TAXPAYERS who have filed income tax returns using Schedule C, Profit or Loss from Business, usually get surprised when they receive a notice from the Los Angeles City requiring them to apply for Business Tax Registration Certificate (BTRC).
It is a common perception that only businesses should get a tax registration. So why would then a caregiver, any domestic helper, or any independent contractor receiving 1099-MISC or cash income would be required to have a BTRC?
Any of these incomes is considered “business” or “self-employment” income and is subject to additional taxes from the city of Los Angeles, as administered by the City’s Office of Finance (OEF).
Per the LA Municipal Code (LAMC): “The City of Los Angeles, Office of Finance requires all firms that engage in any business activity within the City of Los Angeles to pay City business taxes. Each firm or individual (other than a municipal employee) is required to obtain the necessary Business Tax Registration Certification (BTRC) and pay business tax. (Los Angeles Municipal code Section 21.09 et seq.)”
Recently, the OEF has been sending demand notices to California taxpayers who have a “Los Angeles” address and have been aggressively pursuing those who received demand notices but have not registered for the BTRC.
While not to be taken for granted, these notices should not bring panic to numerous “business owners”, the self-employed, and the independent contractors in our community.
However, regardless of the nature of your self-employment, you must register and get your BTRC and advice the OEF what is the nature of your income and how much you made from it. Although OEF received your Schedule C information from the California Franchise Tax Board, the amount of your income and the nature of your business were withheld because the information on your tax return is a privileged data and OEF doesn’t have the legal and valid reason to know.
There are numerous exemptions from paying business taxes, the most common of which is LAMC Section 21.29(a)- business with less than $100,000 in gross revenue (annually).
It is critical to register and apply for annual renewal prior to February 28th for the exemption to apply. Otherwise, you might become subject to penalties.
If you need any assistance or have further questions, you could schedule an appointment in my office.
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Evangeline can be reached at her marketing location at the Ground Floor of Eagle Rock Plaza (in front of Jollibee), 2700 Colorado Blvd., Los Angeles, CA 90041 or at her business address at 450 N. Brand Blvd., Ste. 600, Glendale, CA 91203, phone number (323) 356-3803 or (323) 254-6787.
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The purpose of this article is to provide information of general interest to our clients and prospective clients. The information provided is general in nature and should not be considered complete information on any product or concept described.