(Amended by Ord. No. 138,968, Eff. 8/9/69.)
(a) Assessment of taxes. (Amended by Ord. No. 181,857, Eff. 10/4/11.)
(1) Whenever the Director of Finance determines that any tax is due or may be due to the City of Los Angeles under the provisions of this chapter, he or she may at any time make and give notice of an assessment of such tax; however, the period during which the Director of Finance may make and give notice of an assessment of tax is limited as follows:
(A) When a person timely files an application for a business tax registration certificate or business tax renewal form for a business subject to tax under Article 1 of Chapter 2 of this Code, the Director of Finance may make and give notice of an assessment of tax at any time within three years of the date on which such taxes were due under this Code;
(B) When a person timely files an application for a business tax registration certificate or business tax renewal form for a business subject to tax under Article 1 of Chapter 2 of this Code, the Director of Finance may make and give notice of an assessment of tax at any time within six years of the date on which such taxes were due under this Code if there is a substantial understatement of the amount of tax due on the business tax registration certificate application or business tax renewal form. For purposes of this subsection:
(i) The "tax due" on the business tax registration certificate application or business tax renewal form is the amount of tax properly due from the taxpayer for the period(s) encompassed by the business tax registration certificate application or business tax renewal form;
(ii) A "substantial understatement" occurs when a taxpayer fails to report some of the tax due, and the omitted amount is 25% or more of the amount of tax reported in the business tax registration certificate application or business tax renewal form;
(iii) The filing of an amended business tax registration certificate application or an amended business tax renewal form does not reduce the time period in which the Director of Finance may make an assessment under this subsection;
(iv) The taxpayer's subjective or objective state of mind is irrelevant in determining whether a substantial understatement exists;
(C) When a person files an untimely business tax registration certificate application or an untimely business tax renewal form for a business subject to tax under Article 1 of Chapter 2 of this Code, the Director of Finance may make and give notice of an assessment of tax at any time within three years of the date on which the untimely business tax registration certificate application or untimely business tax renewal form was filed;
(D) When a person makes a willful attempt in any manner to defeat or evade a tax imposed under Article 1 of Chapter 2 of this Code, including the filing of a false business tax registration certificate application or business tax renewal form or the filing of such a form with the willful intent to evade a tax, the Director of Finance may make and give notice of an assessment of tax at any time;
(E) In all other circumstances, including the collection of any tax other than those set forth under Article 1 of Chapter 2 of this Code, the Director of Finance may make and give notice of an assessment at any time otherwise allowed by law;
(F) If more than one of these circumstances applies, the Director of Finance shall have the longest applicable period in which to make and give notice of an assessment.
(2) The notice of assessment shall separately set forth the amount of any tax known by the Director of Finance to be due or estimated by the Director of Finance, after full consideration of all information within his or her knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this chapter and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment.
(b) Service of assessment; right to hearing. (Amended by Ord. No. 181,857, Eff. 10/4/11.) The notice of assessment shall be served upon the person either by handing it to him personally, or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person at the address of the location of the business appearing on the face of the registration certificate issued to him or to such other address as he shall register with the Director of Finance for the purpose of receiving notices provided under this chapter; should the person have no registration certificate issued to him and should he have no address registered with the Director of Finance for such purpose, then to such person's last known address. For the purpose of this section, a service by mail is complete at the time of deposit in the United States mail. Within 45 days after the date of service, the person assessed may either apply in writing to the Director of Finance for a hearing on the assessment or may file a written request that such hearing be waived. If the person neither requests a hearing upon the assessment nor requests a waiver of hearing within the prescribed time, the amount of the assessment shall be final and the amount thereof shall immediately be due and owing to the City of Los Angeles, but penalties and interest as provided by this chapter shall continue to accrue until paid.
(c) Waiver of hearing. If the person requests that the hearing be waived, the Director of Finance may either grant such request and notify the person thereof in writing or may, in his discretion, deny the request and set the assessment for hearing at the time and in the manner prescribed by Subsection (d) hereof. If the Director of Finance grants the request for waiver of hearing, the administrative proceedings prescribed by this section shall be deemed exhausted and the City shall have the right to bring an action in any court of competent jurisdiction to collect the amount of the assessment, plus such penalties and interest as may have accrued thereon as provided by this chapter.
(d) Time of hearing; notice. (Amended by Ord. No. 174,084*, Eff. 8/19/01.) If the person requests a hearing upon the assessment or if the Director of Finance denies the person’s request for waiver of hearing, the Director of Finance shall cause the matter to be set for hearing before an Assessment Review Officer not later than 90 days after the date of the application, or, as the case may be, the date of the Director of Finance’s denial of the waiver of hearing. A request for hearing shall be accompanied by a written statement of the basis or bases for the request. Notice of the time and place of the hearing shall be mailed by the Director of Finance to the person assessed not later than 15 days before the date set for hearing and, if the Director of Finance desires said person to produce specific records at such hearing, such notice may designate the records requested to be produced.
(e) Administrative hearing. (Amended by Ord. No. 174,084*, Eff. 8/19/01.) The hearing prescribed by this section shall be before an Assessment Review Officer. The Assessment Review Officer shall be appointed by the Director of Finance and shall be an employee of the Office of Finance. At the hearing, the person assessed and the representative of the Director of Finance, who shall be a person other than the Assessment Review Officer, may submit such evidence as they believe to be relevant to their respective positions. The Assessment Review Officer may require the presentation of additional evidence from either the person assessed or the representative of the Director of Finance, or from both, and may continue the hearing from time to time for the purpose of allowing the presentation of additional evidence.
