Chapter 5.04
BUSINESS LICENSES1
Sections:
5.04.030 Tax payment required.
5.04.050 Application required.
5.04.060 License tax certificate – Issuance.
5.04.070 License tax certificate – Display.
5.04.080 Audits and corrections.
5.04.090 Determination of tax classification.
5.04.110 Penalties for delinquency.
5.04.130 Gross receipts confidential.
5.04.140 Evidence of doing business.
5.04.150 Constitutional apportionment.
5.04.160 Apportionment guidelines and other regulations.
5.04.170 Misrepresentation of material fact.
5.04.220 Revocation or suspension – Grounds.
5.04.290 Revocation or suspension – Procedure.
5.04.010 Purpose.
This chapter and Chapter 5.06 BMC are enacted solely to raise revenue for general municipal purposes. They are not intended to be regulatory. The payment of a license tax, and its acceptance by the city, and the issuance of a business tax certificate to any person shall not entitle the holder thereof to carry on any business unless he or she has also complied with all of the requirements of this code and all other applicable laws, nor to carry on any business in any building or on any premises designated in such business tax certificate if such building or premises is or are situated in a zone or location in which the conduct of such business is in violation of any law. (Ord. 04-12 § 2).
5.04.020 Definitions.
The following words and phrases, whenever used in this chapter, shall be construed as hereafter set out, unless it shall be apparent from the context that they have a different meaning.
A. “Administrator” means the finance director, his or her designee, or another city officer or employee charged by the city manager with the administration of this chapter.
B. “Business” includes professions, trades, and occupations and all and every kind of calling whether or not carried on for profit. Where a person subject to the tax acquires a business, unless that business is a newly established business, the business shall be deemed a continuation of the previous business and the gross receipts of the business from both before and after the acquisition shall be considered in calculating the amount of any tax due from the person engaging in the business at the time the tax is due.
C. “Gross receipts” means and includes the total of amounts actually received or receivable from sales and the total amounts actually received or receivable for the performance of any act or service for which a charge is made or credit allowed, whether or not performed as a part of or in connection with the sale of materials, goods, wares or merchandise. Included in “gross receipts” are all receipts, cash, credits, and property of any kind without deduction of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses. Excluded from “gross receipts” are:
1. Cash discounts allowed and taken on sales;
2. Credit allowed on property accepted as part of the purchase price and which property may later be sold;
3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;
4. Such part of the sale price of property returned by purchasers upon rescission of the contract of sale as is refunded either in cash or by credit;
5. Amounts collected for others where the business is acting as an agent or trustee to the extent that such amounts are paid to those for whom the amount is collected, provided the agent or trustee furnishes the administrator with the names and addresses of the others and the amounts paid to them;
6. That portion of the receipts of a general contractor which represents payments to subcontractors licensed under this chapter, provided the general contractor furnishes the administrator with the names and addresses of the subcontractors and the amounts paid to them;
7. Receipts of refundable deposits, except that refundable deposits forfeited and retained by the business are not excluded;
8. As to a real estate agent or broker, the sales price of real estate sold for the account of others except that portion which represents commission or other income to the agent or broker;
9. As to a retail gasoline dealer, a portion of his or her receipts from the sale of motor vehicle fuels equal to the motor vehicle fuel license tax imposed by and previously paid to the state of California pursuant to Part 2 of Division 2 of the California Revenue and Taxation Code;
10. As to a retail gasoline dealer, the special motor fuel tax imposed by Section 4041 of Title 26 of the United States Code if paid by the dealer or collected by him from the consumer or purchaser; and
11. Admissions charges for entertainment events, dances, concerts, exhibitions and lectures where such charges are collected by a religious, charitable, fraternal, educational, amateur theatrical, military, state, county or municipal organization, association, public benefit corporation or mutual benefit corporation, if the proceeds of such charges are used for the purposes or objects for which such organization, association or corporation was formed, and do not inure to the profit of any individual.
D. “License tax” means the tax imposed pursuant to BMC 5.04.030.
E. “Newly established business” means a business in which neither the owner or operator, nor any person from whom the owner or operator acquired the business, engaged during the immediately preceding calendar year. The following shall not be considered newly established businesses:
1. A business conducted at a new location whether within or outside the city when the business conducted and taxed at a previous location during the preceding calendar year was discontinued at the same time, prior to, or within 30 days after commencement of business at the new location;
2. The business engaged in during the current calendar year is the same kind as that engaged in during the immediately preceding year, but not at the close thereof;
3. The business to be engaged in during the current calendar year, though not the same kind of business, is taxed under the same section as the business engaged in during, but not necessarily throughout, the immediately preceding calendar year.
