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(a) For all persons required to determine an amount of gross receipts pursuant to this Section 956.1, that amount shall be all non-exempt gross receipts within the City as determined hereunder.
(b) Gross receipts from the sale, lease, rental, or licensing of real property are in the City if the real property is located in the City.
(c) Gross receipts from sales of tangible personal property are in the City if the property is delivered or shipped to a purchaser within the City regardless of the f.o.b. point or other conditions of the sale.
(d) Gross receipts from the rental, lease, or licensing of tangible personal property are in the City if the property is located in the City.
(e) Gross receipts from services are in the City to the extent the purchaser of the services received the benefit of the services in the City. The Tax Collector shall promulgate regulations interpreting whether the purchaser of services received the benefit of services in the City for purposes of this Section 956.1(e). In promulgating such regulations, the Tax Collector shall comply with the requirements of Section 6.16-1 of Article 6 of this Business and Tax Regulations Code, including but not limited to the requirement that the Tax Collector hold a public hearing and allow public comment prior to the adoption of the regulations. Further, in promulgating such regulations, the Tax Collector shall review and consider sourcing rules and safe harbor provisions adopted by the State of California and other jurisdictions.
(f) Gross receipts from intangible property are in the City to the extent the property is used in the City. In the case of financial instruments, sales are in the City if the customer is located in the City. The Tax Collector shall promulgate regulations interpreting whether intangible property is used in the City for purposes of this Section 956.1(f) and whether, in the case of financial instruments, the customer is located in the City. In promulgating such regulations, the Tax Collector shall comply with the requirements of Section 6.16-1 of Article 6 of this Business and Tax Regulations Code, including but not limited to the requirement that the Tax Collector hold a public hearing and allow public comment prior to the adoption of the regulations. Further, in promulgating such regulations, the Tax Collector shall review and consider sourcing rules and safe harbor provisions adopted by the State of California and other jurisdictions.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; amended by Proposition M, 11/5/2024, Eff. 12/20/2024)
(a) For all persons required to determine an amount of gross receipts pursuant to this Section 956.2, that amount shall be all non-exempt combined gross receipts of the person multiplied by a fraction, the numerator of which is payroll in the City and the denominator of which is combined payroll.
(b) Combined gross receipts are the total worldwide gross receipts of the person and all related entities to the person, unless the election provided for in California Revenue and Taxation Code Section 25110 is in effect for the person, in which case combined gross receipts shall be computed consistently with the water's edge election, as set forth therein.
(c) Combined payroll is the total worldwide compensation paid by the person and all related entities to the person, unless the election provided for in California Revenue and Taxation Code Section 25110 is in effect for the person, in which case combined payroll shall be computed consistently with the water's edge election, as set forth therein. A person who has no combined payroll in a tax year shall have no gross receipts under this Section for that tax year.
(d) Payroll in the City is the total amount paid for compensation in the City by the person and by all related entities to the person.
(e) Compensation paid in the City shall be determined as follows:
(1) Where compensation is paid by reason of work performed or services rendered by an individual wholly within the City, all of the compensation for such individual shall be attributable to the City.
(2) Where compensation is paid by reason of work performed or services rendered by an individual partly within and partly without the City, the portion of such compensation attributable to the City shall be determined as follows:
(A) Except as otherwise provided in this Section 956.2(e), the portion of such compensation attributable to the City shall be the portion of such compensation which the total number of working hours employed within the City bears to the total number of working hours within and without the City.
(B) If the amount of such compensation depends on the volume of business transacted by such individual, then the portion of such compensation attributable to the City shall be the portion of such compensation which the volume of business transacted by such individual in the City bears to the volume of business transacted by such individual within and without the City.
(C) If it is impracticable, unreasonable, or improper to apportion such compensation as aforesaid either because of the particular nature of the services of such individual, or on account of the unusual basis of compensation, or for any other reason, then the amount of such compensation reasonably attributable to work performed or services rendered in the City shall be determined on the basis of all relevant facts and circumstances of the particular case, in accordance with any rulings or regulations issued or promulgated by the Tax Collector for the purpose.
(D) If the Tax Collector determines that the percentage of compensation attributable to the City, for any one or more persons, is a relatively stable percentage, the Tax Collector may establish that percentage as a prima facie evidence of compensation attributable to the City; provided, that the Tax Collector shall condition the establishment of such fixed percentage upon the obligation of the taxpayer to report immediately to the Tax Collector any significant change in the taxpayer’s mode of business which may impact the portion of the person’s compensation which is attributable to the City; and, provided further, that the Tax Collector may rescind any such fixed percentage at any time by providing written notice to the taxpayer of such rescission.
