CITY OF SEATTLE
ORDINANCE __________________
COUNCIL BILL __________________
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AN ORDINANCE relating to taxation; amending the payroll expense tax on persons engaging in business in Seattle; amending Section 5.38.020 of the Seattle Municipal Code; and adding a new Section 5.38.025 to the Seattle Municipal Code.
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WHEREAS, on July 6, 2020, the City Council enacted Ordinance 126108, which added a new Chapter 5.38 to the Seattle Municipal Code to impose a payroll expense tax on persons engaging in business in Seattle; and
WHEREAS, in the fall of 2020, the Department of Finance and Administrative Services (FAS) conducted a rulemaking process and then published a Director's Rule for the payroll tax; and
WHEREAS, during the rulemaking process, FAS staff received numerous questions from businesses about how to apply the payroll expense allocation methodology included in the ordinance, especially in situations when employees split their time between work in Seattle and work in other jurisdictions; and
WHEREAS, the City intends that businesses have an understandable, streamlined, and efficient methodology to determine their payroll expense subject to the tax; and
WHEREAS, this Ordinance therefore adds an additional method that businesses may choose to use to determine their payroll expense subject to the tax, based on the proportion of an employee's hours worked in Seattle compared to the employee's total hours worked in all locations; and
WHEREAS, businesses may choose to use either the original method or the new method to determine their payroll expense subject to the tax for each tax year; and
WHEREAS, this ordinance amends Chapter 5.38 to facilitate the imposition, calculation, and administration of the payroll expense tax; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:
Section 1. Section 5.38.020 of the Seattle Municipal Code, enacted by Ordinance 126108, is amended as follows:
5.38.020 Definitions
The definitions contained in Cha...
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