Loading...
(Amended by Ord. No. 176,342, Eff. 1/19/05, Oper. 7/1/05.)
(a) Small Business. No tax is required to be paid under this Article by any Small Business. A Small Business shall mean any person whose total taxable and nontaxable gross receipts from within and without the City do not exceed $50,000.00. The $50,000.00 amount shall be increased to $100,000.00 on July 1, 2006.
(b) Creative Artist. No tax is required to be paid by a person under this Article for gross receipts attributable to “Creative Activities”, earned when that person is engaged in business as a “Creative Artist”, unless the total taxable and nontaxable gross receipts from within and without the City which are attributable to “Creative Activities” exceed $300,000.00 annually.
For purposes of this exemption, a “Creative Artist” shall mean only a person who operates either (1) as an individual, (2) through a corporation with one individual as the only shareholder and the only employee (commonly referred to as a “loan-out”), or (3) through a limited liability company with one individual as the only member and the only employee. “Creative Activities” shall mean activities described herein. Gross receipts from Creative Activities shall not include any gross receipts received by a Creative Artist from activities that are not Creative Activities (for example, public appearances or product endorsements, or teaching as opposed to performing). Such other receipts shall not be exempt under this subsection, and shall be taxable as otherwise provided in this Article. In implementing the intent of this subsection, the Director of Finance shall consider that Creative Activities are distinct from a craft, and that this exemption applies to Creative Artists for their Creative Activities but not to craft persons. References to “multi-media” are to be interpreted as defined in subsection (b) of Section 21.189.4.
Eligibility for the small business exemption provided in subsection (a), above, shall be based on total taxable and non-taxable gross receipts from within and without the City, including receipts for Creative Activities.
Creative Activities shall mean activities performed by Creative Artists primarily for entertainment and/or aesthetic purposes, including assistants or professional trainees performing those same Creative Activities, in the following professions:
1. The following professions to the extent they are directly involved with motion picture, radio or television productions, commercials, multi-media or recorded or live music or theater:
- Actor or announcer; or
- Art director, costume designer, production designer, scenery or set designer; or
- Choreographer; or
- Cinematographer; or
- Conductor of bands, chorales, orchestras, and other musical groups; or
- Director; or
- Motion picture editor, sound dubbing, special effects, or titling artist; or
- Writer (where the writing is the writer’s own creative work, but not writing that is compilation, documentation or description of a non-artistic nature, such as technical writing, the writing of technical or scientific reports, etc.); or
- Music or lyrics arranger, composer or writer; or
2. Author of books, essays, poems or short stories; or
3. Cartoon artist, including animated media; or
4. Creator of visual fine arts, using artist’s materials (i.e., lithographer, painter, sculptor, or the equivalent); or
5. Drawing, graphic, illustration or sketch artist; or
6. Performing artist, including comedian, dancer, impersonator, juggler, magician, mime, musician, or singer; or
7. Photographer, to the extent the photography is primarily artistic in nature and not primarily journalistic or commercial.
(c) Any person exempt from tax under Subsections (a) or (b) shall be required to timely file for registration and subsequent renewals before the delinquency date. The failure to timely file or renew prior to the date the taxes would otherwise have been delinquent pursuant to Section 21.05 of this Article, shall render inapplicable the exemption provided in Subsections (a) and/or (b) and subject the person to the tax that would otherwise be payable and to any interest and penalty applicable thereto.
(Amended by Ord. No. 175,029*, Eff. 2/5/03, Oper. 2/1/03.)
(a) (Amended by Ord. No. 182,275, Eff. 11/20/12.) A business that establishes a new fixed location within the City and is not owned, in whole or in part, by a person that was engaged in business in an existing fixed location in the City in the immediately preceding tax year, is a “New Business” that shall be exempt from the applicable minimum tax for its first tax year of operation. This business shall also be exempt from any other tax imposed under this Article for up to its first two tax years of operation, or its first three tax years of operation if the business first commenced operations between January 1, 2010, and December 31, 2015, as follows:
1. For its first two tax years of operation, a New Business that has less than $500,000.00 of total taxable yearly gross receipts shall be exempt from any additional tax imposed pursuant to this article for any tax year in which it has less than $500,000 in total taxable gross receipts. However, if a New Business first commences operations between January 1, 2010, and December 31, 2015, a New Business shall be exempt from any minimum or additional tax imposed pursuant to this Article for its first three tax years of operation, regardless of how much tax would be imposed absent this exemption. A business qualifying for exemption under this subdivision for its first tax year of operation shall also be exempt from the applicable minimum tax for its second tax year of operation, or its second and third tax years of operation if it first commences operations between January 1, 2010, and December 31, 2015.