(f) "Compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for services. In the case of any person who has no employees, compensation shall also include all taxable income for federal income tax purposes of the owners or proprietors of such person who are individuals. Those owners or proprietors shall be treated as individuals to whom compensation is paid for purposes of subsection (e).
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; amended by Proposition F, 11/3/2020, Eff. 12/29/2020, Oper. 1/1/2021; Proposition M, 11/5/2024, Eff. 12/20/2024)
A person engaging in business within the City must file gross receipts tax returns as provided in Article 6. Those returns must be filed on a combined basis with all of that person's related entities. That person, and all of that person's related entities, constitute a combined group. Every combined group must file a single return; the combined group must choose a single person to file the return on its behalf. Each person within the combined group engaging in business in the City must provide a power of attorney to the person filing the return, authorizing the person filing the return to file said return and to act on behalf of each person with respect to payments, refunds, audits, resolutions, and any other items related to the tax liability reflected in the return. The power of attorney shall be substantially in a form prescribed or approved by the Tax Collector. Each return filed by a combined group constitutes a combined return under this Article and Article 6. The person filing any combined return shall pay the tax liability reflected on the return and any liability determined on audit at the time and in the manner set forth for returns and liabilities in Article 6.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; amended by Ord. 271-13, File No. 131031, App. 11/27/2013, Eff. 12/27/2013, Oper. 1/1/2014)
The Tax Collector may, in his or her reasonable discretion, independently establish a person's gross receipts within the City and establish or reallocate gross receipts among related entities so as to fairly reflect the gross receipts within the City of all persons. This authority extends to determining whether any amount excluded from gross receipts by virtue of Section 952.3(f) is in whole or in part compensation or payment for services and thus included in gross receipts.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
Except as otherwise provided under this Article, the Gross Receipts Tax Ordinance shall be administered pursuant to Article 6 of the San Francisco Business and Tax Regulations Code.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; repealed by Proposition F, 11/3/2020, Eff. 12/29/2020, Oper. 1/1/2021)
(a)
“Payroll Expense Tax Exclusion Credit” means the dollar amount by which a person would have been able to reduce its payroll expense tax liability pursuant to the Enterprise Zone Tax Credit under Section 906A of former Article 12-A and/or the Biotechnology Exclusion under Section 906.1 of former Article 12-A, as if the payroll expense tax were in full force and effect and calculated at a rate of 1.5%.
(b) For so long as a particular payroll expense tax exclusion listed under subsection (a) would have been in effect had the payroll expense tax not been repealed, a person may credit against its gross receipts tax liability for a tax year the amount of a particular payroll expense tax exclusion credit to which it would have been entitled under the former payroll expense tax; however, in no event shall such credit reduce a person’s gross receipts tax liability to less than zero. Any person who claims the credit under this Section 960 must meet all of the eligibility requirements of the former payroll expense tax exclusion(s) it claims. The credit may be claimed against the tax liability only of the person who would have qualified for the former payroll expense tax exclusion and not against any liability of related entities or other members of that person’s combined group.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; amended by Proposition F, 11/3/2020, Eff. 12/29/2020, Oper. 1/1/2021; Ord. 152-21, File No. 210828, App. 9/29/2021, Eff. 10/30/2021)
(a) A person or combined group that opens a physical location in the Designated Areas on or after January 1, 2023 through and including December 31, 2027, shall be allowed a credit against that person or combined group’s Gross Receipts Tax if the person or combined group did not have a physical location in the City for at least three years prior to opening the physical location. The credit under this Section 960.1 shall be an annual credit for each of up to three tax years immediately following the tax year in which the person or combined group opened the physical location in the Designated Areas, provided the person or combined group maintains a physical location in the Designated Areas in the tax year that the credit is taken. To be eligible for the credit, the person or combined group must take the credit for each tax year on an original Gross Receipts Tax return filed with the Tax Collector. The credit shall be in an amount per tax year, not to exceed $1,000,000 per tax year, calculated as follows:
(1) For a person or combined group not engaged in business within the City as an administrative office, as defined in Section 953.8 of Article 12-A-1:
(A) For tax years ending on or before December 31, 2024, 0.45% of the person or combined group’s taxable gross receipts during the tax year from one or more of the business activities of information, administrative and support services, financial services, insurance, and professional, scientific and technical services, as those activities are defined in Sections 953.2, 953.4, and 953.6 of this Article 12-A-1, without regard to any application of Section 953.9 of Article 12-A-1;
(B) For tax years beginning on or after January 1, 2025, 0.45% of the person or combined group’s taxable gross receipts during the tax year from one or more of Business Activity Categories 5 and 6, as described in Sections 953.24 and 953.25 of this Article 12-A-1, and business activities described in NAICS codes 524 (Insurance Carriers and Related Activities), 5611 (Office Administrative Services), 5612 (Facilities Support Services), 5613 (Employment Services), 5614 (Business Support Services), 5615 (Travel Arrangement and Reservation Services), 5616 (Investigation and Security Services), 5617 (Services to Buildings and Dwellings), and 5619 (Other Support Services); or
(2) for a person or combined group engaged in business within the City as an administrative office, as defined in Section 953.8 of Article 12-A-1, 0.7% of the person or combined group’s taxable payroll expense during the tax year.