(f) Decision of Assessment Review Officer. (Amended by Ord. No. 174,084*, Eff. 8/19/01.) Upon completion of the hearing, the Assessment Review Officer may (i) affirm the assessment, (ii) increase the assessment, or (iii) decrease the assessment, as the evidence may require; but the amount of the assessment shall not be increased unless the claim for the increase is asserted on behalf of the City either before or during the hearing. Written notice of the decision of the Assessment Review Officer shall be given to the person assessed in the same form and in the same manner as the notice of assessment.
(g) Optional Office of Finance Appeals. (Amended by Ord. No. 177,019, Eff. 11/14/05.) The Office of Finance may, at its discretion, establish one or more advisory bodies, which may be composed of City staff and members of the public, including members of the business community, to hear appeals from decisions of the Assessment Review Officer. If the Office of Finance does establish one or more boards and the person assessed does not appeal, he or she shall nevertheless be deemed to have exhausted the administrative proceedings provided by this section.
(h) Hearing Before Board of Review. (Amended by Ord. No. 174,084*, Eff. 8/19/01.) At the hearing before the Board of Review, the appellant and the representative of the Director of Finance, who shall be a person other than a member of the Board of Review, may submit such evidence and argument as they believe to be relevant to their respective positions. The Board of Review may require the presentation of additional evidence or argument, or both, from either the appellant or the representative of the Director of Finance, or from both, and may continue the hearing from time to time for the purpose of allowing the presentation of additional evidence or argument, or both.
(i) Determination by Board of Review. (Amended by Ord. No. 181,858, Eff. 10/4/11.)
(1) Upon completion of the hearing, the Board of Review may, by majority vote of its members, affirm or decrease the assessment, as the evidence may require. The assessment shall be final and the administrative review process shall be complete when the Board of Review issues its determination. Written notice of the determination of the Board of Review shall be given to the appellant in the same form and in the same manner as the notice of assessment.
(2) The Board of Review shall not affirm an assessment under the following circumstances:
(A) The taxpayer has a previous Board of Review determination. A "previous Board of Review determination" means an earlier determination by a Board of Review created under Sec. 21.16 of this Code or a predecessor or successor ordinance, and refers to the previous Board of Review determination that most recently addressed the item that is currently in dispute;
(B) The previous Board of Review determination resulted in a written determination specifically stating that the taxpayer earned revenues under one or more Gross Receipts Fund Class or Classes (as defined Municipal Code Secs. 21.41 through 21.49, inclusive, or their predecessors or successors), after reviewing the results of an audit by the Office of Finance in which the taxpayer provided full and complete cooperation;
(C) The assessment that is proposed to be affirmed would result in higher business tax liabilities than those self-reported by the taxpayer solely because of one or more changes from the Gross Receipts Fund Class specifically stated in the previous Board of Review determination or determinations, and the taxpayer provided full and complete cooperation to the Office of Finance in the audit resulting in the assessment proposed to be affirmed;
(D) The business model and method of operations of the taxpayer were exactly the same with respect to the previous Board of Review determination or determinations as before the Board of Review proceeding that resulted in the assessment that is proposed to be affirmed, and in both circumstances the taxpayer fully reported its gross receipts; and
(E) Nothing precluded the Office of Finance from conducting a full and complete audit of the taxpayer both prior to the previous Board of Review determination or determinations and with respect to the audit resulting in the assessment that is proposed to be affirmed.
(3) When a determination (or determinations) made by a previous Board of Review with respect to a taxpayer's Gross Receipts Fund Class is overturned by a subsequent Board of Review determination, the change(s) to the taxpayer's Gross Receipts Fund Class or Classes shall apply to the first full tax year beginning after the year in which an assessment is not affirmed by the Board of Review pursuant to Subsection 21.16(i)(2).
(4) Should a taxpayer wish to challenge a Board of Review determination regarding business classification that would otherwise be negated by operation of Subsection 21.16(i)(2), the taxpayer shall notify the Board of Review via certified mail that must be postmarked within 15 days from the date of service of the notice of decision of the Board of Review. If the taxpayer provides notice under Subsection 21.16(i)(4), no assessment shall be negated by operation of Subsection 21.16(i)(2). The taxpayer may then proceed under the normal procedures for challenging assessments set forth in this Code and California Law. If the taxpayer does not provide notice under Subsection 21.16(i)(4) that it wishes to challenge a Board of Review determination that would otherwise not be affirmed by operation of Subsection 21.16(i)(2), the taxpayer is deemed to have acquiesced to the determination of the Board of Review and may not further challenge the determination.
(5) Nothing in Subsection 21.16(i)(2) shall preclude the Office of Finance from auditing any taxpayer, regardless of the results of any Board of Review determination.
(j) Effect of Delay in Administrative Proceedings. (Added by Ord. No. 174,084*, Eff. 8/19/01.) Failure of the Director of Finance to set any hearing within the time prescribed in this section shall not affect the validity of any proceedings taken hereunder.
(k) Effect of Payment of an Assessment. (Added by Ord. No. 174,084*, Eff. 8/19/01.) Acceptance of any payment upon an assessment, the validity of which has not previously been passed upon by the Assessment Review Officer, shall not preclude the Director of Finance from subsequently levying another assessment in any case where the original assessment does not truly reflect the correct tax liability.
* The provisions of this Ordinance shall become operative with respect to assessments of tax levied by the Director of Finance under Los Angeles Municipal Code Section 21.16 on and after January 1, 2002.