anyone knw anything about city tax?

[look 171]

Small business. Got a letter in the mail about, of course, leech more money outta me. They, the city of LA, wanted to tax me on the income from all my gross receipt for 2015. My business address is not in the city of LA, but did paid and applied for a business lic there so I can do work in the city. Now, they want to tax me on my gross income. WTF? I talked with my accountant over the phone for a few seconds, and will meet with them in a few days. This is pissing me off. I think the city made a mistake. Any thoughts in advance before I see my accountant?

[ossiblue]

Originally Posted by look 171

Small business. Got a letter in the mail about, of course, leech more money outta me. They, the city of LA, wanted to tax me on the income from all my gross receipt for 2015. My business address is not in the city of LA, but did paid and applied for a business lic there so I can do work in the city. Now, they want to tax me on my gross income. WTF? I talked with my accountant over the phone for a few seconds, and will meet with them in a few days. This is pissing me off. I think the city made a mistake. Any thoughts in advance before I see my accountant?

Did a quick search and found the following which may apply to your situation.

First, is this statement: "This section requires that every person engaged in any trade, calling, occupation, vocation, profession or other means of livelihood in the City of Los Angeles, must obtain a Tax Registration Certificate (TRC) and pay the required business tax due, specified in Sections 21.41 to 21.199 of the Business Tax Ordinance. You are considered to be engaged in business in the City of Los Angeles when you physically perform work within the City of Los Angeles for seven (7) or more days per year." (Emphasis mine)

The statement appears to say you are liable for the city tax if you worked within the city limits for seven or more days. It's not clear if that means your are liable only for the jobs that lasted for seven-plus days, or if you worked for seven-plus days that places you in the tax category for your entire business. Given that you're facing a taxing statute, I suspect it's the latter interpretation. Your accountant should know.

Second thing that may apply to you: "Is there a tax liability for a business located outside the City of Los Angeles doing business within the City of Los Angeles?

Yes. However, the application of certain City Clerk Rulings may lower your total tax liability." Obviously, you will need to research the Clerk Rulings.

Third item of interest: "I am a small business owner. Are there any exemptions available to me?

Yes. Starting on January 1, 2007, a small business with $100,000 or less of taxable and nontaxable gross receipts within and without the City, may qualify for a Small Business Exemption (LAMC Section 21.29)." This might be applicable to your situation, as well.

Business Tax FAQ

[look 171]

thanks, LJ. I searched and read that too. I was hoping someone here may have done or dealt with this would give me their $.02

[ossiblue]

Originally Posted by look 171

thanks, LJ. I searched and read that too. I was hoping someone here may have done or dealt with this would give me their $.02

Out of curiosity, did you do seven or more days of work in L.A.? Do any of the exemptions apply?

Regardless, I hope you let us know the results of your conference with the accountant. Good luck.

[look 171]

Yes, more then 7 days. Its less then $100k of income just out of the jobs in LA, but they seem to want my total gross for the year including the work outside of the city. Bad enough with the Feds, state, not the city want their money too even more then half that wasn't conducted within the city of LA. I think they ask just because they can and people seem to just pay it.

[t-tom]

I live and work in Kansas City Mo they take 1% based on your gross. It doesn't matter if you lost money or made it, they want their 1%. Take into account we already have a tax rate of 10.8% in the city.

[look 171]

Originally Posted by t-tom

I live and work in Kansas City Mo they take 1% based on your gross. It doesn't matter if you lost money or made it, they want their 1%. Take into account we already have a tax rate of 10.8% in the city.

How can they take 1% if you report a loss? The whole point of tax is if you made money?

[ossiblue]

Originally Posted by look 171

How can they take 1% if you report a loss? The whole point of tax is if you made money?

My guess would be, the tax is on the gross receipts only, not net or adjusted gross like state and federal income taxes and which allow deductions for losses. Submit your gross receipts, and they take their 1% from that figure, leaving you with a deeper loss.

This is a business tax, not a personal income tax. The point is not to tax the money the business made, but rather the money the business "processed"--like a sales tax. The gov't doesn't care if a business makes money when assessing a sales tax, they just want their cut of the sales "process" or transfer of goods. I think calling it a business "income tax" is misleading as most people think of income as net profit or loss.

[t-tom]

There in lies my problem with the Kansas City tax, it's not just a business tax, you have to pay it as an individual as well.

[Geary]

General Excise Tax, Use Tax, or whatever it's called in your area .. ALL businesses are required to add these taxes to any retail sale they make. Failure to collect it from your customers doesn't relieve you of the responsibility of paying it.

State/City GE taxes are based on your gross sales (whether those sales are product or labor). In California, these collected taxes are paid either monthly or quarterly, depending on your gross sales.

These taxes are due even on product used for your own personal use, since it's likely you didn't pay it when buying wholesale from your supplier.

[WPOZZZ]

Originally Posted by Geary

General Excise Tax, Use Tax, or whatever it's called in your area .. ALL businesses are required to add these taxes to any retail sale they make. Failure to collect it from your customers doesn't relieve you of the responsibility of paying it.

State/City GE taxes are based on your gross sales (whether those sales are product or labor). In California, these collected taxes are paid either monthly or quarterly, depending on your gross sales.

These taxes are due even on product used for your own personal use, since it's likely you didn't pay it when buying wholesale from your supplier.

And depending where you live and do business, there may be differing tax rates. Giant PITA to deal with if you have to do that.

[look 171]

Originally Posted by Geary

General Excise Tax, Use Tax, or whatever it's called in your area .. ALL businesses are required to add these taxes to any retail sale they make. Failure to collect it from your customers doesn't relieve you of the responsibility of paying it.

State/City GE taxes are based on your gross sales (whether those sales are product or labor). In California, these collected taxes are paid either monthly or quarterly, depending on your gross sales.

These taxes are due even on product used for your own personal use, since it's likely you didn't pay it when buying wholesale from your supplier.

I don't have a resale lic or number. Seems like they want my gross sales and most of that money generated from my total gross (80%) sales are not in the city of LA. The city seems to want a part of that too combined and rolled into the whole damn thing.

[Geary]

Not sure about your circumstances, look. In Cali, you normally have two business licenses, issued by State and County. If you're caught doing business without a license, they'll typically bill you some outrageous amount and leave it to you to prove you don't owe it. A visit to the licensing office allows you to discuss your situation, usually with a helpful person. You may not even have to tell them your name when getting the info you need.

They always want to know the gross sales, even if 100% exempt. For instance, all product sold out-of-state is "exported" and exempt from any of these sales taxes.