Director's Rule 5-702

Coin operated vending machines, amusement devices and machines

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Coin-operated vending machines, amusement devices and machines

(1) Definitions. As used herein:

(a) The term "coin operated vending machines" means machines which, through the insertion of a coin will return to the patron a predetermined specific article of merchandise or provide facilities for installing, repairing, cleaning, altering, imprinting, or improving tangible personal property of or for consumers. It includes machines which vend photographs, toilet articles, cigarettes, and confections as well as machines which provide laundry and cleaning services. Effective July 1, 2002, public pay telephones are considered to be coin operated vending machines (See subsection (2)(a)(iii) below).

(b) The term "coin operated amusement devices" means any machine or device which, through the insertion of a coin, provides recreation or entertainment. It includes, but is not limited to, pool and billiard tables, shuffleboards, music machines, video games, pinball games, riding devices, panoram and peepshow devices, televisions and devices for display of pictures or views on film, and those machines or devices which permit the patron to see, hear or read something of interest.

(c) The term "coin operated service machines" means any coin-operated machines other than those defined as "coin operated vending machines" or "coin operated amusement devices." It includes, for example, scales and luggage lockers.

(2) Business license tax.

(a) Retailing Classification.

(i) Persons operating coin-operated vending machines are engaged in a retailing business and must report and pay tax under the retailing classification with respect to the gross proceeds of sales.

(ii) Persons engaged in operating shuffleboards or games of pool or billiards are taxable under the retailing classification on the gross receipts therefrom.

(iii) Effective July 1, 2002, persons engaged in operating pay telephones which are activated by inserting coins, calling collect, using a calling card or credit card, or dialing a toll-free number, and the provider of the service owns or leases the  telephone equipment but does not own the telephone line providing the service to that equipment and has not affiliation with the owner of the telephone line shall report under those amounts under the retailing classification (RCW 35.21.710).

(b) Service and Other Business Activities Classification.

(i) Persons operating coin operated amusement devices, except shuffleboard, pool, and billiard games, are taxable under the Service and other business activities classification on the gross receipts therefrom.

(ii) Persons operating coin operated service machines are taxable under the service and other classification upon the gross receipts therefrom.

(3) License to use real property. When any coin operated machine is placed at a location owned or operated by a person other than the owner of the machines, under any arrangement for compensation to the operator of the location, the person operating the location has granted a license to use real property to the owner of the machine, and will be responsible for reporting and paying tax upon his or her gross receipts therefrom under the service and other business activities classification.

(4) Amusement devices. Where the owner of amusement devices, which are placed at the location of another, has failed to pay the gross receipts tax, the Director may proceed directly against the operator of the location for full payment of all tax due.

(5) Sales of equipment. Sales of coin operated vending machines, coin operated service machines, and coin operated amusement devices to persons who will operate the same are sales at retail and reportable under the retailing classification.

(6) Apportionment -- Inside the City and Outside the City. Persons located within the City and taxable under either the retailing or service and other classification, as detailed above, must report the revenue received from all of their machines and devices located within the State of Washington, except as provided below. Persons located outside the City and taxable under either the retailing or service and other classification must report the revenue received from machines and devices located within the City of Seattle. If the person has an office or place of business both inside the City and outside the City, then the revenue earned on machines outside the City should be apportioned to that office which supports those machines.

(a) A deduction may be taken in the following situation: A machine or device is located in a city which levies a gross receipt tax similar to the City of Seattle, and the person pays the tax on the revenue generated to the other city.

(b) For purposes of apportionment, a coin operated machine or coin operated amusement device is not considered an office or place of business.

Effective: July 15, 2005

I, Kenneth J. Nakatsu, Director of the Department of Executive Administration of the City of Seattle, do hereby certify under penalty of perjury of law, that the within and foregoing is a true and correct copy as adopted by the City of Seattle, Department of Executive Administration.

City Finance

Jamie Carnell, Interim Director
Address: 700 Fifth Ave., 4th Floor, Seattle, WA, 98104
Mailing Address: P.O. Box 34214, Seattle, WA, 98124-4214
Phone: (206) 684-8484
Hours: 8:30 a.m.-4 p.m.

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