Provided, that the administrator may, on written application by a taxpayer, and after considering all circumstances, find that a business described in this definition is in fact new and not a continuation of a business engaged in during the immediately preceding calendar year.
F. “Person” means and includes domestic or foreign corporation, firm, association, syndicate, joint stock corporation, partnership, joint venture, club, business, or common law trust, society, estate, receiver, retirement plan, trustee individual or any other group or combination of individuals acting as a unit.
G. “Sale” includes the transfer of title to any kind of property for a consideration or the serving, supplying or furnishing for consideration of property. A transaction whereby the possession of property is transferred and the seller retains title as security for payment of the price is a sale. This definition does not exclude any transaction which results in a sale within the contemplation of law.
H. “Sworn statement” means an affidavit or a declaration or certification made under penalty of perjury under the laws of the state of California.
I. “Taxpayer” means a person subject to a tax imposed by this chapter. (Ord. 04-12 § 2).
5.04.030 Tax payment required.
A. Except as otherwise provided in this chapter, every person who engages in business within the city, whether or not at a fixed place of business, shall pay a license tax in an amount calculated pursuant to Chapter 5.06 BMC. It is unlawful for a person to transact business in the city, without first complying with the requirements of this chapter.
B. 1. Where a license tax is calculated based on (a) gross receipts, (b) number of persons employed or compensated, or (c) number of residential rental units for which rent is received, this subsection (B) shall apply.
2. The tax with respect to each calendar year (other than the initial calendar year of business operations) shall be due on February 1st of that year, shall be delinquent on April 1st of that year, and shall be calculated based on the actual or estimated gross receipts of the business during the prior calendar year.
3. Though a statement must be filed pursuant to BMC 5.04.050(D), no tax shall be due with respect to a newly established business until the first February 1st that occurs more than 31 days after the taxpayer first conducts the business.
4. With respect to the first license tax due from a newly established business, if a license tax is calculated based on gross receipts and Chapter 5.06 BMC establishes a minimum tax amount due without regard to the amount of gross receipts received by the business, that minimum tax amount shall be prorated based on the number of whole or partial months remaining in the calendar year on the date the taxpayer first conducts the business.
C. With respect to any license tax to which subsection (B) of this section does not apply, the tax with respect to any period of operations shall be paid before the business conducts operations during that period. For example, and without limitation, a license tax charged on an annual basis must be paid for each calendar year during which the business is operated, regardless of when the tax is due or paid. The amount of such an annual, non-gross-receipts tax shall not be prorated due to the fact that the business is operated for less than a year.
D. If two or more activities of a single taxpayer are taxable pursuant to Chapter 5.06 BMC at the same rate and on the same tax basis, the taxpayer may calculate and report the tax due for the activities as a group. If two or more activities are taxable on the same tax basis, but at different tax rates, the taxpayer may calculate the tax for each activity separately or may elect to calculate the tax for the activities as a group by applying the highest tax rate applicable to any activity in the group. If two or more activities are taxed on differing tax bases (such as, for example, gross receipts or days of business activity), the tax must be calculated for each activity separately.
E. Where a license tax is based on gross receipts, a taxpayer may elect to pay the maximum tax indicated in Chapter 5.06 BMC rather than paying the tax that would otherwise be due under that chapter. In such event, the taxpayer need not report his or her gross receipts in the statement required by BMC 5.04.050. (Ord. 04-12 § 2).
5.04.040 Exemptions.
A. The requirement to pay a license tax pursuant to BMC 5.04.030 does not apply to:
1. Any person transacting or carrying on any business exempted by the Constitution or laws of the United States or of the state of California from the license tax, but such exemption shall only extend to such exempt business and not to any other business in which such person may engage;
2. Any disabled veteran holding an honorable discharge from a branch of the military service of the United States, if he or she is physically unable to earn a livelihood by manual labor;
3. Any organization certified by the Internal Revenue Service as an exempt organization pursuant to Section 501(c)(3) of the United States Internal Revenue Code, except with respect to business activities for which the organization is required to pay federal income taxes;
4. Any individual under 18 years of age and whose gross receipts do not exceed $1,000 per year.
B. A person claiming an exemption under this section, in addition to filing the application required by BMC 5.04.050, shall file a sworn statement with the administrator stating the facts upon which the exemption is claimed. In the absence of a statement substantiating the claim, the person is liable for the payment of the license tax required by BMC 5.04.030.
