January 27, 2021
San Francisco and Los Angeles business tax filing deadlines are approaching fast
Local municipal tax filing deadlines are quickly approaching and commonly overlooked. In preparation for the upcoming federal and state filing season, taxpayers should keep in mind the following information on San Francisco and Los Angeles business taxes.
On January 12, 2021, the Board of Supervisors (Board) of the City and County of San Francisco (San Francisco) enacted an ordinance extending the due dates of certain business taxes and license fees. (San Francisco Board File No. 201260, Legislative Version 3 (Ordinance)).
San Francisco's 2021 Annual Business Tax Return includes reporting and filing for: (1) the Payroll Expense Tax — (S.F. City Municipal Code, Article 12-A), (2) the Gross Receipts Tax — (S.F. City Municipal Code, Article 12-A-1) or the Administrative Office Tax, (3) the Homelessness Gross Receipts Tax — (S.F. City Municipal Code, Article 28) and (4) the Commercial Rents Tax — (S.F. City Municipal Code, Article 21). The Annual Business Tax Return due date has been extended by the Ordinance from March 1, 20211 to April 30, 2021. San Francisco's 2020 Business Registration Tax Return, originally due June 1, 2020, and extended to March 1, 2021, has been further extended to April 30, 2021. No penalty will be assessed for taxpayers that pay San Francisco's 2020 Business Registration Tax by April 30, 2021.
The Ordinance also extends various license fees unrelated to the City's Annual Business Tax Return and Business Registration Tax that were due in 2020 and 2021, respectively.
Changes to San Francisco's business tax regime that appeared on the November 2020 ballot will not impact the 2020 Annual Business Tax Return filing. San Franciso's Annual Business Tax Return filing should be completed on its online 2020 Tax Portal (available at Gross Receipts Tax (GR) | Treasurer & Tax Collector (sftreasurer.org)). As of the date of this Tax Alert, San Francisco's 2020 Tax Portal has not yet appeared on its website.
Taxpayers can request a 60-day filing extension by filing the request in writing and paying at least 100% of the tax due by the filing deadline.
The Los Angeles Business Tax is due on the first day of January each year. Business taxes are not deemed delinquent, however, so long as they are paid on "the last day of the month following the month in which the tax is due." For the 2021 Business Tax Renewal (based on calendar year 2020), the due date to file the Los Angeles Business Tax is March 1, 2021, as February 28, 2021, falls on a Sunday. Taxpayers may file their 2021 Business Tax Renewal Form online (available on the Los Angeles City Finance Department's website). To be considered timely filed, a taxpayer must electronically file the forms no later than 11:59 pm PST on March 1, 2021.
Taxpayers can apply for a maximum filing extension of 45 days. An extension request must be made in writing, accompanied by at least 90% of the total tax due, and received or postmarked by the March 1, 2021 filing deadline.
California taxpayers should not assume that San Francisco and Los Angeles are the only municipalities that impose local business license taxes and fees. Nearly every California municipality does so, with the levies varying widely from locality to locality. For example, the City of Santa Monica also imposes a gross receipts tax, but the returns and payments are due by August 31. Unlike state or local income taxes in other states, these taxes do not exclude business entities from payment based on form. Partnerships and limited liability companies that are treated as pass-through entities for federal and California state tax purposes (or disregarded altogether) could be directly liable for various California local taxes.
For businesses active in California, especially in the larger municipalities, it is a best practice to assume that some type of business license tax applies. Information about these special and unique city taxes can usually be obtained from the relevant municipality's webpage. EY California tax professionals stand ready to assist businesses both in finding these business license taxes and in complying with the applicable payment and filing requirements.
1 The Annual Business Tax Return is ordinarily due on the last day of February, which falls on a Sunday in 2021.