 4 125324, is amended as follows: 5 5.55.165 Director of Finance and Administrative Services to make rules 6 The Director of Finance and Administrative Services shall have the power and it shall be the 7 Director’s duty, from time to time, to adopt, publish, and enforce rules and regulations not 8 inconsistent with this Chapter 5.55, with Chapters 5.30, 5.32, 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 9 5.50, 5.52, or 5.53, or with law for the purpose of carrying out the provisions of such chapters, 10 and it shall be unlawful to violate or fail to comply with any such rule or regulation. 11 Section 9. Subsections 5.55.220.A and 5.55.220.B of the Seattle Municipal Code, which 12 section was last amended by Ordinance 125324, are amended as follows: 13 5.55.220 Unlawful actions—Violation—Penalties 14 15 A. It shall be unlawful for any person subject to the provisions of this Chapter 5.55 or Chapters 5.32, 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, and 5.53: 16 1. To violate or fail to comply with any of the provisions of this Chapter 17 5.55, or Chapters 5.32, 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, and 5.53, or any lawful rule 18 or regulation adopted by the Director; 19 2. 20 upon authority of the Director; 21 3. To make any false statement on any license, application, or tax return; 22 4. To aid or abet any person in any attempt to evade payment of a license fee 23 To make or manufacture any license required by this Chapter 5.55 except or tax; Template last revised November 21, 2017 9 Kate Garman MO TNC Tax ORD D2e 1 5. To refuse admission to the Director to inspect the premises and/or records 2 as required by this Chapter 5.55, or to otherwise interfere with the Director in the performance of 3 duties imposed by Chapters 5.32, 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, and 5.53; 4 6. To fail to appear or testify in response to a subpoena issued pursuant to 5 Section 3.02.120 in any proceeding to determine compliance with this Chapter 5.55 and Chapters 6 5.32, 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, and 5.53; 7 8 7. To testify falsely in any investigation, audit, or proceeding conducted pursuant to this Chapter 5.55; 9 8. To continue to engage in any business activity, profession, trade, or 10 occupation after the revocation of or during a period of suspension of a business license tax 11 certificate issued under Section 5.55.030; or 12 9. In any manner, to hinder or delay the City or any of its officers in carrying 13 out the provisions of this Chapter 5.55 or Chapters 5.32, 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 14 5.52, and 5.53. 15 B. Each violation of or failure to comply with the provisions of this Chapter 5.55, or 16 Chapters 5.32, 5.35, ((5.37,)) 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, or 5.53 shall constitute a 17 separate offense. Except as provided in subsection 5.55.220.C, any person who commits an act 18 defined in subsection 5.55.220.A is guilty of a gross misdemeanor, punishable in accordance 19 with Section 12A.02.070. The provisions of Chapters 12A.02 and 12A.04 apply to the offenses 20 defined in subsection 5.55.220.A, except that liability is absolute and none of the mental states 21 described in Section 12A.04.030 need be proved. 22 *** Template last revised November 21, 2017 10 Kate Garman MO TNC Tax ORD D2e 1 Section 10. Subsection 5.55.230.A of the Seattle Municipal Code, which section was last 2 amended by Ordinance 125324, is amended as follows: 3 5.55.230 Denial, revocation of, or refusal to renew business license tax certificate 4 A. The Director, or the Director’s designee, has the power and authority to deny, 5 revoke, or refuse to renew any business license tax certificate or amusement device license 6 issued under the provisions of this Chapter 5.55. The Director, or the Director’s designee, shall 7 notify such applicant or licensee in writing by mail in accordance with Section 5.55.180 of the 8 denial of, revocation of, or refusal to renew the license and on what grounds such a decision was 9 based. The Director may deny, revoke, or refuse to renew any business license tax certificate or 10 other license issued under this Chapter 5.55 on one or more of the following grounds: 11 1. The license was procured by fraud or false representation of fact. 12 2. The licensee has failed to comply with any provisions of this Chapter 5.55. 13 3. The licensee has failed to comply with any provisions of Chapters 5.32, 14 5.35, 5.39, 5.40, 5.45, 5.46, 5.48, 5.50, 5.52, or 5.53. 15 4. 16 Title 5 or Title 6. The licensee is in default in any payment of any license fee or tax under 17 Section 11. Severability. If any part, provision, or section of this ordinance is held to be 18 void or unconstitutional, all other parts, provisions, and sections of this ordinance not expressly 19 so held to be void or unconstitutional shall continue in full force and effect. 20 Section 12. It is the intent of the Mayor and the Council through the annual budget 21 process to use the proceeds of the tax imposed by Seattle Municipal Code Section 5.39.030 for 22 the following purposes: 23 A. Administrative costs related to the tax and regulations of TNC drivers; Template last revised November 21, 2017 11 Kate Garman MO TNC Tax ORD D2e 1 B. Investment in affordable housing near transit; 2 C. Transportation and transit investments, including the Center City Connector 3 Streetcar, and 4 D. A driver conflict resolution center. 5 Section 13. Sections 1 through 12 of this ordinance shall take effect on July 1, 2020. Template last revised November 21, 2017 12 Kate Garman MO TNC Tax ORD D2e 1 Section 14. This ordinance shall take effect and be in force 30 days after its approval by 2 the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it 3 shall take effect as provided by Seattle Municipal Code Section 1.04.020. 4 Passed by the City Council the ________ day of _________________________, 2019, 5 and signed by me in open session in authentication of its passage this _____ day of 6 _________________________, 2019. 7 ____________________________________ 8 President ____________ of the City Council 9 Approved by me this ________ day of _________________________, 2019. 10 ____________________________________ 11 Jenny A. Durkan, Mayor 12 Filed by me this ________ day of _________________________, 2019. 13 ____________________________________ 14 Monica Martinez Simmons, City Clerk 15 (Seal) Template last revised November 21, 2017 13