2012 Business Tax Renewal Instructions
We have updated and streamlined the look of our renewal form this year as we continue to strive to serve you better. The update breaks the renewal form into 7 sections: (1) Taxpayer Information, (2) Tax Reform & Incentives, (3) Tax Worksheet, (4) Certifications, (5) Payment Info, (6) Information Update, and (7) Vendor / Subcontractor / Commercial Tenant Listing. (At minimum, all 2012 renewals should complete sections I, II, III and IV)
Section I - Taxpayer Information
The Taxpayer Information section should be completed with the Account Number, current Legal Name, DBA (if applicable) Business Address and Mailing Address that the City of Los Angeles has on file for your business.
If you either (1) received a pre-printed form that contains information that is no longer accurate or (2) are using a blank form and need to update information the Office of Finance has on file for your business, please check the Change of Information box and report changes or corrections on Section VI - Information Update.
You should also check the Change of Information box and complete Section VI if you have sold rental property, the business was either entirely or partially sold or discontinued, or would like to renew based on a fiscal year and need to report the beginning month of your fiscal year cycle.
Section II - Tax Reform and Incentives
This section includes steps for the Small Business Exemption, the Newly Established Business (second year) Exemption and the Creative Activities Exemption. Additionally, this section solicits the number of persons employed by the business at this location and whether or not leased parking is provided for such employees.
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Small Business Exemption - The City of Los Angeles provides a small business exemption to businesses that (1) have worldwide gross receipts that did not exceed $100,000 for the 2011 calendar year and (2) file/postmark their renewal by February 29, 2012. If you meet both the monetary and timing requirements, check the box on line 1 and enter your worldwide gross receipts, which includes gross receipts from all operations inside and outside the City of Los Angeles for 2011, on the space provided.
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Newly Established Business - The City of Los Angeles provides a second year exemption to certain newly established businesses. Businesses that began operations in 2011 and (1) have total taxable gross receipts that are less than $500,000 for the 2011 calendar year, (2) file their renewal by February 28, 2011, and (3) are not one of the following (i) Construction Businesses (as defined in §21.30(b)(1) of the Los Angeles Municipal Code (LAMC)); (ii) Film Producers (as defined in §21.109 of the LAMC); and (iii) any business owned in whole or in part by a person who was engaged in business in the City during the current tax period. If you meet all three qualifications, check the box on line 2.
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Creative Activities Exemption - The City of Los Angeles provides an exemption to "Creative Artists" if:
(1)the worldwide gross receipts from "Creative Artist" activities did not exceed $300,000 for the 2011 calendar year; and
(2) your renewal is filed on or before February 29, 2012.
A "Creative Artist" is defined as a person who operates whether
(i) as an individual;
(ii) through a corporation with one individual as the only shareholder and the only employee; or
(iii) through a limited liability company with one individual as the only member and the only employee.
Those who may be eligible for this exemption are: actor/announcers; art directors, costume designers, production designers, scenery/set designers; choreographers; cinematographers; musical conductors; directors; motion picture editors; sound dubbing, special effects, or titling artists; creative writing; music/lyrics arrangers, composers, or writers, authors; cartoon artists; lithographers/painters/sculptors of visual fine arts; drawing, graphic, illustration or sketch artists; and photographers (if primarily artistic and not journalistic or commercial). Please refer to LAMC §21.29(b) for more complete definitions or descriptions.
If you meet both requirements for the Creative Activities Exemption, check the box on line 3 and enter your worldwide gross receipts from Creative Artist Activities on the space provided.
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Number of Employees - Please enter the total Number of persons employed at this location on line 4.
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Leased Parking - Please indicate whether or not your business provides leased parking for employees at this location by checking the appropriate box on line 5.
Section III - Tax Worksheet
This section consists of a table that will be used to perform tax calculations for each fund/class associated with your business. Please follow the steps below for calculation of the tax due for each activity.
