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(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expense tax exclusion listed under subsection (a) would have been in effect had the payroll expense tax not been repealed, a person may credit against its gross receipts tax liability for a tax year the amount of a particular payroll expense tax exclusion credit to which it would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)
For tax years beginning on or after January 1, 2025, a person or combined group shall be allowed a credit against that person or combined group’s Gross Receipts Tax (including the administrative office tax imposed under Section 953.8) for 50% of Stadium Operator Admission Taxes under Article 11 of this Business and Tax Regulations Code paid to the City during the tax year and 50% of taxes paid to another local government during the tax year that are substantially similar to the Stadium Operator Admission Tax under Article 11 of this Code. In no event shall the credit under this Section 960.2 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 year.
(Added by Proposition M, 11/5/2024 Eff. 12/20/2024)
(a) For tax years beginning on or after January 1, 2025, a person or combined group shall be allowed a credit against that person or combined group’s Gross Receipts Tax equal to 0.5% of such person or combined group’s taxable gross receipts from business activities described in NAICS code 445110 (Supermarkets and Other Grocery Retailers (except Convenience Retailers)), up to a maximum annual credit of $4,000,000.
(b) For purposes of this Section 960.3, “taxable gross receipts” means a person or combined group’s gross receipts, not excluded under Section 954 of this Article 12-A-1, attributable to the City.
(c) In no event shall the credit under this Section 960.3 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 year.
(d) Notwithstanding subsection (a), the credit under this Section 960.3 shall not be allowed against the Administrative Office Tax imposed under Section 953.8.
(Added by Proposition M, 11/5/2024, Eff. 12/20/2024)
(a) The first person or combined group to both enter into a binding agreement to lease all or a portion of each Qualified Building and require at least 100 employees to occupy that Qualified Building shall be allowed a credit against that person or combined group’s Gross Receipts Tax (including any tax on administrative office business activities under Section 953.8). Any other person or combined group that meets these requirements for such Qualified Building shall not be entitled to the credit, even if their lease is for a different portion of the Qualified Building. The credit shall be an annual credit commencing in the tax year following the tax year in which the person or combined group entered into the lease of all or a portion of the Qualified Building and first required at least 100 employees to occupy the Qualified Building, and continuing for the lesser of 15 years or until the end of the tax year in which the person or combined group’s original lease term without extensions expires (the “Credit Term”); provided, however, that the person or combined group may only take the credit for each tax year during the Credit Term in which the person or combined group continues to lease the Qualified Building and continues to require at least 100 employees to occupy the Qualified Building. 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 equal the lesser of: (1) the Gross Receipts Tax liability of the person or combined group for that tax year; and (2) $4,000,000.
(b) For purposes of this Section 960.4, “Qualified Building” means a building located within the City that meets all of the following requirements:
(1) The building contains at least 450,000 gross square feet, exclusive of any space provided under subsection (b)(7);
(2) Construction began on the building between November 5, 2024 and November 4, 2029, inclusive;
(3) Construction of the building incorporated at least 50% of the remains of the exterior walls of a prior structure (measured by the state of the structure when its owner of record on November 5, 2024 acquired it) that was at least 100 years old on November 5, 2024;
(4) Construction on the building created at least 500 construction jobs over the course of construction;
(5) At least $500,000,000 (not including the cost of the land or financing costs) was expended for the development and construction of the building;
(6) Except as provided in subsection (b)(7), the building is used exclusively for non-residential purposes;
(7) The building is part of a project that provided (prior to issuance of the building’s first temporary certificate of occupancy) at least 50,000 gross square feet of publicly accessible open space or affordable housing, or that designated building space to be leased to or occupied by any organization that: (A) serves the community, including but not limited to an organization dedicated to educating youth, childcare, the arts, or serving low-income, unemployed, or unhoused persons; or (B) is tax exempt under Internal Revenue Code Section 501(c)(3). The requirement in this subsection (b)(7) may be satisfied with space that is not within or adjacent to the Qualified Building.
(c) The Planning Department shall, by January 1, 2025, establish procedures for developers and other persons to obtain certification that a building is a Qualified Building under subsection (b). To be eligible for the credit, the person or combined group claiming the credit must submit a copy of that certification with the person or combined group’s Gross Receipts Tax return.
(d) In no event shall the credit under this Section 960.4 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 year.
(Added by Proposition M, 11/5/2024, Eff. 12/20/2024)
(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)
The Board of Supervisors may amend or repeal Article 12-A-1 of the Business and Tax Regulations Code without a vote of the people except as limited by Article XIIIC of the California Constitution.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
To the extent that the City's authorization to impose or collect any tax imposed under this Article 12-A-1 is expanded or limited as a result of changes in state or federal law, no amendment or modification of this Article 12-A-1 shall be required to conform the taxes to those changes, and the taxes are hereby imposed and the Tax Collector shall collect them to the full extent of the City's authorization up to the full amount and rate of the taxes imposed under this Article 12-A-1.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
Except as provided in Section 965(b) below, if any section, sentence, clause, phrase, or portion of Article 12-A-1 is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, the remaining sections, sentences, clauses, phrases, or portions of this Article shall nonetheless remain in full force and effect. The people of the City and County of San Francisco hereby declare that, except as provided in Section 965(b), they would have adopted each section, sentence, clause, phrase, or portion of this Article, irrespective of the fact that any one or more sections, sentences, clauses, phrases, or portions of this Article be declared invalid or unenforceable and, to that end, the provisions of this Article are severable.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
(a)
No section, clause, part or provision of this Article 12-A-1 shall be construed as requiring the payment of any tax that would be in violation of the Constitution or laws of the United States or of the Constitution or laws of the State of California. Except as provided in subsection (b) of this Section 965, if any section, clause, part or provision of this Article, or the application thereof to any person or circumstance, is held invalid or unconstitutional, the remainder of this Article, including the application of such part or provision to other persons or circumstances, shall not be affected thereby and shall continue in full force and effect. To this end, the provisions of this Article are severable.
(b) If the imposition of the gross receipts tax in Section 953 is held in its entirety to be facially invalid or unconstitutional in a final court determination, the remainder of this Article 12-A-1 shall be void and of no force and effect, and the City Attorney shall cause it to be removed from the Business and Tax Regulations Code.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
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