(i) The exemption for tax in the second tax year of business operation is extended to December 31, 2017. The exemptions for tax for the second and third tax years of business operations are subject to review and may result in a suspension under any of the following circumstances as determined by the Council, subject to the approval of the Mayor:
(A) The City experiences a major natural or human-made disaster including, but not limited to, earthquakes, fires, or terrorist incident, for which the response and recovery require expenditure of more than one percent of General Fund revenues (i.e., $40,000,000 in 2006-07); or
(B) An economic downturn resulting in a greater than one percent overall actual decline in all General Fund revenue for the fiscal year ended June 30th of that year (i.e., $40,000,000 in 2006-07); or
(C) The City is legislatively, legally or otherwise precluded from levying and collecting General Fund revenue that results in a greater than one percent total decline in budgeted General Fund revenue for the fiscal year (i.e., $40,000,000 in 2006-07); or
(D) The City receives a legal judgment for which either an option for legal appeal does not exist, or the City Council and Mayor decline to pursue that legal appeal, and the judgment exceeds ten percent of the Reserve Fund (i.e., $18,500,000 in 2006-07); or
(E) There is a non-discretionary occurrence requiring expenditure of funds from the Emergency Reserve Account of the Reserve Fund.
(ii) To implement a suspension of the exemption in a given calendar year, action by the Council, subject to the approval of the Mayor, must be made by September 30th of the preceding calendar year.
(iii) The exemption period shall be in effect for ten years unless the Council takes one of the following actions: (a) before September 30th of the fifth year the Council takes an affirmative action not to extend the exemption period for a second consecutive five year period; or (b) prior to September 30th of the tenth year of the exemption period, the Council extends the exemption period beyond ten years. A suspension of the tax exemption will result in an equivalent period being added to the original ten-year exemption period, or five-year exemption period if the Council takes action not to extend the exemption period for the second five-year period. This would result in the sunset clause of the ordinance expiring at the end of ten years, or the number of years the exemption was in effect plus any suspension period, whichever is greater, but in no event would the actual number of years of second year tax exemption exceed ten, unless the Council takes an affirmative action to extend the exemption period beyond ten years, or if the council takes an action not to extend the exemption period for a second five-year period, the sunset clause of the ordinance would expire at the end of the fifth year, or the number of years the exemption was in effect plus any suspension period, whichever is greater, but in no event would the actual number of years of second year tax exemption exceed five.
(iv) Reinstatement of the tax exemption shall require approval of the Council, subject to the approval of the Mayor.
2. A new business shall not include a construction business involved in the following activities: single-family housing construction (as defined by the 1997 NAICS Industry Code 233210); multi-family housing construction (as defined by the 1997 NAICS Industry Code 233220); manufacturing and industrial building construction (as defined by the 1997 NAICS Industry Code 233310); commercial and institutional building construction (as defined by the 1997 NAICS Industry Code 233320); highway and street construction (as defined by the 1997 NAICS Industry Code 234110); bridge and tunnel construction (as defined by the 1997 NAICS Industry Code 234120); water, sewer and pipeline construction (as defined by the 1997 NAICS Industry Code 234910); power and communication transmission line construction (as defined by the 1997 NAICS Industry Code 234920); plumbing, heating, and air-conditioning contractors (as defined by the 1997 NAICS Industry Code 235110); painting and wall covering contractors (as defined by the 1997 NAICS Industry Code 235210); electrical contractors (as defined by the 1997 NAICS Industry Code 235310); masonry and stone contractors (as defined by the 1997 NAICS Industry Code 235410); drywall, plastering, acoustical, and insulation contractors (as defined by the 1997 NAICS Industry Code 235420); carpentry contractors (as defined by the 1997 NAICS Industry Code 235510); floor laying and other floor contractors (as defined by the 1997 NAICS Industry Code 235520); roofing, siding and sheet metal contractors (as defined by the 1997 NAICS Industry Code 235610); water well drilling contractors (as defined by the 1997 NAICS Industry Code 235810); structural steel erection contractors (as defined by the 1997 NAICS Industry Code 235910); glass and glazing contractors (as defined by the 1997 NAICS Industry Code 235920); excavation contractors (as defined by the 1997 NAICS Industry code 235930); security systems services (except locksmiths) (as defined by the NAICS Industry Code 561621); or a film producer (as defined in Section 21.109 of this Code or the applicable industry code).
(b) Any new business that is exempt from tax under Subsection (a) above shall be required to obtain a Tax Registration Certificate and an exemption letter from the Director of Finance. Failure to obtain these documents prior to the taxes becoming delinquent pursuant to Section 21.05 of this Code, shall render inapplicable the exemption provided in Subsection (a) and subject the business to the tax that would otherwise be payable and to any interest and penalty applicable pursuant to Section 21.05 of this Code.