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Business Activity - If using a pre-printed form, Column A should list all your taxable business activities that are currently reported to the City of Los Angeles.
i. If you are in a business activity not listed on the Renewal Form or are using a blank renewal form, write a description of the Business Activity on lines 6-12 under Column A.
ii. If you are still in business but have ceased one or more of the activities listed, or if you are no longer in business, check the Change of Information box in Section I and complete Section VI as shown above.
iii. If you purchased your business from the owner shown on this Renewal Form, please contact one of our offices listed here.
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Fund/Class - Column B should list the fund/class that correlates to each taxable business activity listed in Column A. (A listing of Fund/Classes can be found in §21.41 et seq. of the LAMC. You may also refer to the business tax rate charts available here.)
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Primary Class - If you have 2 or more Business Activities whose "Basis for Tax" is gross receipts listed on lines 6-12, and one activity constitutes at least 80% of your annual taxable gross receipts, you may then consolidate all gross receipts and report them under this one Primary Class by checking the appropriate box in Column C. This allows you to possibly lower your tax liability if your primary classification has a lower tax rate than other business activities. If electing to consolidate, leave Columns D, F and H blank for the activities which were not selected as the Primary Class. For more information on Single Primary Tax Classification Election, please refer to §21.06.1 of the LAMC.
The following example assumes a wholesale and retail business that had gross receipts in 2011 of $1,000,000.00. $800,000.00 was attributed to wholesale activities and $200,000.00 was attributed to retail activities. Since the wholesale business constituted 80% of all gross receipts from 2011, the business would be entitled to elect wholesale as its primary class and take advantage of the lower tax rate for wholesale activities.
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Basis for Tax - Column D describes the manner in which your fund(s)/class(es) are taxed. Please refer to the table below and enter your Basis for Tax for each Fund/Class code you are reporting on your renewal.
Fund/Class
Basis for TaxL043 Gross Receipts of $20,000 or more L055, L094, L108 Flat Rate L062 Number of Tables L063, L064, L265, L763 Number of Machines L070 Number of Alleys, Machines, Tables and Courts L109, L309. L142, L188
L193, L194, L195, L196See Worksheet All Other Funds/Classes Gross Receipts
The term "gross receipts" shall mean gross receipts (including reimbursed expenses) from the previous calendar year or your previously designated fiscal year reported on an accrual or cash basis in accordance with Internal Revenue Service (IRS) guidelines. If reporting on an accrual basis, you may exclude from your reportable gross receipts any uncollectible amount ("bad debt") apportioned to the City of Los Angeles, which has been written off as a "bad debt" in compliance with IRS guidelines. Any portion of "bad debt" subsequently recovered by a taxpayer shall constitute taxable gross receipts in the year that it is recovered. Gross receipts associated with certain activities may be excluded from the basis for tax for businesses conducting only part of their activities within the City or whose gross receipts include amounts received from or paid to a related entity.
Small Business/New Business Exemption - If you checked the box on either line 1 or line 2, as described above, and meet the requirements for either the small business or new business exemption, enter "0" on line 18 and proceed to line 19 of Section IV.
Creative Artist Exemption - If you checked the box on line 3 of Section II and meet both requirements of the Creative Artist Exemption, do one of the following for each fund/class listed:
- If all gross receipts for the fund/class are derived from "Creative Activities", enter "0" in Column D "Basis for Tax".
- If all gross receipts are not derived from "Creative Activities", enter the taxable gross receipts (gross receipts not attributable to creative activities) in Column D, "Basis for Tax".
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Tax Rate - This is the rate of tax for the correlating activity. If you are using a preprinted form, the correct rates should be printed in Column E. If you are using a blank form or adding a new business activity, you can find tax rates from our Tax Rate Tables. If you see "WKST" in Column E or are renewing for business activities requiring a specialized worksheet, please go to the appropriate supplemental worksheet to calculate the tax.
- Tax Computation
- For gross receipts, the tax computation is based on the rate shown in Column E (or found on our tax rate tables if using a blank form) per one thousand dollars ($1,000) of gross receipts or fractional part thereof. Round up total gross receipts in Column D to the next highest $1,000, then multiply the result by Column E and enter the result in Column F.
