§ 7-1006. Deductions, exemptions, and charitable organizations.

(1)

No deductions from gross income shall be made except income earned from business done wholly outside of the city on which a license tax is paid to some other municipality or county and fully reported to the city, taxes collected for a governmental entity, or income which cannot be included for computation of the tax pursuant to state or federal law. The applicant shall have the burden to establish the right to exempt income by satisfactory records and proof.

(2)

No person shall be exempt from the requirements of this ordinance by reason of the lack of an established place of business within the city, unless exempted by state or federal law. The license inspector shall determine the appropriate classification for each business in accordance with the latest issue of the North American Industry Classification System (NAICS) for the United States published by the Office of Management and Budget, and shall administer interpretations whenever necessary to determine the proper classification of a business. No person shall be exempt from this ordinance by reason of the payment of any other tax, unless exempted by state law, and no person shall be relieved of liability for the payment of any other tax or fee by reason of the application of this ordinance.

(3)

A charitable organization shall be exempt from the business license tax on its gross income unless it is deemed a business subject to a business license tax on all or part of its gross income as provided in this section. A charitable organization, or any for-profit affiliate of a charitable organization, that (1) reports income from for-profit activities, or unrelated business income, for federal income tax purposes to the Internal Revenue Service, (2) has a fixed physical location in the city and receives income from the sale within the city of merchandise or services, or (3) receives income from the sale or rental of property within the city, shall be deemed a business subject to a business license tax on the part of its gross income from such for-profit activities or unrelated business income, from its income from the sale within the city of merchandise or services, or from its income from the sale or rental of property within the city. A sale of merchandise or services as described in this section shall not include:

(a)

Donations without return consideration;

(b)

Member or sponsor dues or attendance fees for members at meetings or conventions of the organization;

(c)

The wholesale sale of blood or blood products;

(d)

The sale of religious books or the proceeds from day care services or catering services provided by a religious organization to its members; or

(e)

The occasional sale of merchandise by the organization as a special fundraising event of limited short-term duration.

A charitable organization shall be deemed a business subject to a business license tax on its total gross income if (1) any net proceeds of operation, after necessary expenses of operation, inure to the benefit of any individual or any entity that is not itself exempt under 26 U.S.C. section 501(c), or (2) any net proceeds of operation, after necessary expenses of operation, are used for a purpose other than a charitable purpose as defined in this article. Payment of necessary costs of operation and wages to non-management employees will not disqualify a charitable organization from exemption. Excess benefits or compensation in any form beyond fair market value to a sponsor, organizer, officer, director, trustee or person with ultimate control of the organization shall not be deemed a necessary cost or expense of operation.

(4)

A charitable organization must provide a copy of their tax exemption letter from the Internal Revenue Service in order to be designated as a charitable organization.

(Ord. No. O-11-13, 4-9-13; Ord. No. O-21-16, 5-10-16)