* Section 3 of Ord. No. 175,029 provides that “[t]his section is repealed effective December 31, 2006.”
(Added by Ord. No. 174,083, Eff. 8/19/01, Oper. 1/1/02.)
(a) There shall be a Settlement Bureau in the City Attorney’s office, which shall be staffed by one or more representatives of the City Attorney. The purpose of the Settlement Bureau shall be to receive and respond to offers of settlement from persons who have been assessed or otherwise billed for delinquent taxes, or who have filed claims for refund of overpaid taxes which have been denied in whole or in part, under this article or Articles 1.1, 1.3, 1.7, 1.11 or 1.15 of this chapter. The tender of an offer of settlement shall not constitute any part of the offeror’s administrative remedy process. The amount of any unaccepted offer or counteroffer of settlement shall not be disclosed by the Settlement Bureau staff to any person outside of the Settlement Bureau, whether within or without the City Attorney’s office, except as may be necessary to obtain approval of a provisionally accepted settlement, as provided in subsection (c) hereof.
(b) Any person may tender to the Settlement Bureau an offer of settlement of a claim by or against the City, described in subsection (a) hereof, prior to the commencement of litigation on the merits of said claim. Each such offer shall be in writing and contain the amount the offeror proposes to pay to or receive from the City and the factual and legal grounds in support of the offer. In response to any offer or counteroffer of settlement, the Settlement Bureau, on behalf of the City, shall accept it, reject it or make a counteroffer. The terms of any settlement between the offeror and the City shall be set forth in a written agreement executed on behalf of both parties. The tender or pendency of an offer of settlement in the Settlement Bureau shall not affect the timing or disposition of any administrative proceeding under Section 21.16 of this article. Upon execution of a written settlement agreement on behalf of both parties, any pending administrative proceeding on a claim which is the subject of the settlement shall terminate. Upon the commencement of litigation by or against the City on the merits of a claim which is the subject of a pending settlement offer or counteroffer, said pending offer or counteroffer shall be deemed rejected.
(c) Any settlement offer or counteroffer accepted by the Settlement Bureau, which requires the approval of a person or entity, other than the City Attorney, pursuant to Charter Section 273 or Los Angeles Administrative Code Sections 5.173 or 5.175, shall be accepted provisionally on behalf of the City, subject to obtaining such other required approval.
(Added by Ord. No. 174,088, Eff. 8/19/01.)
(a) Reward Program. The Director of Finance is authorized to pay such sums as the Director deems necessary for detecting nonpayments and underpayments of City of Los Angeles business tax. Any amount payable under this section shall be paid from the proceeds of the amount collected as a result of the information provided.
(b) Eligibility to File Claim for Reward. Any person, other than certain present or former City of Los Angeles employees, who submits to the Office of Finance information relating to the nonpayment or underpayment of business tax is eligible to file a claim for reward under this section. No person who was employed by the City of Los Angeles in the Office of Finance, at the time the person came into possession of information relating to the nonpayment or underpayment of business tax, or at the time the person submitted such information to the Office of Finance, shall be eligible for reward under this section. Any other City officer or employee, or former City officer or employee, is eligible to file a claim for reward if the information submitted to the Office of Finance came to the officer’s or employee’s knowledge other than in the course of the officer’s or employee’s official duties.
(c) Submission of Information and Filing Claim for Reward. Any person desiring to claim a reward under this section must submit information relating to the nonpayment or underpayment of business tax to the Office of Finance on a form furnished by, and in the manner prescribed by, the Director of Finance. As early as the time of such submission of information, but no later than one year after the City’s recovery of unpaid or underpaid business tax pursuant to the submitted information, the person must file a claim for reward with the City Clerk on a form furnished by, and in the manner prescribed by, the Director of Finance.
(d) Payment of Reward. All relevant factors, including the value of the information furnished in relation to the facts developed by the investigation of the nonpayment or underpayment, shall be taken into account by the Director of Finance in determining whether a reward shall be paid, and if so, the amount thereof. Reasons for rejecting a claim for reward include, but are not limited to:
(1) the information submitted by the informant was of no value;
(2) the information submitted by the informant was already known to the City; and
(3) payment would be contrary to law.
