The Office of Finance encourages businesses to voluntarily register and pay Business Tax obligations due the City of Los Angeles. The Voluntary Disclosure Program provides incentives for unregistered In-city and Out-of-city businesses to satisfy their Business Tax obligations.
Benefits from the Voluntary Disclosure Program
Participation in the Voluntary Disclosure Program (VDP) may provide the following benefits:
- Effective October 4, 2011 through October 3, 2012, the ord_181859.pdf limits the look-back period for which the Office of Finance can make an assessment for prior Business Taxes to three years for qualified businesses. Beginning October 4, 2012, the look-back period for qualified businesses participating in the VDP will be limited to five years. Without this benefit, the maximum period for assessment would be eight years pursuant to Sec. 21.19 of the Los Angeles Municipal Code.
- Allows the Office of Finance to waive delinquency penalties.
- Allows an applicant to obtain a written opinion as to whether or not the Office of Finance would be inclined to approve a voluntary disclosure request based on circumstances presented anonymously.
Who is liable for City of Los Angeles business taxes?
Los Angeles Municipal Code Section 21.03 (Imposition of Tax) requires that a Business Tax Registration Certificate be obtained and a Business Tax be paid by every person engaged in business within the City of Los Angeles. Failure to obtain a Business Tax Registration Certificate and/or failure to pay Business Tax when due may result in the assessment of interest and penalties pursuant to Los Angeles Municipal Code Section (LAMC) 21.05.
A person shall be deemed engaged in business within the City if:
- such person or his employee maintains a fixed place of business within the City for the benefit or partial benefit of such person, or
- such person or his employee owns or leases real property within the City for business purposes, or
- such person or his employee regularly maintains a stock of tangible personal property in the City for sale in the ordinary course of business, or
- such person or his employee regularly conducts solicitation of business within the City, or
- such person or his employee performs work or renders services in the City on a regular and continuous basis involving not less than seven working days per year for all such employees, or
- such person or his employee utilizes the streets within the City in connection with the operation of motor vehicles for business purposes.
The foregoing specified activities shall not be a limitation on the meaning of engaged in business.
Who qualifies for the Voluntary Disclosure Program?
To qualify for the Voluntary Disclosure Program, you must meet the following conditions:
- Be engaged in business in the City of Los Angeles as defined by LAMC Sec. 21.00(i)
- Cannot have previously filed an application for a Business Tax Registration Certificate, been registered with the Office of Finance, or filed a Business Tax renewal form
- Have not been previously contacted by the Office of Finance or its contractors regarding your tax liabilities under Article I of Chapter 2 of the LAMC, and are not currently under audit for or otherwise contesting such liabilities
- Voluntarily come forward, prior to any unilateral contact with the Office of Finance or its contractors, and file both an application for a voluntary disclosure agreement and a full and accurate statement of your activities within the City of Los Angeles for the eight immediately preceding annual tax periods
- Fully and completely cooperate with an investigation of the taxes at issue in the Voluntary Disclosure Agreement, including providing all books and records to the Office of Finance
- Failure to register and pay the Business Tax was not as a result of fraud or intent to evade the provisions of the Los Angeles Municipal Code
Voluntary Disclosure Program Application
If you believe that you qualify for the Voluntary Disclosure Program, an application must be submitted to the Office of Finance. The program application and instructions are available by clicking here > Voluntary Disclosure Application and Instructions [PDF 3 page, 53.1 KB]: To remain anonymous, if so desired, program applicants may have a representative contact the Office of Finance. Company representatives should not reveal the name of the company or any information that could readily identify the company to the Office of Finance until the agreement is executed.
Any qualified business entering into a voluntary disclosure agreement must fully disclose, under penalty of perjury, all material facts pertaining to its Business Tax liability. The business has 30 days to file annual tax renewal forms and pay all applicable taxes and interest once the voluntary disclosure agreement is signed. In addition, the business must also agree to continue filing annual tax renewal forms and pay any Business Tax due in the future.
Violation of the agreement
The Voluntary Disclosure Agreement (VDA) will be null and void if the business:
- Misrepresents material facts provided to the Office of Finance with respect to the VDA
- Fails to file annual renewal forms or pay Business Tax for the periods covered by the agreement
- Defaults on an installment payment plan for the taxes at issue under the VDA
You may direct additional questions to Mr. Allen Shum, Senior Tax Auditor at email@example.com.