C. Upon proper showing contained in the sworn statement, the administrator shall issue a license tax certificate to the person claiming exemption without payment to the city of the license tax otherwise required by BMC 5.04.030.
D. The administrator, after giving a person receiving a license pursuant to subsection (C) of this section notice and a reasonable opportunity for hearing, may revoke such license tax certificate upon receiving information that the licensee is not entitled to the exemption claimed. (Ord. 04-12 § 2).
5.04.050 Application required.
A. Each person engaging in business within the city, whether or not at a fixed place of business, shall file a written statement each year with the administrator upon forms provided by the administrator indicating the business activity to be conducted, the location of the business, the officers or other principals of the business, the period for which the application is submitted, the amount of license tax due for that period, and sufficient information to allow computation of the license tax due.
B. The statement required by subsection (A) of this section shall also include a list of all contractors or subcontractors engaged by the taxpayer to conduct business in the city during the preceding year.
C. The administrator shall not accept a statement unless accompanied by payment of the license tax due.
D. With respect to license taxes based upon gross receipts, a person filing an initial statement for a newly established business shall file that statement within 30 days of commencing business. Such person shall file statements no later than March 31st of each subsequent calendar year during which business is conducted in the city.
E. With respect to any other license tax, the statement is due at the time the business license tax is due. (Ord. 04-12 § 2).
5.04.060 License tax certificate – Issuance.
A. The administrator shall issue a license tax certificate to each person who submits an application and pays the license tax as required by BMC 5.04.050. The license tax certificate shall indicate the name of the business for which the license tax is paid, the person paying the license tax, the location of the business, the type of business for which the license tax has been paid, the period for which it has been paid and such other information as is deemed necessary by the administrator for the administration of the tax.
B. A license tax certificate is not transferable, except that if the holder of a license tax certificate changes his or her place of business, he or she may apply to the administrator for a transfer of the license tax certificate to the new location. The tax for such a transfer application shall be established from time to time by resolution of the city council. A transfer application must be filed within 30 days of the establishment of a new location.
C. No license tax certificate shall be issued to any person until any previous indebtedness for taxes and fees imposed by this chapter upon that person, and with respect to the business for which the person seeks a license tax certificate, has been paid.
D. A separate license tax certificate is required for each branch or location of a business and for each separate type of business at a single location. Each license tax certificate shall authorize the tax certificate holder to transact and carry on only the business stated therein at the location or in the manner designated in such certificate; provided, however, a business may obtain certificates for separate locations either by submitting combined or separate applications for each location. (Ord. 04-12 § 2).
5.04.070 License tax certificate – Display.
A. Each taxpayer shall display his or her license tax certificate as follows:
1. If the license tax certificate is issued with respect to a business carried on at a fixed place, the taxpayer shall post the license in a conspicuous location at that place;
2. If the license tax certificate is issued with respect to a business that has no fixed place of business, the taxpayer shall keep the license upon his or her person at all times while conducting business;
3. If a taxpayer uses a motor vehicle in connection with his or her business, he or she shall affix to the vehicle in a manner specified by the administrator a tab furnished by the city showing that the license tax has been paid. The administrator may waive this requirement in the case of a taxpayer who operates three or more vehicles within the city, or in any case in which the administrator determines that this requirement is not necessary to the administration of the tax.
B. The administrator, any police officer, or any person authorized by the administrator to do so shall have the authority to enter any place of business taxed under this chapter at any reasonable time and demand exhibition of the license tax certificate issued with respect to that place of business.
C. Any person who willfully fails to exhibit a license tax certificate in the manner required by this section is guilty of a violation of this chapter punishable as a misdemeanor pursuant to BMC 1.08.010. (Ord. 04-12 § 2).
