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(a) For tax years ending on or before December 31, 2024, notwithstanding any other provision of this Article 21, a person or combined group exempt from payment of the gross receipts tax under Section 954.1 of Article 12-A-1, as amended from time to time, shall also be exempt from payment of the Early Care and Education Commercial Rents Tax.
(b) For tax years beginning on or after January 1, 2025, notwithstanding any other provision of this Article 21, a “small business enterprise” shall be exempt from payment of the Early Care and Education Commercial Rents Tax. For purposes of this subsection (b), the term “small business enterprise” shall mean any person or combined group whose gross receipts within the City, determined under Article 12-A-1, did not exceed $2,325,000, adjusted annually in accordance with the increase in the Consumer Price Index: All Urban Consumers for the San Francisco/Oakland/Hayward Area for All Items as reported by the United States Bureau of Labor Statistics, or any successor to that index, as of December 31 of the calendar year two years prior to the tax year, beginning with tax year 2026, and rounded to the nearest $10,000. This subsection (b) shall not apply to a person or combined group subject to a tax on administrative office business activities in Section 953.8 of Article 12-A-1.
(Added by Proposition C, 6/5/2018, Eff. 7/20/2018, Oper. 1/1/2019; amended by Proposition M, 11/5/2024, Eff. 12/20/2024)
(a) Any person subject to the Early Care and Education Commercial Rents Tax imposed under this Article 21 that leases or provides Commercial Space in a property in the City for a Qualifying Child Care Facility that operates for more than six months in a tax year shall be allowed a credit against the Early Care and Education Commercial Rents Tax for that tax year. If a person entitled to the credit under this Section 2106.1 is required to file an Early Care and Education Commercial Rents Tax return on a combined basis under Section 2107, the credit may be claimed against the Early Care and Education Commercial Rents Tax liability required to be reflected on the combined return for that tax year. In no event shall the credit allowed under this Section 2106.1 reduce a person or combined group’s Early Care and Education Commercial Rents Tax liability for any tax year to less than zero, and no credit shall be allowed as a carryforward to a subsequent tax year.
(b) For purposes of this Section 2106.1, the credit for a tax year shall be based on the total number of Infants, Toddlers, and Preschool-Age Children for which the Qualifying Child Care Facility is licensed by the California Department of Social Services to provide care and shall be in the amount prescribed in the table below.
Number of Infants, Toddlers, and Preschool-Age Children | Amount of Credit |
1 to 49 | $7,200 |
50 to 99 | $16,000 |
100 or more | $36,000 |
(c) The following definitions shall apply for purposes of this Section 2106.1.
(1) “Qualifying Child Care Facility” means a facility that is licensed by the California Department of Social Services, or any successor agency, to provide non-medical care to Infants, Toddlers, Preschool-Age Children, or any combination thereof 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 in a group setting.
(2) “Infants” means children under two years of age.
(3) “Toddlers” means children between the ages of 18 months and 30 months.
(4) “Preschool-Age Children” means children who are enrolled in a child day care center licensed by the California Department of Social Services, or any successor agency, and who are not enrolled in a child care center or part of a child care center where less than 24-hour per day non-medical care and supervision are provided to Infants or School-Age Children.
(5) “School-Age Child” means a child who has entered the first grade or above or who is in a child care program providing care and supervision exclusively to children enrolled in kindergarten and above.
(d) To be eligible for the credit authorized under this Section 2106.1, persons wishing to claim the credit must:
(1) Maintain a reasonable method of documentation that can be reviewed or verified objectively that demonstrates that the person is eligible for the credit provided for in this Section 2106.1, and provide such documentation to the Tax Collector upon request; and
(2) File a timely annual Early Care and Education Commercial Rents Tax return regardless of the amount of liability, if any, shown on the return after claiming the credit provided for in this Section 2106.1.
(e) The Tax Collector shall verify that any credit claimed pursuant to this Section 2106.1 is correct. The Office of Early Care and Education, or any successor agency, shall provide to the Tax Collector upon request such information that the Tax Collector may require to verify that a Qualifying Child Care Facility for which the credit is claimed meets the eligibility requirements of this Section 2106.1, and the Tax Collector may share taxpayer information with the Office of Early Care and Education, or any successor agency, for this purpose. To the extent permitted by law, the Office of Early Care and Education, or any successor agency, shall maintain the confidentiality of any such information that the Tax Collector provides, and shall be subject to Section 6.22-1 of Article 6 of the Business and Tax Regulations Code with respect to such information.
