Posted on August 8, 2007 by Joseph M. Wallin

New City of Seattle Tax -- Employee Hours Tax

Effective July 1, 2007, persons engaged in business within the City of Seattle (the “City”) will have to start paying a new “employee hours tax” (also known as “The Business Transportation Tax”). The tax was imposed to “provide an equitable means of generating revenue to ensure that those who regularly utilize the City’s transportation system are supporting that system.” The proceeds of the tax are to be used strictly for transportation purposes. 

The tax is measured by the number of employee hours conducted within the City during the calendar year (pro rated for this first year of the tax). The amount of the tax is equal to the employee hours working within the City during the calendar year multiplied by the rate of $0.013202 (pro rated for the first year). Vacation and sick leave hours are excluded from hours worked. All business reporting an employee hours tax due are entitled to a nonrefundable credit of $50 from the amount of tax due.

Key Points:

  • The tax applies to employee hours worked inside the City regardless of whether the place of business is located within or without the City.
  •  If an employee works within and without the City, it is the responsibility of the taxpayer to calculate and report the number of hours worked in the City.

Exemptions:

The following types of businesses are exempt from the tax:

  • Businesses having annual worldwide gross income of $50,000 or less;
  • Businesses that are preempted from taxation by cities pursuant to federal or state statutes or regulations, including, but not limited to, the following:
    • Insurance businesses and their agents as defined by RCW 48.01.050 and 48.17.010, respectively, and whose total revenue is exempt from the business license tax per SMC 5.45;
    • Businesses that only sell, manufacture, or distribute motor vehicle fuel as defined in RCW 82.36.010 and exempted under RCW 82.36.440;
    • Businesses that only distribute or sell liquor as defined in RCW 66.04.010 and exempted in RCW 66.08.120;
    • Federal and state government agencies and subdivisions (except the City of Seattle).
  • Domestic servants or gardeners, maintenance or repair persons employed in or around a private home.
  • Volunteers and persons providing services in return for only aid or sustenance from religious or charitable organizations.

Deduction: 

There is a deduction from the tax available for the number of employees, or their hours, for those employee who do not regularly (at least 80% of the time) commute to a workplace in the City using a motor vehicle occupied by a single person. Commuting methods eligible for the deduction include use of mass transit, carpooling, walking, and/or bicycling.

Link to the ordinance:  http://clerk.ci.seattle.wa.us/~scripts/nph-brs.exe?
s1=&s2=&s3=&s4=122191&s5=&Sect4=AND&l=20&Sect1=IMAGE&Sect2
=THESON&Sect3=PLURON&Sect5=CBOR1&Sect6=HITOFF&d=CBOR&p
=1&u=%2F%7Epublic%2Fcbor1.htm&r=1&f=G

Link to the rule with respect to the ordinance:  http://clerk.ci.seattle.wa.us/netacgi/nph-brs.exe?s1=5-921.NUM.&l=20&Sect6=HITOFF&Sect5=BTXN1&d=BTXN&p=1&u=/~
finance/btxn1.htm&r=1&f=G

For a link to the definition of engaging in business in the City:  http://clerk.ci.seattle.wa.us/~scripts/nph-brs.exe?d=CODE&s1=5.30.030.snum.&Sect5=CODE1&Sect6=HITOFF&l=20&p=1&u=
/~public/code1.htm&r=1&f=G

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