(b) For purposes of this Section 960.1:
(1) “Designated Areas” means the areas in the City located in zip codes 94102, 94103, 94104, 94105, 94107, 94108, 94109, 94111, 94133, and 94158, as those zip codes exist on the effective date of the ordinance adding this Section 960.1.
(2) “Opens a physical location” means that the person or combined group opens, by acquiring real property or pursuant to an agreement with a term for at least six months, a location of the person or combined group that is available for the person or combined group’s use and can accommodate one or more employees.
(3) In determining whether a person or combined group had a physical location in the City prior to opening a physical location, any physical location in the City of the person or combined group’s predecessor in interest shall be deemed a physical location in the City of that person or combined group.
(4) The acquisition of an existing business shall not constitute the opening of a physical location.
(5) In determining whether a person or combined group had a physical location in the City prior to opening a physical location, and in determining whether a person or combined group has opened a physical location in the Designated Areas:
(A) A physical location shall not include a home or other residential location and shall also not include a location for a short-term residential rental use, as that term is defined in Section 41A.4 of Chapter 41A of the Administrative Code, as may be amended from time to time; and
(B) A person or combined group that owned or leased real property all of which such person or combined group leased or subleased to a third party that was not in such person’s combined group and did not lease back shall not be considered to have had or opened a physical location as a result of owning or leasing that real property for the time period in which the real property was leased or subleased to the third party.
(c) For purposes of this Section 960.1, “taxable gross receipts” means a person or combined group’s gross receipts, not excluded under Section 954 of Article 12-A-1, attributable to the City.
(d) For purposes of this Section 960.1, “taxable payroll expense” means “payroll expense” as defined in Section 953.8(f) of Article 12-A-1, attributable to the City.
(e) In no event shall the credit under this Section 960.1 reduce a person or combined group’s Gross Receipts Tax liability to less than $0 for any tax year. The credit under this Section shall not be refundable and may not be carried forward to a subsequent tax year.
(f) Notwithstanding Section 6.22-1 of the Business and Tax Regulations Code or any other provision of law that would limit public disclosure, the person or each person in the combined group that is engaging in business within the City waives any right to confidentiality in the fact that it has claimed any credit under this Section 960.1 for a particular tax year. Nothing in this subsection (f) shall constitute a waiver of the confidentiality of the information in the person or combined group’s Gross Receipts Tax return, including the amount of any credit claimed under this Section, other than the fact that the person or combined group has claimed a credit under this Section.
(h) Commencing with a report filed no later than October 31, 2024:
(1) For tax years 2023 and 2024, the Tax Collector shall submit an annual report by October 31 of the calendar year following each tax year to the Board of Supervisors that sets forth aggregate information on the dollar amount of the credits taken each year and the number of businesses taking the credit; and
(2) For tax years 2025 through and including 2028, the Tax Collector shall submit an annual report by March 31 of the calendar year two years after each tax year to the Board of Supervisors that sets forth aggregate information on the dollar amount of the credits taken each year and the number of businesses taking the credit.
(Added by Ord. 151-23, File No. 230155, App. 7/28/2023, Eff. 8/28/2023, Retro. 1/1/2023; amended by Proposition M, 11/5/2024, Eff. 12/20/2024)
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