5.04.080 Audits and corrections.
A. Taxpayers shall maintain and preserve, for a period of at least four years following the date the tax was due, such records as may be necessary to determine the amount of the tax due and shall, upon request of the administrator, provide the necessary records to substantiate the tax paid or due for such business. If upon audit of such records, the administrator determines the tax imposed by this chapter has not been paid in full, the administrator shall notify the taxpayer of the balance due, including any accrued penalties and interest. Such amount shall be paid within 30 days after notice is issued by the administrator.
B. If an audit reveals an overpayment, the administrator shall notify the taxpayer of the amount overpaid. Unless the taxpayer requests a refund of the overpayment within thirty days after notice is issued by the administrator, the overpayment shall be applied as a credit against the next annual tax due from that taxpayer.
C. If an audit reveals an underpayment of $25.00 or less, the administrator need take no action to collect the underpayment.
D. Rather than request information and conduct an audit, the administrator may request a taxpayer to file a corrected statement pursuant to BMC 5.04.050. If such corrected statement is filed and the administrator is satisfied with its accuracy, the existence of any underpayment or overpayment under this section shall be determined with reference to that corrected statement. If a taxpayer fails to file a corrected statement or the administrator is not satisfied with a corrected statement, the administrator may conduct an audit pursuant to subsection (A) of this section. (Ord. 04-12 § 2).
5.04.090 Determination of tax classification.
A. The determination of the class of business in which an applicant for a tax certificate is engaged for purposes of Chapter 5.06 BMC shall be a ministerial task of the administrator. The administrator may, at any time within one year after receiving a statement pursuant to BMC 5.04.050, correct the classification reported by a taxpayer and recalculate the tax due. The administrator shall then treat the results of this recalculation as the results of an audit.
B. In the event an applicant disagrees with the determination of the administrator as to the class of business in which the applicant is engaged, the applicant may file an application for reclassification with the administrator. This application shall set forth with specificity the facts upon which it is based. Upon receipt of a reclassification application, the administrator shall review the matter and either affirm the original classification or assign a new classification and shall notify the applicant of the decision in writing, which shall be final.
C. The administrator may refuse to accept an application for reclassification from an applicant who has applied for reclassification within the previous 12 months if the application fails to state material and relevant facts that were not and could not have been presented in the previous reclassification application. (Ord. 04-12 § 2).
5.04.100 Failure to file.
A. If a person fails to file a required application or statement or fails to file a corrected statement within 15 days of a demand by the administrator, the administrator may determine the amount of license tax due, using the information he or she is able to obtain.
B. When the administrator makes a determination under subsection (A) of this section, he or she shall give a notice of the amount of license tax due by serving it personally or by mail, postage prepaid, addressed to the taxpayer at his or her last known address.
C. Payment of the corrected tax shall be due within 15 days of the service or mailing of the notice pursuant to subsection (B) of this section. (Ord. 04-12 § 2).
5.04.110 Penalties for delinquency.
A. Upon a taxpayer’s failure to pay the entire tax when due, the administrator shall add a penalty of the greater of $10.00 or 10 percent of the unpaid tax on the first day of each month following the month the tax was due; provided, however, no penalty shall be assessed in excess of 50 percent of the tax due. For the purposes of this chapter, a payment made by mail shall be deemed received on the date of a postmark on the envelope in which the payment is received, or if payment is made by means other than U.S. mail, payment shall be deemed received on the date the payment is stamped “received” by the administrator or his or her designee.
B. On the first day of the month following the date on which the maximum penalty provided for in subsection (A) of this section has accrued, interest at the rate of one percent per month shall begin to accrue. Interest shall accrue at this rate on the amount of the unpaid tax, exclusive of penalties, for each month or portion of a month until the tax is paid. (Ord. 04-12 § 2).
5.04.120 Refunds.
No tax shall be refunded unless it is determined by the administrator that it has been paid in error, computed incorrectly, overpaid, or collected illegally. No refund shall be made unless a written request therefor is received by the administrator within one year of the payment of the tax. (Ord. 04-12 § 2).
5.04.130 Gross receipts confidential.
Information concerning gross receipts or operating costs furnished or secured pursuant to the provisions of this chapter shall be confidential, shall not be subject to public inspection, and shall not be made available to anyone not charged with the administration of this chapter. (Ord. 04-12 § 2).
