Director's Rule 5-801

Personal Services, Service Activities

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Personal services, service activities

(1) Seattle Municipal Code Section 5.45.050 imposes a business license tax upon every person for the privilege of engaging in business within the city of Seattle. Persons engaged in a specifically named business activity classified within SMC 5.45.050 are subject to the corresponding tax rate set forth in the code, which is applied to the value of products, gross proceeds of sale, or gross income of the business. The business license tax classifications set forth in SMC 5.45.050 are as follows: extracting, manufacturing and processing for hire, manufacturing flour or wholesaling grain, wholesaling, retailing, tour operators, printing and publishing, motor carriers transporting freight for hire, and service and other business activities. All business activities which are not specifically identified in the code as reportable under any of these tax classifications, and all            services not specifically classified elsewhere in the code are reportable under the service and other business activities classification.

(2) Personal or professional services defined. The term "personal or professional services," as used herein, refers generally to the activity of rendering services to persons as distinct from making sales of tangible personal property or the providing of services which have been defined in the code as a "retail service," "sale" or "sale at retail." (See SMC 5.30.040 or 5.30.050.)

Examples of persons rendering personal or professional services include accountants, aerial surveyors and map makers, agents, athletes contracting to provide professional services, ambulances, appraisers, architects, attorneys, barbers, baseball clubs and other sports organizations, beauty shop owners, brokers, chemists, chiropractors, collection agents, court reporters, dentists, detectives, employment agents, engineers, financiers, funeral directors,' hospitals, janitors, kennel operators, laboratories, landscape architects, loan agents, medical service providers, motor carriers other than freight haulers, music teachers, orchestra or band leaders contracting to provide musical services, physicians, real estate agents, school bus operators, schools, stenographers, warehouses, teachers, theaters, undertakers, veterinarians, and persons engaged in other similar professions or services.

(3) Business license tax.

(a) Persons engaged in rendering personal or professional services, or any business activity other than, or in addition to, those for which a specific rate is provided in SMC 5.45.050, are taxable under the service and other business activities classification upon the gross income from such business.

(b) The service and other business activities classification does not apply to persons engaged in the business of cleaning, repairing, improving, altering, etc., the tangible personal property of others, such as automobiles, houses, jewelry, computers, refrigerators and machinery repairs, laundry, or dry cleaners. Also, it does not include certain personal and professional services specifically included within the definition of the term "retail service", or "sale at retail" in SMC 5.30.040 or 5.30.050, such as amusement and recreation businesses of a participatory nature (See Seattle Rule 5-700 Amusement, recreation, and physical fitness services.); abstract, title insurance and escrow businesses, credit bureau businesses and automobile parking and storage garage businesses. Furthermore, it does not include persons who render services to others in the capacity of employees as distinguished from independent contractors. (See Seattle Rule 5-039 Employees distinguished from persons engaging in business.)

(c) There must be included within gross income amounts reported for tax all fees for services rendered and all charges recovered for expenses incurred in connection with the services rendered, such as transportation costs, lodging, meals, and telecommunications charges, etc.

(d) Persons engaged in a personal service business and selling articles of tangible personal property apart from the rendition of personal services shall report those sales separately under the retailing or wholesaling classification--whichever applies.

Effective: January 31, 2008

I, Dwight D. Dively, Director of the Department of Finance 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 Finance.

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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City Finance manages the financial operations of the City of Seattle and oversees the City’s financial controls and enterprise reporting while working to achieve the goals set by the Mayor and the City Council.