Seattle Rule 5-043
Engaging in Business
(1) Tax imposed onengaging in business. Seattle Municipal Code Chapter 5.45 imposes an excise taxupon the privilege of
"engaging in business activities" withinSeattle. The tax is measured by the value of products, gross proceeds of sales,or gross income derived in whole or in part from such business activities. Theamount of tax is determined by multiplying the
measure of the tax by theapplicable rate. The measure and the rate that apply to a business activity isdetermined by the tax classification of the activity.
(2) Definitions.
(a) The term "engaging in business activity"means commencing, conducting, or continuing in business, and also the
exerciseof corporate or franchise powers, as well as liquidating a business when theliquidators thereof hold themselves out to the public as conducting suchbusiness.
(b) The terms "office" and "place ofbusiness" are defined in SMC 5.30.040.
(3) Business activities on which tax is imposed. Thedefinition of engaging in business is broad and extends to all
activitiesperformed with the object of gain, benefit or advantage with which Seattle hasnexus.
(a) Gain, benefit or advantage. A person isengaged in business if it performs activities with the object of gain,
benefit,or advantage to the person. The gain, benefit or advantage may be indirect. Theactivity need not actually result in any gain, benefit, or advantage, as longas any of those were its object.
(b) Nexus. A person has created nexus with Seattleif, whether itself or through others acting on its behalf, it:
(i) is physically present in the City; or
(ii) endeavors to maintain a share of the market withinthe City; or
(iii) avails itself of the economic benefits of the City.
Once a person has established nexus, a person is presumedto continue in business in Seattle as long as the person continues
to generategross proceeds of sales, gross income, or value resulting from the originalnexus generating activity.
(c) No physical location required. A person may beengaged in business activities in Seattle whether or not it has an
office,other place of business, or any other physical location in the City. A personis engaged in business activities in Seattle if it seeks to maintain a share ofthe market in the City or otherwise avails itself of the economic benefits ofthe Seattle
market by directing its activities at that market.
(4) Examples of engaging in business activities. Theactivities listed in this section are illustrative only and are not
intended tonarrow the definition of "engaging in business" above. The Cityexpressly intends that engaging in business include any activity sufficient toestablish nexus for purposes of applying the tax under the law and theconstitutions of the
United States and the State of Washington. Without beingall inclusive, any one of the following activities conducted within the City bya person, or its employee, agent, representative, independent contractor,broker or another acting on its behalf
constitutes engaging in business andrequires a person to register and obtain a business license tax certificate:
(a) Owning, renting, leasing, maintaining, or having theright to use, or using, in connection with a business activity,
tangiblepersonal property, intangible personal property, or real property permanentlyor temporarily located in the City;
(b) Owning, renting, leasing, using, or maintaining, anoffice, place of business, or other establishment in the City in
which businessactivities are conducted;
(c) Soliciting sales;
(d) Making repairs or providing maintenance or service toreal or tangible personal property, including warranty work and
propertymaintenance;
(e) Providing technical assistance or service, includingquality control, product inspections, warranty work, or similar
services on orin connection with tangible personal property sold by the person or on itsbehalf;
(f) Installing, constructing, or supervising installationor 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 personalproperty, 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 managingreal property;
(k) Rendering professional services such as thoseprovided by accountants, architects, attorneys, auctioneers,
consultants,engineers, professional athletes, barbers, baseball clubs and other sportsorganizations, chemists, consultants, psychologists, court reporters, dentists,doctors, detectives, laboratory operators, teachers, veterinarians;
(l) Meeting with customers or potential customers, evenwhen 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 inthe City, acting on its behalf, or for customers or potential customers;
(n) Investigating, resolving, or otherwise assisting inresolving 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 thegoods took place;
(p) Delivering goods in vehicles owned, rented, leased,used, or maintained by the person who sold the goods or another
acting on itsbehalf; and
(q) Accepting or executing a contract within the City andthe goods and services are provided or delivered in the City.
(5) Safe harbor for persons engaging in certain businessactivities. SMC 5.30.030 allows a person to engage in certain
businessactivities in Seattle without being required to obtain a business license taxcertificate or pay tax.
(a) Activities allowed without business license taxcertificate or tax payment. A person may perform one or more of
thefollowing business activities without licensing and paying tax to Seattle, providedthat it engages in no other business activities in or with the City. If, inaddition to the activities in this subsection (5)(a), a person performs one ormore of the
business activities listed in subsection (4), or another businessactivity, the person must register and pay tax.
(i) Meeting with suppliers of goods and services as acustomer.
(ii) Meeting with government representatives in theirofficial capacity, other than those performing contracting or
purchasingfunctions.
(iii) Attending meetings, such as trainings, boardmeetings, retreats, seminars, and conferences, or other meetings wherein
theperson does not provide training in connection with tangible personal propertysold by the person or on its behalf.
(iv) Renting tangible or intangible property as acustomer when the property is not used in the City.
(v) Attending, but not participating in, a "tradeshow." Persons participating at a trade show shall review the
City's tradeshow ordinance, SMC Chapter 6.20.
(vi) Conducting advertising through the mail.
(vii) Soliciting sales by phone from a location outsidethe City.
(viii) Accepting or executing a contract with the Citywhen:
1. The aggregate value of all City contracts with theperson during the calendar year is Five Thousand Dollars ($5,000) or
less andthe person is engaged in no other business within the City; or
2. The person's only source of revenue consists ofcontracts with the City for neighborhood planning purposes, sister
cityassociations, or Arts Commission grants, and is less than the taxable thresholdamount provided in SMC Section 5.55.040D.
(b) Delivery by common carrier. A seller locatedoutside the City merely delivering goods into the City by means of
commoncarrier is not required to register and obtain a business license taxcertificate provided that it engages in no other business activities in or withthe City. If, in addition to delivering goods by common carrier, a sellerperforms one or more of
the business activities listed in subsection (4), oranother business activity, the person must register and pay tax.
DIRECTOR'S CERTIFICATION
I, Glen M. Lee, Finance Director of the City ofSeattle, do hereby certify
under penalty of perjury of law, that the within andforegoing is a true and
correct copy as adopted by the City of Seattle,Department of Finance and
Administrative Services.
DATED this ______ day of July 2016.
CITY OF SEATTLE,
a Washingtonmunicipality
By: ____________________________________
Glen M. Lee,Finance Director
Department ofFinance and Administrative
Services
Effectivedate: July 14, 2016