5.04.140 Evidence of doing business.
The use of signs, circulars, cards or any other advertising media, including, without limitation, the use of telephone solicitation, or any other means by which a person may hold himself or herself out as, or represent that he or she is, doing business in the city, shall constitute evidence that a person is doing business in the city. (Ord. 04-12 § 2).
5.04.150 Constitutional apportionment.
A. If a person believes that the license tax, as applied to him or her, places an undue burden on interstate commerce or violates the due process or equal protection clauses of the United States or California Constitutions, he or she may apply to the administrator for an adjustment of the tax. Such adjustment shall be supported by a sworn statement setting forth the method of business and gross receipts calculations and such other information as the administrator may consider necessary to consider the claim.
B. The administrator shall review any application pursuant to subsection (A) of this section, and shall fix as the license tax an amount that is reasonable, nondiscriminatory and consistent with applicable law. The amount so fixed shall not exceed the amount that would otherwise be due pursuant to this chapter. (Ord. 04-12 § 2).
5.04.160 Apportionment guidelines and other regulations.
The administrator, in consultation with the city attorney, and subject to the approval of the city manager, may:
A. Promulgate guidelines for the apportionment of the gross receipts of businesses which operate both inside and outside the city to assist taxpayers in calculating the portion of their activities subject to the tax imposed by this chapter; and
B. Adopt any other rules or regulations necessary or desirable for the enforcement of this chapter.
Any apportionment guidelines or rules or regulations for the enforcement of this chapter shall be effective only after they have been published in the manner required for an ordinance of the city. (Ord. 04-12 § 2).
5.04.170 Misrepresentation of material fact.
It is a violation of this chapter punishable as a misdemeanor pursuant to BMC 1.08.010 to knowingly or intentionally misrepresent to any officer or employee of the city any material fact, relative to any tax imposed under the provisions of this chapter. (Ord. 04-12 § 2).
5.04.180 Civil debt.
The amount of tax, fee, penalty, or interest imposed by the provisions of this chapter shall be deemed a debt to the city. An action to recover such debt may be commenced in the name of the city in any court of competent jurisdiction. (Ord. 04-12 § 2).
5.04.190 Remedies cumulative.
The conviction and punishment of any person for failure to comply with the provisions of this chapter shall not relieve that person from paying any tax, fee, penalty, or interest due and unpaid at the time of such conviction, nor shall payment prevent prosecution of a violation of any provision of this chapter. All remedies shall be cumulative, and the use of one or more remedies by the city to enforce this chapter shall not bar the use of any other remedy. (Ord. 04-12 § 2).
5.04.210 Cost recovery fee.
In addition to the license tax imposed pursuant to this title, the city council may, by resolution, establish and impose a fee, to be collected with the license tax, to recover the city’s costs of implementing the requirements of this title, including the costs of compliance and audit programs. The anticipated proceeds of such fee shall not exceed the city’s actual or expected implementation costs. (Ord. 04-12 § 2).
5.04.220 Revocation or suspension – Grounds.
The administrator may revoke or suspend a license granted under this chapter for any of the following reasons:
A. A false statement in the application;
B. Failure to comply with a regulatory provision in the statutes of the state or the ordinances of the city;
C. Failure to operate the business in an orderly and business-like manner in obedience to orders, rules and regulations applicable to it;
D. Conducting business in an illegal, improper or disorderly manner, or in a manner which endangers the public welfare. (Ord. 04-12 § 2).
5.04.290 Revocation or suspension – Procedure.
A. Authority of Administrator. The collector shall give the licensee written notice of the grounds for revocation or suspension. The notice shall specify a time and place of hearing, and shall be given at least five days before the time of the hearing. The licensee shall show cause why his license should not be revoked or suspended.
B. Appeal to Council. The licensee may appeal the decision of the administrator to the council in accordance with Chapter 1.44 BMC.
C. Failure to Appeal. If the licensee does not appeal, the decision of the administrator is final and conclusive on expiration of the time fixed for appeal. (Ord. 07-29 § 1; Ord. 04-12 § 2).
Prior legislation: Prior code §§ 5-101 – 5-103, 5-111 – 5-116, 5-121 – 5-129, 5-131 – 5-135, 5-141 – 5-145, 5-161 – 5-168, 5-171 – 5-175, Ords. 72-7 N.S., 75-1 N.S., amendments during 1980 codification, Ords. 96-4 N.S., 97-10 N.S. and 03-9.