(f) The Tax Collector shall submit an annual report to the Board of Supervisors for each year for which the credit authorized under this Section 2106.1 is available, that sets forth aggregate information on the dollar value of the credits taken each year and the number of persons taking the credit.
(g) The Controller, not later than four years after the effective date of the ordinance in Board of Supervisors File No. 181082 establishing this Section 2106.1, shall perform an assessment and review of the effect of the credit provided by this Section 2106.1. Based on such assessment and review the Controller shall prepare and submit an analysis to the Board of Supervisors. The analysis shall be based on factors that the Controller deems relevant, and may include, but shall not be limited to, data contained in the annual reports to the Board of Supervisors as required by subsection (f) of this Section 2106.1.
(h) The credit provided by this Section 2106.1 shall be allowable in tax years ending after December 31, 2018, and shall expire by operation of law on December 31, 2023 2028. No person may use or claim the credit provided for under this Section 2106.1 after the expiration date of this Section.
(a) Persons subject to the Early Care and Education Commercial Rents Tax shall file returns at the same time and in the same manner as returns filed for the gross receipts tax (Article 12-A-1), including the rules for combined returns under Section 956.3, as amended from time to time.
(b) If a person is subject to the Early Care and Education Commercial Rents Tax but is not required to file a gross receipts tax return, such person or combined group’s Early Care and Education Commercial Rents Tax return shall be filed at the same time and in the same manner as if such person or combined group were required to file a gross receipts tax return.
(c) For purposes of this Article 21, a lessor of residential real estate is treated as a separate person with respect to each individual building in which it leases residential real estate units, notwithstanding Section 6.2-15 of Article 6, as amended from time to time, or subsection (a) of this Section 2107. This subsection (c) applies only to leasing residential real estate units within a building, and not to any business activity related to other space, either within the same building or other buildings, which is not residential real estate. The Tax Collector is authorized to determine what constitutes a separate building and the number of units in a building.
(Added by Proposition C, 6/5/2018, Eff. 7/20/2018, Oper. 1/1/2019)
The Tax Collector may, in his or her reasonable discretion, independently establish a person or combined group’s gross receipts from the lease of Commercial Space in properties in the City and establish or reallocate gross receipts among related entities so as to fairly reflect the gross receipts from the lease of Commercial Space in properties in the City of all persons and combined groups.
(Added by Proposition C, 6/5/2018, Eff. 7/20/2018, Oper. 1/1/2019)
(a) This Article 21 is intended to authorize application of the Early Care and Education Commercial Rents Tax in the broadest manner consistent with its provisions and with the California Constitution, the United States Constitution, and any other applicable provision of federal or state law.
(b) The Early Care and Education Commercial Rents Tax imposed by this Article 21 is in addition to all other City taxes, including the gross receipts tax imposed by Article 12-A-1 of the Business and Tax Regulations Code, as amended from time to time. Accordingly, by way of example and not limitation, persons subject to both the Early Care and Education Commercial Rents Tax and the gross receipts tax shall pay both taxes. Persons exempt from either the gross receipts tax or the Early Care and Education Commercial Rents Tax, but not both, shall pay the tax from which they are not exempt.
(Added by Proposition C, 6/5/2018, Eff. 7/20/2018, Oper. 1/1/2019)
Except as otherwise provided under this Article 21, the Early Care and Education Commercial Rents Tax Ordinance shall be administered pursuant to Article 6 of the Business and Tax Regulations Code, as amended from time to time.
(Added by Proposition C, 6/5/2018, Eff. 7/20/2018, Oper. 1/1/2019)
All monies collected under the Early Care and Education Commercial Rents Tax Ordinance shall be deposited to the credit of the Babies and Families First Fund, established in Administrative Code Section 10.100-36. The Fund shall be maintained separate and apart from all other City funds and shall be subject to appropriation. Any balance remaining in the Fund at the close of any fiscal year shall be deemed to have been provided for a special purpose within the meaning of Charter Section 9.113(a) and shall be carried forward and accumulated in the Fund for the purposes described in Section 2112(d) of this Article 21.
(Added by Proposition C, 6/5/2018, Eff. 7/20/2018, Oper. 1/1/2019)
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