(e) Amount of Reward. The amount of a reward shall represent what the Director of Finance deems to be adequate compensation in the particular case, not to exceed 10 percent of the additional taxes, interest and penalties which are recovered as a result of the information. No reward shall be paid if the Director of Finance determines that the recovery was so small as to call for a reward of less than $50.00. Payment of a reward will be made as promptly as the circumstances of the case permit, but not until the taxes, interest and penalties involved have been collected. However, the informant may waive any claim for reward with respect to an uncollected portion of the taxes, interest and penalties, in which case the claim may be immediately processed. Only a duly authorized representative of the Director of Finance is authorized to make any offer or promise, or statement otherwise purporting to bind the Director of Finance with respect to the payment of any reward or the amount thereof, and any such offer, promise or statement must be in writing.
(f) Protest by Informant Against Action on Claim. If an informant protests the action taken on the claim, the Director of Finance or the Director’s representative may confer with the informant or the Director’s representative to resolve the protest. In the course of such conferring, the Director or the Director’s representative may disclose the amount collected pursuant to the information furnished by the informant, notwithstanding the provisions of Section 21.17
of this article. However, the results of any audit or examination shall not be revealed to the informant or the informant’s representative in violation of Section 21.17 of this article.
(g) Anonymity of Informant. In order to fairly distribute the burden of taxation among the subjects thereof, it is the policy of the City of Los Angeles to encourage informants to submit information concerning unpaid and underpaid business taxes. In furtherance of this policy, no person shall disclose the identity of an informant to any unauthorized person, except to the extent required by law. If other than the informant’s true name is used in furnishing the information, the claimant must include with their claim satisfactory proof of the claimant’s identity as the informant.
(Added by Ord. No. 178,101, Eff. 1/9/07.)
Unless specifically listed under other areas of this article, the annual tax rates are as follows:
(a) Tax Rate A shall be $1.05 for each $1,000 of gross receipts or fractional part. (Amended by Ord. No. 179,171, Eff. 10/8/07.)
(b) Tax Rate B shall be $1.32 for each $1,000 of gross receipts or fractional part. (Amended by Ord. No. 179,171, Eff. 10/8/07.)
(c) Tax Rate C shall be $2.65 for each $1,000 of gross receipts or fractional part. (Amended by Ord. No. 179,171, Eff. 10/8/07.)
(d) Tax Rate D shall be $3.28 for each $1,000 of gross receipts or fractional part. (Amended by Ord. No. 179,171, Eff. 10/8/07.)
(e) Tax Rate E shall be $3.70 for each $1,000 of gross receipts or fractional part. (Amended by Ord. No. 179,171, Eff. 10/8/07.)
(f) Tax Rate F shall be $5.07 for each $1,000 of gross receipts or fractional part. For tax years beginning after December 31, 2015, the rate shall be reduced from this maximum rate as follows: (Amended by Ord. No. 183,419, Eff. 3/20/15.)
1. For the tax year beginning on January 1, 2016, Tax Rate F shall be $4.75 for each $1,000 of gross receipts or fractional part;
2. For the tax year beginning on January 1, 2017, Tax Rate F shall be $4.50 for each $1,000 of gross receipts or fractional part;
3. For tax years beginning after December 31, 2017, Tax Rate F shall be $4.25 for each $1,000 of gross receipts or fractional part.
(Amended by Ord. No. 183,419, Eff. 3/20/15.)
For every person engaged in business as a Child Care Provider, Multimedia Business, Internet-based Application Service Provider, Internet-based Data Manipulation Businesses, Telephone Company, or Tugboat and/or Barge Operator, or engaged in Wholesale Sales, Tax Rate A, set forth in Section 21.33(a), shall be applicable.
(a) CHILD CARE PROVIDERS.
1. A child care provider means providing non-medical care for children under 18 years of age in need of personal services, supervision or assistance essential for sustaining the activities of daily living or for the protection of the individual on less than a 24-hour basis.
2. As used in this section, the term “gross receipts” does not include receipts earned by:
(i) Community chests, funds, foundations and/or corporations: (A) that are organized and operated for religious, hospital or charitable purposes; (B) that are not conducted for profit; and (C) for which no part of the organization’s net earnings inures to the benefit of any private shareholder or individual;
(ii) Non-profit secondary schools which are duly accredited by the University of California;
(iii) Non-profit elementary schools in which instruction is given to students in the pre-primary and primary grades in the several branches of studies required to be taught in the public schools of the State of California;
(iv) Rotary, Kiwanis and Lions Clubs;
(v) Non-profit automobile clubs, chambers of commerce, and other community service organizations; and
(vi) Trade associations such as the Merchants Plumbers Association, Merchants and Manufacturers Association, and labor organizations.
(b) MULTIMEDIA BUSINESSES.