Example: Gross receipts of $237,461 would be rounded up to $238,000. The tax would then be calculated as 238 x the applicable tax rate = Tax Computation.
For all others, multiply Column D with Column E and enter the result in Column F.
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Back Tax - This column only applies to businesses or activities newly established in 2011. Copy the amount from Column F into Column G, unless "N/A" is printed in Column G.
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Tax Due - Add Columns F and G and enter the result in Column H
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Add lines 6-12 in Column H and enter the sum on line 13.
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This line applies only to businesses within Empowerment Zone A (EZA). Line 14 indicates the minimum amount of taxes due for such businesses.
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This line also applies only to businesses within Empowerment Zone A. Enter the lesser of Lines 13 and 14 on Line 15.
Timely Filing: Business Taxes are due January 1st of each year and are delinquent if not paid on or before the last day of February of each year. If February 29th falls on Saturday or Sunday, then the next business day will be considered timely. February 29th is the last day for timely filing for 2012 renewals. All payments received at any of our branch offices by 5:00 P.M. on February 29th, postmarked by the U.S. Post Office, or filed electronically no later than 11:59 P.M. on February 29th are considered timely. If you are completing your renewal after February 29, 2012, then compute interest and penalty on late payments as shown below.
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Interest - Interest at the rate of 0.3% per month applies as of March 1, 2012 and the first day of each month thereafter until paid. Interest applies only to the amount of principal tax due. To calculate, multiply 0.003 x number of months delinquent x amount on line 13 (line 15 if an EZA Business).
Example (Using the same figures from the tax computation above):Date Filed Interest Rate Months Delinquent Principal Interest Due 04/15/12 0.3% 2 $2,413.32 $14.48
- Penalty - A penalty of 5% applies to the amount of unpaid tax due
as of March 1, 2012; 10% as of April 1st, 15% as of May 1st, 20% as
of June 1st and caps at 40% as of July 1st. Penalty applies only to
the amount on line 13 (line 15 if an EZA Business).
Example (Using the same figures from the tax computation above):
Date Filed Penalty Rate Months Delinquent Principal Penalty Due 04/15/12 10% 2 $2,413.32 $241.33
- Total Amount Due - Add lines 13-17 (15-17 if an EZA Business), and enter the result on line 18. This is the total amount due to the City of Los Angeles for your Business Tax Renewal.
Section IV - Certifications
19-21 - The owner, partner, or officer must sign and print their name on line 19. Indicate your title and daytime phone number, with extension if applicable, on line 20. Enter the date and provide an email address where the City may contact you on line 21.
Section V - Payment Information
22 - If payment is due, please check the appropriate box on line 22 corresponding to the method of payment you will be using. Only one form of payment is allowed.
If paying by check, please write your account number on your check.
If the total amount due is $50,000 or more, you must remit your payment to the City electronically via Automated Clearing House (ACH) transaction through your bank in addition to submitting the completed Renewal Form. You must pre-register no later than February 10th in order to make an ACH transaction. Please click here for more details.
If you have chosen to pay with a credit card, please complete lines 23-25, providing all required cardholder information.
Fee Disclosure: All Visa Debit Card payments will be assessed a flat fee of $3.95 per transaction with a maximum allowed payment amount of $1,200. All other credit or debit card payments will be assessed a fee equal to 2.7% of the payment amount with a minimum fee of $3.95. This fee will be assessed to the same credit/debit card provided.
Make a copy of your completed Renewal Form to retain for your records. If mailing your form, please ensure that your check is enclosed and mail the original with required signatures to the following address:
City of Los Angeles
Office of Finance
P.O. Box 513996
Los Angeles, CA 90051-3996
The renewal MUST BE POSTMARKED NO LATER THAN MIDNIGHT on February 29, 2012. Your cancelled check, credit card transaction, or ACH confirmation is your receipt if payment is due. Proof of mailing is highly recommended.
A new "Business Tax Registration Certificate" will not be mailed to you unless changes or corrections were required. The certificate you have remains valid unless it is suspended or revoked.