1. A multimedia business means a business that produces films, disks, tapes, software or other recording devices, whether visual or audio, through the integration of two or more media, which media include, without limitation, computer generated graphics and video, film, slides, video tapes, audio tapes and photographs or provides computer programming services on a contract or fee basis to the producer of these media. These services shall include computer software design and analysis, modification of custom software, digital imaging and other related programming services, the development of online and internet services and the design of web sites for clients.
2. A multimedia business shall not include: a business that utilizes multimedia to sell goods or further its business; motion picture, television or radio producers; radio or television broadcasters; or an adult entertainment business, as defined in Section 12.70 B. of this Code.
(c) INTERNET-BASED APPLICATION SERVICE PROVIDERS.
1. An internet-based application service provider (ASP) means a business that provides its customers access, exclusively through the internet, to electronic applications that are available exclusively on computer devices operated by or on behalf of the ASP. An “electronic application” is a computer program that provides the user with the ability to accomplish a specific task. An ASP shall not include a business that provides electronic applications, including but not limited to computer software, for customers to download through the internet. A business does not qualify as an ASP unless its internet-based electronic application provides information to the user directly without any substantial intermediation by any person except for technical support related to the use of the electronic application. An ASP shall not include a business that sells electronic applications through the internet, or any business that obtains its income from the use of its electronic applications by itself, on its behalf, or by any related entity as defined in section 21.00(a).
2. An ASP business shall not include: a business that utilizes an application to sell goods or further its business; motion picture, television or radio producers; telephone companies; radio or television broadcasters; or an adult entertainment business as defined in Section 12.70 B. of this Code.
3. The ASP business tax classification shall apply only for the 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017 and 2018 tax years unless the Council acts by ordinance to amend this Section and extend the length of time for which this classification shall apply.
(d) INTERNET-BASED DATA MANIPULATION.
1. An internet-based data manipulation business means a business that exclusively provides access to internet-based applications that allow a user to search, compile, and otherwise manipulate data, including but not limited to a business that operates or provides access to one or several “search engines”. A “search engine” is an internet-based application that retrieves documents or files or data from the internet, a computer network, a database, or other data sources. “Data” includes visual, numerical, and written information. A business does not qualify as an Internet-based Data Manipulation Business unless its internet-based application provides information to the user directly without any substantial intermediation by any person except for technical support related solely to the use of the internet-based application.
2. An internet-based data manipulation business shall not include: a business that utilizes internet-based data manipulation to sell goods or further its business; motion picture, television or radio producers; telephone companies; radio or television broadcasters; or an adult entertainment business as defined in Section 12.70 B. of this Code.
3. The internet-based data manipulation business tax classification shall apply only for the 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017 and 2018 tax years unless the Council acts by ordinance to amend this Section and extend the length of time for which this classification shall apply.
(e) TELEPHONE COMPANIES.
1. A person engaged in the business of providing telephone services means a telephone company as the term is used in Article XIII, Section 19 of the Constitution of California.
2. For the purpose of this section, “gross receipts” shall have the same meaning as in Subsection (a) of Section 21.00, except that only those receipts derived from providing telephone services within the City of Los Angeles shall be included, and further excepting, that only receipts resulting from intrastate telephone services shall be included. “Gross receipts” shall also include receipts from the selling of advertising or advertising space in any directory, other printed matter or any other media only for business tax purposes commencing on or after January 1, 1984.
(f) TUGBOAT AND BARGE OPERATORS. Tugboat and barge operator means any person engaged in the business of operating a tugboat or barge.
(g) WHOLESALE SALES. A wholesale sale or sale at wholesale means a sale of goods, wares or merchandise for the purpose of resale in the regular course of business; provided that a blind person, within the meaning of this section, need not include the first $100,000.00 of gross receipts in the computation of the amount of tax due. This exemption shall not subject these persons to the provisions of Section 21.49, Professions and Occupations, of this article.
(1) A blind person, within the meaning of this section, means a person having not more than ten percent visual acuity in the better eye, with correction as certified by a licensed physician and surgeon who specialize in diseases of the eye or the Bureau of Vocational Rehabilitation of the Department of Education of the State of California. The exemption provided by this section shall not apply until a certificate as to the blindness shall be furnished to the Director of Finance.
(2) No tax under this article shall be required to be paid by any non-profit wholly owned retailer food cooperative by reason of its sales to its owner-members.
(3) For the purpose of this section, newspapers, magazines, periodicals, books and other printed matter is deemed to be included in the term “goods, wares or merchandise” and the term “gross receipts” means California receipts from the selling or furnishing of advertising or advertising space in printed matter in addition to California receipts from the sale of goods, wares or merchandise. The provisions of this subsection shall apply only to business tax periods commencing on or after January 1, 1984.
Loading...